Jag Venugopal's Blog

December 23, 2011

How brick and mortar retailers can win in an online world

Filed under: Digital Living — Jag @ 6:34 am

Amazon’s price comparison app has stireed up a hornet’s nest among brick and mortar retailers. Though I haven’t used this particular app, similar apps on my mobile phone allow me to scan a barcode and search for the product online.

Understandably, brick and mortar retailers are very worried about becoming mere showrooms for online stores. Their concern is that a shopper will visit the store, examine the product and then order it online for a lower price. They have come up with various strategies to prevent this from happening… asking people caught barcode scanning to leave, removing barcodes from merchandise, and borrowing from the mattress industry, coming up with exclusive lines for each retail chain to thwart direct comparison.

These steps are ineffective. Customers can still type in the product name into their smartphones, if BestBuy decides to remove barcodes. Asking potential customers to leave the store is terrible business practice, barcode or no barcode. And while exclusive lines work for mattresses, where the decision is very subjective, it will hardly work for electronics where innumerable online forums offer comparisons between even the slightest brand variants.

A better approach would be for brick and mortar retailers to leverage their strengths… they have the customer physically present in store, and have an opportunity to build a deeper face-to-face relationship. How about store associates that are actually knowledgeable? And how about offering in-store warranty service? If I do not have to mail my malfunctioning electronics halfway across the continent to have it repaired but instead have my local BestBuy turn around a repair within a week, would I buy from there? Absolutely! This would be especially useful in gadgets with high failure rates, for example, laptops.

And for a revolutionary idea, how about letting the prospective customer “borrow” a demonstrator for a few days? The customer can try the product in the privacy of their own home, and if they don’t like it they can turn it back in, no questions asked. A fee can be charged, which would be waived upon in-store purchase of the product. Would I like to try this with a cell phone or a camera? You bet! I’d happily pay 50 bucks to have one for a couple days so I make the right decision on a 500 dollar purchase.

For people like my parents, who find newfangled gadgets difficult to use, how about in-store classes on how to use their newly purchased camera/smartphone/other gadget? It doesn’t have to be free.

A commentator on a newspaper’s website put it best: Amazon does not complain about an unfair playing field… the brick and mortar retailer has the customer in store, can talk to them and sell them on goods, and the customer is holding the product in their hand. Amazon is at least 24 hours removed from having the product in the customer’s hand and they never get to see the buyer, much less talk to him. Amazon’s not complaining. Why should retailers?

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