HOW YOUR RETAIL STORE CAN BE LIKE AMAZON: IN 3 DIFFICULT STEPS (I BET YOU WERE HOPING FOR 3 EASY STEPS)
Originally published in RetailerNOW Magazine
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August 2015 --
On a recent rainy day, I was channel surfing when I came across a documentary about Amazon. It’s safe to say there are few people who have the business vision Amazon founder and CEO Jeff Bezos possesses.
Bezos recognized early on that the Internet would forever change the way we conduct business. He envisioned a place where we could buy millions of products with the greatest of ease. Today, of course, there is no one who plays the online retail game better. Amazon had more than $80 billion in online sales last year. That’s more than the next 14 largest retailers’ sales combined.
But don’t be intimidated. You can beat Amazon at its own game and stay relevant in retailing (especially with Gen X and Gen Y) if you take these three steps. They may not be easy or instantaneous, but they’re worth it.
Retailers need to be a 2015 disruptor much like Amazon has been the past 20 years. You can’t be a complacent thinker who only dreams about acting, you need to be a visionary who puts those dreams into action.
That’s what Bezos did. His first step was to study retail and look for a complacent model he could exploit with his vision. That model was the neighborhood and national book store chains, a $16 billion industry. Why? Because he knew a typical 5,000-10,000-square-foot store had a finite number of options a consumer could shop. Bezos asked himself: What if consumers could shop all the millions of titles that have been printed, and purchase them online at one location?
He knew that by o ering an unlimited number of titles, someone would buy one of something. That’s the definition of the Long Tail.
“The theory of the Long Tail,” says Chris Anderson, former editor-in-chief of WIRED magazine, “is that our culture and economy is increasingly shifting away from a focus on a relatively small number of ‘hits’ (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.”
As the costs of production and distribution fall, especially online, Anderson argues there is less need to lump products and consumers into one-size-fits-all containers. “In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare,” he says.
Anderson predicts that demand for products not available in traditional brick-and-mortar stores is potentially as big as for those that are.
Books, along with their distribution outlets, were a perfect target. They were entrenched in the old model of limited selection, which required customers to make a special trip to browse and discover which titles were available, with the hope of finding what they were looking for, and then hoping it was in stock. The old model was controlled by a few distributors who decided what was available to consumers. Of course there were millions upon millions of selections consumers may have wanted to read, but didn’t know about because of the limited selection. In the old days, newspaper or magazine book reviews, in-store recommendations and friend’s recommendations drove sales. They are still a primary source in the buying process, but not before the Zero Moment of Truth, the information consumers are looking for online as their first step in the purchase process.
Bezos believed in his vision and he implemented it with passion and commitment. He had no problem exploiting the old model of retail, and to this day, he is committed to continuing this passion for his vision everywhere, in any retail sector, that becomes complacent.
Does this sound a little familiar?
The home furnishings industry has long displayed the same attributes as the bookstore model, opening the door for Wayfair, One Kings Lane, Overstock and, of course, Amazon to disrupt the status quo.
Why? Because consumers may not like or want the limited sofa selection on your oor or the slightly larger selection on your website. When consumers feel constrained by your store’s selection, they turn to the Internet, incorporating the Long Tail search for the sofa or dining room table they want.
Retailers need to put their entire inventory online because study after study shows more than 80 percent of consumers want to buy local, especially Gen X and Millennials. If they can’t find it locally, they will have no problem buying it from another retailer online whether that retailer is 20 states away or across the ocean.
Think about this: Why would you want to limit your store sales and pro ts by creating a limited selection? Is that how you prefer to shop? One or two choices of toothpaste, shampoo, T-shirts, etc? If not, why would you assume others want to shop only your limited selection?
That’s why Wal-Mart and other big box retailers exist. They offer choices, thousands of them, and even that is now under attack because of Amazon’s model. This isn’t a fad or trend, this is retail today. The more you show, the more you’ll sell and the more you’ll make.
Home furnishings products come in a variety of colors, shapes, sizes—thousands of manufacturers and distributors with millions of SKUs. Why limit your selection to brown or black, when there may be one or 100 consumers in your market who may want purple? Have you been following DIY shows and trends? It’s all about “my design,” not “my store’s design.”
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HUNDREDS OF PAGES FILLED WITH INFORMATION TO HELP RETAILERS AND BRANDS COMPETE IN TODAY'S DIGITAL WORLD
About Bill Napier