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Click or Brick, Part 2

October 14, 2008

In my last blog I summarized a part of the "Brick or Click" round table held at last month’s Casual Show. I talked about how many retailers in our industry have web sites that are only informational. This blog covers the rest of the round table which was about a side of our industry that, until now, has been left to the big boxes, wholesale clubs, and catalogs. . . selling on the web.

Of the thirty or so attendees at the internet round table, only one was selling direct over the Internet and that company was a fulfillment company for larger retailers who sold over the Internet. For most of us, selling online is not something we want to do. Yet, we have to compete every day with retailers who are selling via the Web.

This was a hot topic for the  brick and mortar retailers at the round table. We all felt buying outdoor furniture is a full immersion experience. Not only do customers have to sit in a chair to see if it is comfortable for them, they have to see live swatches, be guided through the multitude of choices by a knowledgeable and professional sales consultant, receive white glove delivery service, and have someone to fall back on if a warranty problem comes up. Since a web site can’t provide these services, we don’t think it is appropriate for vendors to allow their products to be sold over the web.

Pricing was another concern. Some vendors allow their products to be sold over the web for whatever price the seller can get. Others don’t allow their product to be priced on a web site. The easy way around this for any etailer is to have the consumer contact them at a toll free number or via email. Once that contact is made, the etailer glady supplies pricing. Not much different than putting the price on the web in our opinion. Then there are the vendors who have developed a Minimum Advertised Pricing of MAP system. These vendors allow etailers to advertes prices as long as they are equal to or greater than a minimum price set by a vendor. Usually this price is 20 to 30 % off the suggested retail price.

But even MAP didn’t satisfy many of us. Some lines don’t discount their furniture enough for a brick and mortar retailer to sell it at MAP and still make a profit. It was the consensus that we would rather our industry stayed out of etailing and relied on more traditional distribution. But that is not going to happen!

There was a very well known long-time specialty retailer at the conference who has decided “if you can’t beat them, join them!” Their new website should be up and running in the next few weeks; and, when it is, they will start selling on the web. While many of us sympathize with them, it was disappointing to us that they are becoming our competition.

If you are going to etail, you web site is going to be considerably different than an informational web site. First of all, you have to decide if you will sell right off the web or do it via toll free phone calls of email. If you are going to sell direct, you have to have a “shopping cart” function on your site. This will allow your customer to shop, get a freight quote and pay without ever dealing directly with you or your staff. This function could be handled by using products available through Yahoo, Google, or Amazon. Since Internet transactions have a higher incidence of fraud, processing fees are usually higher and you have to have approval of your processor to accept cards over the Internet. You will probably have to renegotiate your credit card processing rate and maybe even find another processor.

In addition, your site has to have pictures of everything you are selling and an on-line design center that has fabric and frame swatches from every line you show on the web. Your site also has to be constantly updated. It should not show anything that is out of stock at your warehouse(s), or has been discontinued by a vendor. It would not be unusual for you to have to have at least one individual whose sole job is to keep the site up-to-date and handle sales leads generated by it.

If you are going to sell outside of your trade area, you are going to need a white glove delivery service. This service will have to be able to unpack, assemble, place and touch up the furniture. They will also have to be able to remove any packing materials. This is the hardest part of the transaction. We all know furniture never comes in without some need of touch up, with parts missing, in the wrong color even though the box is marked with the correct color, or out of square.  If you are delivering this furniture to someone far outside of your trade area, you have to be prepared to handle this. Your business plan may be that you just write off the goods and provide the customer with a new piece. If that is too expensive, you have to find a way to get the defective product back to you or the vendor and then get a replacement out to the customer. Sounds fun!

On the other hand, any business is going to have its own set of problems. For a florist it is the huge amount of flowers that die before they are sold. For a real estate broker, it is how to survive during slow economic times. But they way you handle these problems will be “cost of doing business.” So, just because your “Internet only” business doesn’t have rent or mortgage payments on a physical store front, there will be other expenses a physical store doesn’t have. Be sure your business plan includes those costs when figuring out your profitability.

In an ideal world, we would all like our way of doing business to stay the same from year to year. It is so much easier to stay the same than to change. But that is not the reality of business or life. We all have to change. I admire anyone who can change their business model and start etailing.  Just remember, the grass is always greener on the other side until you hop over the fence and start grazing there.

Yours in confused retailing, Bruce