Sunday 25 August 2013

Online or Bricks ‘n’ Mortar But Not Both

When I first started in business my business guru (my accountant) told me to make up my mind whether I wanted to retail or wholesale but don’t try to do both. He reasoned that the two functions were different enough to make them incompatible. He said “Do one really well, but don’t try to do both.”

In today’s retail market multi-channeling is the buzz word. Retailers are expected to add an online presence to their traditional bricks ‘n’ mortar stores. We are constantly hounded by retail commentators who say the modern retailer cannot survive without a professional website and all the associated trappings like immediate, inexpensive (or even free) delivery, guaranteed stock holdings, constant website updates, free returns, lowest prices – and the list goes on.
So it was interesting to read Ruslan Kogan’s (founder and CEO of one of Australia’s most successful new retailers) comments recently when he suggested that online and traditional retailing were incompatible - “Any business has to have a viable competitive advantage – a value added model that ensures sustainability. Your competitive advantage underpins your entire business. The competitive advantage for online players and traditional retailers is completely different. For traditional retailers, that means relying on a certain level of returning foot traffic. For online retailers, it means fulfilment optimisation and efficiency driving highly competitive pricing structures. These two models are completely incommensurable.” (thanks to Power Retail for the quote)
If Kogan is correct then a lot of retailers are spending a lot of money trying to get two incompatible functions to mix. I have a website, but I have never allowed it to distract me from giving full attention to my physical stall presence and I think my old accountant would approve.

Have Your Say - click here

COMMENTS:
25/08/2013 18:00:34 Online "There is merit to the argument.
See here: http://ganador.com.au/retailsmart/2013/2/25/are-you-a-strategic-lemming
Having said that: through technology you can create a seamless mult-channel experience. 
The difference with your accountant's (correct) advice is that you are dealing with the same customer in m/c - unlike w/sale vs retail." Dennis  

25/08/2013 20:55 Online "Good point Dennis. The same customer who enjoys our traditional retail offer may also wish to engage online and in fact that is becoming increasingly likely." Ed