To Sell or Not to Sell: The eCommerce Dilemma

December 2001

Biz Life Magazine

By Chad Cheek

   When faced with the daunting task of deciding whether to create an eCommerce strategy, traditional brand marketing managers, small and large business owners and corporate strategists are asking very poignant and intriguing questions.
   However, they're not always finding the answers. "Do we need to develop an eCommerce strategy? If so, what should it be? "Will we damage our traditional commerce trade channels by selling online?" "Should we create a fresh new online presence that's different than our traditional brand positioning?" Even now, in the technologically savvy 21st century, the most basic and fundamental question is still being asked: "Why should I be online at all?"
   Interestingly, there is no standard answer to any of these questions.
In response to the eCommerce quandary, one could ponder: "Am I selling a product or a service?" "Will my customers expect to find me online? If so, how and where?" "If what I'm selling can be sold legally on the Internet (see beer and cigarettes), can it be marketed, warehoused and shipped cost effectively, without negatively affecting traditional and current channels of trade?"
Because the medium continues to change so rapidly, the answers and opportunities also change from week to week. Fundamentally, however, a good strategy should be the ready compass when navigating the waves of the eCommerce dilemma.

Traditional Marketing Still Works

   Although there's much to be learned about selling products online, many traditional marketing practices apply. For instance, a direct marketing strategy can be modified effectively as an online marketing or eCommerce development strategy: IN direct mail marketing, you attempt to sell your product or service by sending people information. You attempt to identify people who are most likely to want your product or service, find prospects, then convert them to customers. Their efforts are similar to what must be achieved in an effective online presence and eCommerce initiative.

There is Only 'One Customer'

   Today's retailers face a difficult challenge. "Will selling product online erode my catalog and retail sales?"
   While the debate may be endless, there are strategic opportunities to find deep pockets of incremental business while providing increased customer service. The one thing to keep in mind is that while shopping venues and advertising mediums may be changing and varied, there is only One Customer. Additionally, while the ability to access the Internet grows, people are inherently the same as they have always been - they will pay what they feel is a fair price for something they really want, and they prefer to shop in an environment they perceive to be convenient and comfortable.
   Barnes and Noble recently launched bn.com, which offers just about every item that can be found in the retail store. Perhaps the strategy is to compete with Amazon.com [see below]. Maybe they feel that dollars lost at retail can be made up in spades as they continue to market their online presence.   Or, perhaps the good folks at Barnes and Noble understand their consumer - people who absolutely love the opportunity to browse at retail, read the forward of the new John Grisham book while sitting in a comfortable chair with an espresso and a couple of scones. They'd probably like to believe that this fundamental principal of destination retail will never ever change. They might also recognize that this same customer may want to buy three copies of that book and send it to three different people across the United States; that they'd like to go online and have the gift-giving logistics accomplished magically at the click of a mouse.

'One Customer' Service

   While browsing in a big-box retail store recently, I overheard a woman tell her husband: "Steve, these lines are just too long. Now that we know this is the video camera we want, let's just go home and see if we can find it online. It might even be cheaper. Write that number down and let's get the heck outta here!"
   Which brings me to another theory that a colleague of mine espouses: Retail is for browsing and the Internet is for buying! Many retailers - and some manufacturers who depend wholly on retailers - may feel that they suffer in this scenario. The bottom line: While consumers have become more Internet savvy, it might mean that retailers and manufacturers will have to become more 'Customer savvy.'
Some are doing it well by effectively utilizing all three modern channels of trade to sell to the One Customer: retail, catalog and Internet. Some are doing it more slowly than others: Pottery Barn has not yet been doing eCommerce a full year, having launched potterybarn.com in August 2000. But, boy, when they do it, they do it. What you find online is a virtual home tour and fully functioning design studio. We should all be so well decorated.
   While shopping at my local Banana Republic recently, I found a pair of grey pants on sale for $39.99. The problem: they didn't have my size. Not yet discouraged, I went directly to bananarepublic.com and found that the same pants were on sale online for the same price. My size was in stock, so I ordered them. When they arrived, they were tagged incorrectly - the wrong size (ironically the same size that didn't fit in the store). Still undaunted, I called the 1-800 number. After finding that my size was, in fact, no longer in the warehouse, the always-gracious "Tammy" sent me digging for any recent catalog I could find. When I gave her the number from the back of one, she was able to suggest two or three different styles that I might also enjoy. After browsing her suggestions, I still wanted the $39.99 on-sale ones that I had seen in the store (there were nice pants). So, she called a store on the West Coast, they sent me the pants overnight - in the right size and neatly gift wrapped. I was finally ecstatic. Later, I was able to march the ill-tagged pair into the retail store and return them. They even refunded my shipping costs.
   While this may sound exhausting, it might also be a fine example of a retailer who understood the needs of the One Customer. I wanted those $39.99 grey pants. It should be their goal to sell me the pants - however I want to do it. Thanks again, Tammy.

Developing a Strategy

   Determining what type of online eCommerce beachhead to establish may be easier said than done.

Strategy One: Offer a slightly or dramatically different product online so that the consumer has to shop both or all three places.

Strategy Two: Utilize the Internet as a clearinghouse for seconds and overruns that have previously not had an outlet.

Strategy Three: Offer everything you make online, ship it for free and perhaps get out of the retail business altogether.

Obviously, each product or service offering has to be scrutinized upon different criteria, but recent online successes - and failures - shout one message: Be first, be fast and be number one.
In their book The 11 Immutable Laws of Internet Branding, Al Ries and Laura Ries declare that Singularity is the key. They say that while the real world always has room for a No. 2 brand - see Duracell and Energizer, McDonalds and Burger King - there is no need for a No. 2 brand online. Once a site becomes known for their offering, specialized product categories, etc., the next site to offer the same thing is an afterthought. Being No. 2 is the same as being No. 22.

Consider just two examples:

• Amazon.com was introduced in 1995 as the first bookstore on the Internet. Their strategy was to call themselves The Largest Bookstore on Earth. Currently, they sell a billion dollars' worth of books - and now other merchandise - a year, many times more than the No. 2 competitor, our friends at bn.com.
• eBay was introduced as the first auction site on the Internet. It's still heads and shoulders above the competition, handling more than 2 million auctions a month n some 850 product categories. In truth, when we think 'online auction,' we think eBay regardless of what some Johnny-come-lately auction.com has to offer.

   Some may say, "Those examples are different; they're Internet-only brands." While that may be true, much can be learned from the behavior of busy Internet-goers as they seek to access needed products and services via the Internet.
   Michael Dell realized this early. Initially, Mr. Dell attempted to carve a niche by selling computers by telephone, but his strategy shifted. Now, Dell sells more computers online than anywhere else. We should all be so visionary.
   So, perhaps the strategy becomes, "Let's see what our competitor is doing online. Let's see what other folks who sell in or near our category are selling online. And then, once we have evaluated those offerings, let's build an eCommerce presence that is different than anything anyone else is doing. By the way, let's hurry up and do it now!"
    Even marketing experts (bless their hearts) who feel that selling their product online will be brand-adverse and hurt their traditional efforts might need to search a little harder to find a way to give the customer the opportunity to buy their product online. Extending the brand positioning may be the first step.
   Another colleague recently showed me Tiffany's eCommerce site: tiffany.com. For those who long to purchase custom-made, handcrafted, engraved silver cuff links and don't live near an exclusive retail location, the site provides the opportunity to browse at our (er, your) heart's content. The result? An exclusive and luxurious shopping experience, complete with a history lesson and special gift-wrapping options. Yes, they'll even ship it in a Tiffany-blue box.) The brand is in no way damaged; in fact, it might even be compared to how nice it might feel to browse on 5th Avenue. It's an eCommerce shopping experience completely unlike most of your everyday, down-and-dirty, discount shopping sites. The point: It is appropriately upscale and the obvious result of some strategic thinking centered around what they perceive their One Customer expects of their brand. We should all be so sterling.
Hey, maybe there's something on sale for $39.99! Let's hope they'll send the right size.

Chad Cheek manages programs and public relations for the Piedmont Triad Internet Council. He also manages Internet advertising and business development initiatives for clients of Stratapult Studios, an interactive marketing agency in Winston-Salem, North Carolina.

Courtesty of BizLife Magazine.