Marketing Expert's Corner

This article written in 2009.

 

No More Stores?

So the ridiculous merchandising tricks you saw above are part of what it takes to succeed when selling through Amazon.  These tricks would never work across a chain of real-world brick-and-mortar stores, because the insta-mob tactics of social networking can't get focused the way they do on the internet.

When thinking about stores and shopping, your mind immediately gravitates toward B2C images.  And it's true, merchandising is essential for most B2C plays...but it  seems only vaguely interesting to B2B companies.

But B2B companies buy plenty of stuff from catalogs, on-line sites, and other indirect channels.  Even eBay is used by B2B companies as both a source and a sink for inventory.  So the dynamics of what's going on with stores, distributors, and channels are pretty important in B2B, too.

Have you noticed the number of bankruptcies in storefronts this last year?  The landscape is changing in a very big way, and not just for the retailers.  Just try to buy a camera:  all the camera chains have gone out of business.  Unless you live in a big city or have a Fry's or Best Buy nearby, finding a good camera is pretty tough.  Sure, you can go to Wal-Mart or Costco, but the selection is pitiful and the salespeople know less than nothing about the product.  Essentially, the entire shopping experience for cameras has changed, and the way that camera vendors get to customers -- business and consumer alike -- is going through a phase change.  And it's not just cameras:  an increasingly wider range of product categories simply will not be bought in stores going forward.

Taking the camera example further, it was customary to visit a camera specialty shop, compare several brands and models, and understand the interaction of accessories (where all the profits were) before buying the camera body.  Now, the only way to find a decent selection is to go on line.  You can't feel or even see the camera before you buy it, so looking through camera enthusiast sites and web reviews and online forums is critical to the decision process.  Once you've made your choice, you purchase the camera and return it in a few days if you don't like it.  With the demise of brick and mortar stores, the laws of retail physics have changed.  Vendors and their distributors have to excel at:

  • Attracting interested people to their sites
  • Communicating effectively without ever speaking
  • Merchandising through on-line catalogs
  • Daily price promotions and loss-leaders
  • Coupon and rebate processing
  • Online invoicing, purchase, and refund tracking
  • 24-hr order turnaround, with very low handling costs
  • Thoroughly integrating CRM with their web site, eCommerce, and call center systems
  • Constantly shepherding their customer base and getting repeat business
  • Being really easy to do business with, particularly for 
    returns and warranty
  • Choosing inventory that doesn't have a high return rate

One of the most remarkable examples of these skills is Woot.com, which can make several million dollars an hour selling one product, carrying no inventory, and handling no phone calls.  At the other end of the extreme is the B2B long-tail specialist, ResearchAndMarkets.com, with over 300,000 SKUs and an average SKU turnover of 1 item per year...carrying no inventory, and handling no phone calls.

I can hear the B2B marketers beginning to yawn.  Better not.  Because every one of your B2B customers is a consumer first, and has been changing their buying habits.  They expect that a $50,000 purchase will be handled as smoothly as a $50 one.  And this means that even if you've never sold your product through an ecommerce system, you're going to need to know more about ecommerce processing.  The mechanics of everything from quote generation to fulfillment need to be streamlined.  This isn't a matter of just "good e-marketing" -- it's the entire purchase and fulfillment cycle.

More important than these mechanics is the way you interact with your prospects and help them find the right information.  The goal is to guide them through their decision process...but what is their decision process?  This means understanding the world from your prospect's point of view and level of awareness, giving them only the information that will be helpful at that point in their discovery process.  It also means knowing how to cultivate and harness customer feedback so that it builds trust in your message and your company.  Finally, it means growing a community of interest around you, where your web site is the "go to place" to find out about the product category.  Survey after survey has shown that customers -- B2B or B2C -- find customer feedback as the most credible source of pre-purchase information.

This level of customer cultivation is not easy -- don't expect to be great at it for a while.  There's an interesting corollary:  it's almost impossible to be really great in more than one channel.  Tiger Direct has the online channel nailed, but are nowhere in stores.  Fry's has the "electronic grocery store" nailed, but their online site is so-so at best.  Apple manages to do both, but not with the same products: 

  • Its stores are unbelievably profitable because of their customer interactions, but you wouldn't put apple.com at the top of the list for ecommerce and internet marketing. 
  • iTunes has become a major transaction hub for thousands of content vendors, but there's no real-world counterpart.

The happy news here is that if you get good at just one channel, you'll be miles ahead of your competitors.

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