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Dan Cole

Death of Retail: Fact vs. Fiction

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A real interesting read.  

Death of Retail: Fact vs. Fiction

While I wasn't surprised to see brick and mortar closings exceeding the new starts, I was surprised by the number of new starts in the dollar store type businesses.  Removing those it becomes a really sad picture.

What can we do to stand out and offer a different experience as more and more customers shop on-line?  In particular, what are you doing or planning to do?  For those with repeat customers, what can we do to keep them coming back?

Dan

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The "dollar stores" are thriving because they're at the very bottom of the food chain, with many customers who can't afford a computer, and/or don't have a credit card (need to pay cash). It's all part of the deliberate destruction of the middle class (and thus, democracy) and the rise of the small oligarchy and the large peasant class.

I see a major problem for brick and mortar retailers in that online merchants don't collect sales tax (often, even when they're supposed to). This gives many consumers the impression that it's legally tax free, and that can be a 7 or 8 percent price difference right there (neglecting higher shipping costs to deliver one at a time directly to your door). States are going to have to get their act together and either eliminate sales taxes (making up lost revenue elsewhere) or come up with streamlined consolidated systems that make it very easy for a merchant anywhere to figure out the tax rate on an item, and to remit collected sales tax. I'm not holding my breath for this to happen. B&M retailers of certain classes of items also have a problem with "showrooming", where potential customers come in to inspect the merchandise (perhaps tying up a salesperson for some time), then go online to order it, a double whammy for the retailer.

On the other hand, besides higher shipping costs, eCommerce requires very restrictive return policies. Otherwise, customers too often buy one of everything and then return all but one. They can't actually try on a piece of clothing or otherwise personally inspect it, and so abuse the system.


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Like the proud mother watching her son marching in a military parade exclaiming, "Look, my Jimmie is the only one in step", the USA is, I believe, unique in quoting prices to consumers without the sales tax included. In the EU it is called VAT but it amounts to the same thing. The argument that big companies put forward supporting this, is that it is clear to the shopper just how much they are charging so a comparison from state to state is fair. But the actual cost to the consumer from state to state is different. In the EU there is a wide range of VAT rates from country to country but the total price, including VAT must be displayed both instore and online. The shopkeeper or online person, if their turnover is above a certain amount on a rolling three month annual total, have to register for VAT and produce returns to HMRC, (Internal Revenue) and pay the VAT that they have collected. They are subjected to random personal inspection of their books. It is a two way process as any VAT that they have paid on goods and services that the business has bought can be claimed/offset against the total. That is why it is named VAT (Value Added Tax) as HMRC, in effect, receive tax on the profit generated from the sale. Whilst nobody likes paying it, we all know that VAT is in the price and get on with it. At least when you get to the check out you know in advance how much you will be expected to pay.


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22 hours ago, Dan Cole said:

What can we do to stand out and offer a different experience as more and more customers shop on-line?  In particular, what are you doing or planning to do?  For those with repeat customers, what can we do to keep them coming back?

In addition are there things we can do to create a user experience that differentiates ourselves from market places like Amazon? While the on-line market is increasing, so is the competition.   What can we do differently that will allow us to stand out?  Do your customers really care about a pretty website, a better user experience etc or are they only concerned getting the lowest possible price.  As a friend of mine always says....is this just a race to the bottom?

Dan

 

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On 6/17/2018 at 9:14 AM, Dan Cole said:

Do your customers really care about a pretty website, a better user experience etc or are they only concerned getting the lowest possible price.  As a friend of mine always says....is this just a race to the bottom?

For the vast majority of online shoppers, the lowest possible price (so long as the service isn't too painful) rules. The biggest retailers, like Amazon, who can put the most price pressure on their suppliers, will win. There used to be a concept of "trusts" and "monopolies" and "anticompetitive behavior" which governments tried to put an end to, but they all seem to have given up on that, allowing (and even encouraging) ever-larger businesses. Some day very soon Amazon will be large enough to start dictating government policy, and no one will be able to stand up and say, "no." Just look at all the state and city governments falling over themselves to be HQ2.


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Amazon is typical of many new company's which I class as parasitic. They basically enter a market and make massive losses bulling other company's with loss making pricing policy's. The objective is to monopolize the market by braking the back of the competition. Its a strategy many (mainly USA but not exclusively) companies have used. It never works long term!

Amazon is making eye watering losses in its overseas bushiness, manly due to the fact that other country's are less willing to accept this type of behavior.

In the end the consumer becomes wise to this and good service win in the end. Sadly this takes time and many good small and big competitors are decimated in the process. Uber is another more recent example.

I am approached by Amazon on a regular basis wanting me to add my products to Amazon. I politely decline each time as do many company’s and manufacturers. The race to the bottom is a slippery slope and many who take it live to regret it.

The answer is not clever or specially difficult. Offer your customers excellent service with good product quality at a reasonable price. Good companies have been doing it for years and will continue to thrive.

https://www.theverge.com/2018/4/26/17286942/amazon-q1-2018-earnings-international-retail-losses-overseas-sales


 

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7 hours ago, JcMagpie said:

The answer is not clever or specially difficult. Offer your customers excellent service with good product quality at a reasonable price. Good companies have been doing it for years and will continue to thrive.

I use to think that but if you're selling standard commodities, based on what I'm seeing, I think price now rules, if the service isn't too bad.  I guess you could say that I subscribe to the "race the bottom" theory now.  As that article points out traditional retail is in big trouble, for a number reasons including on-line sales, which I think will offer lots of opportunity for those who get it right...whatever right is. 

I was hoping this thread might generate some discussions around that.  What can we do to take advantage of those opportunities and minimize of the impact from giants like Amazon.

Dan

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On 6/17/2018 at 3:44 AM, mhsuffolk said:

the USA is, I believe, unique in quoting prices to consumers without the sales tax included. In the EU it is called VAT but it amounts to the same thing.

I'm not sure where the tradition (in the US) of quoting prices without sales tax arose. Certainly in the old days (possibly into the 20th century) there was no sales tax, and so the quoted price was the price paid. Maybe the practice of pricing sans tax just kept on, with no one really thinking about it (or hoping sales tax would go away soon). For a given store, there would be no confusion about the tax rate to apply, but unless everyone agreed to (or was required to) price with tax, merchants who listed with tax would be at a price disadvantage. When advertising for several stores across several different tax jurisdictions (districts), there remained the possibility of confusion, as tax rates might be different at each store. Maybe they figured it was just easiest to list prices without tax. For some items with federal or state excise taxes (another form of sales tax, specific to a product or service), the tax is often folded into the quoted price.


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14 hours ago, Dan Cole said:

I use to think that but if you're selling standard commodities, based on what I'm seeing, I think price now rules, if the service isn't too bad.  I guess you could say that I subscribe to the "race the bottom" theory now.  As that article points out traditional retail is in big trouble, for a number reasons including on-line sales, which I think will offer lots of opportunity for those who get it right...whatever right is. 

I was hoping this thread might generate some discussions around that.  What can we do to take advantage of those opportunities and minimize of the impact from giants like Amazon.

Dan

Well we do have some option to minimize the affects of company's like Amazon.

The very thing that they see as the advantage ie size, is also the main disadvantage for them. The service they provide is very sterile and automated.

We can offer a more personal experience. Answer the phone respond to emails and other communications in a timely fashion.

Get to know your product range and offer good quality and detailed information. Make your website more than just the sock marketing text.

Make your descriptions personal and specific to your site.

Amazon is not doing anything new! They like you rely on manufacturers and distributors for the products they offer.

Build a good relation ship with your suppliers, work with them and share marketing and sales strategy. You will be surprised how willing you will find most as they too like to have a divers range of customers. No manufacturer or distributor wants all their eggs in one basket. They dislike seeing margins squeezed as Amazon and company's like it always end up doing.

You should be able to be competitive with anything Amazon can offer as long as its not a loss leader! But that has always been true. You will never be competitive selling some basics such as milk, bread, sugar! These are all loss leaders even among most traditional retailers.

Working with a good manufacturer or distributor you should be able to compete on a level playing field with Amazon. Yes you may have smaller margins on some products, but you balance this with the higher margins on specials and branded goods.

I am not a big Amazon user never have been probably never will be. I do however buy from it from time to time. I’m finding people like Gearbest, Banggood, coolicool, Allibaba, and the many others are quickly moving into the same market as Amazon.

Many of the new ones as quickly setting up EU divisions that are offering full EU consumer protection and better prices. More competition in this area is good for everyone. I dislike monopolies and cartels.

Unfortunately its a case of move with the times or be left behind.

 

 

 

 

 


 

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Anyone has much success in building an excellent customer care team with a slimming budget? With the race to the bottom theory, I found the direct to consumers vendors seems to be doing okay with being able to scale their volume.

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4 hours ago, clustersolutions said:

Anyone has much success in building an excellent customer care team with a slimming budget?

I know it can feel daunting but put simply “Yes” good customer care if free! It costs nothing to be polite and friendly with your customers.

With good well written and informative auto response emails you can make sure the customer promptly receives all the information they need.

If using drop shipping work with your supplier to ensure tracking information is sent to the customer when order is processed.

Follow up with each customer and ask if everything arrived and if all is well, you will be surprised how much good will this builds.

If a customer has a problem make it easy for them to contact you. Every invoice / delivery note should tell them what to do if they have a problem.

Yes I understand not all of this translates over to high volume low value selling. It just to indicate that good service is not all about spending a lot of money. :smile:


 

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Ah, the hard part is having real-person support and your are depended on employees. Just the other day,  I had to contact my insurance at the doctor's office because the nurse was too lazy to do so. The person on the phone was rude, and the premium of our insurance is like rent money for majority part of the country.

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