April 13, 2009

Bricks And Clicks And Multichannel Experiences

I'm looking for feedback. Based on what I've read on Twitter, the 2% of America that uses the micro-blogging service that will become the greatest marketing tool of all time until everybody switches to yet another platform in 2010 have strong opinions on these topics. What do you think?

Issue #1: Is it acceptable for a big-box retailer to offer merchandise online that is not available in stores?

Issue #2: Is it acceptable for an online merchant to require you to place an item in the shopping cart in order to find out what the price of the item is?

Issue #3: Is it acceptable for big-box retailer to offer the same merchandise at different prices in different channels? For instance, can a retailer sell a television for $1,299 online, but the same TV costs $1,329 in stores?

Issue #4: Is it acceptable for a big-box retailer to offer the same merchandise at different prices in different markets? For instance, can a retailer sell a television for $1,299 in Milwaukee, and for $1,329 in Philadelphia?

Issue #5: Name one online brand that demonstrated an increase in sales and profit because they allowed customers to leave reviews of merchandise online, and attach a link to the case study you are referring to.

Issue #6: Name at least two catalog brands that dove head-first into physical retail stores, avoided crippling debt, and still managed to have a direct channel that grew at the same rate prior to diving head-first into retail stores?

Issue #7: It is generally accepted as a best practice that the airline industry charges customers different amounts for identical seats on an airplane. Is it acceptable for a multi-channel brand to charge customers different amounts for the same sku on the same day, akin to what the airline industry does?

Issue #8: If multichannel customers are the best customers, and all businesses have gone "multichannel" over the past several years, why aren't there more "best customers" to prop up the economy during these trying economic times?

Issue #9: Is it truly necessary for a retail brand to have an outstanding "bricks and clicks" experience?

Issue #10: Is it acceptable to allow an algorithm to fully optimize your search marketing campaigns, or should humans control the process, albeit at lower levels of profitability?

5 comments:

  1. Anonymous7:55 AM

    Kevin,

    Some fascinating questions to ponder here. Some from a marketing perspective, but just as many from a consumer perspective.

    The law of supply and demand was partially behind the spike and decline in gas prices. The gas didn't suddenly become more expensive to produce and distribute, so oil companies made large profits and the public was displeased. Yet at the same time, airlines' overhead does not change dramatically depending on when a ticket is purchased, but people accept that the price goes up for some other reason as the travel data gets closer. Hmmm. Why do consumers accept this seemingly arbitrary gouging?

    Multi-channel pundits at one time claimed everything should priced the same regardless of channel. But we know which channels have higher fixed costs to cover. Should those who purchase online pay a lower price, a thank-you for helping to save costs? Or should online be the same (at least) to subsidize the retail channel? How about funneling the fixed cost savings of an online purchase into free shipping, so that the total price across channels, including taking possession of the item, comes out equal? What would that do the channel loyalty, and what are the impacts on justifying channel expansion at that point?

    I think companies have many good reasons to charge different prices (market will allow it, warehouse location, etc.), but the consumer perception may not understand these. That the airlines trained us to accept radical price differences for the same product is an accomplishment.

    Anyway, I'm firing up the grill because I sense you're going to make some steaks out of a few sacred (multichannel) cows today. Good stuff!

    Jim

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  2. Multichannel stuff is a mystery. I generally feel that all situations are unique to each business within each industry. Best Practices and rules for how to do this stuff don't seem to be best applied with a broad brush.

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  3. Anonymous7:30 PM

    Great post, Kevin.
    1. Yes--necessary for some as they are able to offer higher margin goods that with direct to consumer are not carried inventory. See this article... http://www.internetretailer.com/article.asp?id=26590
    2. As a consumer, I avoid sites that do that and similar tactics like removing items from your cart after only a few minutes.
    3. Acceptable? Yes as there are tradeoffs--shipping vs sales tax,store vs web promotions, etc. But as in Best Buy's case, open to backlash if poorly presented.
    4. Yes and expected. Think Hawaii, Alaska, California vs Iowa. But a portion of your savvy consumers will go to net.
    5. N/A
    6. Not my area of expertise but would J. Crew be one? Or is this a trick question and the answer Sears(from 19th century?)?
    7. Back in early 19th century that was norm until Wannamakers offered just one price. Does your question imply we've come full circle?
    8. Sarcasm duly noted. Next question...
    9. Yes. Examples are Macys(net is now 4% of sales) and Penneys(8-9%) which is propping up those companies. Sears is trying now to catch up. On a related note--Macys net sales rose 29% to about $950million in 2008--while I am not privy to their numbers, that has to be equivalent to sales for their 40-50 worst performing stores.
    10. N/A.

    Great questions! Discussions should be very interesting. Thank you.
    K

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  4. Thanks for your response, "K". Boy oh boy, everybody's mileage will vary ... your responses work for some, and don't for others. All good answers, however.

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  5. Many thanks for covering these key topics. Understanding your customers, and I mean really understanding your customers (not just how you think or want them to be) . . . is critical to the timing, level and sustainability of your success. Thanks again.

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