Why Offline Stores are Doomed and Letting Consumers Consume
October 30th, 2007 by Michael Gray in Business IssuesIf you're new here, you may want to subscribe to my RSS feed. Read my top posts or learn more about Michael Gray. Want more frequent updates follow me on Twitter. Thanks for visiting!
Full admission I’m a pretty difficult person to buy a gift for, my tastes are somewhat bizarre eclectic and seemingly random to almost everyone. So when it comes time for relatives to buy me a gift I get a lot of gift cards. For my birthday earlier this summer I got a $50 gift card to Borders Books. This was a great gift I could go pick out a book, some music or a DVD.
I had my eye on a few things but was really looking for a boxed set of DVD’s on the American Revolutionary War or World War II (the fact that I want to buy history DVD but hated history in school says something about our education system but I digress). One that I had my eye on was “The Revolution” a 5 DVD series from the history channel
I could purchase the item from Amazon for $27.49. So knowing what I wanted and how much it should be I got in my car and drove the 20 minutes to the nearest Borders Book store and eventually found someone to open locked glass case (because treating your customers like criminals is always a good thing). However I was shocked to learn the exact same box set of DVD’s was $49.99. So not only had a wasted an hour of my time (20 minutes there 20 minutes back and 10 minutes finding a sales person) I was getting charged an additional $20 for it. I could just as easily have stayed home saved the time, aggravation, gas, mileage and $20. The only person who benefited in that part of the equation was the offline store. That is the exact type of treatment that makes me never want to set foot in a mall or other offline store again.
However the story doesn’t end there it gets a bit more interesting. Since I’m now video iPod equipped I also had the ability to purchase the exact same item through iTunes for even less I could get it on Amazon!
For arguments sake let’s assume I wasn’t using a preexisting gift card, but was paying with my credit card, would I choose to save even more money and get it from iTunes? The answer is unequivocally no. Assuming I had a method to watch iTunes purchases on my TV it’s still not the best choice. Call it what you want but iTunes method of copyright protection is just as restricting as DRM from major record labels. If I purchase through their system I’m locked into their format. If I buy the discs I can rip them into my iPod or any other device and watch them where/when and how I want. As a consumer I get to consume in the way that’s most convenient for me. When you free consumers from the burden of DRM, copy protection, locked phones, closed networks, incompatible data formats, or any other walled garden you are limiting them and yourselves. If you set them free they absolutely will consume it in ways you didn’t intend, expect or anticipate, but here’s the kicker they will consume more of it.
If you’re an online store you better think hard and be honest if you are providing a real value that can’t be beaten online. If you’re going to charge me more, and inconvenience me you might as well close up shop now and find something else to do, because I don’t think you’ll be around much longer. If you are providing goods or services online remove as much friction from he process as possible. Slippery service providers, who enable me to do what I want quickly and easily are the ones who are going to get my business.
Sphere It
October 30th, 2007 at 8:06 am
Amazon isn’t always perfect though. If you compare prices for items on Amazon.com and Amazon.ca, you’ll often find the base price of items on the .ca is higher than the base price for the same item on the .com (and no, it isn’t an exchange rate thing).
For instance: Sopranos Season 6, Part 1 DVD on .com: http://www.amazon.com/Sopranos-Season-Part-1/dp/B000BO7DWI/ref=pd_bbs_3/104-3319686-3981565?ie=UTF8&s=dvd&qid=1193745813&sr=8-3 is 44.99. On the .ca, it’s 99.98: http://www.amazon.ca/Sopranos-Season-Part-1/dp/B000BO7DWI/ref=sr_1_2/702-0477842-7856814?ie=UTF8&s=dvd&qid=1193745847&sr=8-2
No, really. Amazon gouges the shit out of Canadian customers. Luckily, I kept my American account open under my business address and simple buy on the .com and ship to myself in Canada (I pay more on shipping, but it still is no where NEAR that price difference).
October 30th, 2007 at 8:36 am
I partially agree Michael, except for the “… you might as well close up shop now and find something else to do, because I don’t think you’ll be around much longer. ”
The internet is still in it’s infancy and there are exponentially more people offline than there is online.
There’s still a couple of generations to go before we reach the point of more online sales than offline.
But, as you point out, they need to think about providing products in multiple formats. Those that do this earlier will reap the rewards saved for early adopters and will have a distinct advantage over the slow movers in their industry.
I buy a LOT off Amazon and other online retailers, but given the chance, I’ll give my local offline retailers the chance to keep my money in the local community. If they choose not to try and match or come close to the price, well, then I’ll go online and it’s their loss.
Great post. Thanks for making me think.
October 30th, 2007 at 10:06 am
Compare to amazon, I would like to purchase item from ebay.com, and there you can find some very interesting products in the worldwide.
October 30th, 2007 at 2:13 pm
lory - Be careful buying on ebay, you might end up with a Mandarin version of March of the Penguins (speaking from experience of course!). =)
October 30th, 2007 at 5:19 pm
The offline store lets you take an item into your hands and inspect it upfront. Pictures on the Internet show the best angle of an product and sometimes it just misleads the truth.
It’s also about the shopping experience. Get a cup of coffee and stroll through the book store.
I admit I buy 90% of things online, but when/if I go into the store I a) want to see the item I am buying and not have the hassle of shipping it back and b) sometimes you just need to get away from it all.
October 31st, 2007 at 7:56 pm
I agree with Michael. Better yet - by running a brick and mortar storefront to supplement our online store, we are fulfilling both options.