Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

How Seamless Are You?

How Seamless Are You? is a study by Accenture on omni-channel retailing, from the customer’s point-of-view.

In my review, I found nothing earth shattering … because it told me what I expected:  customers want to be able to do business with you on their terms, rather than on yours.

Customers expect uniformity in products, pricing and promotions across all available channels.

So, if your organization is complaining about the negative impact of “show rooming” on your sales, then you should immediately consider the fact that your business may not be competitive in these three areas.

There seems to be some reluctance, among some retailers, to recognize that you win and keep customers by being the best company to buy from.  That may mean the best products, or the best prices, or the most attractive promotions.

But you can’t just sit there doing everything like you’ve always done things and expect to preserve your place in the market.  You must be better at something.

You must be more convenient, have a better selection, more available inventory, lower prices … something that differentiates you.

The principles of success have not changed … only the tactics required to implement those principles in the most effective way.

Filed under: News, Omni-Channel Commerce, Opinion, , , , , , , ,

Cash registers fade away as smartphones, tablets take over

This trend was very foreseeable.  And anyone who doesn’t see it, needs to re-evaluate.  Here’s a link the this story by the AP, published by Gannett … Link

Note even Walmart is experimenting with an iPhone app that enables a shopper to scan items as the shopper drops them into her cart.  Stopping at a self-check-out terminal only to pay and perhaps bag up the items.

And if you’ve never used the “self-pay” function in Apple’s Store app, you should try it.  Scan an item, login with your Apple ID, pay with your registered credit card, email yourself the receipt and walk out of the store.  You can do it with any item that is not stored in the back of the store (which includes the big, very valuable items, as you would expect).

Once again, we talking about convenience to the customer … it’s a never-ending theme, but I’m always amazed at how few people get it.

Personally, I’m waiting for my grocery store to allow me to email my receipt … I hate those long pieces of paper!

Filed under: Ideas, multichannel commerce, News, Opinion, , , , , , , ,

Customers Prefer Easy to Exceptional

Customers Prefer Easy to Exceptional — this link takes you to the full article in Multichannel Merchant.

It’s an excellent premise.  And the premise of the article — that customers prefer easy resolution to exceptional customer service — is consistent with the fundamental idea that direct commerce is about convenience.

So, Merchants, make it convenient (read that as “easy”) to buy things from you and easy to resolve any problem that might arise.

Filed under: News, Opinion, , , ,

What will likely happen in Q4

Press reports are starting to come out that:

  • retailers are not hiring as many seasonal employees for 2009Q4.
  • merchandise orders for Q4 may be as much as 20 percent lower than in previous years

What can we concluded from these two facts:

  • customer service in retail, brick & mortar stores may reach an all-time low.  There simply won’t be anyone around to help you.  You’ll probably have a hard time just finding someone to take your money.
  • e-commerce sites will gain sales faster than ever before — for multiple reasons:

First, because you can check yourself out and don’t have to rely on finding someone to help you.

Second, retailers will likely make sure inventory for their online store is broad and deep.  Because they can sell to anyone, anywhere at anytime.  Thus, they will more likely sell thru online store inventory than physical store inventory.  Plus, they can replenish inventory for the online store faster than they can to physical stores (at least, in most cases).

Third, buying online is less frustrating and annoying than going to a store.  This will be especially true, because there will be fewer sales discounts in physical stores (due to lower inventories) and fewer people to help (see “First”).

*  *  *  *  *

Now, don’t get me wrong.  Total direct commerce sales (as reported by the Commerce Dept) remains about five percent of retail sales, but direct commerce sales are growing reliably, while total retail sales has been in decline for most of the past 12 months.  The bottom-line:  We will see direct commerce (online & catalog) take a big jump forward in Q4.

That in turn will cause at least a short-term increase in activity during the first half of 2010 by companies who will seek to upgrade their online store, or maybe even finally set one up.

Filed under: Direct Commerce, Opinion, , , , ,

Why have direct commerce sales held up better than overall retail sales?

First, I suppose I should document the inference in my question that direct commerce sales have held up better.  Based upon Retail Sales data from economy.com, the following facts are in evidence:

  • Current retail sales (actually, Aug 2009) are just a little below what they were in Oct 2008.  But they are also about the same as they were in Dec 2005 / Jan 2006.  Overall, a drop of 7.5 percent from their peak in Nov 2007.
  • In contrast, current direct commerce sales (Jul 2009), which also peaked in Nov 2007, are down only 2.25% from their peak.

Why?

I suggest there are two reasons:

First, the decline in retail sales driven by the general downturn in the economy has resulted is even less staff at retail stores, resulting in even poorer customer service, resulting in more customers being driven away from stores.

Second, direct commerce has always been driven more by convenience than by price.  And affluent consumers are more interested in convenience than price.  So, affluent consumers, who are less affected by the economic downturn, have sustained sales at direct commerce businesses to a greater extent than retail stores.

The Implications

My concern about this is the longer term effects, when retail managers recognize that their retail store sales will recover regardless of the poor quality of their customer relationships.  If they can get by with fewer staff now, can they get by with fewer staff later?  Maybe, maybe not.  But I bet they’re going to try.

This is just one reason why joblessness recovers more slowly than the economy.

This also explains the continuing pressure on businesses of all types to move to the internet for their core business functions — it allows them to accomplish as much if not more with the same or fewer employees.

Filed under: Uncategorized, , , , ,

What drives direct commerce?

This post is an exercise in reminding myself of the fundamentals.  And just like football, you’ve got to get the fundamentals right, before you move on to the more sophisticated permutations of the business.

The fundamentals of Direct Commerce are convenience, customer service and, sometimes, price.

Convenience
The reasons the direct marketing channels exist, at all, is because they are more convenient than the brick-and-mortar retail channel.  What is it about convenience?  Could be any of several things — which varies by the individual customer:

  • saves the time to drive to and from the store
  • avoids having to “rummage” thru a store to find what you’re looking for
  • avoids having to deal with untrained, poorly trained or rude retail clerks
  • avoids having to find a parking space
  • avoids having to “lug” stuff to and from the car
  • avoids the crowds at the mall — especially at heavy shopping seasons, like Christmas or Back-to-School
  • allows me to shop from anywhere — work, hotel, and now, with a mobile device, even from my car
How can you provide additional convenience to your customers and, just as importantly, to your prospective customers?
Customer Service
Customer Services has several components.

Pre-sale contact, when a customer is trying to learn more about a product so they can make a decision whether or not to buy, whether or not the product meets their needs or satisfies their desires.

Post-sale contact, when a customer is trying to resolve some issue which has arisen after the purchase decision.  This might be an exchange, a return, a simple “where is my order?” inquiry or anyone of about 20 or so typical customer service inquiries.
Finally, reliability and trustworthiness, which at the end of the day, determines if a customer wants to do business with you again.  Your customers need to trust that you’ll treat them right and that you’re not afraid to actually talk to them on the phone.
Have you noticed how difficult it can be to actually get a customer service rep on the phone?  Or, even get a reasonably prompt answer to an email?
A lot of companies spent a lot of time and effort trying to avoid dealing directly with their customers.  Ever tried to call Amazon?  It’s almost impossible to find Amazons’ customer service phone number.
Price
And I should emphasize that price is only sometimes a fundamental.   It seems to get more important as the product price points increase, but there is also a point at which price becomes irrelevant — either because the price is so high or the price is so low.
And the exact location of this price range varies by product category.
This is also why shipping cost is a factor.  My rule of thumb is that if shipping cost is more than 10 percent of merchandise cost, then the customer will at least “pause” to consider if it’s worth it.
So, be sure you spend a little time on the fundamentals each week — then move on the more esoteric stuff.

Filed under: Direct Commerce, Opinion, , , , , , , ,

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