Whee! We’re doing business online
Remember you heard it here first. There’s a nearby planet called Zodzod. It orbits around the sun and is populated by people just like us. Life has evolved in a similar way too, with one important difference.
Nobody on Zodzod thought of making clothes or setting up stores to sell them. Thus everybody used to walk around either naked or partially covered by lettuce leaves.
But that all changed the day the Zodzodians managed to tune their computers into our frequencies and found they could buy clothing from Earth online.
Our retailers fell over themselves to win a share of this wonderful new market. They set up low cost rocket dispatch (they made a couple of extra bucks out of that too, just quietly) and did humungous business. They kept the market they already had and added another one, bigger than the original, to their sales. Being an Australian clothing retailer with a slick website was as close to heaven as you could get without dying.
If all this sounds silly it’s no sillier than major retailers who think they’re going to sell more clobber by setting up websites. While each individual company thinks it will, the Great Retail God in the sky, who looks down on the whole industry as one, shakes his finger and says no.
Certainly, the early adopters will for a time, exemplified by a bout of crowing late last year from Iain Nairn, CEO of Witchery. He claimed that out of his 80 stores, the ‘online model’ occupied fourth position in profitability. I’m surprised it only ran fourth, since it doesn’t have to pay for shop assistants, fit-out, rent or lighting.
Right now the opportunists are doing okay because their snouts are in the online end of the trough where there’s still plenty of swill. But basically, there’s only so much that can be bought. Every web sale is a non-shopfront sale. Let me say that again: every web sale is a non-shopfront sale. In other words, the market is simply fragmenting and forcing every retailer into eventually going online just to stay where they were pre-internet.
That’s fine, but what happens to the shops in huge, expensive-to-run centres or sitting in busy high-rent strips? You don’t need to cut down their sales by much to make them unprofitable. Right now they’re in the transition stage towards becoming showrooms and fitting rooms for online sales.
Once that trend really starts to bite, the consumer will be hard-put to find a shop where she can see a garment and, more importantly, try it on before going sniggeringly to the web for her purchase. She’ll be forced to buy-by-photo and return the goods at her expense if they disappoint upon arrival.
Going backwards down the supply chain, the online temptation also applies to wholesale apparel suppliers. The last 50 years of commerce in the apparel industry has been characterised by middle-men progressively being cut out.
Everybody is fixated on moving up close and personal to the consumer dollar. Manufacturers, who supply retailers, are now jumping up as web entities too. Of course, the moral and commercial imperative is to offer goods to the public that are either not available from retail, or are at a higher price online. But you watch these vows crumble when the going gets tough and the temptation to grab the cash becomes irrespirable.
Manufacturers never believe retailers have bought enough of their merchandise, or have displayed it correctly or sold it with appropriate enthusiasm. The internet allows them to start their own, noble love affair with the consumer.
Those who are in lust over their internet prospects don’t appreciate how fast the web is growing and how difficult it’s becoming to be noticed. There are companies who will charge you for advice on how to get to the top of search engine lists. The assumption is that everybody can be first, or, at least, displayed on the first page. How stupid is that?
So the way to be noticed is to advertise and direct people to your website rather than your store.
Not so long ago the banks made the fashionable decision to save themselves from having to deal face-to-face with the wretched public by moving to internet banking. Human contact was swapped for cuddling up to the money in the computer room. The big banks went on a branch-closing spree. Then a few clunky old-fashioned banks opted for personal service. Oops, the big banks realised that people like to deal with people and began to re-populate branches.
The same applies to retailing apparel where the experience is more than price, but right now it’s in danger of being starved by the internet.