Q: Is the online world the best place to sell a product
or service these days? My friends seem to think that brick
and mortar stores will totally disappear in the future. I
debate this all the time with them, but it seems to be heading
that way. Your thoughts? - Alex H.
At last report, Alex, Sam Walton was still resting comfortably
in his discounted grave, so I'd say brick and mortar is safe,
at least for the next few years.
During the dot-com boom the mantra was "Brick and mortar
is dead!" Then when most of the dot-com's crashed like
an elephant sitting on a wicker chair, the mantra suddenly
changed back to "The Internet is dead! Long live brick
and mortar!"
In both instances those doing the shouting were dead wrong
(and highly annoying). The correct mantra should be "Long
live ecommerce enabled brick and mortar!" It's not as
catchy, but a lot more accurate.
So to formally answer your question, Alex: I have to agree
with you: brick and mortar is safe for many years to come.
That's not to say that online selling will not continue to
grow and overshadow in store sales in the coming years. But
smart retailers realize the potential - and limitations -
of the internet and are making plans accordingly.
Smart retailers know that while the Internet has the potential
of opening up new sales channels for them, they also know
that not all customers will shop online, at least for another
generation or two. Until every man, woman, and child on the
planet can operate a computer as easily as a cellphone, there
will always be consumers who will not buy online.
Smart retailers also understand that a successful online strategy
depends on the mindset of the buying public. They understand
that the internet is not erasing business models: it is changing
business models. Those that adapt will succeed,
those that do not, will one day close their doors.
When http://Amazon.com
burst onto the scene with big plans to change the way people
buy books, Barnes and Nobles did not close their brick and
mortar stores out of fright. They also did not ignore the
trend toward online shopping. Instead they directed resources
toward building their own online sales arm to compete in the
online marketplace.
Many large retailers that were slow to jump on the online
shopping bandwagon are now getting serious about online sales.
They are using the Web to launch new product lines and sell
things you normally would not find in their stores. Wal-Mart
for example, sells products online that would be too pricy
for their retail stores, like $6,000 plasma TVs and expensive
sports memorabilia.
Setting up an online shop is also cheaper than ever before.
A web store that would have cost hundreds of thousands of
dollars just a few years ago can now be built for less than
$10,000. Online retailers can also stock more items than brick
and mortar stores that only have so much shelf space.
As more consumers have access to broadband you will continue
to see a rise in online shopping and a rise in the number
of companies setting up online points of sale. One example
is http://Sears.com,
which saw online revenues skyrocket 40% in the past year.
Forrester Research says US online sales will hit $145 billion
in 2005, which translates to 7% of US retail sales. That's
a 26% rise in 2 years.
Wal-Mart will no doubt have a big effect on online sales as
they bring their "lower prices everyday" mentality
to the Web. Just as they muscled suppliers for the lowest
prices in their stores, so will they bring their weight to
bear online. This is great news for consumers. As more retailers go online consumers
will have more choices and find lower prices.
One thing that may ensure that some brick and mortars never
go away is what i call "The Try It On Factor." If
you have to try it on or want to see how you look in it, there
will always be a need for brick and mortar stores. For example,
I wear cowboy boots (I have a pointed foot) and i would never
buy a pair of cowboy boots without trying them on first, so
until some genius comes out with a way for me to hold my big
foot up to the computer monitor and get a perfect fit, I will
only buy my boots in the store.
I do believe that someday the majority of products will be
purchased online. We are already seeing this trend in many
industries. DVDs, CDs, videotapes (which will definitely go
the way of vinyl records in a couple of years), books, cellphones,
televisions, computers, stereos, etc. are all big sellers
online. It's also possible to buy a car from the comfort of
home and shop for a house. I know because I've done them both
several times.
When debating the death of brick and mortar you must also
consider the fact that shopping is a social experience for
many consumers, i.e. females, who happen to control the purse
strings and make most of the buying decisions for their families.
Case in point: Every year my wife and her mother trek
to Birmingham and Atlanta for annual shopping trips. When
I point out that there are perfectly good malls right here
in our own backyard, I am told that I'm missing the point.
he point of these trips is not to buy anything. The point
is to shop, to eat, to hang out, to bond. If a purchase is
made, oh well. Scientific studies on these phenomena have
concluded that "It's a girl thing."
For men, shopping is a chore. For women, shopping is an experience.
So until my wife and mother-in-law can get the same satisfaction
sitting in front of a computer monitor as they do exploring
the malls, there will always be brick and mortar.
