A Quasi-Interview on Multichannel Experiences

Blogger, author and multichannel retail expert Kevin Hillstrom recently asked some deep questions about Bricks, 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?

Since I just couldn’t get my responses to fit within the 140 character Twitter limits (even less when you consider @minethatdata is required), I thought I’d answer them here on the blog and turn the questions over to you, the Get Elastic readership, to add your input.

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

Absolutely. The online channel can be a great place to clear out overstock/old stock/returned-to-stock items, manufacturer refurbs and so on. There are also items that it’s more cost effective to fulfill from one warehouse than to deliver to each big-box store, or which the retailer can drop-ship for special orders. It’s generally accepted that product can vary from store to store in retail chains, even in the same city. And better selection is one of the appeals of online shopping. So I’d be surprised if customers balk at “online-only” items.

 

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?

The only reason I can think of why an online retailer would hide a price online is if it’s trying to bend Minimum Advertised Price (MAP) rules. From a manufacturer and competitor perspective, no this is not acceptable! It’s also risky from a customer expectation perspective. The ability to see a product’s price is one web convention that can confuse and irritate customers when broken. Most customers don’t understand MAP — all they see is a retailer that is hiding information unless you add the product to the cart.

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?

Of course from a business perspective this is perfectly fine. Different stores have different variable costs (different rent/lease costs, minimum wage by State, cost to transport goods etc) and may price items accordingly. Also management may have discretion on when to mark down merchandise. But I’d be interested in research on consumer attitudes about this. Some customers want consistency across channels — especially important for ROPO (Research Online, Purchase Offline) shoppers. Nobody wants to feel ripped off because they bought from a store. Other consumers expect everything online to automatically be cheaper than in-store, and will be upset if prices are the same online. These customers don’t understand the online channel isn’t overhead-free. They don’t understand the investment in ecommerce technology, personnel to run the store/call center/warehouse/marketing and the operation/fulfillment costs. I think it’s very difficult to always have seamless pricing across stores and channels. So the best thing to do is have an explanation for why prices may differ posted online, and train salespeople to be able to answer the question from the floor.

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?

Yes, I believe this is acceptable for the reasons above. However it is risky if you use universal pricing on your website. A workaround is to use geo-IP targeting to pull the correct price list for a visitor and try to ensure consistent pricing among the stores in the region, or ask customers to enter a zip code to access the site.

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.

Mistergooddeal.com raised conversion by 40% after adding reviews (summary and case study). Not sure about sales and profit percentages.

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? Wow, that’s a tall order. Pass :) 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?

This happens all the time. Many retailers offer coupon codes to email or affiliate traffic or first time/repeat customers. Esprit sent me a one-day-only coupon to use in-store via email as part of their loyalty program. Best Buy invited me to an exclusive online-only sale last Christmas. As a Canadian, I’m usually charged much higher prices when online shopping from US sites, though they’re usually separated out into “shipping and handling fees.” And it’s annoying when you have to pay $2400 for software that students can buy for $300…but there’s rhyme and reason for these price differences. Nevertheless, this is acceptable in these cases. Retailers using geo-IP to price products higher for wealthy zipcodes vs. less-wealthy — that’s a gray area.

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?

Multichannel customers may be the “best” customers, and there may be more of them thanks to businesses going multichannel — but multichannel customers are just as likely to feel the economic crunch as hard as those with single channel shopping preferences. The recession just doesn’t discriminate!

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

Although ecommerce growth is flattening, it’s still a channel of growth for many industries. If a retailer is looking to grow and reach new customers – online could be a safer bet than opening new brick and mortar shops. And if there is customer-driven demand for the online purchase option – then yes, it’s truly necessary. Plus, there’s a lot of value in bringing the online experience in-store through kiosks and even mobile access to product information, videos and customer reviews which could boost in-store conversions. But if you’re going to have an online channel – make it outstanding. In the last few months, 2 of Canada’s largest retail chains pulled the plug on their online stores. Could lack-lustre experience be to blame? Don’t have ecommerce just for the sake of having ecommerce.

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?

No way, it’s humans. Hands down. As wicked-smart as the engineers and mathematicians are that create the algorithms, there needs to be human oversight. Computers can’t build your keyword list without understanding which long tail keywords apply to your business and which should be added as negatives. What if the algorithm decided to delete keywords with low click through rates without investigating the reasons behind the low rate? And with the economy as it is, we can’t afford to put the entire paid search industry out of work, can we?


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6 Responses to “A Quasi-Interview on Multichannel Experiences”

  1. 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.

  2. John Hyde says:

    #9 – It must take a lot of courage and honesty for a company to abandon its half-hearted online efforts and concentrate on a great bricks-and-mortar experience with well-trained staff and tidy shops.

    Of course the real leaders will be the firms with great shops, a great online presence, and the ability to work the 2 together to create a true multi-channel experience for their customers.

    One part of this will be a generous policy plus staff training to deal with the inevitable snags where people see different prices or find products are unavailable in the different channels. Deal with these issues using generosity and humility and you will get the customer onside:

    “I’m sorry sir, we don’t sell that item in our stores. But if you come over to the kiosk with me, I will order it online for delivery to your home tomorrow. I think it qualifies for free delivery this week…”

  3. Natalie says:

    Issue #5 – Would be interesting to know whether reviews had a positive or negative effect on their sales and profit.

  4. [...] Kevin Hillstrom’s process seriously and asks the almost heretical question, is e-commerce necessary for a retail brand? (See issue #9). I say the answer is a resounding “YES.” But, driving sales to your [...]

  5. Nick says:

    Great interview really useful

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