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The Allure of Ecommerce (4 reasons why small retail brands often fail at online sales)

These days, everyone wants a piece of the Ecommerce action. I understand the temptation… There are many stories circulating about the demise of brick and mortar stores and the rise of the bricks and clicks model.

It’s a shiny penny that many can’t resist. But if brick and mortar retail is the heart of your brand, you better be careful when it comes to ecommerce.

First of all, the tales of retail armageddon are greatly exaggerated.

According to The Economist, only 10% of all products sold in America in 2017 were sold through online retailers. So if you have a retail store, don’t give up. Ninety percent of all the stuff in the world is still being sold though brick and mortar stores, many of which are small, locally owned establishments.

retail marketing Amazon Go store

According to The Atlantic, the retail industry isn’t dying, but it is at an inflection point.  “Some brick-and-mortar retail brands with large footprints are struggling, while some e-commerce brands, like Warby Parker and Amazon, are now realizing the value of storefronts. Indeed, Amazon sees an uptick in online shopping in regions where it has a physical store, according to CNBC.” 

So it goes both ways.

More on retail industry branding.

One thing’s for sure… There’s an inevitable march toward the “bricks and clicks” model, where all retailers have elements of both ecommerce and traditional retail sales.

Here’s why: It feels better to buy from a real person. Simple as that.

We all appreciate the infinite information available online and the lazy-ass convenience of one-click buying, but it leaves us feeling empty. Unfulfilled. Vaguely dissatisfied when compared to traditional retail shopping.

Which leads me to 4 common problems that arise when successful little retailers try their hand at ecommerce…

1. They forget what they’re really all about.

If you have a successful, specialty retail store, chances are you provide a fair amount of personalized service. You wouldn’t stay in business without it.

For many of the retailers I know, that personal touch is a core element of their brand promise. That’s what they’re all about, and it’s impossible to duplicate that online.

Even if you devise the world’s greatest online shopping user interface, the shopping experience will always feel better in real life.

So when it comes to ecommerce, your value proposition no longer applies.

too many choices BNBranding Brand Insight Blog2. They don’t differentiate their online store from the sea of competitors.

There’s a ton of competition in the wide, wide world of ecommerce, but very few companies do anything to differentiate their online store from all the rest.

It doesn’t make sense… They wouldn’t open a brick and mortar store that’s exactly the same as the store across the street, but that’s what they do online.

They use the same Ecommerce website template. They offer the same products for the same MAP price. They even use the exact same wording for the sales page of every product.

You can’t just cut and paste the same exact blurb, same photo and the same product specs and expect good results. You have to differentiate yourself somehow. You need to customize your pitch, improve your copy, and mix up the words a bit. You need to give people a reason to buy from you, instead of Amazon.

So how are you supposed to do that?

You could offer a unique mix of products. (Most niched e-commerce sites offer the exact same products as their competitors. But even if you could find something they don’t have, it’s not a sustainable advantage unless you have an exclusive arrangement with the manufacturer. So scratch that.)

You could offer lower pricing. (Actually, most MAP pricing agreements preclude you from doing that.)

You could use different technology. (There are many different back-end Ecommerce systems these days, and they all work pretty well. A good user interface is the cost of doing business in this space.)

You can have better content presented in your own, unique way, based on brand values that prospects will actually care about.

That, you can do!  Learn how with this post.

3. They fail to see the difference between Ecommerce transactions and in-person sales.

Besides a ridiculously low price, what do online shoppers want?

Information. Insight. And peace of mind.

Even if they’re ready to pull the trigger online shoppers want facts, reviews, articles or some kind of credible content that helps make the purchase decision a little bit easier.

But amazingly few e-commerce sites actually fit the bill when it comes to informative content. Most offer no insight. No salesmanship. No differentiation whatsoever. They just regurgitate the manufacturer’s product spiel and hope for the best.

In fact, most online ecommerce sites aren’t really retail sites at all. They’re more like virtual warehouses.

If you want to establish a successful Ecommerce store you need to act like a real retailer, but in the online world. That means content marketing. That means sharp, convincing copy, and inspiring product stories. That means salesmanship.

ecommerce differentiationEarly in my career I wrote copy for Norm Thompson. Before J. Peterman ever became famous, Norm Thompson had a unique voice that resonated with its mature, upscale audience. We produced long, intelligent product pitches that went way beyond technical specs and pretty pictures.

For instance, I remember writing a full page spread on the optics of Serengetti Driver sunglasses. You could buy Serengetti’s in many different places, but no other sales outlet was as thorough as Norm Thompson.

Those spreads were helpful. Heroic. Practical. Luxurious. Readable. And convincing. It was the voice of the brand, and guess what? It worked.

The conversion rates and sales-to-page ratios of the Norm Thompson catalog were among the highest in the direct response industry. It’s tough to find anything remotely close in the on-line world. And unfortunately, Norm Thompson has failed to maintain that unique voice in the e-commerce arena. There’s no “Escape From the Ordinary” on their websites.

4. They’re not prepared for the added operational complexities of Ecommerce.

It’s a lot of work, running a profitable store. And guess what?  It’s just as much work running an Ecommerce store.
That’s what you have to get your head around before you dive into ecommerce… It’s like having two different businesses.
I know at least one retailer who thinks she can just “put up a website to take care of her excess inventory.” It’s never as easy as that. Here are just a few of the operational challenges you’ll face:
Buying gets more complicated, since there may be items that you sell online but not in your store, and vice versa.

There are technical issues galore… You better make sure that your POS system syncs seamlessly with your ecommerce platform. You’ll need a webmaster and someone to handle continual site updates as well as SEO, SEM and all the other components of digital marketing. You can easily get sucked into doing a lot of behind the scenes management that you’re not qualified for, and you really don’t enjoy.

Labor costs will increase. You’ll need more help to get those orders filled and the website maintained. You have to run a pick, pack and ship operation out of the back of the store.=

So ask yourself this: Do you have the bandwidth for ecommerce? And will your traditional retail business suffer if you’re pulled in another direction?
According to Gartner Research, 89% of marketing leaders predict that customer experience will be the primary basis for competitive differentiation in the coming years of retail. Here’s an example of how well the customer experience of bricks and clicks can work:

Bricks & clicks REI coopI recently bought a new pair of walking shoes.  I could have purchased them online — I certainly did enough research — but I wanted the front-line opinion of a good shoe salesman. I wanted to talk with a human being, have a conversation and get a read on the three different shoes that I was considering.

I wanted to feel the difference.

So I went to the local REI and made a great purchase.

I trust that place. I love what the brand stands for. The salesmen know their shit. And REI’s site was a great source of information that started me on the path to purchase.

REI’s website was more credible than the manufacturer’s website, and it had better info on hiking shoes than Amazon or any other online resource that I could find.

The manufacturer’s brand and the local REI store both benefit from REI’s online presence and the REI brand ethos. The REI brand benefits from the expertise of its local salespeople to help close sales that started online.

That’s how it’s supposed to work! Bricks and clicks.

It’s a great model that can work for a big company like REI. But it’s not so easy for a small retail chain or an individual store. So before you start fishing for new customers through ecommerce, I’d suggest that you do some soul searching. Maybe you’ll find your brand.

2 retail marketing strategy

Retail Marketing Strategy — Super Sales vs. Super Brands.

BNBranding logoIt’s discount days in the retail world right now. Everywhere you turn there’s a super sale, an inventory reduction, a seasonal clearance event or some other equally banal form of discounting.

retail marketing strategySign of the times, I suppose. With all that pressure from online retailers, brick and mortar store owners are desperate to get people in the door, even if it causes long-term damage to their brand.

But does discounting really hurt your brand?

That’s a question that often leads to heated debates between ad agency folks and their clients. The creatives are quick to condemn anything that involves a price point. But clients want to “move the needle” and “get an immediate ROI” on every advertising dollar. They often claim that any sort of “image” advertising is a waste of time.

Then there’s the agency Account Executive, trying desperately to bring the two sides together in a sort of middle-east peace accord that will save the account for another year. Not a good scenario for a lasting client-agency relationship.

But I digress.

The question is, where does discounting fit into your retail marketing strategy? Does it hurt a brand to run a half-off sale? It depends on the brand and the strategy behind the sale.

So before you hire that sign painter to emblazon your front window with “Everything Must Go!”  ask yourself two questions:

  1. Does the sale or promotion complement your brand promise or contradict it?
  2. Who would the sale appeal to? Are you luring only your best customers, or is a sale a good way to introduce new folks to your brand. And will you ever see those people again?

retail marketing strategyNordstrom has the right answer to both those questions.

When it comes to brand integrity, Nordstrom is the bellwether for the retail industry. It’s a chain known for high prices and bend-over-backward customer service.

Bargains are NOT part of the Nordstrom brand ethos. So yes, frequent discounting would definitely hurt that brand.

If Nordstrom had a Super Bowl sale and a Valentines Day sale and an Easter sale and a Mother’s Day sale and a Father’s Day sale like most department stores, consumers would slowly but surely begin to question the entire premise of the business. They’d begin to doubt Nordstrom’s stature as the industry’s service leader and wonder if the chain compromised the quality of the merchandise.

Might as well go to Macy’s.

So here’s how Nordstrom handles discounting without compromising their brand promise: They only have one store-wide sale a year: The Anniversary sale. (Plus an annual Men’s Sale and an Annual Women’s Sale.)

retail marketing strategyTo manage the inevitable department store inventory challenges and discounting pressure, they opened The Nordstrom Rack. If you like Nordstrom’s outstanding merchandise, but don’t want to pay standard Nordstrom prices for the service, go to the Rack. It’s like a sale all the time. Same stuff, but a totally different shopping experience.

So here’s the final answer: If you have a retail brand that emphasizes customer service and outstanding quality, use discounts very sparingly. Because every sale will send mixed messages to an already skeptical audience.

Contrast that with Wal-Mart. Wal-Mart shoppers aren’t going to Nordstrom for the annual men’s sale. They’re going to Wal-Mart every Saturday where a constant barrage of markdowns is always expected, and perfectly “on brand.”

Wal-Mart’s corporate culture takes frugality to an entirely new level, and it shows up on every isle in every store. Wal-Mart’s brand promise demands big, loud sales, or at least the perception of sale prices all the time. That’s why they have spend more than $800 million a year on advertising… it’s a constant state of “Sale.”

For both Wal-Mart and Nordstrom, the retail marketing strategy delivers on the brand promise. Their sales appeal to core customers as well as those who are looking for a bargain. And there’s a good chance they’ll come back again after the sale.

Unfortunately, most business owners can’t answer the question, “is this sale consistent with your brand promise?” Because they don’t know what their brand promise is. When pressed, they can’t pinpoint what their business is really all about, beyond making their quarterly numbers.

They’ve never thought about it. They’ve never articulated it. And they certainly haven’t communicated it to the public in a clear, compelling, consistent manner. They’re too busy advertising “value.”

The Gallup Organization has done extensive research regarding brand promises and have found that the vast majority are poorly defined and poorly communicated.

retail marketing strategy

Sometimes it takes nerve to resist the “big sale” temptation.

“Rather than attempting to convince a skeptical audience that their brand offers something truly meaningful and distinct, some companies have found it easier just to bribe their prospects (with sales) … Repeat purchases that are driven solely by brand bribery, however, are not the same thing as a brand relationship.”

In other words, sales might increase short-term transactions, but they don’t improve your brand loyalty.

Successful brands like Nordstrom have lasting, loving relationships with their customers, not one-night stands. And the more Amazon pushes its automated, efficient-but-impersonal approach to retail, the more valuable Nordstrom-like service becomes.

So think twice about your retail promotional strategy. If your brand’s promise is to consistently deliver the cheapest goods and services in your category, then go ahead. Run sales every month.

But if your brand promise is to deliver value or service or anything else beyond low price, then find another way to drive traffic.

Your brand will be better for it.

For more on brand strategy, try this post. 

marketing strategy BNBranding

 

 

 

For more on how to differentiate your store without resorting to bribery, try this post. 

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