Archive for January, 2007

Big boxers have a (not-so) secret weapon in the online sales wars. They just need to use it…

January 30, 2007

Owen Thomas of Business 2.0 sent me an interesting article last week that reveals big box retailers are losing the online battle.

Apparently, when consumers search for items to purchase online, their search results are 6x more likely to point them in the direction of internet-based retailers than traditional brick and mortar stores.

That news shouldn’t come as a total surprise. Despite the drastic improvement of retailers’ e-commerce presence over the past 5 years or so, they’re still the new kids on the block when it comes to acquiring online customers. You tell me who should be better at organic search marketing — Amazon or OfficeMax?

What’s more interesting than the obvious answer is the idea of how big box retailers can strike back: Instead of simply trying to beat the e-commerce giants on their own virtual turf, brick and mortars should leverage what may be the most non-obvious of their weapons in the e-tail battle: the store itself.

The local store is a feature the vast majority of e-commerce beasts, by definition, lack. But why is having a store presence valuable in internet land, the world where store shelves are imaginary? Because having a store (or several hundred) means your products are physically much CLOSER to your customers, and therefore can potentially be delivered much more quickly.

If you’re living in San Francisco (or Boca Raton for that matter), how can you get an HP 5610 DeskJet printer faster — by having CDW ship it overnight from a central warehouse in Illinois, or by having it delivered in 4 hours from the nearest big box store?

Unless you live in rural Montana or Alaska, the answer is fairly straightforward. With LicketyShip leading the way in store-to-door delivery, as long as there’s a big box retailer within 25 miles of you, its like having a distribution center in your own backyard. Having product forward deployed in every major metro across North America is a feature that no pure online seller can yet match. And the big boxers who’ve got it should flaunt it.

The obvious follow-up question: “What about price?”

Sure, e-tailers will oftentimes have lower prices for products. In our HP printer example above, CDW weighs in with a price of $134.99 for the same printer LicketyShip found at a local store for $159.99. So it may seem the clicks beat the bricks, right?

Wrong. Remember, you still have to have the less expensive printer shipped to you from ILLINOIS. CDW offers FedEx standard overnight service to San Francisco for $56.10. LicketyShip offers 4 hour service direct from the store for $9.99.

So all in, it’s CDW + overnight delivery: $191.09

Or LicketyShip + 4-Hour Delivery: $169.98

Shocking, no?

The local store makes the difference. Of course, same-day delivery is a faster, premium service; it just happens to be an added bonus that in many cases, it’s less expensive too.

And that probably makes sense – jet fuel isn’t cheap… 🙂

Update: Owen has pointed out that $9.99 is our current sale price for 4-hour shipping, not our regular price (which is $19.99). Good catch! So to clarify, if we weren’t running a sale, our all-in price for the example above would be $179.98, which is still lower than the $191.09 price at CDW.