Hard Lessons Breathe New Life Into Retail Stores
nytimes.com
nytimes.com
Stratechery has a great write up in this (albeit a few years old, it’s still largely applicable)
It’s that last example that resonates when talking about retail especially. To buy a designer bag is an event: you’re greeted at the door, given a drink, have an attendant on hand at all times (who will model the bag for you, if need be); if you purchase it’s almost like a ceremony, complete with special packaging, congratulations (for them taking your money!), and perhaps a follow-up call a day or two later. Obviously given its scale an Apple Store isn’t quite the same, but it’s in the ballpark, especially relative to the buying experience for most electronics. Moreover, it’s the after-sale experience that is arguably the best part: you’re given help setting up your new device, transferring files, invited to classes to learn how to use your purchase, and assured that a genius is ready-and-waiting to take care of any problems that arise
https://stratechery.com/2014/apple-stores-innovators-dilemma...
Tim Cook fired one chief of retail store operations within six months after he realized that the guy didn’t get that.
A completely inexplicable decision.
https://daringfireball.net/linked/2012/01/31/browett
"You don’t see many executives trading up from CEO of one company to senior vice president of another. That Browett is from Europe is a pretty good signal that international expansion is a top priority for Apple retail."
He was already hedging his bets a couple of days later, though:
https://daringfireball.net/linked/2012/02/02/dixons-sucks
"I'm not implying that Browett was hired to or intends to Dixons-ify the Apple Store experience — just pointing out that it’s a curious hire, also given how rarely Apple hires executives from outside the company."
High or low Margin is almost irrelevant to the point: if you’re a commodity trying to sell as a non commodity you will fail.
Quick observation: a lot if not most businesses tend to be commodities (e.g. they lack real differentiation from their competitors)
This person is not that knowledgeable about the product. And can't answer any detailed questions. If you want a Mac mini you'll have to insist that it does in fact exist.
Also your product will not be bespoke. For that you must order online. Only plane vanilla is allowed to be sold at the stores - so no extra RAM or disk space for you.
If you would like someone to help you learn your new machine you can come back next week for an "appointment". This appointment is used in the doctor sense where it's actually expected you'll wait another 10-15 minutes until you see someone who can help.
Every time I go it's an excercise in frustration. But I'm impatient and want it now.
Quality control.
If you do have an item through a retail store with a physical presence, not only should (common) items be there at any time, they should also be of actual durable quality.
On the other hand, if you buy something retail, you can A. see it yourself first and B. have a physical store you can return it to.
For a major example of this, Apple sued sellers over knockoff (and potentially hazardous) USB chargers being sold as official Apple chargers. “Shipped and sold by Amazon” and as far as customers can tell, it’s the real thing.
https://www.theverge.com/2016/10/20/13343682/fake-apple-char...
Best Buy’s supply chain doesn’t have this problem.
This is common across all sorts of products. A shoe company (I forget which) stopped selling on Amazon because they couldn’t do anything about being mixed in with all the fakes, and fountain pens bought there (Lamy Safari in particular) have good odds of being Chinese knockoffs of questionable quality.
Common products that are normally sold at a high mark-up at retailers, are usually always counterfeit if bought from amazon. Case in point are the expensive electric tooth brush replacement heads by Oral-B.
You will pay $5-$8 per head from a physical retailer. Yet on amazon, there are tons of them being sold for much less. If you do buy one from amazon, the product will not be the same as from a physical store even though the packaging is identical. Its a cheap counterfeit.
Another time, I bought a hand cranked can opener. It was supposed to be a heavy duty "Made in America" can opener. Yet once I got it, the construction was nothing at all like the product images showed (was held together by cheap pop rivets instead of solid rivets) even though all the brand markings (including a big print "made in America") were there. It broke quickly. Looking on ebay I discovered an identical item only instead of it have a printed "made in America", it said "China"...
I bought some on eBay, advertised as genuine but not. The packaging was near perfect. The only thing that gave them away was the different mouth-feel and two misplaced mold release marks.
Genuine Braun dual-action brushheads have two divits on top of the brushhead. The copies have the two divits on the side.
I sent a note to the seller warning him that some counterfeits might have gotten into his supply. Seller refunded me.
If you get counterfeits from Amazon I am sure the 3rd party seller will refund you.
At some point this crosses the line into anti-trust territory.
There are other vectors for counterfeiting own brand products but you would have to be a supplier. In normal retail 'own brand' products can be sourced from many suppliers. If you are selling ready meals then the exterior pack could be provided by the supermarket with that being consistent. Meanwhile the contents could come from one of many industrial units at one of many suppliers. In this way 'co-mingling' is possible. In the UK we had a little problem a few years ago where 'own brand' ready meals were full of horsemeat. The products themselves were 'legit' but the contents were not.
I would say that Amazon Basics are vulnerable to this type of fakery that goes on further up the food chain. This is fully possible with commodity items such as batteries. As per the UK horsemeat problem there is a serious reputation risk if this happens, terrifying the customers this way is a bigger existential threat to the brand than any 'anti trust' laws.
It would be interesting to see counterfeit numbers for items sold by Amazon itself vs by someone else on Amazon. Anecdotally I've never had an issue with stuff sold by Amazon itself and steer away from our vendors if possible.
Not to mention Amazon's ability to throw your purchases at your door when the disinterested delivery agent is only measured on packages delivered per hour rather than returns due to damage.
What does this mean?
You all should try bhphoto.com -- good prices, no counterfeit gear.
It's not that I'm anti-Amazon - I use my Kindle every day, a long time Audible subscriber and I use Prime Video.
Frys is a nice choice for buying electronics: they have in-store same-day pickup, and they'll price match Amazon and Newegg. It's pretty convenient if you have one nearby.
This one surprised me a bit, but Best Buy also has equivalent prices to Amazon on a lot of things. A few days back I was looking for some items and found that they had everything available for the same price and I could go pick it up on the same day.
Amazon do seem to be stepping up their delivery speed, though. This morning I ordered something that wasn't available at other retailers and I was given an option for same-day delivery. A few hours later it arrived.
If I order something from, say, nordstrom.com, I’m pretty confident that the item will be high quality and exactly the same as if I’d bought it from one of their physical stores.
Or for another example, if I were to order some clothing from mrporter.com, I have similar expectations of quality even though they have no physical stores.
If I buy something from eBay or Craigslist though, I have no expectations that it will be of a certain quality standard.
To my mind, most physical stores ought to be like showrooms: innumerable products are hard to judge solely from pictures and text descriptions but easy to judge with ten seconds in person. Let online and off converge.
People go to the store, look at the thing, then, maybe buy it online anyway, for any number of reasons. Net effect, physical locations become showrooms that move very little actual product, and fail to close the expected number of sales.
That doesn’t work if you are Best Buy.
> That doesn’t work if you are Best Buy.
Apparently it does work if you're Best Buy.
> we price match products shipped from and sold by these major online retailers: Amazon.com ...
https://www.bestbuy.com/site/help-topics/best-buy-price-matc...
Best Buy price matches because it gets people in the store. I don't believe for a second that they did it in response to losing business to online storefronts; rather, I think it's far more likely that they did it in response to other retail chains doing the same. Their customers came to expect it, so they obliged, as a marketing tactic to make sure their retail competition didn't have that as an edge. Their price match policy is also pretty strict; they won't match just anything on Amazon, it has to have some degree of verification and be from a trusted seller. (Especially for things like iPads / common fake listings, etc.) Last time I checked it had to be "Sold and shipped by Amazon" but that might have changed, it's been a while.
(Source: I worked at a Best Buy store for about 4 years.)
There are many ways of paying:
Products have to be supplied in a fairly 'just in time' way so you are doing the warehousing/distribution that retail chains used to fully take care of.
You have to take back unsold inventory or take back inventory if it under-performs and the range/model/SKU is dropped. So this also means that for the customer there is no 'old model deeply discounted' unless it is a store demo unit.
You have to pay for marketing. For Best Buy to promote your brand you need to pay for that.
You have to pay for what shelf your products are on. This is a bit like concessions in department stores or end of aisle shelves in a supermarket. You only get your products at eye level and prominent if you pay.
You might have to pay for Best Buy specific models. This can involve cosmetic changes to the product that mean more production costs (e.g. moulds for injection moulding, packaging).
You might have to have a team of people do in store training, visiting Best Buy stores and teaching the staff how to demo your products. This is actually really crucial.
Best Buy do provide sales data that helps forecasting demand, this is useful but in the olden days the store would take all the risk of ordering what they thought they could sell.
Despite all of the above Best Buy are great to work with for most brands. However, not all chains are. There are plenty of stories of companies that have worked with Walmart to come apart. This happens as the margin Walmart demands means that one has to nickel and dime the product to make it as cheap as possible. People buy into the brand, take it home and find it is rubbish. They take it back, don't buy the brand ever again and cost you money. Meanwhile the specialist retail channels that the brand did have stop selling the product as Walmart have started selling it for less than what they can sell it for. In this way a brand can quickly die. The trap is that if you don't sell your product at the price they want to sell it at (as a 'loss leader') then they can boot you out of the store and get your rival in instead. It is lose or lose for the brand when the retailer does this.
One of my pet peeves is something bookstores should do: have a simple way to buy ebook versions of the in-store books, so you get some of that money. Sure, after finding a nice book in your showroom I could bring up Amazon on my phone, search for the book, then bring up your website, search for the book, compare prices, then go through checkout; or you could give me an app to scan a barcode that will bring up the book and a Buy Now button that triggers Apple Pay. At that point, I simply cannot be arsed to look at Amazon just to save $2, like most people cannot be arsed to pirate music when iTunes and spotify are painless.
The rise of Amazon, and the rise of brands that 100% own the physical display of their wares and don't use Amazon (e.g., Warby Parker), are putting the middlemen out of business. Unless you offer some customer service experience that is hard to duplicate (independent bookstores and their curation, Sephora with its makeup gurus, etc.) your middleman store is going to have a rough time.
I note that Amazon felt compelled to buy a grocery store chain, in order to get a purchase in that sector.
There's an interesting balancing dynamic there. Brands really like to be at or below eye level. On the other hand, if I went to a grocery store and the store didn't carry Oreos, I would have a pretty negative opinion of that store (and I don't even like Oreos, personally). Based on that, I assume famous brands have a good amount of market power relative to stores. But I care very little about what shows up in the toilet paper aisle; I would guess payment-for-placement is more significant over there.
Also, Oreos vs. Chips Ahoy isn't a fight; those are both Nabisco cookies.