Saturday, May 23, 2020

We Are All Multi Channel Retailers Now

If you had asked me at the beginning of March, if having an online store was necessary, I would have told you no. The vast majority of retailers make single digits of their revenue from online sales. It's something I've watched closely, because it seems like a logical thing to do, but it actually isn't. Online sales are an exhaust port for dead stock, a blessing, and a curse for everyone else. Most online retailers use Amazon to sell online, and before that Ebay. Many more only sell Magic singles online through TCGPlayer. Only a handful make any reasonable percentage of their sales online through their own branded store, and of course, they're in a "I told you so" mode.

Was I wrong? Small business is not about planning for 100 year floods, it's about being nimble with the opportunities and threats presented and quickly pivoting in times of crisis. It takes about 100 hours to add 1,000 descriptions to an online store. Stores generally have somewhere in the 2,500 to 5,000 item range, with the big boys upwards of 15,000.  If your big store can spend 1,500 hours, we'll call it $18,000 in California wages, just so customers can view items from home and you get a few percent in direct sales, you are probably uniquely successful in this trade. It makes no sense in normal times.

Now things are different, and for long enough to just as well be permanent. Customers are scared and are not returning to businesses as they re-open. They would still like delivery to their homes. I bought a delivery vehicle for this purpose, as I'm that certain this will continue. Having an online store is an essential part of delivery and curbside pick up. How long will this continue? The answer is longer than you can survive without an online store.

The next year to eighteen months will be a challenge for retailers. You may not need an online store after that. You may be able to dodge this 100 year flood a second time. However, you probably can't survive this period without an online presence. You are also going to have to figure out outreach online. Facebook might have worked in the past for most customers, but you'll need to figure out where the rest of them have gone in the online world. If I thought my Pokemon kids were unresponsive on Facebook before the pandemic, they are absolutely missing in action during it. My marketing to them had been Wednesday night Pokemon.

So if you ask me in two years, will an online store be necessary, I would tell you probably not. I don't believe shopping habits have been permanently changed. I believe humans are social creatures and they thrive with social interactions, and providing that will be even more important when you can safely do so. I also don't know of any other retail business model that works without that social interaction, barring some online monopoly fueled by Wall Street capital. Yes, Amazon simply wins in a pandemic. There is no competing model.

If you ask me now if an online store is necessary now, I would say absolutely and you are very late to this party. Most retailers I know have been building their online store since late March. Those who spent the time to do it right and integrate their POS systems with an online store took longer to launch, but saw perhaps double the sales of those who put up something quick next to their point of sale systems. POS adjacent. I'm doing both, propping up our integrated online store as quickly as possible, while adding items to our stand alone online store for emergency revenue, until which time we swap in the integrated one (hopefully next week).

In normal times I would recommend going to conventions, community outreach and other channels for sales, but I'll instead recommend you look within. Search for fruit at the top of the tree. We are accustomed to doing cost-benefit analysis, and only reaching for low hanging fruit. In this time of fruit deficit, no fruit is too high. When there are no customers to serve, your time has no value. Find ways to generate revenue that you may have discounted in the past because the benefit was only marginal.

Gift wrapping is a good symbol of this. If your store doesn't do it, because "you're not good at it" or you just simply didn't see the point, get yourself a gift wrapping station today and watch a YouTube video or something. Find out what customers want and stock it, even if it's outside of distribution. This isn't a new retail channel, but it's an opportunity to tap new revenue, and when this is all over, your store will be that much better for it.

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