Tuesday, October 29, 2013

Mobile Shopping

In a review of a book about marketing to mobile phone users, six steps were outlined:

  1. The Set-up (Pre-buy)
  2. The Move
  3. The Push
  4. The Play (selection)
  5. The Wrap
  6. The Take-away
The author writes about an experience in a sporting goods store where he researched the prices on his smartphone. He found another retailer with a price 30% less. The store would not match the other's price, so the author purchased from the other place. It seems the author punishes the store for getting him interested in the item initially. In fact, in his strategy, no retailer should have a brick-and-mortar business with onsite retail (requiring labor that may often be idle) because they won't be able to compete with solely online retailers. A location retailer will always have trouble competing with a 'distributor' business.

So how do you compete? Very few win if the only dimension of competition is on price. And they won't win for long. We need to think of the other customers' needs like delivery, quality, technology and service. In terms of sporting goods, the author could have been challenged on whether he was buying the right gear for his needs. Perhaps what he saw was inappropriate for his athleticism and experience with the sport. If the consumer is knowledgeable, he/she might as well shop online. If they need expertise to help with the buying decision, then the difficulty of making a good purchase increases with shopping online. The only way to counter that is to have liberal return policies, which already are a dearth to retailers. Online retailers need to have extremely liberal return policies, like Zappos.com. Return shipping costs will start to cut into the profits. The author also recommends liberal discounts to attract customers and data tracking for each of those stages above. You can pay for services to track tweets and Facebook messages (and more).  This will increase costs, especially for the little guys in business. 

National Retail Federation suggests that their members are losing $9 billion in return fraud (3% of total sales). Can you imagine the cost of returns for legitimate reasons, like buying the wrong product?

The health care industry has learned that malpractice suits are reduced with just a bit more attention given by the physicians. Retailers might cut back on disloyalty and single-dimensional competition over pricing by providing helpful, knowledgeable staff and not leave to customers to speculate and 'treat' themselves.

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