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Buyers Drive The Process Online But The Lowest Price Isn't Always the Best
# 1 WEB HOSTING PROVIDER!24/7 Uptime With Full Control Panel! Lowest Cost Hosting GUARANTEED! FREE Custom Website Builder For Your New Or Existing ..... Online buyers' ability to comparison shop -- aided by a vast array of shopping bots -- has turned traditional retailing on its head. But are low prices all customers want' No way!
Some web-wise merchants have responded to the Internet's new retail rules retailers by including comparison shopping on their own sites, others put their heads in the sand. Leading the list of slow to get online retailers is Home Depot who, according to the Aug 16 issue of Fortune, recently issued "a Godfather-esque" directive to its suppliers selling goods online. The gist of it was stop selling online or you won't be selling to us.
"Dear Vendor," the May 19 letter began, "It is important for you to be aware of Home Depot's current position on its'(sic) vendors competing with the company via e-commerce direct to consumer distribution. We think it is short-sighted for vendors to ignore the added value that our retail stores contribute to the sale of their products....We recognize that a vendor has the right to sell through whatever distribution channels it desires. However, we too have the right to be selective in the vendors we select and we trust that you can understand that a company may be hesitant to do business with its competitors."
What Home Depot really is worried about is its customers going straight to the manufacturer and bypassing Home Depot.
Going head to head with Home Depot won't be simple for any company. Stanley Tools, for one, has scrapped its e-commerce plans in the face of Home Depot's threat. After all, Home Depot is one of the "category killers" who put thousands of mom and pop hardware stores out of business."Who's to say," Fortune reporter Katrina Brooker muses, "that it can't do the same to pesky suppliers with dot.com dreams'" Web shoppers, that's who!
Several factors come into play:
oOnline shopping does not provide instant gratification. Sometimes, all a customer wants is to buy something and use it right now
oPeople are still willing to pay more for superior service, even online
oFew retailers will be able (or want) long term, to sustain prices so low they cannot make a profit
oAlthough low prices might bring customers to a site, discounts alone won't necessarily keep them there or convince them to return
oOnline, a store that provides complete information from a variety of sources can be more valuable than a single site that provides only its own or partial information.
Online comparison shopping is available at a wide range of sites. These sites promise "you'll never miss a sale again;" "40 - 60% off retail in 13 categories;" daily or weekly sales updates; and email bargain newsletters tailored to your shopping interests. Some claim to scan 50 million products.
Each of these services is powered by shopping bot software. Some even provide shoppers with the ability to search, compare and buy in a secure e-commerce environment. The majority accept advertising, but a few, like Price Scan claim to be unbiased and objective because they eschew advertising. Some online shoppers, no doubt, study the information on these price comparison sites before they make a buying decision. Then there is everyone else.
What makes a shopper decide that price isn't all that matters' Extraordinary service -- the very same quality that allows some stores to charge more for their items because they make shopping convenient, pleasant and reliable -- still can win over price. Superior service makes fancy cars, designer duds and luxury travel appealing. It also allows L.L. Bean, Nordstrom's, and a handful of other merchants able to charge more for their products than bargain merchandisers selling essentially the same goods. And great service is not going out of style any time soon.
In terms of costs, online retailers seem to have obvious advantages over bricks and mortar retailers. Traditional retailers need to spend $3 to $5 million to open a store. They usually can only pull from a 25 mile radius, meaning they need to make a fair margin. While online merchants can set up shop for less, and sell internationally, many have set prices so low that it is impossible for them to make a profit. Therefore, the good deals consumers now expect won't be sustainable over the long haul. Only the ones with the deepest pockets can hold out, and one begins to wonder why they would want to.
Retailers are dealing with online sales in different ways. Barnes & Noble made the mistake of not being first in their category to get online. Like so many other traditional merchants, they finally ......
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