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Understanding Retail Strategy

by beckygoudy on April 30, 2009

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This post was inspired by Ander & Stern’s book: Winning At Retail.

“Sell what I need…”

Ecommerce is a complex issue riddled with issues such as design, online marketing, and order management, just to name a few.

Still other issues facing online business owners are things like: finance, insurance, employees, facilities, shipping, etc.

With all of these, it’s easy to lose sight of what’s actually bringing your buyers through the door in the first place: your retail strategy. In other words, what is your unique value proposition that you offer your customers? How do you come up with that value proposition? Why are they buying from you?

We’ve looked at thousands of sites, and realized that one of the reasons a site (or business) does so well is that they know who they are, and more importantly, who they’re not. To name a few, some of the niche examples we like (in no particular order) are:

  • Baby memory books
  • Natural/Organic Body Care
  • Collectible 80s Action Figures (GI Joe, etc)
  • Japanese Fishing Equipment
  • Modern Pet Furniture
  • Hawaiian Beach Wedding Dresses

There is a “black hole” concept in retailing where only above average retailers will survive. If your annual profits are hovering around 1%, this may mean that you’re teetering on the edge of the “black hole”. And while you are enjoying some profits, this may not sustain you long-term.

These days, it’s imperative to do something better than your competitors. You have to own a concept in your customers’ minds, whatever that may be.

Walmart owns low cost; Walgreens owns quick; Target owns discount fashion. Whatever your site sells you need to make sure it makes sense to your target market and is clearly defined in their heads.

So what should you own? According to Ander & Stern, there are five possible areas to own in a customer’s head:

  • Price (Cheap-est)
  • Assortment (Big-est)
  • Fashion (Hot-est)
  • Solution-oriented Service (Easy-est)
  • Speed-oriented Service (Quickest)

Owning something in a customer’s head also drives your costs down. For instance, assume you own a store that sells lab coats. Running a PPC campaign for the keywords ‘lab coats’ inevitably will bring you some sales. However, devoting your site to a highly targeted niche like Maternity lab coats (and the same for your PPC campaign), can do wonders with your ability to target your profits.

So, if you know who your customers are, how do you win with them? Put simply, customers want (in order of importance to customers):

  1. The item they’re looking for, and for it to be in stock.
  2. Information on where to find the products they’re looking for (via intuitive layout, search tools, or a combination of the two).
  3. Quick and pain-free checkout
  4. Tools that assist customers in making buying decisions — via chat with a knowledgeable customer service person, buying guides, or articles. These need to be quick and easy to access, and not get in the way.

What is your retail strategy? We invite you to join the conversation.

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