Competing Against Multi-channel Brands and Retailers

If you market branded consumer products on your online store, your company is in a high risk due to the multi-channel strategies of producers, marketplaces, and large specialty retailers.

Let’s say you sell Under Armour products. One of your items is a “Men’s Coldblack® Player Polo” that lists for $64.99. Besides competition from Amazon.com, DicksSportingGoods.com, Golfsmith.com, and other specialty retailers, you now compete directly with UnderAmour.com. In actuality, Under Armour is targeting 25 percent of its revenue to be generated from its online store. Under Armour is now number 143 on the Internet Retailer Top 500 Guide and derives 9 percent of its revenue online. So you can see it’s an aggressive online approach to go from 9 to 25 percent.

Here is what a customer would find on Google by looking for this shirt.

Enlarge This Picture

Google search results for “Men’s Coldblack® Player Polo.”

As a customer, I am most likely to select one of the very best sites for this product. In actuality, because UnderArmour.com is the next option, I’m likely to go there , as it might have the greatest choice of colours and sizes. Here’s a screenshot of UnderArmour.com’s”Men’s Coldblack® Player Polo” landing page.

 

“Men’s Coldblack® Player Polo” product detail page, at UnderArmour.com.

 

UnderArmour.com is a well-designed website, offering free delivery on all orders. If I like Under Armour products and’m not trying to purchase non-related items, I may also search for additional accessories or comparable items while I’m there. There would be no reason to shop at other stores.

If I choose to shop elsewhere, I’ll find the identical essential selections and price at Amazon.com and DickSportingGoods.com and other smaller retailers. Typically, they offered free shipping with a $49 order. So I could get this shirt on a lot of websites for the same price, before sales tax.

Considering that the pricing is constant, Under Armour appears to protect its pricing up to Apple and other big brands. If you’re a smaller retailer, how can you sell Under Armour and compete against these kinds of companies?

You might be thinking that its best to market other branded products which aren’t structured this way. For now, that could be a viable strategy. But virtually all brands are moving toward this sort of multi-channel model. They are investing heavily on online operations — complex online shops, social media investment, and electronic marketing. They probably have mobile-optimized shops and many also support apps. If you buy from them, they’ll market aggressively through email. They will probably offer promotions, free shipping, and possibly even loyalty benefits.

Build Customer Loyalty

In short, smaller online retailers need to develop customer loyalty and enhance their retention to be successful against these larger opponents. Price discounts will damage your margins, and with branded things it could be more challenging to dismiss in the future. You will need to find different items to sell, to keep customers.

It’s much less costly to pay to an existing client than it is to get a new one. Let’s look at a number of the ways to enhance customer retention.

Improving Customer Retention

Amazon.com is using its Prime app to great advantage for a loyalty device. Along with free two-day delivery on any purchase, members also receive benefits via Prime Instant Video and Kindle Owner’s Lending Library. Amazon also understands that Prime members spend far more time shopping on its own website, thus increasing Amazon’s chance for more earnings.

Smaller merchants will need to come up with their own loyalty programs which are like Prime. A fantastic place to start is a level of free delivery. Because most online stores offer free shipping at some level, why don’t you pack it for all orders? It doesn’t need to be 2-day delivery. It might be a single annual fee like Amazon, or a one-time offer to buy at a specific level and receive free shipping for a year.

See also:

/summer-sales-preparation-for-online-stores/

/what-to-know-about-inventory-shrinkage

/2-types-of-inventory-report

/how-to-choose-the-best-shopify-app

/5-characteristics-of-top-bigcommerce-stores

/inventory-management-problems-to-avoid

/6-challenges-to-online-shopping

Structuring a Loyalty Program

But do not use free shipping by itself as your loyalty program. With the addition of additional benefits, you will increase your repeat business and client retention rate. The lifetime value of a client increases with a well-designed and handled loyalty program. Some other elements of a program you might consider are:

  • Same day or priority shipping;
  • Free returns including return transport;
  • Exclusive offers for members only;
  • A 5 to 15 percent discount on all orders depending on the size of an individual arrangement;
  • A 5 to 15 percent discount on all orders after a landmark purchase level is accomplished in a specific time interval;
  • Bonus points which may be gathered for future purchases or discounts;
  • Early access to new things or promotions;
  • Secure access to personalized pricing based on your purchase amounts;
  • Occasional giveaways;
  • Price matching offers.

Sometimes, you might choose to create a very simple program that includes only free delivery and returns. Maybe reward points make the most sense for your type of business. You might even want multiple levels. Evaluate your opponents to gauge the very best components of your loyalty program. Survey your customers to ascertain what would motivate them to purchase more.

The purpose is to create a program of some type. Market it anywhere: on your home page, on product pages, on your shopping cart, in your emails, on social networking. Tie it in your brand so that people associate your brand with that app. This way, if a customer shops for a branded merchandise like Under Armour, he might not find an immediate reduction from you on the buy, but perhaps he will earn points for a future purchase, get free transport, and know he does not have to cover the return shipping if the item isn’t as expected. That might be reason enough for him to visit your store to the purchase as opposed to a larger merchant where he has no previous connection.