Red Zebra Business Centre - Management Memos
July 2012 Making Measurably More For Your Business Since 1985! Page 1
Time to think about on-line trading #2!

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s we continue to focus especially on the changes in all kinds of trading being wrought by the internet, the retail market space is showing the greatest, and the most rapid, changes. Change brings anxiety, and that, in this case, brings claim and counter-claim in some rather irrational ways!

The internet is such a powerful tool to build up your sales

This year almost all of our effort has been devoted to helping one particular sector of retail - retail pool shops - to get on-line. This is the beginning of multi-channelling for small retail!


Multi Channelling

While this might be the beginning of multi-channelling for small retailers, the change is not without its challenges. Specifically, many small retailers consider the internet to be an unfair monster that is determined to destroy their business.

Not surprisingly, that brings a defensive outlook that is both unhelpful, and counter-productive. The other day a phone contact said “We don’t want anything to do with those tossers who just bastardize the industry!”

That person was probably thinking back ten years when a famous product was available on-line at $248, and the best local wholesale was $284. Even then, the $284 was 'Plus GST'!

Things have moved on.  Today the internet is just one of many methods to reach customers.  But it is scary!  Unless you’ve done a four year marketing degree, it’s not easy to see how to approach a completely new medium, and make it work for you. That's why we can help you build up your pool shop in this “New Age of Retail”.

We are Management & Marketing Consultants with 15 years of experience in the pool shop business (and 27 years overall). We have created “mylocalpoolshop.com.au” as a tool to help our pool shop clients develop their on-line skills and begin the transition. Click here to see the Retailer's Information Home page.

Sharing the costs keeps the individual cost of participating way down, and participants get their  on-line retail presence at fraction of the cost of doing it themselves later.  The internet presence is not about replacing the retail store.  It’s about building up the existing business by using multi-channelling techniques to meet customers where they're looking!


Retailers Fight to Resist Internet Trading

It is well known that a year ago Gerry Harvey of 'Harvey Norman' fame, conducted a heavy weight campaign to change the GST structure. His goal was to redress an inequity imposed by self-interested bureaucrats who declared it would cost more to collect than it would  be worth.


If you have come across the bureaucratic mind-set before, (and who hasn't?) you will find that not surprising. Those who are secure in their public service pay and conditions will never recognise the damage that a skewed tax system will wreak on small business people.


Despite this, Harvey's campaign was a dismal failure, and a misjudgement of the retail mood of heroic proportions! Consumers went 'ballistic' in reporting on-line price savings well outside the scope of the GST!


What is wrong is the underlying business model. If not wrong, then simply outdated. Either way the future demands changes.


The example referred to in the previous column is a good case in point. You can easily estimate that the product referred to will have a Total Factory Cost of $120, and a 'first wholesale' price at the factory gate of $160.


That same product was selling to the consumer for almost $900 at retail - with $400 going to the final point of retail sale. Consumers don't like that kind of price regime! (Taking all $A in this example.)

In a desperate attempt to shore up retail margins, some retailers are banding together to get special consideration from suppliers. This 'special consideration' includes special low buy prices and agreement not to supply traders who use the internet.


What is being proposed is neither practical nor lawful.


Many retailers are already getting the best possible price from their suppliers. There are just no more discounts to have! So the idea is not practical.

The ACCC is considering the practice of agreeing to ban internet sales for the purpose of  price maintenance, and will report in due course. Of course, any form of agreement to hold prices higher than they would otherwise be is unlawful. Any agreement to this effect will collapse at some point!

Traders are quite happy to take the benefits of the Competition and Consumer Act as consumers. It is reasonable to demand that traders actually face up to the new reality.


What we are seeing here is a new form of competition. Competition bring lower prices and a higher standard of living.


Competition also means developing new and more efficient ways of doing business. Multi-channelling is one of them!


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If you'd like to find out more about how to make measurably more in your business right now, talk to us, or ask us a question here! Remember, there's no charge or obligation.


This same offer applies in New Zealand. Click Here!

McNicol Williams Management & Marketing Services is a Small Business Advisor listed with the Small Business Victoria, and has presented The Red Zebra program under its auspices. This listing requires that the first hour's consultation is always free. So when we say "No charge or obligation", we mean it!

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