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 Internet's new retail rules retailers by including comparison shopping on their own sites, others put their heads in sand. Leading list of slow to get online retailers is Home Depot who, according to 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," May 19 letter began, "It is important for you to be aware of Home Depot's current position on its'(sic) vendors competing with company via e-commerce direct to consumer distribution. We think it is short-sighted for vendors to ignore added value that our retail stores contribute to sale of their products....We recognize that a vendor has right to sell through whatever distribution channels it desires. However, we too have right to be selective in 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 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 face of Home Depot's threat. After all, Home Depot is one of "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 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 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 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 -- 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 same goods. And great service is not going out of style any time soon.