Gone are the days where small retail business owners stayed up late trying to work out how to compete with the large retail chains. Now it’s the large chains on one front and an army of local and foreign based online companies on the other. In a war that may ultimately leave just one party standing, one small business has taken a unique approach to the battlefield that seems to be winning them ground on both fronts.
Vincent Teubler and his business partner Kleo Mandikos own Inkspot Franchising Pty Ltd a national chain of some 30 primarily shopping centre based retail stores that sell Ink and Toner. Their traditional battleground was the large retail chains of Officeworks with the convenience based superstores and local strip shop based mega franchise CartridgeWorld. “When we started the business we needed to find a way to directly compete with these 2 mega chains” according to Teubler.
“The buying power, geographic store distribution and marketing power of these guys is formidable and we would spend countless late nights working out ways to progressively nibble out a unique place for Inkspot in the printer consumables market. Focussing on the high rent but high convenience shopping centres gave us a convenience “edge” over the big guys neither of whom have stores in the shopping centre” Teubler says.
That “edge’” allowed them to build out across Australia over the last 9 years and start developing other unique benefits to gain and retain customers. “Once we found our niche in the shopping centres we were able to focus on specialist product knowledge, building the unique and quality centric Inkspot aftermarket product brand and ensuring we had price alternatives to meet customers differing budgets”. Addition they were able to start expanding out of the retail shopper focussed shopping centres and develop their stores capacity to meet business requirements. “ All small businesses use printers and they care enough about their bottom line to actively look for cheaper Cartridge suppliers, after all printer ink and toner can be horrendously expensive. Having staff and location stability allowed us to broaden our local are marketing activities to include commercial businesses and gain further commercial stability”
But then along came a whole new army. “ Just when we were beginning to breath, the online market started to mature. Online has been around a long time but initially both retail and commercial customers were sceptical of buying expensive specialised products online. But oh boy has that changed rapidly over the past 12-18 months”
What was a handful of foreign companies suddenly became a deluge of online retailers. “At one stage we were having difficult even keeping up with the new no name brand companies suddenly competing with us online. It was the stuff of nightmares. Traditional retail stores can’t compete online. Stores have huge rent and staffing overheads for a start. How could we possibly compete with prices little over wholesale levels online without effectively going broke at a retail level”
But rather than panic at having a whole new battleground at their doorstep, they took a step back, breathed and took a long hard look at the whole retail supply chain. “ We noticed that the traditional big competitors had simply gone online with mirror pricing to their retail stores. Sure it provides their customers with convenience but it doesn’t address the other great motivator for customers going online. Price.” On the other battleground front they noticed a whole raft of new competitors online with cheap prices. They asks themselves the question ‘Why hadn’t they taken over the whole market?’ According to Teubler it was a case of support. “All these online stores selling cheap cartridges but no brands and absolutely no support. They were in fact cheap and nasty. If a customer had a problem good luck to them having it resolved with an online retailer. In fact good luck even working out how to resolve it. “
“So that’s where when the solution began to materialise. A solution that would allow us to gain back market share from the online retailers and concurrently take a bigger market share against our traditional competitors and all whilst avoiding cannibalising our existing retail network”
Online Promo codes was the key to the Inkspot online solution. Most e-commerce platforms allow customers to enter a promo code for an additional discount at the online checkout. It allows stores to run special online promotions and reward customers accordingly. “we gave each store their own promotion code. It gave their customers a 10% discount when they shopped online, enough to ensure that each store could promote themselves anywhere in Australia with their Promo Code and for us to track online sales back to their store. The online prices are set at in store levels for single purchases but go all the way to online pricing if customers purchase in bulk. This promotes bigger purchases and when a customer uses the promo code for their extra discount it acts to link the customer to a particular store”
Inkspot had created an online solution that
- Allowed them to steal market share from their traditional Retail competitors by having bulk discounts available online
- Allowed them to stem the flow of customers to online as well as steal market share back from online by having a combination of discounted online products and nationwide in store retail support
- Allowed each store to build sales as they not only can retain customers who were going online but gain some back. In addition each store could actively promote the online store anywhere in Australia. Well away from their traditional customer base.“ Inkspot has found a solution that allows us to use online to gain significant new customers across the network, compete head on with the large traditional retailers on price and head on with the nameless online retail stores on support”
- For one retailer at least, ground is being made up in the battle to survive and thrive…..well until the next competitive threat emerges…..Pokémon Go perhaps. J