A second retail outlet to the world
In last week’s blog entry we talked about the notion of a how the eCommerce website of a non-retailer could be seen as an entirely new business, or at least one that could be structured that way.
For retailers, it’s a similar story but with a different slant.
The typical scenario for a retailer is that they are a business with one or more outlets, structured to best accommodate the pragmatic and financial requirements of the owner.
What’s critical to remember here is that each outlet is predicated on its location. That is, it is located to best convert passing and destination traffic to bring in customers and sales.
But when it comes to selling online, location considerations are less critical. In some cases they may not be a factor at all.
At this point it’s a good idea to consider the business model of Amazon.
Amazon is (or was) a website
Amazon is probably the biggest success story there is when it comes to eCommerce. Established back in the very first days of eCommerce, Amazon was quick to establish its foothold in cyberspace and soon became the leading online retail provider.
Of course whilst it may have distribution centres across the globe, it was a single US based business you were dealing with.
Amazon is very much your ‘department store in cyberspace’, starting off with books and music before expanding into pretty much everything that can be reasonably delivered – from pet food to perfume.
So if you consider that in marketing terms, Amazon is the US-based ‘market leader’ when it comes to the online retail space (China’s Ali Baba is bigger still) , another like Wal-Mart will be the ‘market follower’ or challenger. Then you have any number of niche players like Australia’s Peters of Kensington.
So once you start selling online, where there are no borders or territories, you are essentially creating an online niche player.
Your own online niche player
Say for example you are a gift store. Whilst there may well be some overlap between your physical customers and those who shop and buy online, the fact that your website is automatically accessible by several billion people means that, technically at least, it’s a different business.
All of a sudden it’s not just those that can physically get to your store that can browse and purchase your product. It’s pretty much anyone who can find you, regardless of their location.
That fact changes the game considerably.
Now you are able to access a much larger base of customers who may have different characteristics, locations and budget levels.
Online threat or opportunity?
You are now longer limited to just those than can physically get to your outlet. Depending on your constitution, that fact can be either frightening or magnificent.
Even now, some 18 years after eCommerce was unleashed on an unsuspecting public, I never cease to be amazed that for little more than petty cash, you can set up a retail outlet that anyone in the world with an internet connection can access within a few keystrokes.
Alas, few retailers consider this when establishing their websites, having their websites mirror their physical outlet(s) when it comes to communication, range, stocks and so on.
A legitimate second business
So given the online market differs so comprehensively to the market of your physical outlets – providing you want it to, it can easily be argued that it is in fact a second or subsequent business, or outlet as such.
And as such, you could argue that it could have its own manager, marketing, range and so on.
Similarly, the physical retailer could rethink their physical outlet into not just a shop, but a distribution centre for their online business.
That in turn has ramifications on their asset base because if well thought out, the website can be a sellable asset quite separate from the core outlet.
Have you thought about your retail business in this way?
If so, you may have an asset worth considerably more than you bargained for.