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The best online shopping experience. Hint: it’s not Amazon

April 4th, 2012 No comments

Brick and mortar stores are in trouble, but so are we. Brick and mortar stores like Best Buy will surely be missed once their gone, even if we’re the one digging their graves. Every shopper with a smartphone has probably already engaged in some form of “showrooming.” Showrooming is the act of going to the camera store to get a feel for how well a new model feels in the hand only to purchase it much more cheaply online. Today Amazon even offers an app that allows shoppers not only to scan barcodes and compare with the online price, but to buy the product right there for less money-guaranteed.

Many items like groceries, where freshness is hard match, or clothing wear fit is difficult to ensure, resist showrooming. Electronics, the heart of of Best Buy’s business, are a different story. Once I’ve convinced myself that my new gadget will fit in my stereo cabinet or on my kitchen counter, there is little incentive for me to purchase it locally. Shoppers go to Best Buy to confirm the few things that online retailers haven’t been able to convince them of, and then place an order online where it’s often significantly cheaper, because, well, Best Buy has to pay all those clerks, and keep the lights on in their attractive showrooms in convenient locations.

We’re using Best Buy and others like them as a place to touch and feel products and make our final decisions, but we’re only rarely paying for that privilege. Even though we have an interest in the status quo, it’ll be hard to convince Best Buy’s stock holders if they can’t make any money. The real beneficiaries are online-only stores like Amazon.

It isn’t easy to be an online only retailer, but Amazon addressed many of the needs of their customers’ unique situation. Price and selection are very big drivers, but not the only ones. In addition, consumers need to decide which items to buy and determine if a product really does fit needs and expectations. Amazon offers an array of tools from suggestions to user reviews that do wonders to remove the obstacles to online purchasing. The rise of efficient logistics from FedEx and UPS has sealed the deal, turning the FedEx man into Santa for adults. Of course, avoiding sales tax isn’t bad either, even though most states insist that you’re not really legally doing this. Perhaps this inadvertent discount was necessary to jumpstart online retailing, but, today, even if we lost the 5 – 10% advantage, many purchases would still stay online. We may love Amazon and other online retailers, but they’re getting a free-ride, paid for by brick and mortar show rooms for their goods.

It’s not impossible to be both. Perhaps the best online retailer today is Recreational Equipment Incorporated. REI has managed to sync their online and real-life shopping experience to the point that it’s almost invisible. Buy online, ship to the store. Not available in store, we’ll get it for you from our catalog. Same price, same products, same service.

I bought a compact video camera recently. I was able to choose the product completely online thanks to copious reviews and comparisons with a variety of similar products. I didn’t even visit a brick and mortar store. Still, after I’d played with it for a day, I realized it wasn’t going to meet my needs and wound up having to return, at my own shipping expense, to the online store where I bought it.

I’m replacing that camera with a different one available at REI. Still buying it online, but this time, if there is any problem with that camera or it doesn’t meet my expectations, it can go back, at no extra expense to me, to my local store. I can both showroom and return the product from the brick and mortar store, but buy it conveniently online and have delivered to my door. It truly is the best of both worlds.

The REI model could work elsewhere. Imagine if a new electronics superstore charged a membership fee, just to enter their stores. I imagine it like this. You pay $100 per year to be a ElectroShop member, and you get $120 a year credit towards your purchase. You can buy from our online catalog and pick up your item in our store, or have a look at a sample in the store and place your order online. You’re motivated to purchase from us because you’ve already paid ahead of time for the privilege, (hey, we’ve got to keep these lights on somehow) and because we offer the easiest return service out there. Electronics can be heavy or expensive to return to an online store, but here at ElectroShop, you can just bring it back, no questions asked.

Best Buy might find it hard to implement this model, but something has to be done to cover their costs, because right now, we’re getting this showroom service for free and the going out of business sales are proof that the current model is not sustainable.

Slowing the development cycle

February 20th, 2012 No comments

Apple’s a bit slow. The iPhone has been followed up, twice now, with incremental upgrades. The iPhone 3GS and the iPhone 4S were both relatively minor tweaks on the previous model. Bloggers complain, customers barely notice, but one group is absolutely thrilled: developers.

I work with an Apple developer and it turns out, that despite all the hoops and regulations they have to jump through to even sell something related to the Apple an Apple platform, it’s all worth it because Apple has made the big picture much easier. The write-once-deploy-anywhere notion is sort of true in Apple-land in a way that Andriod can’t even dream of. Once a piece of software or hardware is developed for an Apple product, it will plug into the same port, in the same location and have the same application hooks on iPods, a range of iPhones, and a couple of different iPads. That’s a pretty big deal when compared to developing an accessory for an Andriod-based phone or tablet. In that world, it’s develop once, and then try try again for nearly every phone or tablet on the market.

Apple will release an iPad “3” in March, but, like their other incremental upgrades, it isn’t the time to expect much. Rumors are starting to shake out that there won’t even be an all new A6 quad-core processor, for example. As if anyone but the technorati even cares. The iPad is firmly in the lead among tablets; there is little reason to rock this particular boat. I could, for example, imagine that the real feature of the new iPad will be its price: cheaper than the last ones. Such a move would be devastating to the competition who are making compelling products but struggling to make them as inexpensively as Apple has (with the obvious exception of Amazon).

A cheaper iPad could be decimating to the only real competitor: Amazon’s Fire. Seeing as the iPad already runs Amazon’s Kindle app, a cheap iPad would fill a visible niche. Not to mention how happy developers would be. They wouldn’t have to re-design accessories for this new product. Keeping developers happy is critical in these days when your product isn’t just a shrink-wrapped device, but rather that whole eco-system of market channels, accessories, and add-ons.

Still, I’ve taken up this prediction thing, lately, so, I’ll predict that, in spite of my hopes and dreams, Apple will not be lowering their iPad 3 price. They can always (and likely will) sell last year’s model for cheaper, but really, why would they want to cannibalize their own margins to sell a few extra units? The Kindle has proven no real threat and there is little point in being both the performance and low-cost leader.