Censorship By Another Name

Censorship By Another Name

Online_Retailers

The front page of most Australian Newspapers right now refers to the bleating of major retailers crying about how “unfair” it is that the public can now shop online and pay less, for products that otherwise could be purchased from them, through traditional retailer outlets.

This has created quite a debate.

They claim, and I quote “Failing to support Australian retailers will see a reduction in hours and shifts for casual and part-time workers, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services.” And have suggested that the Australian government needs to do something, to “even the playing field.”

All of which is exaggeration particularly when you consider that the Internet only accounts for about 3% of all retail sales in Australia. It’s also estimated that ONLY between 20 to 50 percent of the 3% relates to overseas purchases.

So, overseas Internet retail sales account for a mere slither of Australian retail sales. I would argue that any intervention to change the status quo is a matter of censorship by a different name.

Here’s what the late great Don Chipp had to say about censorship…

“Well, it’s my philosophic view that every adult should have the right to see, read or listen to whatever they please.” Don Chipp on “Enough Rope” with Andrew Denton.

Don Chipp was a rare bird; a popular politician who entered politics in 1960 and years later, founded the Australian Democrats, with the noble intention of “Keeping the Bastards Honest”.

As the Minister for Customs and Excise in charge of censorship, he considered censorship “evil”, because in his words, “It’s the beginning of the Big Brother state and if you start censoring matter from facts from people, then it’s an easy step to start censoring all manner of things.”

Fundamentally in my opinion, the censoring of the Internet and the manipulation of it in the name of creating “a level playing field” is all wrong and they are barking up the wrong tree. Here’s why…

I believe they’ve missed the point and their missing the opportunity.

Firstly, the point is the power in sales has shifted back to the purchasers like never before. Let’s face it, as little as 5 years ago if I wanted to buy a set of golf clubs I’d go to either a specialist retailer or a golf shop at a golf course.

Today of course, I could go to a cyber golf Shopping Mall on the Internet. This is a shopping habit that is here to stay and no amount of intervention, effort to censor it, will succeed.

The old retail model in its present form is out dated, but not done with yet. The vast percentage of purchases still prefer to purchase through traditional retail models. The trick is to embrace all distribution methodologies available to you, and not put all your eggs in one basket.

Secondly, it would seem that they (major retailers) think this price advantage that’s been delivered to overseas retailers is a massive advantage, when in actual fact statistics have shown that less than 7 in 10 consumers list price as their major consideration when making a purchase.

There is a caveat to that statement, and that is, they WILL consider price first if it’s the first and only consideration they’re given. In other words the “Value Proposition” presented to the consumer by the seller lacked any other reason to buy from them other than price “Value Proposition”.

For example there was NO outrages guarantee, NO added value, NO urgency or scarcity, NO OFFER TO RESPOND. In other words, devoid of any other reason to buy other than consideration of price.

Another quote from Wednesday’s West Australian “Prices not the only reason more Australian’s are going online to do their shopping. Many like the convenience of shopping over the Internet, leaving behind the battle to find a parking space, crowds and the wait for attention of a shop assistance.”

Not that there is anything wrong with looking for the best deal. For example, “A pair of Levi’s 501 jeans retails for $129.95 in Australia at Just Jeans. On foreign website 501levisboutique they sell for just $77 a pair,” as quoted in Wednesday’s West Australian, 5th of January 2011.

With all that said, there is a solution. And the solution works equally for major retailers as it does for small business owners, although most major retailers are so ingrain in their institution thinking that even when they’re presented with the solution, they are unlikely to act on it.

In a word the solution is… AGILITY.

Today, like never before, there is a need to be AGILE, a need to embrace new media, which is what the Internet is… a new media. There’s a need to respond quickly to changes in the market place, how people shop, why people shop, where people shop.

Failure to respond will see you left behind faster than ever before. Loyalty is a thing of the past. My mum and dad bought fish and chips from the Weld Street Fish & Chips shop every second Friday night of my childhood. You couldn’t have paid them to buy those fish and chips or any other fast food for that matter anywhere else. They were loyal.

My loyalty, that of the baby boomer, extends to “giving you a couple goes at it.” If you’re still messing it up, I’m done with you.

My daughter, of course, a member of the Y generation will swap and change at a moment’s notice, you don’t even have to make a mistake to lose her. The slightest hint of sloppiness and she’s moving on.

So agility equals MICRO MANAGEMENT, it’s something big companies can’t or won’t do, they MACRO MANAGE.

MICRO MANAGEMENT is an incredible economic advantage that’s delivered to small business if they’re smart enough to take advantage of it.

Everywhere else in business will get your arse kicked by the big boys. You will never buy the advertising space in the newspaper at the rate they pay, nor will you buy radio time or TV time at the rate they pay, nor will you have the buying power they have with suppliers as they dictate the suppliers how business will be done.

This luxury will NOT be afforded to you, but you have a bigger and better advantage and to push my point home, it’s MICRO MANAGEMENT. You can be the least and last effective by what’s happening in the market place, not first and most effective.

In fact, because of your AGILITY you can be the first to take advantage of what’s happening in the market place, and turn what at first glance may be a disadvantage into an advantage.

The first place to start MICRO MANAGEMENT is by micro managing your MARKETING AND SALES. The second place is by micro managing your LIST OF PROSPECTS AND CLIENTS.

I think my biggest marketing lesson, and that’s a big statement, is LIFETIME VALUE OF A CLIENT. That is how much someone spends with you over their lifetime and how you can influence how often they buy, how much they spend.

Most major retailers are transactional, that is their game is to make a profit, if possible on every sale. And for every reason you can think of, particularly today, where it’s three times more costly to get a client today to transact with you than it was 10 to 15 years ago, this model is flawed.

You see your profit isn’t made on the first sale, it’s made on the sales that follow because most of us will need to go negative to get a client the first time. This is referred to as the FRONT END (FE), sales made after that are referred to the BACK END (BE).

It’s obvious to me as a consumer that the big retailers don’t get or understand the biggest marketing lesson I’ve ever learned being… LIFETIME VALUE OF A CLIENT.

I myself have purchased from Angus & Robertson, Boarders, David Jones, Harvey Norman, Myers, Target, and Just Jeans (all of whom were involved in running the full page ads in major Newspapers recently under the heading of AUSTRALIAN RETAILERS FIGHT FOR A FAIR GO). Yet only Myer has attempted to use any direct marketing to get me to buy again, and even then it was basic by our standards.

All the rest have done nothing with my name and address even though in some cases they have it as part of the transactions I did with them. For the record, these aren’t the only major retailers I have purchased from, as you can imagine I have bought from many over the years. Yet none of these other retailers have used direct marketing, like direct mail, SMS, or email to get me to purchase again.

Why don’t they “get it”? It’s INSTITUTIONALISED THINKING, it is so ingrain. This way of doing business is so ingrain they know no better in spite of the evidence to the contrary.

Thirdly by switching from institutionalise advertising and marketing to…

EMOTION DIRECT RESPONSE ADVERTISING AND MARKETING

The forth place is to change the economic in your favour by switching from ‘UNVITED PEST” IN THE SALES AND MARKETING PROCESS TO “WELCOME GUEST” by switching to only LEAD GENERATION driven advertising. Most advertising is “one shot” where you’re hoping to make a sale today.

We, however only use LEAD GENERATION advertising which is designed to get a prospect to say “I am interested” or “I may be interested in the future, I would like to find out more”. You see at any one time, roughly 3% of the market place is ready enough to buy anything, 6% are very interested and a further 30% could be influenced.

The remaining 61% couldn’t “give a damn” and you literately couldn’t give it away to them and they wouldn’t want it.

In using “one shot” advertising you’ll only ever appeal to the 3%, LEAD GENERATION is advertising to the 39% and that gives us a massive economic advantage over any business big or small that uses “one shot” advertising (just like the major retailers do and most likely your competitors).

At a recent seminar I attended, it was stated that 89 of the top 100 money making websites on the planet, responsible for trillions of dollars in sales, start their relationship with the prospect by using LEAD GENERATION and giving stuff away for free.

Do you require any further proof that switching from pest (sales person) to guest (LEAD GENERATION) is an incredible MICRO ADVANTAGE delivered to small business on a silver platter.

Finally, few major retailers, if any in Australia, understand you must treat your clients or prospects as an AUDIENCE, that is you must entertain them and involve them when attempting to sell to them. I’ll give you an example.

In Nashville, Tennessee there is a company called “The Bass Stores,” they specialise in selling outdoorsie stuff to men, and men hate to shop. Yet they have men shopping for a day, spending like there’s no tomorrow. You see, they treat their clients and prospects as an audience, entertain, and involve them by making the whole experience for buying from them EXPERIENTIAL.

You can catch a fish, row a boat, fire a gun or bow and arrow etc. Anything you can buy, you can literately try. How can the Internet compete with EXPERIENTIAL retail shopping? It can’t.

Maybe it would be wise council if the major retailers turn their attention to what they can control, where they can be AGILE, where they can offer an “apples to oranges” comparison in the mind of the prospect or client.

After all, as Independent senator Nick Xenophon so rightfully pointed out,

“…the government should be doing tax breaks to smaller businesses, not large corporations. If anyone needs our support, it should be the family businesses and the small shops that are not only battling a growth in online sales but also battling these retail giants.”

A rare correct insight from a politician, but even more rarely actioned upon. After all, small businesses is the backbone of the country. We should be enabling not inhibiting their progress.

All the best,
Mal Emery

Committed to Elevating the Financial Wealth and Wellbeing of Society
Through Entrepreneurial Excellence and Guilty of Conspiracy to Create Capitalism

P.S. If you’ve missed any of my previous Rants, I have them all available
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  1. Gerry Harvey isn’t really suffering personally – he’s already made his mega-millions. HOWEVER, his stores are predominantly franchises, and his franchise owners are the ones really suffering from this paradigm change.

    Harvey doesn’t have the answer (even though it’s staring him in the face), so all he can do is look like he has the franchisors’ best interests at heart by making a lot of very public noise, hoping to gain the sympathy vote AND appear as though he’s trying to make things better for the franchise owners.

    Unfortunately, he’s wasting his time, and eventually those store owners will realise he has no solution for them… At that stage, who knows what might happen. I suspect Gerry will take his booty and move far far away before that happens.

    Aside from that, these massive companies SHOULD be able to kill all the low-cost online businesses with their endless pockets, just by following the money and going online (properly) themselves.

    How much overhead does a giant retail store ( stock & staff) add to the price of every product they sell?

    By adding online as an effective sales channel, they could be kicking butt against the small players out there, but they’re too slow, stupid & ignorant as to how to make it work properly – hence they lose everytime they try.

    Lastly, the 10% GST is usually a small part of the price difference between the big box retailers & the online overseas folks. I can buy a Canon Powershot SX210 IS at Harvey Norman for just under $500, and on Ebay, I can buy it from Hong Kong for less than $300, INCLUDING shipping.

    Same camera, massive price difference.

    Certainly, that 10% GST made minimal difference to the price, compared to the overhead of the big store, staff wages AND high profit margins these guys try to add to the product lines.

    It’s the Emperor’s Clothes story all over again (or the Boy Who Cried Wolf!).

    Wake Up Gerry & Friends. Get into the 2nd decade of the 21st Century and do business the way your customers want, not the way you have locked yourself into for the last 10 years.

    No sympathy from anyone out there except your co-conspirators in this ridiculous scam!

  2. Mal,

    Perhaps we should send your rant to the retailers. You have nailed it perfectly and what you have in this rant is gold.

    There’s 6 months worth of coaching in what you wrote here – just hope those that need it most read it and take action.

    Steve

  3. Hi Mal. Awesome article. Huge issue with retailers at the moment.

    Absolutely got it about retail customer relationships.

    I worked with one of my clients in December 2010 to identify the top ‘serial spending’ customers in their POS and posted a personalised Christmas Card to all of them thanking them for their business in 2010.

    All customers get a personalised birthday email too. Next step is a posted birthday card.

    All customers get invited to special member’s only sales and events (post, email and SMS).

    Entertainment and shopping experience….

    I’ve thought long and hard about this one. I’ve got to put on my creative hat.. haha.

    Got a ripper one for a sporting retailer (if they have the space)… one of those throw the ball speed test setups. I saw one at Scitech in Perth in June 2010 – very popular with the kids (who bring along adults with money!!!).

  4. Great points Mal. – It actually brings a smile to my face knowing that that big guys are whinging. I’d love to see the success of one of those big stores if they actually started applying the strategies that you teach.,

  5. The world is changing and how we do business is changing. This never stops. Survival of the fittest, adapt or perish. When Mr. Hardly Normal burst onto the scene many years ago he changed the game. Now the game is changing again but not to his liking. Sounds like sour grapes to me. Create some fantastic online shopping experiences here in Oz and I’m sure the average person will buy locally. Get better at what you do than your competitors, simple!

  6. Hi Mal
    Well Said
    Although mostly retired I still run a Power seller bus on Ebay with imported camera products, so I am interested in this debate.
    It brings back memories for me as a Farmer when country town retailers were upset with the likes of HN and other big retailers coaxing country people away from the local store to the big city to shop in a bigger marketplace. And the first response was how can we force people to shop local, of course you can’t, if your not supplying what people want then you wont get the business.

    Well guess what HN and the others, the worm has turned stop winging and get with the pro gramme if these guys developed an online business in parallel to their current then they could meet the demand.
    A number of retail businesses are doing this and winning, not complaining
    Passive complaining will not work.

    In fact it simply advises the other 97% of shoppers how easy it is to shop on line

    Ric

  7. Mal,
    I think this is great that some one is specking out and educating the public.
    These company have had the monopoly for too long.

  8. Fantastic article, the world of retail is changing all the time. The Good Guys are competing online. Relationship marketing where a person can ask questions to a KNOWLEDGEABLE sales person and have quality service are the businesses that will win. I hate shopping at Bunnings unless u I know exactly what I want. The sales team have no idea on products they stack on the shelves, just the isle number. I often happily pay more for good quality sales service, and then return again.

  9. Great article mal & I haven’t even got to the end of it. I’m a big fan of the lifetime value of a client, I think it’s a highly lucrative and valuable asset to any business, especially small business.

    What about when someone really messes this up? When someone screws over a high paying client through crap products and service, and not only blows it with one, but blows it with many? How damaging for a business over a lifetime is it to have a stack of high paying clients bad mouthing the business?

    I’m interested in this because it’s happened to me & some others recently, & I’ve no idea what the repercussions for that business will be…but I imagine that it goes both ways. We reap great rewards from maintaining good relationships with clients, especially high paying ones that were potential life time customers, & I guess our business gets the repercussions of doing the opposite:)

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