Guest article: Are there really no retail start-ups?
In a Twitter survey, the majority of my readers did not want me to open up the blog to several authors in general. But that doesn’t mean that one or two external articles can’t bring a different perspective to the discussions. That’s why there’s now a post on the topic of “retail start-ups”.
The post originated from a tweet in which I asked my followers why there were no retail start-ups:
Why are there no retail start-ups? #followerpower
– Alain Veuve (@alainveuve) January 26, 2016
@alainveuve we’ll send you a guest post :)
– Mathias Schreiber (@mattLefaux) January 26, 2016
Here is the guest article by Mathias Schreiber entitled: “Are there really no retail start-ups?” Thank you very much!
Are there really no retail start-ups?
by Mathias Schreiber
I am not of the opinion that there are no retail start-ups. They simply do not have the visibility. I would like to shed some light on the reasons for this with a thesis.
After all, there are start-ups on every corner, be it the flower store, the snack bar or the second-hand store with one employee – they are all start-ups. So obviously the statement that there are no new retailers is somehow not true.
So let’s take a look at the usual answers to this statement:
- You don’t earn enough money.
- The risk is too great.
- Today, people only sell online anyway.
- You don’t grow by 500% for 3 years.
This assessment means that investors – whether VCs or financial institutions – no longer believe in the retailer and are extremely reluctant to grant start-up loans or investments.
As a result, start-ups have to work with their own capital, which is often tied up by the cost of goods, especially in retail. There is too little left over for the necessary public image and accompanying advertising measures.
This at least explains the original question: there are start-ups, but you just don’t notice them.
Consulting
Brick-and-mortar retail has enormous advantages over online retail, but unfortunately it rarely manages to capitalize on them.
First of all, we have to admit that to date, no digital solution has been able to replace a face-to-face consultation. No matter how much money you’ve paid your SEO copywriter, a consultant will always get the better deal. Get over it.
No technology can see the customer’s reaction on the other side, let alone assess it, no online store can put the customer off about an unavailable product with a gift mini-item and suggest an alternative. And no… “Customers also looked at the following items” is not advice.
“
This is where retailers can and must score points”
On the other hand, you need people to provide appropriate advice. Not only do they need to be technically adept, they also need to be able to read and understand the customer. In short: you need experts in the field of “sales”. It can be assumed that the founder himself has these qualities, so capital must be available to hire specialist staff.
This is where the foresight of investors is required, because remember: quality sells – the rule is as simple as that.
However, good advice offers many more opportunities than just face-to-face business. Every retailer should be digitally positioned in order to further leverage the customer loyalty created through expert advice.
Imagine you were given good advice in a retail store yesterday and now you realize that a piece of accessory is missing. A set of guitar strings, for example, or a longer cable. It’s not worth getting in the car and driving to the retailer for such an item. But the retailer’s online store is open for you anyway and you don’t care about the 50 cent price difference to the cheapest supplier on Amazon at this point. After all, you know what you can get from “your” retailer. You ignore the fact that this is, piquantly, the same product as on Amazon, and that’s a good thing.
After all, the retailer has taken time for you, listened to you and advised you in your best interests – you should give him the 50 cent margin.
Sufficient goods
Another advantage to be exploited is the immediate availability of the goods.
It is incomprehensible that impulse purchases are completely underestimated. The myth of the objective, well-informed customer who only buys what he/she really wants to buy can be destroyed quite quickly with good advice.
You’d also be surprised which product groups appeal to customers on an emotional level. Clothing is the classic example, but just think about why IKEA sends you through the maze of inspiration (if you like decorating) or frustration (if you just wanted to get a small shelf).
Realize that cross-selling in the style of “customers who bought this also bought that” doesn’t even begin to bring the same success as a “here, look at how this strap looks on your guitar”.
That’s not to say that cross-selling in eTail is a bad idea, but spend a little time on decent algorithms and don’t show headache pills to the customer who just added flip-flops to their cart – search clusters like Solr or Elasticsearch can help a lot here.
The opportunity to experience the feel of a product is in the same league. How does the table feel, how does the fabric feel, how does the wood of a drum set feel. You are able to get an impression of the quality of workmanship, you can tell whether a screw rattles or not – in eTail you are quickly confronted with a rather complex task.
Customer reviews can help here – or not, as we all know. The challenge here again lies in the budget.
In order to sell enough goods and meet impulse purchases, the goods must first be available on site. And as if that wasn’t problematic enough, it also has to be displayed and presented attractively. Here too, specialist staff are an advantage.
Exhibition
On the other hand, distributors can also help here. They can get goods on consignment and thus reduce some of the financial risk. At trade fairs, large retailers buy up a manufacturer’s entire stand on the first day in order to stock up their exhibition with inexpensive B-goods.
Point-of-sale promotions are almost always supported by the manufacturer or distributor, which is another way to give the exhibition a visual boost.
We recently spoke to a manufacturer who compared a PoS campaign with placing advertising banners at his retailers – we should forget this comparison very quickly.
So let’s summarize:
- Good, empathetic staff
- Sufficient goods on site
- Attractive presentation
These 3 factors not only lead to higher sales, but also automatically to greater reach. Word-of-mouth should not be underestimated, especially in specialized retail.
Ask yourself: What do you do when you are unpacking the purchase you made with good advice, along with the impulse buys lying next to it, at home? You tweet, you tell friends etc. And, hand on heart: you won’t send Amazon links, but you will mention the retailer.
(R)etail
On the other hand, eTail naturally offers opportunities to create a customer profile that you can only dream of in retail. The challenge will therefore be to create similarly good customer profiles as is possible in eTail.
Clever new technology is needed to track which products a customer has held in their hands and which products they have looked at.
Ideally, you should give your customers a card when they enter the store that is able to track which products they are interested in via NFC. Combined with a short, standardized evaluation of the consultation, you can already achieve a lot here.
To create a good profile, the online store and retail merchandise management system must also be directly linked. Don’t just swipe your products over the barcode scanner – ask your customer for a customer number to merge the profiles. Follow up in a qualified manner and start after-sales measures.
Did your customer buy a product that is suitable for complementary sales via wear products? Then send the first email 4 weeks later, directing the customer precisely to these products.
Offer the customer the opportunity to prepare a shopping cart online and advise them when they visit your store, customize the shopping cart, trigger impulse purchases and inspire your customer to buy more.
Side note: It is still completely unclear to me why supermarkets offer me the option of home delivery, but no one has yet come up with the idea of offering shared shopping baskets for partners.
What could be better than digitizing the handwritten shopping list for everyone in a household and covering the needs of two people instead of one?
Mathias Schreiber
is an entrepreneur and founder of the agency WMDB in Düsseldorf. WMDB employs around 20 people and develops browser-based solutions for large customers. In 2014, he gave up the management of the company to devote himself full-time to the further development of TYPO3. As product owner, he is responsible for the strategic and functional development of the CMS and organizes the activities of the core team.
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