This is War: How E-Commerce Companies are Killing Retail Giants
Toys R’ Us, Sports Authority, Gander Mountain, Blockbuster, Macy’s, Sears, and many other retail giants are taking the plunge into the grave after the relentless beatdown that e-commerce companies have been giving them over the past decade.
In the ‘good old days’, the consumers (you and I) enjoyed walking into these stores to search, select, and purchase our favorite items. It was an easier time; a time when the only things that mattered in life were the things we could see, touch, feel, or hear. The times when shopping in-store was memorable by many, and the idea of seeing and touching something before you buy it was the only way to truly know if you were making the right purchase.
Those days are long gone, and the businesses that we once looked at as giants are now lying lifeless and defeated right before our very eyes. “Now Available For Lease” and “Now Closing” signs are filling your local storefronts and strip malls across the nation, and with no explanations. These retail giants refuse to disclose specific details of these failures, because many of them were completely preventable. Had these major companies took the time to think “outside the box”, they wouldn’t be on their knees waving their white flags.
Who did this? How did this happen? How could this have been prevented? What do we learn from their mistakes? We will answer these questions and explain to you in great detail the cause and effect that e-commerce companies have had on retail giants.
Who could take down a giant retail chain?
The answer you’re expecting: Amazon. The answer that is correct: You. Yes, you the consumer are the person behind the demise of these retail chains. Is if your fault? Nope. Who’s fault is it? The retail chains’ fault. Make sense? No? Don’t fret.
As a consumer, the introduction of massive amounts of technology throughout the last decade has shaken many of us. This technology has led us around town by holding a stick of bacon in front of our faces until we realized that we have finally stepped outside of our traditional “box”, and the grass is much greener on the outside. By this, I mean that this technology has been created to make our lives easier, simpler, and to save valuable time. Why drive to blockbuster and hope the movie you want to watch isn’t out of stock when you could flip on yourVudu app, and buy the movie for the same price from the comfort of your own home, and you can even watch it from anywhere in the world that has an internet connection without having to carry around a DVD? Easier, simpler, and time-saving. This just makes sense, right?
The same concept applies to clothing retail chains such as Macy’s and Sports Authority. These storefronts have limited inventory and most likely a teenage kid working for minimum wage will be there to guide you into making your best purchase. Why not order online and have an unlimited selection of variations, colors, sizes, and have the entire internet at your fingertips to get reviews, sizing options, and never even leave your house? And if it doesn’t fit or you don’t like it, they’ll exchange it for free and cover the return shipping. How easy and convenient is that? As a matter of fact, in most cases, you’ll find that if you search for something you find in-store on the internet, you’ll also find that it is cheaper. Beautiful! It almost makes you wonder how these retail stores stay in business, right? 🙂
As a merchant or a producer of goods, you want these retail chains to bite the dust. So you’re happy as a clam right now. These retail giants will almost always exclusively sell mega-corporate products such as Nike, Reebok, Under Armour, and those alike. If you, as a producer of goods came out with a product line, do you think Target would sell your line? Absolutely not! They wouldn’t even give you the time of day, regardless of how amazing your products were. If you did manage to get face time, then you’d probably get about three words in before security nabbed you and tossed you into the alley like you were a crazy person. However, they will carry Johnson & Johnson’s 9,000 lines of soap, gummy bears, and inflatable bath toys that were made by underpaid children in Malaysia. Companies like Target and Wal-Mart are the enemy of any producer or merchant that isn’t a fortune 500 or mega-corporate manufacturer. They don’t care about you, they don’t care about America, they don’t care about jobs, they don’t care about product quality, they don’t care about undercutting pricing until your mom and pop shop hits the dirt, and they don’t care about how your product can benefit people. They care about cutting costs, driving sales, and maximizing profits. Period.
So where are we going to sell as merchants? How are we as consumers going to find the largest inventory of products and variations available online, for the cheapest amount, that isn’t the “garbage you typically find in the store”?
E-Commerce companies, and mega e-commerce companies such as AMAZON. Amazon was never really a “store” to begin with, it was a marketplace. It was an online flea market for new and cool stuff. The merchants pay their rent (commission fees) and anyone can shop there who has an internet connection. There are millions upon millions of products for sale, including your typical in-store garbage, as well as items made by local, small, medium, and large businesses. Finally, there is a place for manufacturers and local retailers to sell their products without a massive investment into an e-commerce platform, but instead is charged a commission of sales. Anyone can list, anyone can shop, and everyone has a fair and equal opportunity in the same marketplace. No longer does Bob’s Soap company need to invest $10,000,000 in an e-commerce platform that can compete with Target. And with the exposure to such a large and variable amount of products, who’s going to go to Sports Authority and get smacked in the wallet for a baseball glove, when they can go to Amazon and select from over 3,000 different styles and colors of baseball gloves and get it there for cheaper?
The local merchant giveth, the mega-retailers take-eth away, and then the people get mad and steal-ith from the mega-retailers and giveth backith to the local merchants. The circle of life.
How could this have been prevented?
Well, if I was a major retail chain I would start by analyzing trends, analytics, insights, and feedback. If you look at the last decade of in-store sales, you will probably notice a massive decline in many of these stores year to year. You may also notice that more of your customers are purchasing online as opposed to in-store. So what is this data telling you? Common sense tells you that you start investing in your online sector of your business and start to withdraw from your physical locations. This should preferably be done well before the cat has been let out of that bag and you are $12.50 away from bankrupting yourself. This should have been done over 5 years ago at the latest. If you’re a mega-retailer and you’re just now finding out that e-commerce is the new king , and you should start closing physical locations — it’s too late pal, the ship has sailed and the oceans have turned. Natural selection has snuffed you out. This should have been analyzed and forecasted by all of these companies, and it is borderline disturbing that these companies would rather stand around with their hands in their pockets and watch their ship sink, than take a chance and try to make their operation better for the people, and not themselves. Many of these corporations like Sports Authority have teams that range from hundreds to thousands of people who are responsible for these tasks collectively. There is no excuse for lack of this knowledge, understanding, and inaction.
The second thing I would do is find the solution. You will not find this solution by only looking for problems, you will also need to be looking for opportunities. In reference to many sports, you’ll hear people repeat quotes like “if they can’t score, then they can’t win”, (which honestly is the worst piece of advice I’ve ever heard) and many of these major retailers take this approach. The idea that a good defense is your best offense is a terrible way to approach your business, because in almost every aspect of life and business its “kill or be killed”. You’re either killing (making a move) or getting killed (closing up shop). There isn’t a third option of “crawl into a ball in the corner and hope I endure the beating”. The reason I believe business and life is about offense is because every living thing on this planet (besides plants) need to be offensive to survive. Even turtles are equipped with a shell as a natural defense mechanism, but if that turtle just sits there thinking about how not to get eaten instead of how to get food, then that turtle will die of hunger. If you stand still, you get eaten. If you move forward, you still may get eaten, but you have a fighting chance at the ultimate goal — survival. It is no different in business. If you sit still and sip your coffee for too long, I’m going to take full advantage of those seconds, capitalize on them, and make sure you pay for them in full. This is not just business, this is not just life — this is war. The only way to win the business war is to be the best and most suited contender to please your customers and suppliers. Give them what they want, how they want, and when they want it. To find out how to do this is to learn and know your audience. If your audience is shopping online and not interacting in your stores like they used to, then listen to what they’re telling you. If you don’t listen, then don’t expect their loyalty. If sites like Amazon are killing your sales dollars, then formulate a plan of attack or die. Follow the trends, analyze the data, search for the offensive opportunity — and when that opportunity presents itself to you, capitalize on it to the furthest extent possible.
The last thing I would look at is company value. What kind of value are you bringing to your customers? Are you just skimming costs to drop prices? Are you trying to be like McDonalds and make your cheeseburgers out of cardboard to cut costs and drop prices, and is this creating a value to your customers? Are these values following the trends and the analytics? My best business advice in today’s market place is to not be greedy. People are exposed to so much media pertaining to companies who are just out to make a buck at the cost of their customers. Many companies are even jeopardizing the health of their customers just to cut off an extra $0.02 per product. If you’re supplying your customers with a crapchute product just to compete with costs, look at cutting costs that don’t involve poisoning and ripping off your customers, try cutting other costs. Add value. There are many retail companies that are thriving competitively with Amazon lurking around, and that is because they create value to their customers. They provide a great product, they’re innovative, and they’re cutting edge. The internet is now big and the world is very small, so throw the cardboard burgers away and start offering something worth having.
What can we learn?
What we can learn from e-commerce companies who have made retailer giants their girlfriends is that you need to be constantly aware of your surroundings, your audience, and the data. You need to analyze, formulate a plan, and act offensively. You need to keep an eye on the trends and how they are affecting your industry. You need to create value for your customers. You need to be creative, innovative, and cutting edge. You need to be patient and calculating, until it is time to strike. You need to understand that its better to act early than to act too late. If you need to cut costs, then cut costs, but don’t cute value.
What we have truly learned from watching these retail giants fall from grace is that in business you need to learn how to adapt. The world we live in is always changing, and there’s always that new kid on the block who is going to try to outwork you and take what you have. The second you take a moment to enjoy the flowers is always the most dangerous moment that exists, it is the moment that your competitors have been patiently waiting for. These moments are life-and-death moments, where one dies another is born. In such a technologically advanced environment, your whole world can change in an instant. You’re either changing the world or the world is changing you. Make a move or get moved. The choice is yours.
Ladies and gentleman,
This is war.
PRESIDENT, NEWSTYLE DIGITAL