Going 'online only' for exclusive net gains

Retailing is now an information war – and while US brands court consumers with online-only offerings, local stores are still intent on protecting physical operations at all costs.

This week I found myself in New York for work purposes. Sunday provided a small window of tourism time, so I ventured down to SoHo to indulge in some shopping.

In mid-market fashion retailer J.Crew I heard something I had never heard before. A chap had come in, looking for a version of the brand’s in-demand Ludlow sports jacket. The specific size he wanted (37.5 was “only available online”. He could order it on one of the store’s tablets and it would be delivered “within three days free of charge”. The chap ordered the jacket in-store on the customer service representative's tablet and within five minutes the sale was done. Easy.

As I continued browsing, I too found out that some items I was looking for were only available online.

It struck me as something novel: a retailer offering some of its strongest selling product lines only online and not in-store. It was definitely something I have rarely (if ever) experienced with traditional Australian retailers, particularly in fashion. In most cases it is the opposite - key products are marketed as ‘not available online’.

There have been numerous occasions where you’ve walked into Australian retailers and they don’t have what you’re after. Nine times out of ten, that’s because they simply do not have the stock. In fact, many Australian retailers would do the opposite of what J.Crew are doing – they would put their strongest product lines in-store only.

Look at the respective websites of David Jones and Myer and compare the range offered to that of their larger physical stores. What’s offered online is a fraction of the variety available in the physical stores. It’s no wonder why neither would be considered ‘go-to’ sources for those looking to buy online.

Maybe that’s the point. Perhaps some local retailers don’t want to encourage consumers to move online. I remember just five years ago I was speaking to a large automotive marketer, who told me he had faced significant opposition to placing too much information about their vehicles online as it would stop people going into the dealerships and that was “where they were closed”. Too much information stacked the odds in the favour of the consumer; it worked best for the company when they could throttle the amount of information and control the sales process.

Ultimately, this auto brand couldn’t fight the desire of consumers for more information, and eventually it gave in and provided the information. But was it too late? Sales figures over the past five years would say it was. The reality was the internet gave potential customers the means to find the information anyway – which they did. It could have been made so much easier by the brand if it were proactive in supplying its materials online, instead of insisting on physical visits to keep dealers happy in the short term.

Tim Burrowes of Mumbrella wrote a must-read op-ed about the trials of Australia’s large retailers over the Christmas period. He asked why online retail sales only comprised 1 per cent of Myer’s total annual sales. Myer CEO Bernie Brookes had made the comment almost as a way of defending the companies embarrassing eight-day website meltdown as a way of appeasing concerned investors, yet Burrowes was curious as to whether this was an indirect admission that Myer had been sitting on its hands while domestic and international competitors innovated with speed and agility.

Investors seemed unfazed by the downtime Myer experienced, with its share price down less than 2 per cent over the past month. It suggests the market does not currently consider Myer as a player in the online space. The dust has now settled on the end of year meltdown and the site is back and functioning. But what will be the enduring cost to the brand? How many aggrieved customers will come back?

Would you walk into Myer to purchase a high-volume item, only to be told it was available only online, like the chap I came across at J.Crew did? Highly unlikely. Would J.Crew’s online sales comprise just 1 per cent of their total sales? Highly unlikely.

I’ve no doubt that both Myer and David Jones have ambitions to compete in the online space. Ultimately they must; consumer momentum is charging in that direction. But whether they share the same appetite for the speed of that change with consumers is another matter. Going back to the 1 per cent/99 per cent split of revenue between digital/bricks and mortar, are Australia’s retailers focusing on protecting the 99 per cent, or growing the 1 per cent?

Ben Shepherd is a media and technology consultant. He can be found on LinkedIn and on Twitter.

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