A special coverage from The Coalition of Visionary Resources COVR in partnership with Kim Perkins
Q: How do I keep my online store from cannibalizing sales from my brick and mortar location?
A: Before we look at specifics of how to deter your online sales from siphoning profits from your brick and mortar store, let’s look at what your goal is by creating an ecommerce site. Are you selling online to increase sales to your local customer base? Or to attract an expanded customer base in other geographic locations? Or both?
Do you hope that the online marketplace you create will drive customers to your physical location? Do you see this as a way to enhance customer service for your existing customers, such as an easy pick up in store after purchase to save them time? If your ultimate goal is to ensure locals continue to shop at your physical store, here are a few things to consider:
- Do not make your online sales platform more attractive financially than your physical location. By this I mean, do not run sales or specials online that are not honored or duplicated in the physical store. In fact, you may want to only have sales at your brick and mortar location.
- If you have a loyalty program, you could decide to only honor those rewards in person and not online. This will guarantee that your most loyal customers will continue to shop in person. Studies continue to show that loyalty reward programs are incredibly effective at retaining customers. If you doubt this, check your wallet. Do you tend to frequent establishments that reward you as a customer? I know I do.
- Your online sales platform can be a gold mine of information if you focus on testing the waters with new products and opening new revenue streams from out-of-town shoppers. It is far less expensive to list a new product line on your ecommerce site and gauge the response than to stock an entire shelf or new product display. And if you capture emails from visitors, you can send them information whenever you introduce a new product, thereby opening new customer revenue streams.
- Remember that most customers of independent retail stores value the in-store experience. They want the whole shopping adventure – eye-catching displays, featured new products, a friendly smile, music, inviting aromas, and knowledgeable sales staff. These are all things it is hard to duplicate online. So it is natural for them to keep showing up in person, even if what they want to purchase can easily be ordered online.
A recent PriceWaterhouseCooper customer insight survey suggests that in addition to thinking about the “traditional metric of ROI (return on investment) to determine a company’s success, we need to introduce another metric, one with a laser focus on customer experience: ROE (return on experience).” If you can provide the experience customers are seeking, you will have no worries that your ecommerce site will adversely affect your brick and mortar sales.
Q: Should custom jewelry be returnable?
A: My short answer to this question is “no.” Generally, custom-made jewelry is not returnable. Most of the time, custom jewelry is created through a multi-step process with a jewelry designer where the customer has a vision for what they would like, the designer interprets that vision, creates a drawing and sometimes a wax model, and then completes the creation to those specifications. The customer is consulted and gives approval at each step in the process. This makes the custom piece unique, often non-traditional, and very personal. For that reason, it is usually not returnable as it may not appeal to the general public. Even if you are customizing jewelry for a customer in a simpler process, such as letting them pick a stone and decide on the type of wrapping they would like it set in, it still becomes a personal piece that makes an individual statement and may not be resalable.
Q: How can I keep a reader from taking my customers with her when she defects to a new store in my location?
A: This is a multi-faceted answer depending on your agreement with the reader. The following factors will affect the answer. Is the reader an employee or independent contractor? Do you have a signed, written agreement with the reader that addresses this issue? Was it created by an attorney that will represent your interests and stand behind it? Do you have clear guidelines that define who is your customer and who might be theirs? If the reader is an employee, and you have a written non-compete agreement, you might have more recourse than if they are an independent contractor. Still, non-compete agreements are notoriously hard to enforce. If the reader is classified as an independent contractor, by definition, you are stating that they can and usually do perform their craft in other places of business. You might limit the surrounding area in which they can compete, but you cannot prevent them from reading elsewhere.
Let’s step back for a moment and look at the broader picture here. Although it is unfortunate when a reader leaves, especially a popular reader who attracts customers to your store, this situation of trying to define whose customer is whose is a sticky matter and is very rarely a win-win. Even if you have an iron-clad written agreement that prohibits a reader from reading for your customer at a different location, it is tough to identify when an agreement has been violated and also to litigate if you choose to take some kind of legal action.
If a reader leaves and you suspect they are taking your customers with them, how are you going to prove it? Will the customer testify or show up at mediation? And what about the fact that they may have brought customers to your store or had a following before they began working at your location? Are those individuals your customers or the reader’s customers? And do the customers have a say in who they “belong” to? As you can see, the waters get a little murky around these issues.
When I owned a brick and mortar store from 1991 to 2014, we had a very successful reader program. We had 10 to 15 readers (independent contractors) working one or two shifts a day, seven days a week. Some readers were there once a month and some once a week. Because it would have been so difficult to establish whose customer was whose, we did not try to regulate that, and only asked that the reader not provide readings at another establishment within a five mile radius. That way, if they read at another store, they were far enough away that we felt it did not encroach on our business. The other thing we asked was that, if a customer sought them out for a reading on a day that they were not at our store, they did not charge the customer less than what we charged, so the customer was paying the same amount or more than if they were at our store.
Another point that we paid particular attention to was why a reader left when it happened. Were they able to receive a more favorable financial split at another store? Were they able to work a more desirable schedule? Did we need to adjust to be more in line with area norms?
This might sound like a radical idea, but what if you took the approach that there is plenty for all (customers, money, etc.) and concentrated on making the reader and customer experience at your location the best in town? This would allow you to move beyond the competitive state of “yours and mine” and focus on ways to enhance reader visibility, attract more customers, create stronger customer loyalty, and make a seamless scheduling and payment process, etc. If you concentrate on being the premier location for the very best readers in your area, readers and customers will both be happy at your location.
Author: Kim Perkins
Kim Perkins is a business consultant, author and national speaker. She is the former co-owner of Elysian Fields, Books & Gifts, located in FL. As a consultant, Kim specializes in helping small businesses achieve financial health and excellent employee relations.
