Business Killer 4: Non-traditional Competitors Cont'd
Posted by Ryan Volberg at September 28, 2007 2:00 PM

Online Retailers – How to Compete

This week, let's take a look at our friend, Bob the Jeweler and how he can tackle competition from online store equivalents.

Let’s recap:

Bob’s Jewelry Store faces intense competition from web-only vendors. A search for a popular brand of watch that he sells produces nearly 2 million results, many of them from virtual stores with no physical retail presence.

In addition, Bob must also contend with eBay sellers who sell both authentic and imitation products. A search for the brand produces over 1300 items. Most are priced well below what Bob has priced his watches at.

Bob suspects that these online competitors are directly affecting his business.

Why?

Well, each week he sees several customers who enquire thoroughly about specific brands of watches. They try them on, they ask lots of questions and price is one of the biggest concerns for them. Then, he never sees them again. The worst part...since quality employees are hard to find, Bob is often short staffed by at least one person. If he spends time with a customer who has no intention of purchasing, there's a good chance that he'll miss out on a real customer.

His suspicion is confirmed when one customer, in an effort to get Bob to lower his price states, “I can get this watch for half the price online." Bob is tempted to retort with, "Well then, why didn't you get them to educate you on the entire line?” He holds his tongue, but he's very troubled.

Can Bob overcome his pricing issues? Does he just need to slash his prices? If he does, he might as well shut his doors. It's just too expensive to maintain a presence in his current location with near-wholesale pricing.

So, he works on a strategy.

The first realization that he makes is that he will not be able to convert every internet shopper to become his customer. In order to do this, he must reduce the amount of time he spends with people who simply will not buy.

Qualify Relentlessly

In the past, Bob has taken the "ignore the elephant in the room" attitude towards internet shopping. He begins to ask shoppers who are looking at his merchandise a new question, "Have you done any research on this watch?" Really, he's asking "Have you shopped online?" but by posing the question in terms of research, it removes some of the barriers. In fact, he's amazed at how proud people are of the work they've put into the purchase already.

When it becomes clear that the prospect has been shopping extensively online, he asks them another straightforward question, "What's stopped you from just buying it online?" This question does two things to the shopper.

First, they provide the reasons why they want to deal with Bob. This is critical because he's actually got the customer "selling" themselves.

Secondly, in many cases, Bob can quickly determine whether this is a shopper that he can convert and can decide how much time he'd like to spend working with the shopper.

Be Bigger than the Sale

Bob has owned his jewelry store for 22 years. He's an expert in several lines of watches, including some that he doesn't even carry.

Bob is also a watch collector himself and owns several heirloom quality watches.

But how does he actually portray his expertise in a way that adds value to the sale?

He begins with asking more questions. Where will you be wearing the watch? How will you usually be dressed? Are you involved in sports? Do you have a style in mind? This line of questioning will allow Bob to match the right watch to the right shopper for the right occasion.

Next, he creates some basic educational tools such as cutaway models of watches that explain the inner workings of a watch. A model demonstrates the precise nature of timepieces and where and how quality watches differ. In addition to adding value, Bob also knows that the stories about how the watch is made will stay with some of his customers and be repeated when they talk about their recent purchase.

In addition, he starts to bring in some of his collectible watches and show them to serious shoppers as a way to transfer his passion.

By elevating himself beyond the sale itself and portraying his passion, he transforms himself from salesperson to expert and aficionado.

Next week we will look at more strategies to compete with online retailers.

Ryan Volberg is the CEO of Vivonet, a company dedicated to ensuring retail and restaurant success.

Category: Survival Tips

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