Monthly Archives: June 2016

Retail Customers use of Social Media Sites

Social media have created one of the most exciting and efficient opportunities for retailers to reach their customers. It also offer great opportunities for the owners of social media networking sites to get ‘pay per click’ income  when retailers post ads on the sites and visitors click on the ‘buy’ buttons to buy stuff.

That is why all popular social media networking sites such as Google, Facebook, Instagram, Pinterest and Twitter recently have added the ‘buy’ button to their sites. They did it to make online shopping easier for their users, and to make some money…

According to Anna Torres writing in the ChannelAdvisor, Twitter is backing off the easy-click purchase strategy. Maybe retail customers don’t like doing shopping on Twitter’s site?

How do retail customers use social media sites?

The customers of retailers visit specific social media sites for the following reasons:

  • Facebook – as of the first quarter of 2016, Facebook had 1.65 billion monthly active users (Statista). So retail customers use Facebook because everyone else is using it.
  • Google Plus – is an interest-based social network that is owned and operated by Google Inc. Similar to Facebook, Google Plus allows customers to add events, invite people, and then share photos and media;
  • Instagram, owned by Facebook  is a free online photo sharing and social network platform. It is a fun and quirky way for people to share their life with friends through a series of pictures.
  • Pinterest was founded by Ben Silbermann, Paul Sciarra and Evan Sharp. It is a visual bookmarking tool that helps customers to discover and save creative ideas.
  • Twitter, founded by Jack Dorsey – is a service for friends, family, and co-workers to communicate and stay connected through the exchange of quick, frequent messages. Fifty nine percent of Twitter users turn to the platform to catch up on news.

Retail customers use Twitter  differently compared to what they do with the other social media sites. By mainly reading, listening to and viewing the latest news, they seem to have less appetite for shopping, avoiding Twitter’s buy buttons…

Visit eBizplan for help in developing your online retail business.

Bricks and Clicks Retailers – the Best of Both Worlds

The way forward for retail is Bricks and Clicks. In an article earlier this year Justin Taylor head of EMEA retail trying to console Bricks and Mortar retailers said: “despite the impact of e-commerce, physical stores remain a cornerstone of consumer engagement”.

The question that remains to be answered is:  Why is online retail growing worldwide and, at the same time, Bricks and Mortar retailers that are not engaging their customers online are closing down?

Why do Bricks and Mortar retail customers shop online?

If Bricks and Mortar retailers are the cornerstone of customer engagement, then where have their customers gone to? The customers of Bricks and Mortar retailers probably left because they find online shopping to be more convenient:

  • They can shop 24/7 from anywhere;
  • They can get more information about products and services online;
  • They can go online to search for specific products and where to find them;
  • They can compare the prices of products online; and
  • They can share their experience online with friends, family and social communities.

In spite of the fast growth of online shopping, many retailers that are doing their business only online (Pure Clicks) are now starting to look for physical retail space.

Why are Pure Clicks retailers looking for Bricks and Mortar retail space?

It is not a simple matter of Bricks versus Clicks says Justin Taylor. Physical stores remain a hugely important part of the retailing mix as they offer the ability to interact with merchandise, instant gratification for consumers, personal service and professional guidance.

We have seen the migration from bricks to clicks, and the pattern in some instances is now heading the other way as brands born online are now seeking physical space. The answer is Bricks and Clicks retail shops that have both physical and online space. Bricks and Clicks retailers have the best of both worlds.

Integrating the physical with the online may pose a challenge for most retailers. eBizplan, a management consulting business can help retailers to run the physical and online business as one.

Retailers Biggest Challenge – Integrating Online with Offline

Retailers who are for years in business are using technology that is developed for running a physical shop (Bricks and Mortar) better and making shopping for their customers easier.  A study by Forrester Consulting found that although 90% of the UK retailers are now doing business online. However, most of them find it difficult to join their online and offline technology.

Only 26% of the retailers interviewed mentioned that their sales are influenced by the online channel.

Technology use by the customers of Bricks and Mortar retailers

Most of the customers of Bricks and Mortar retailers visit their website to get information about the inventory in the shop.  A recent study by Forrester Consulting,  found that 39% of customers are unlikely or very unlikely to visit a  store if its website does not provide physical store inventory information.

Only 32% of the shop owners that was interviewed offered a function on their websites for customers to view their in-store inventory details.

Customers want shopping convenience

The study indicated that half of all customers cited store pickup options as important or very important to them when shopping online. However, only a third of retailers today already support store-pickup programs.

Read also:  Will “Click and Collect” Solve the Delivery Headaches for Grocers?

The customers interviewed demanded the following:

  • Absolute guarantees that the product is actually available;
  • Rapid picking and notification alerts;
  • Customers want to pay at the point of pickup;
  • Customers want the option to pick their goods up at alternative locations.

In-store experience in the digital age

The customers are in power when they use their smartphones in the shop. They use their smartphones to check inventory availability before entering the store.  The customers also use their smartphones to get more information about the products  they are interested to buy.

Bricks and Clicks retailers need to be both masters of the store and of the digital domain.

eBizplan, an online consulting business, can help retailers to draft a strategic plan to integrate their offline and online business.

Reasons Why Start-Up Businesses Fail

Robin Allen from Smart Insights reported results from research recently done by Quartz why 87 bootstrapped (companies that start without venture capital) failed. Allen highlighted the fact that the results show ‘poor marketing’ positioned above pricing issues, legal challenges or burn out as a reason why start-up businesses fail.

The main reason that bootstrapped companies failed was because their business models were not viable. The matter of having a viable business model and business strategy will be discussed briefly in this post.

The result of the study by Quartz is shown in the table below.

Reasons for failing Number
Business model not viable 10
Customer development issues 8
Lacked financing/investors 8
No market need 8
Disharmony on team/investors 6
Inexperience/skill gap 6
Not enough traction 6
Technical/product issues 6
Lack of focus 5
Ran out of cash 4
Bad location 3
Ignore customers 3
Failure to pivot 2
Hiring mistakes 2
Poor marketing 2
Burnout 1
Lack of passion 1
Legal challenges 1
Pricing/cost issues 1

What is a business model?

A business model is according to Magretta (2002) similar to a story – a story that explains how your enterprises works. A good business model answers questions such as:

  • Who is the customer?
  • What does the customer value?
  • How do we make money in this business? and
  • What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?

By having the answers to these questions a start-up business will come a long way to establish if their business idea is viable. A business model on its own will however not provide sustainable outcomes for most businesses. A business also needs a strategy…

What is a business strategy?

Whereas a business model is more concerned with the operational activities, the use of resources and the capabilities of a business, a business strategy had more to do with what the business should do in the future. A business strategy answers questions such as:

  • Where are we now?
  • Where do we want to be?
  • How will we get there?
  • How will we stay there and make some money?

A business model and business strategy usually come together in a business plan.

The integration of the business model and the business strategy

A well written business plan may serve as a vehicle to combine a business strategy with a business model. The opportunities and threats identified with the strategic SWOT analysis of the business can purposefully matched with the strengths and weaknesses that was identified with the business model.

Furthermore, if a prospect business owner draft a business plan before starting his/her business, most of the reasons way the business may fail (listed in the above table) may already have been identified and taken care of.

Also have a look why online businesses fail in South Africa

Please visit eBizplan if you want help to develop a business model, a business strategy and business plan for your start-up business.

Note

Magretta, Joan. 2002. Why business models matter. Harvard Business Review, 86-92.