Internet is to retail as the VCR was to motion pictures
As published in ADV - Advertising and Marketing, Philadelphia, May, 1997
By Paul Entin
In the early 1980's, when VCR's were becoming as essential to American consumers as televisions, executives in the struggling motion picture industry were terrified that people would stop going to the movies. Since watching movies at home was a comfortable, convenient and inexpensive experience offering a wide selection of titles, they reasoned, why would anyone drive to the local cinema? While this dramatic change first brought fear, the advent of the VCR actually sparked an industry resurgence. By making movies more accessible, more people began to watch more movies more often. The video quickly became a profit center for the studios while demand for new movies increased dramatically.
With growing consumer acceptance of the Internet, retailers stand at a similar crossroads. Many retailers fear the Internet, reasoning that if people purchase their wares on-line, malls will become barren monuments to the harried lifestyle of the American consumer. Other retailers study these changing lifestyles and embrace the Net as a means to better serve their customers. Still others watch from the sidelines for more evidence to assure their on-line success.
According to the Internet Marketing Association, 55% of 60 million on-line households made purchases electronically in 1996 and 58% plan to in 1997. By the year 2000, over 450 million households will be on-line, according to Robert Glazer, President and CEO of Progressive Networks. That's proof enough for Sears to develop one of the finest Web sites in retail (http://www.sears.com), but not quite enough proof for the original mail order giant to offer electronic purchasing. Still skeptical about consumer demand, Sears offers to mail their catalogs and promotes traditional purchasing by providing a list of its retail locations.
Using these on-line or virtual storefronts, retailers may offer product information, technical support, discounts, promotions and other meaningful content 24 hours per day, 7 days per week, eliminating geography and operating hours as obstacles to doing business. Adding an on-line order form transforms the most localized retail shop into a global retail center.
The Doll House, for example, which stocks over 5,000 collectible dolls in a single store in Oklahoma, enables viewers to order with a credit card or to receive a brochure by postal mail. According to Ann Rozell, owner of the Doll House, the Web site has accounted for hundreds of international sales since its unveiling in September, 1996, although Ms. Rozell acknowledges people are still "a little shy" about providing a credit card number on-line and often use the phone. Similarly, since publishing giant Macmillan unveiled Macmillan Online (http://us.macmillan.com/) last year and added a secured server, over $1 million in sales have been recorded, with 50% coming internationally, according to Kim LaSalle, MCP Marketing Manager.
By exposing merchandise to millions of people who were previously beyond the reach of traditional retailers, the Internet permits the tapping of new markets that had not even been considered. More people may become interested in more products, leading to increased sales. For developing name and brand awareness, the Internet may be the most efficient of all available vehicles by enabling retailers to consistently interact and develop long term relationships with their customers. But it's because customers benefit from the Internet that retailers may benefit. For the surfer, information gathering and comparison shopping is conducted at their leisure without any sales pressure. Buying is quick and easy.
As consumer buying habits continue to evolve, retailers who embrace the Net as one part of a coordinated marketing communications program may realize significant improvements in revenues, name awareness, recognition, positioning and even at-store foot traffic. However, "you can't expect to do all your marketing on-line," agreed Ms. Rozell of the Doll House.
--Paul Entin is president of epr, a full service marketing and PR firm based in Bloomsbury, NJ.