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The Internet - Part 2 - Is It Unfair Competition?

Furniture World Magazine


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Perspectives about selling furniture on the web from a conventional retailer with a giant web presence.

As retailers, we have always complained about how "unfair" it is whenever an alternate distribution channel opens up. But really, is distribution through an Internet company any more "unfair" than distribution by "North Carolina" discounters? What about mail order catalogs? How about the military PX that may sell home furnishings? Or the warehouse clubs? Or the national and powerhouse regional chain stores? Or the growing trend toward "factory direct" stores? Is an Internet store fundamentally any more unfair than any of the above? Obviously not.

Still, some retailers are reacting to the Internet with unreasoned fear. And it's fear based on media hype and misconception, not the realities of furniture retailing, whether on "Main Street" or "Cyberstreet".

It's interesting to note that even as the alternate channels proliferate, good merchants continue to successfully carve very profitable niches for themselves in every area of the country. There are several reasons for this:

THE LOCAL FURNITURE STORE'S STRENGTHS
We (the local stores) have the hometown advantage. We support the local police, fire department, schools, charities, Little League and so on. People prefer to do business with their neighbors, especially when we as neighbors are good corporate citizens.

Being local, we have the merchandising edge too, with styles more closely in sync with local taste. Therefore, we are more likely to have the piece the shopper is looking for in stock, for immediate delivery. That allows us to satisfy the near universal desire for "instant gratification". Being able to "deliver tomorrow" is something that an Internet furniture retailer will be hard-pressed to duplicate.

Real world retailers have another huge advantage: Real live, flesh-and-blood, sales people. Nothing online comes close to the human connection that can be made with a warm smile and a firm handshake. Compared to a salesperson that takes a genuine interest in helping a customer, e-mail doesn't have a chance. The real live human will win the battle for a customer's mind, heart and business nearly every time.

Given these advantages, the well-managed local store has nothing to fear from Internet competition. As I pointed out in the December/January issue of FURNITURE WORLD, online retailers can help to educate consumers and then drive large numbers of ready and willing buyers into local retail stores. For retailers to profit from this traffic, they simply need to be good merchants. Stores need to be clean, fully stocked, clearly tagged and fairly priced. Product lineups should be fresh. Sales people must be properly trained and motivated to really help the customer, not just move merchandise. Most importantly, they need to treat the customers with appreciation and respect. Good merchants do these things instinctively. And good merchants have nothing to fear from the Internet or mail order, or warehouse clubs, or any other channel of distribution.

Alternatively, stores that fail to meet the customer's ever-higher expectations will find survival very difficult in the years ahead. We believe there will be a continued and even accelerated consolidation of the retail landscape as a result of the ever-increasing competition on the Internet and other alternate channels. Good merchants will thrive in the shakeout. The bad ones are not going to make it.

BUT WHAT ABOUT PRICE?
Isn't everything being sold at dirt-cheap prices on the Internet? Isn't price the great advantage of the Internet?

It may be for selling books or airline tickets, but in our experience, the furniture business is an entirely different animal.

While every distribution channel has inherent strengths and weaknesses, the cost of acquiring a customer, then providing the personal service to assist that customer to make a buying decision, then providing high quality home delivery, and a competent level of service after the sale, is the great equalizer. What is saved in physical facilities is offset in large part by these cost components.

In that we include nationwide home delivery, the price we offer products for on our Web site represents a solid value to the customer. But it's a price that will by no means threaten the existence of well-managed real world furniture stores. A good furniture merchant can compete with the Internet quite successfully. And the reality is, they are competing.

INTERNET COMPETITION IS A BOON TO WELL MANAGED FURNITURE STORES
The numbers don't lie. Compare the conversion rate of visitors to buyers at a Web site with the closing average at a furniture store. A simple projection shows that each month, after shopping our online showroom, tens of thousands of motivated furniture shoppers are descending on their closest retailers, primed and ready to buy. And in many cases, this is plus business.

These are people who otherwise may have spent that discretionary income on a new piece of sports equipment, or a cruise. Instead, they found a beautiful piece of furniture while "surfing" the Internet.

Yes, we know that many Internet educated shoppers use the information they find online to negotiate prices. While the prices charged by legitimate online retailers are competitive, they are within the range that most retailers will gladly meet to make a sale, and quite often it's a sale they may not have made at all, had the customer not found the item first on the Internet. Retailers who are prepared to sell the unique benefits they offer their customers are successfully competing with the Internet.

WHO IS SHOPPING ON THE INTERNET?
In spite of the tremendous advantages the local furniture store enjoys, furniture is being sold over the Internet. Which leads to the question: Who is shopping, and who is buying on the Internet?

After nearly two years of talking to thousands of our visitors, we can say that the "shoppers" can include anyone with access to the Internet. That's some 60 million technically adept, and generally higher income Americans who use the Internet to browse, before they buy. The one thing they have in common is that they want information, and lots of it.

What's interesting to analyze is who the actual buyers are. After discussions with hundreds of our customers we find they break out into basically three groups:

  • Shoppers for whom a trip to a furniture store is either too distant, or the selection at their local store is too limited, (generally because it's a very small town store). Typically these are folks living in remote or sparsely populated areas who otherwise may opt to do without the item in question.
  • Shoppers who are time constrained. Folks with two jobs. Shift workers. In general, people who find it hard to carve the time out of their schedule to get to the stores to shop. These folks sometimes tell us that if they couldn't buy online, they would just defer their furniture purchase indefinitely.
  • The third group is an unintentional gift we sometimes get from the local retailers. This is the customer whom the sales staff ignored... or talked down to... or insulted... or the customer who walked out after being high-pressured... or was given misleading or incorrect information... or who felt the store's advertising was deceptive...or who experienced such bad service from the store the last time they made a purchase there, they vowed to never return.

We see these folks as "refugees" from their local retailer and do everything we can to make them feel welcome and confident in our ability to serve them. Sometimes they reward our efforts with their business. But note: We didn't "take" these sales from the local stores; they gave them to us, "gift wrapped".

We know well that consumers today have VERY high expectations. They simply won't put up with bad service at any point in the transaction process. Those with the means will "vote with their feet" and shop elsewhere. That's exactly what the Internet allows them to do, quickly and easily.
Taken together, when extrapolated on a nationwide (and even international) basis, the three groups that make up the majority of our buyers comprise a market that deserves to be served, and the Internet is the most efficient means to that end.

NEXT MONTH
The third part of this series on internet marketing will continue in the April/May issue of FURNITURE WORLD with a discussion of the following topics.

  • Can internet distribution be stopped?
  • Do Manufacturers have a choice?
  • How manufacturers can protect their brands on the internet.

Stephen Antisdel, age 46, is President of Bookouts Furniture - Steve's main focus is administration, personnel and store advertising. He oversees strategic planning, budget forecasting, insurance, and tax matters. In the retail furniture business since 1968, he started at Bookouts on the delivery truck, showed an aptitude for sales, then buyer, and finally to management, by 1978. Steve is familiar with every aspect of the retail furniture business. Questions or comments can be directed to Stephen care of FURNITURE WORLD at editor@furninfo.com.

 

Furniture World is the oldest, continuously published trade publication in the United States. It is published for the benefit of furniture retail executives. Print circulation of 20,000 is directed primarily to furniture retailers in the US and Canada.  In 1970, the magazine established and endowed the Bernice Bienenstock Furniture Library (www.furniturelibrary.com) in High Point, NC, now a public foundation containing more than 5,000 books on furniture and design dating from 1620. For more information contact editor@furninfo.com.