The newest buzzword I am protesting is omnichannel. I don't hate it, but I don't love how misleading it is either. So I sat down to interview Timothy Bush of TLB Consulting, a veteran Retail Consultant and the host of the On The Shelf Podcast. I wanted to talk to him about the future of retail, sales channels, and the differences between products that are on-the-shelf versus products that are online.
Not Omnichannel: Choosing The Best Channel
How consumers make purchases is changing, and that directly affects how the big box retailers buy products, and even why products make it on the shelf in the first place. With my heavy focus on products I knew I needed to talk to you about this and shine a light on what you need to know because 1) omnichannel sales strategies aren't for every business and 2) it's important for you to develop a plan based on where your product falls.
The two major sales channels you're probably considering:
Online is all about consumer choice.
On the shelf is all about what's there in that moment.
Your sales strategy should directly outline every step of your plan to get your product either online via Amazon or another platform, or on the shelf in a big box retailer. But before you ever solidify that strategy, you need to know the best channel for your product, a necessary distinction plenty of businesses skip completely. So Tim and I came up with the top 5 things you should consider to determine whether or not your product belongs on the shelf, or if online is the best channel for you.
But First... New School vs. Old School
I pointed out that big box retailers have changed how they buy products and even why products make it on the shelf, and this is what changed:
Buyer: The job of a new or modern buyer is more numbers based than anything else, which causes most risk to be mitigated, eliminating the option for unique products almost immediately. One skew from a single vendor doesn't happen in this world. This bigger picture view is borderline extreme and it kind of has to be when it's based on data.
Merchant: Old school style of merchant who is taking risks on new products, and invested in their product choices. Merchants are educated in their product categories and will buy one skew from one vendor if it's the right item. Old school merchants have spent time in stores, understanding what/why/how consumers make decisions to purchase.
Box box retailers and stores used to have merchants. They were knowledgeable in their area, trained specifically to the category they purchased in, and they spent a lot of time getting to know their consumer habits. Now, it's a buyers market, the risk is mostly gone, and buyers don't need to know their consumer, just the numbers that represent them. For this reason alone, it is incredibly important for you to understand these 5 points:
- Breadth of line. Buyers want to purchase a collection from one vendor because it's less work for them, once they know they love your product. Buyers are doing the job today that 3 or 4 buyers were doing a few years ago. So they can't be the merchant they maybe want or need to be. They have to make sure your product is worth their time, and in order for this to be true, they are looking for multiple skus from one vendor.
- Visibility & Pricing. Online products have total visibility so your pricing has to be perfect. You have to be an expert in pricing your product while gaining the margin you need. Everything is transparent online, and consumers know how to dig in to find what they are looking for at the price point they think is reasonable. It's also important to note that in the store, people have their smartphones out and are always checking online as well, so on the shelf pricing needs to be exact also. If you're on the shelf, you have competition, and so you really have to be specific and clear. Thanks to technology and the never ending stream of wifi availability, you can't really hide on the shelf from your competitors.
- Features. Speaking of pricing... If your product has features that drive the price up, they need to be obvious on the shelf, or it won't work. Online, there is more of an opportunity to really dig into those details, and explain those features, without worrying so much about the higher price point. This is a major distinction and incredibly important to your success.
- Inventory. Retailers don't want to be the first to take a risk and give up shelf space for something that others haven't already jumped into. Retailers are no longer flexible or nimble so unless your product fills an obvious gap, and solves a problem that is real and perceived, you're out of luck. Online space is free, per se, so there's less risk involved, even for you.
- Touch. Even with all of the changes happening in the world of retail, consumers still have a strong desire to hold, touch, and feel a product before they purchase it. That means it isn't all doom and gloom for retail, but they have to find their flexibility if they want to see future success exceed past success. If your focus is online, you have to make sure that your marketing and branding somehow replaces this need for touch and feel before purchase.
Expert Tip From Tim Bush: You're not actually "in-store" until you get your first reorder. Lots of products make to it the shelf and die there.