Irreverent Retail Relevance in a Digital Era – Part 1

Tim Cose

Tim Cose
Hal Leonard Corporation

by Tim Cose, Hal Leonard Corporation

The days of an enclosed system in which you, your supplier, and your customer were the only moving parts are over. The ever-present competition and outside marketing influences that arrived with the Digital Era have wreaked havoc on the comfortable little market you signed up for. But there is some good news for those who are willing to look for it. Although you’re no longer the only one speaking on behalf of your products, your products are speaking louder than ever for themselves. And although online and mobile business has a head-start on content creation, content is still king and it is still your specialty. The communities which used to gather around your storefront have migrated, but they can be brought back home. Yes, there are obstacles, but there are also opportunities. To demonstrate these highfalutin platitudes, I am going to try to put them in context for you as a Retailer in the Digital Era. If we’re lucky, inspiration will appear along the way.

Wagging the Long Tail

Good music has a funny way of sneaking up on you. When I was a young Luddite, I inherited (from a corner of the basement) a few dozen vinyl records from my parents. Many of the artists were completely new to me, so imagine my joy when I started to discover good music — really good music! — on the strange old discs. This is pretty much how iTunes works. No, iTunes doesn’t sell pressed petroleum platters; iTunes sells the joy of musical discovery.

Good music is its own context, which is how iTunes succeeds. A system of sophisticated algorithms called iTunes Genius recommends that a customer buying an Adele song might also like Nina Simone [1]. A big leap? Maybe, but recommendations like that are how new-to-you music is discovered. The innovation and the other half of this process is the Long Tail business model made practical by the Internet [2]. Because iTunes has millions of songs available without physical inventory, connecting the dots for the customer and digitally delivering the product has nothing to do with supply and demand. A ‘popular’ sku and an ‘unpopular’ sku for iTunes are one and the same [2]; nothing need ever be discontinued and nothing need ever be passed up as a potential product. The value is determined by the context.

Don’t fill your sheet music displays with Nina Simone songs, but don’t fill your bargain bin with them either. The era of the Internet should not stop you from buying popular products; if anything, it increases their mass appeal and exposure. What should stop is the need to unload a slow but worthy product at any price. The success of iTunes’ model has caused nearly every other online content delivery company to start wagging their Long Tails (Hulu, Netflix, Pandora, etc) and because of this, once-popular artists and even instruments (ukulele, anyone?) are talking louder than ever. No, this doesn’t mean that there aren’t bad products [3], but it is up to you to be your own Retail Product Genius and assign some relevance and context to your inventory and to your customers’ requests.

The bad products, on the other hand, can stay in the cloud, provided your customers know they’re still available from you. Variety is not good for variety’s sake; the ragged fringe of what is not marketable is not a place you need to tread in the store, but it is definitely the place to be on your website or your store computer. Ask your manufacturers and publishers how you can participate in online sales of their hard and digital catalogs. They are in it for the Long Tail and the fringe demographics, and physical inventory precluded, you should be too. The more help you can give your vendors the better (because we know that all the fringe-market weirdos shop at your store).

The Part Where I Say Amazon (Spoiler Alert)

But first, back to my vinyl addiction. Deciding early on that smelling, tasting, and watching my vinyl collection would be nowhere near the rewarding experience that listening could be, I set out to find a turntable. Armed with a modicum of product research and the reassuring knowledge that vinyl was on the verge of a Renaissance, I set off to the nearest Big Box electronics store. To my surprise, the look I received in response to my inquiries on the whereabouts of the phonograph section bordered on vegetative (I have, in fact, seen a turnip give a better account of itself to a barking dog). So, I turned and fled into the waiting and comforting arms of the Internet…

Content is king but Amazon’s court is full of jesters. Amazon’s secret weapon and the grease that keeps their wheels turning is User Generated Content [5]. UGC is just what it sounds like: content added to the Amazon listings by its customers. UGC keeps Amazon at the top of the search results, leading to more traffic, more sales, and more UGC. Of course Amazon never points out that online user reviews are not statistically viable sources of information [8] or that they are typically comprised of amateur generalizations. Nevertheless, those consumer reviews and the free content they provide are the SEO (Search Engine Optimization) keystone to Amazon’s traffic and in turn their success.

Do your customers know what your customers think? Studies show that ‘earned’ advertising (i.e. word-of-mouth) vastly outweighs the confidence inspired by any other advertising format. The next runner-up is the online review [9]. Solicited customer reviews enrich the shopping environment and reassures your shoppers; whether that environment and those shoppers are online or in the store does not matter. If the Smiths, stopping in to buy reeds, don’t know what the Joneses think about that new step-up saxophone they just bought their pubescent Honor Student, you are missing out on a marketing opportunity.

While it may not be practical to survey every customer walking in the door about their favorite products, getting a customer to share their opinion with you, and the rest of the world, may not be as hard as you think. Your customers want to share their shopping savvy and their altruistic advice with others [8]; it makes them feel good. They want to be reassured by the thoughts and opinions of others who, at one time, were sitting in their purchasing position.

You don’t want to try to beat Amazon at the game it has created, but you can beat Amazon at the game that has always been your own, namely real and meaningful customer interaction. Get your customers involved by asking for written reviews of big-ticket items to be posted in your store. Offer incentive for Tweets or Facebook posts about purchases. Run raffles for YouTube product review or demonstration entries (and don’t forget to post the links in the store as QR codes). Get your customers socially involved and invested in your store and in your products both online and offline. The probability that you will see a return in valuable User Generated Content at the local level and probably also win some points with your customers is a lot higher than discovering a way of teaching monkeys to do it instead.

And speaking of 500 pound Amazonian gorillas (for pun’s sake)…

TO BE CONTINUED

Tim works at Hal Leonard Corporation, where he is in his fifth year as a District Sales Manager.  His past experience includes retail and sales both in and out of the music industry.  When he isn’t immersed in music, Tim enjoys reading, writing, and tinkering with his stereo.  According to his wife Amanda, vinyl addiction is a very real problem.

[1] Nick at The Vly House “The iTunes Business Model and its Widespread Effects” 2011 http://www.thevlyhouse.com/2011/01/the-itunes-business-model-and-its-widespread-effects/

[2] Anderson, Chris at Wired Magazine 2004 “The Long Tail”http://www.wired.com/wired/archive/12.10/tail.html

[3] Anderson, Chris at LongTail.com 2005 “What the Long Tail isn’t”http://www.longtail.com/the_long_tail/2005/06/what_the_long_t.html

[4] Bustos, Linda at Get Elastic 2010 “10 Reasons Not to Copy Amazon”http://www.getelastic.com/10-reasons-not-to-copy-amazon/

[5] McGee, Matt at Small Business Search Marketing 2007 “How Amazon.com Became the SEO-Smartest Retailer Online” http://www.smallbusinesssem.com/how-amazoncom-became-the-seo-smartest-retailer-online/945/

[8] Chen, Fay, Wang 2003 “Marketing Implications of Online Consumer Product Reviews”http://plaza.ufl.edu/faysa/review.pdf

[9] Grimes, Marisa 2012 “Global Consumers’ Trust in ‘Earned’ Advertising Grows in Importance” http://nielsen.com/us/en/insights/press-room/2012/nielsen-global-consumers-trust-in-earned-advertising-grows.html

3 Responses to Irreverent Retail Relevance in a Digital Era – Part 1

  1. Thank you, Tim for sharing your wisdom. Now how do you deal with that long tail when you get an order that requires several shipping charges from different publishers but the customer is new, expects fast delivery and really doesn’t want to know that you will lose money supplying his order. Catch 22 Win some, lose some.

  2. Tim says:

    Hi Glendower! It sounds like you’re referring to a special order or online order situation. Correct me if I’m wrong, but you’re making the point that Long Tail popularity potentially increases the requests you get for things that you do not have in stock. I definitely agree that it can. While I intended to limit the reference in the article insofar as it pertains to existing stock at brick and mortars (ie what used to be considered dead stock), I think your hypothetical is a worthwhile thing to consider.

    Focusing on something like the Long Tail for profit (and/or a large percent of revenue) is very different than trusting it as a supplement to existing sales. Focusing on the Long Tail as a primary component to a business necessarily implies either a huge investment in inventory or very slim margins (as you mentioned). This is because Long Tail products are things that have either already peaked and tapered in popularity (like Lion King PVGs) or things that have the benefit of a small but consistent demographic (like a left handed guitar method). To focus on and see meaningful revenue from the Long Tail, you have to have not just one of, but both Lion King and Left Handed Guitar available (as well as thousands of other products like them). Technically you can’t exactly call it a Law of Averages kind situation, but in day-to-day business it effectually is.

    I think in the particular situation you mention, you’re seeing the slim margins that can result in selling Long Tail products (if you don’t already have them on hand). The article was directed at retailers who may become distressed by existing slow-moving inventory; I certainly didn’t mean to imply that traditional brick and mortar retailers should go out of their way to find Long Tail products (with the exception of digital services). That’s a whole ‘nother ball of wax!

    I’m actually in the middle of pouring over some very interesting sales data that has a lot of implications for Long Tail products, reordering strategies, popularity half-life, etc. If I can make enough sense of it, I will write another article for the blog. I’m just pulling myself away long enough to respond to your comment. Thank you for reading. I appreciate the discussion!

  3. […] the local Big Box, I punched ‘turntable’ into Google and was immediately funneled onto Amazon (see Irreverant Retail Reverence, Part 1) where I fully expected to have the choice of either a pink plastic suitcase with a speaker in the […]

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