Retailers Refuse to admit Reality

SOPA was like a flashback to 2003.  Once again content publishers were “infuriated” by illegal file sharing and piracy, in much the same way the music industry was before Steve Jobs came along and gave them a wonderful solution that married creativity and technology so everyone could win.  This week’s announcement that Middle East retailers who were planning to open online stores have changed their minds prompted me to think about how that gap is being filled by equally innovative upstarts, and will probably prevent any likelihood of the big box retailers gaining their customers back.

Before the end of 2011, there was many an optimistic article claiming that 2012 would see the opening of more online stores driven by Lulu hypermarket and Ikea.  All of a sudden, they have changed their minds citing the fact that online shopping isn’t popular enough.  You would have thought that before going to the press in June 2011 stating their optimism, they would have mapped out the popularity.  Plus, we just had Christmas, usually a huge driving factor for online sales.  Sales for the site EmiratesAvenue.com had risen 50 per cent in the month leading up to Christmas Day 2011 compared with the same period last year.  Julian Pascual said, “In the few weeks before [Christmas], we sold over half a million dirhams of goods.”

Personally I don’t buy the retailers’ argument .  In fact Euromonitor states:  “Despite the size of the e-commerce market, it is expected to grow dramatically over the next four years, with spending online to hit US$2.09 billion (Dh7.67bn) by 2016, more than double the $1.01bn spent last year”.  But then it isn’t the first time research has been completely dismissed, as last week’s spat between advertising execs and Ipsos and PARC demonstrated

If smaller outfits such as JadoPado / Nahel / Souq / Markavip / Sukar / Mumzworld / Alshop / Emirates Avenue can do it, it seems absurd that the larger retailers can’t, especially considering they already have the logistics and infrastructure set up, including warehousing.   But; like Sony’s failure to create an end to end solution for music a decade ago, even with the key ingredients of recording label, device and electronic expertise; this is probably just Big Business Syndrome.  The inability to reach consensus, bureaucratic fumbling and failure to focus on the end consumer is stifling innovation.  

One of the main problems in the mentality is this: “let’s get the website running first and get an audience” (GM of Ikea UAE) rather than “we already have a database of customers, let’s think about how technology can make their lives easier”.  I particularly like this interview with Mumzworld founder Mona Ataya as an example of how to think right.

Should the big retailers eventually decide to launch their online shops, they should be in an advantageous position to leverage their existing marketing and CRM abilities to drive a lot of traffic to their online stores efficiently.  They already have brand names that people are aware of.  They already have communication channels set up with customers. In some cases they may even have a loyalty programme.

How would they go about doing it?  Starting with a good SEM / SEO strategy, communications that span 3 screens (tv / mobile / web) and a social presence to take care of customer service and social shopping including the occasional deal or discount.   Citruss TV – the QVC of the arab world has a great formula.  It has a TV channel, a great facebook page with over 35,000 fans, a website you can buy the goods from, promoted tweets and a call center.

For the large conglomerates, MAF Group, Emke Group, Landmark Group,  it’s a brilliant way to capture great data which could lead to cross selling opportunities from other divisions within the group. Clearly if you’ve got a woman buying stuff from Babyshop online, she might be persuaded to buy a 7 seater minivan to transport her and her family.  How do you get to this stage? Not without capturing and analyzing all that data, and www.npario.com have a great solution that gives you powerful analytics in a easy to read and easy to manipulate format.

Big Retail need not worry, because there is an all in one E-commerce platform based on SaaS called www.martjack.com which is already being implemented here by fashion startups, airlines, electronics chains and more. The monthly license fee starts as low as $200/month.  I’ve seen this product in action and it works. Best of all, it hardly takes anytime to set up and the features are flexible, giving you more time to focus on servicing your customers.


By focusing on where the market is now, rather than building for the future, retailers are literally starving themselves of future customers.  Today’s startups are swiftly transforming into tomorrow’s big business, and by that time they will have had years of experience iterating and finding a solution that works.  I hope they get a move on.

 


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