In my experience, one of the great fears in etailing is the commoditization of mass merchandise—the fear that a merchant’s entire online presence (or even their actual store) will be reduced no more than a list of product data for consumers to wade through, making one merchant indistinguishable from another. The outcome of which is the nullification of the service and experience factors that have traditionally gone along with the retail purchasing process.
After all, all factors being equal (shipping, returns, etc.), my final decision to make a purchase comes down to the reliability of the product and how affordable it is, as I’m sure it does for many.
This fear is becoming a reality. Commoditization is rapidly developing through comparison shopping engines and third party retail marketplaces. However, whereas CSE’s do aggregate your data alongside many dozens of other merchant’s ostensibly equivocating them all, CSE’s are essentially viewed as a tool of pragmatic convenience rather than a negative force for etailer’s because shoppers do have to click through to a merchant’s store to make a purchase.
The third party marketplace is a different matter altogether. By opening a storefront under Amazon marketplace for example, you reduce your brand much more significantly by losing it amongst a sea of almost equally unidentifiable storefronts—particularly if you buy a product directly following a search and don’t go through a vendors store—all for whom Amazon performs complete order fulfillment. What you are actually doing is trading branding, service and experience for a sale at a reduced margin.
It’s a catch 22 though. Play the game or be lost all together.
Comparison shopping online is a reality. It’s as simple as the click of a mouse; you don't have to drive across town to 10 locations anymore or save all of the circulars from your Sunday paper to compare prices from different stores. So it’s an impossibly more competitive environment that forces etailer’s to use services that place them where the shopper will be looking for them, many of which serve to push them further down the path of undermining themselves.
In an upcoming post I’ll elaborate on commoditization and what you can do to fight back.
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