The Jabberwock is stalking businesses in every sector everyday. The big question; "Is it stalking you?" A more important question; "If it is stalking you, would you even know it?"
"Beware the Jabberwock, my son! The jaws that bite, the claws that catch!" (From Through the Looking-Glass by Lewis Carroll)
"Beware the Jabberwock, my son! The jaws that bite, the claws that catch!" (From Through the Looking-Glass by Lewis Carroll)
The Internet is the Jabberwock and the battle has begun. There are stores that are winning, and lot more stores that are losing, and very few stores not feeling the effects of
e-commerce on their bottom line.
Since 1996 the Internet has been like the Terminator ("My CPU is a Neuro-Net processor. A learning computer."), it is getting smarter, faster, and more deadly to traditional retail business models each year. In just ten years it has grown from nothing to a serious rival to fixed location stores, and it wants nothing less than to be the dominant retail channel.Unless you change, it will win.
e-commerce on their bottom line.
Since 1996 the Internet has been like the Terminator ("My CPU is a Neuro-Net processor. A learning computer."), it is getting smarter, faster, and more deadly to traditional retail business models each year. In just ten years it has grown from nothing to a serious rival to fixed location stores, and it wants nothing less than to be the dominant retail channel.Unless you change, it will win.
The Jabberwock is a hungry beast and has feasted heavily on bookstores, electronics, travel agents, music stores, and car dealers and now it is coming for you. So what does it take to beat the Jabberwock?
You have to get lean, fast, and mean. You have to re-think your business from the ground up and use the strengths of the Internet against itself. Creating a business plan to meet the Jabberwock head on is sort of a version of electronic judo. Storeowners and managers facing the Jabberwock without an offensive/defensive business plan suffer all the classical symptoms of grief.
Denial: "No one will buy expensive Items over the Internet." I hear this from just about every high margin goods retailer I have talked to over the past ten years, and they are wrong. A good friend of mine in California just recently bought a $70,000 powerboat over the Internet.
Anger: Most of the storeowners and managers complain that people are coming into their stores to get product information and then buy the items over the net. That is true.
Statistically about 7% of the people who come into a store will buy the product over the Net. And that is okay. These are usually the people for whom lowest price is the only decision factor. These people usually turnout to be your worse customer service nightmares as well. So let them go.
Bargaining: "We will meet and beat an legitimately advertised price." This strategy only appeals the worst possible customers. The last thing you want to do is make a very low net margin sale that ends up draining expensive customer service resources from your company.
Depression: This manifests itself in the form of an endless series of price "depressing events." I looked at the marketing plan for a store that had 16 sales events on their promotions calendar. This is a store that in the last couple of years has seen profits depressed from double digits six years ago to very (critically) low single digits.
In very low profit operations, the only people making money are the vendors, freight carriers, land lord and employees.
Acceptance: When the only game plan owners and managers have is to try to do the same thing as before but better; they are accepting low profitability. When faced with a situation not of your liking your have four choices. Change the game. If you can't change the game, then change the rules. If you can't change the game or the rules, then get out. If you can't change the game or the rules, won't get out, then suffer.
The Jabberwock is just a business model. It is a very successful business model, but nonetheless it is just a business model: an evolutionary improvement to a way of doing things.All business models have a lifespan. There was a time when business models had decades of lifespan before change was necessary. Those days are gone.
In today's economy, you are lucky if your business model has five years.
Let's think about the impact of change. Changing environments are the drivers of evolution. This is going to require a different way of thinking about business and it is something that is not going to be very easy to do. It is so hard to do and so hard to do right, that most (small and large) businesses avoid doing it. In the end, you either control the changes or the changes control you.
The problem most owners/managers have is accepting the time has come to change. Unless there is a Jabberwock stalking them; the tendency is to “leave well enough alone.”
An interesting phrase that one – “leave well enough alone.” I am sure it was the same phrase uttered by the owners of buggy factories when the first primitive automobiles came driving down the road.
The time has come for all good businesses to reinvent themselves before someone else comes along and does it to them. That especially applies to the world of retail that is under siege right now by the Internet. Storeowners and managers have to look no further for role models than the paragons of the Internet to see examples of the process of "continuous re-invention" taking place.
Yahoo went from being a search engine to being the advertising and marketing force of the Internet. Google went from being a search engine to being a provider of applications and services over the Internet.
Apple Computer went from being a niche computing company to the leader in digital entertainment.
Amazon.com right now is evolving from a pure e-commerce retailer, to the becoming the service and support backbone of e-commerce over the Internet in much the same way Cisco System evolved from being a computer networking company to becoming the communications backbone of the Internet.
Retailing has arrived at the crossroads of evolution. There are many possibilities for evolutionary change to take place. Some stores will evolve, and some stores won't proving conclusively Darwin's theory that, "Only those who adapt to change the fastest, will survive."
In closing, let me rephrase the big question; "Are you evolving?" A more important question; "Are you evolving fast enough?" An even more important question; "How do you know?"
