Who's afraid of the big bad ... Wayfair
Who's afraid of the big bad wolf
The big bad wolf
The big bad wolf
Who's afraid of the big bad wolf
Tra la la la la
Long ago there were three pigs
Little handsome pigs
For the big, but very big, very bad wolf …
Growing up French; I never knew the English Barbara Streisand song (we had a similar version and it went the same way). How this relates:
First little pig doesn’t adapt and is forced to leave his house.
Second little pig, also fails to properly adapt and is forced to leave with the first little pig in tow.
Third little pig, wisely learned from their mistakes, and built a bigger and stronger house, thus saving the whole family.
It’s a cute song, it’s a kid’s song. The reality of it is that most retailers don’t have three chances at getting better and defeat the big bad wolf. There is little doubt; with reported sales in excess of $2B (that’s a B - as in billion) and a marketing budget of over $200M, Wayfair is a force to be reckoned with. But, is it all doom and gloom? The answer: is NO - not really. If history teaches us anything, it’s when something new becomes mainstream, all the established players start to fear it and will try to run from it. A great Canadian poet by the name of Shane Koyczan said “Sometimes, when we believe in monsters, they take up residence under our beds”. In other words, it is all about your attitude and ability to face the concern head-on.
A few years back, Amazon came to the market and they were going to ‘crush the competition’, nothing would be left standing in the wake of this new and powerful online giant. We were told they would obliterate their competition, most of bricks & mortar stores would close.
Fast forward to a few years later, it’s now 2017 and I can still go out to my local Chapters/Indigo store to purchase a book, a board game, my e-book reader or a fitness tracker. No denying Amazon has had its effect in the grand scheme of things, and some retailers shut down. In the US, Radio Shack, HHGregg, Rue21 and others have all filed for bankruptcy or soon will (according to experts). But is it really Amazon’s fault?
When you think of how you shop, when was the last time you wandered into The Source to purchase a most likely overpriced cable or adapter? Did you enjoy purchasing that battery and being offered an extended warranty on it (yes I’ve seen that happen first hand)? The reality is: most of these retailers, are gone because of a multitude of factors. And while online retail may have been the final nail in the coffin, it takes more than one nail to shut it down completely.
So back to the subject at hand, will Wayfair be your Amazon? Will it be enough for independent retailers of furniture to shut down? Most likely not, and I will add: it may be one of your greatest tools for success as well. To help you understand how that can happen, we need to understand why the consumer is shopping there in the first place.
To start things off, consumers know the name. It has been plastered across their TV sets and web browsers for the last few years. Wayfair spends more than 50% of their marketing budget on targeted online ads so they are there when the consumer is researching for their next purchase.
Secondly, they are amazing at convincing the consumer that they are the cheapest guy around the block. Remember this is all about perception because in reality, they are not. Try to price out a few items and see.
Thirdly, they have the most extensive choice (according to them) because they sell millions of items from thousands and thousands of manufacturers. But have no worries, you don’t need to call your bank and close your doors quite yet. Here are some ideas on how to compete against this big bad wolf …
The answer is very simple, by being you, the same you – you’ve always been and changing just a few things. So let’s tackle each one of these three points separately to give you more details.
Brand recognition, people know the name because Wayfair is spending more than I can afford on Marketing and Advertising…
Yet, people walk in your store and know who YOU are. They know who your sales staff is because they have been with you a long time. They know your delivery staff (sometimes personally), so they know what to expect from you. Is there better brand recognition than that? According to Price Waterhouse Cooper’s “Total Retail 2016” survey (while they weren’t busy screwing up the Oscar’s Best Picture winner), in the furniture & homeware category, the survey finds 27% of customers prefer to do their research online - while 42% prefer to do it in-store.
According to the same survey, the numbers for the household appliance category are 38% online research - while 35% prefer in store. Surprised by these numbers? I know I was! Hearing how much traffic is down in stores, I would have never guessed 42% of people prefer to research in-store for their furniture purchase. In any case, there is still a huge amount of people that research online, I am not the first one to tell you this and I won’t be the last. This also tells us the main reason why Wayfair is spending so much of their marketing dollar targeting ads online. They want to capture the customers that are researching product. Your next question will be “Yeah, but research doesn’t equal a purchase” and you are absolutely right. Because the same survey shows us that in the furniture and homeware category; only 17% of people prefer to purchase online while 62% prefer to purchase in-store.
The same trend happens in the household appliances category with only 22% of people saying they prefer on-line versus 59% that prefer in-store purchases. The lesson here: be wise with your marketing dollars. Invest them in places that will give you the best brand recognition. If you are not already spending marketing money online, you need to start doing it.
Don’t put all your eggs in the same basket, but do spend money online to create a ‘pay per click’ campaign or social media ad. A quick note on that; people HATE to receive special offers on their social media so try to stay away from posting special after special. Creating ads for Facebook appears differently than a post and that’s where you should be looking.
According to the same survey, here are the ways consumers prefer to receive discounts and special offers: 58% email, 20% printed, 10% text message and the last one on their list is social media with a mere 3%. Maybe now is a good time to think about collecting emails and using them to send promotions. But other than that, the name says it all, SOCIAL media, key word being SOCIAL. This is where you can shine and build that brand recognition. Use your social media account to be relevant to your local customers. I guarantee you’ll have a better chance of appearing on their timeline and engaging them - than any big online retailer if you stay local and are relevant to them with your posts. Use the power of “you, your staff and your local story” to build that brand recognition. This will far outweigh what a big retailer with no local presence can do.
Wayfair is much cheaper and they always offer free delivery plus a lot of promotions…
While they can be cheaper on some things (mostly accessories and smaller items); the reality is that they are more expensive on many of the big ticket items, and I mean much more expensive. I encourage you all to go on their site and find one or two items in each commodity that you sell and compare the pricing. I have seen some dining sets that sell for 30% more on Wayfair than the regular price in your store. Same is true for some dressers I saw that sell almost twice the price online than in your store.
So are customers still purchasing the item on Wayfair? Yes, some do and you may never see these customer in your store, but the numbers mentioned earlier also show that 62% prefer to purchase in-store. That means you do have a chance to see those customers and you just have to show them you have better pricing while also bringing them more value.
An easy way to communicate some of their lavish prices is by placing a price comparison on a couple of items that you know you beat their prices on. Make sure to detail everything you include in your service and the extras they have to pay with Wayfair. Are you always going to be cheaper? Most likely not, but the idea is for your customer to realize that they are not cheaper than you, not the other way around.
Consumers have this false belief that everything is cheaper online, but that’s not the reality and you need to help them realize the true fact. While we are talking about perceived value, also remember that we are referring to an online store that prides itself in offering free delivery on every purchase over 75$ (there are some exceptions). But when digging into their delivery terms, it is very easy to see that their free delivery is a “front porch, outside the door” type of delivery. While this practice may be ok for smaller items; does your customer really want a couch delivered outside their front door? And, you should worry about someone driving by and taking the item off your porch because you’re not home yet. But wait, you can get it delivered inside your door for $69; that’s better - now the customer just has to unpack it… wait what??? No, that fee only covers the carrier to open the door and put the item inside the house. If the customer wants to have it placed inside the room where it’s going, the charge then becomes $99. In case you are wondering, they do offer “white glove” setup service for $129 - but it is not available on all items.
Looks (facts) can be deceiving, especially when you compare what an independent retailer offers for service and delivery, even if there is a delivery charge. Speaking of deceiving looks; make sure you go through a ‘fake’ purchase when you do your research, Wayfair often has extra costs for a specific colour or different size. Make sure you highlight the difference and advantages you offer.
They have the most extensive choice available…
I am sure they do, they have agreements with close to 10,000 vendors and they stock hardly anything. Whatever they stock in their distribution centres is on consignment from the vendors and the rest is all delivered using a drop-ship program. So being an independent guy; can you deal with so many vendors? The answer is NO - even if given the choice, you shouldn’t deal with such a large vendor base.
I have heard it all before; the customer is looking for this particular item and ‘I could not sell it’ so he purchased elsewhere. The truth is, if the customer is looking for “this” particular item, 99% of the time it’s because someone else did a better job of selling the item than you did. This is when your staff becomes your greatest allies to win this battle. Make sure they are properly trained and are knowledgeable about what they sell and what the competition is selling. I am very confident that if you don’t have the exact item the customer is looking for, you have something that is very similar and will fit their needs.
In the same survey as mentioned earlier, 40% of customers said that a sales associate with a deep knowledge of the product range would make their in-store shopping experience better. Think about this for a moment and try to figure out how Wayfair can compete with that element. They can try to do it through the use of reviews and live chat but they will never replace an experienced sales associate on your floor. A person who can answer questions and is likely someone from your local community. Choice can be good - but too much choice is also a very bad thing.
As sales professionals, we have all done it at one point in our careers. Remember, when you first started selling furniture, appliances and/or mattresses? I bet you were just like me; all gung-ho about seeing that first customer walking through the door - you were going to dazzle them with all you have to sell. Then you showed them the stove, which had a smooth top, the other one that had the convection feature, and then moved on to the other one that had the warming zone … you see where I’m going with this. And when you finally caught your breath, after convincingly showing the customer 12 out of the 16 stoves on the floor, they just stood there, looking at you with a puzzled look on their face. Seemingly, just off a bad roller coaster ride, wondering why they came in - in the first place. They politely smiled, thanked you for all the information and said they would be back. Yes, you know it: they never came back, or worse, they came back and purchased from another salesperson.
The fact is, with experience, you understood that making it simple was, and still is, the key to customer satisfaction. When faced with too many choices, the consumer is lost and more often than not, they don’t go through with the purchase. Having too many choices can be an obstacle when the information is not harnessed properly. Some easy solutions to this, is using digital touch displays in your store - allowing you to offer a wider product selection while your staff can easily guide the consumer through relevant and appropriate choices.
I assure you that brick and mortar locations are not about to disappear. In fact, in some U.S. markets, Amazon is studying the possibility of opening physical stores to sell furniture and appliances. Again, acknowledging they will never be able to properly compete with an independent store because they are lacking that true connection, that relationship.
These few points can help you become more effective with your fight again Wayfair. Use their weaknesses to benefit your business. Be yourself, be social, don’t be afraid of talking about price and make sure your staff is well trained.
These are all thing your online competitors can’t do, and these are also things that you can do better than your physical competitors. You may need to adapt because of new players, but the adaptation does not always consist of building a whole new house.
Oh oh oh! The three little free pigs just winked and laughed…. Ah! WOO!!!
Please feel free to contact François with any questions or comments.