Does Gerry have a point?

Online retailing simply has no black-or-white future, but one thing is certain – smart companies need to get their online strategy right. PAUL WALLBANK

By Paul Wallbank

Gerry Harvey certainly stirred things up last week with his comments on SmartCompany about online retailing.

While I don’t agree online retailing’s a dead-end; there are some important things we need to understand where our businesses sit in a downturn.

We can put products and services into three distinct categories – essentials, discretionaries and deferrables.

Technology businesses like mine are deferrable – people can put off purchases, upgrades and services until another time. Many service providers like dentists, mechanics and builders are in a similar position, as are big ticket items like whitegoods, furniture and motor vehicles.

The challenge for those of us in the deferrable category is to convince our customers why they shouldn’t put calling us off until another day. We need to offer services at price points that convince our clients to call us now.

It’s tempting to think the essential sector should be fine. However it’s quite likely many businesses that think their products are essentials might be in for a nasty shock.

I saw an interview with a supermarket worker in a newspaper a few weeks ago where he said he thought his job was safe because “people will always need food”.

This is true as far as it goes, however most food products in the local supermarket are luxuries instead of staples. The problem for that supermarket worker’s managers are most of their profits come from those luxuries.

The luxury, or discretionary, sector is where I think Gerry Harvey has a point. The vast majority of online stores are offering non-essential goods, and many of them are going to find things tough over the next couple of years.

For the discretionary businesses, it’s going to be essential customers perceive they will get value for parting with their hard earned dollars.

Online marketing is going to be a crucial part of getting the message out to cash-strapped customers, and this where Gerry is wrong – the smart online stores, the ones that do get the message out about the value they offer, will survive.

The markets are changing and businesses have to change with them. This means online stores are going to be an important part of the future of retailing regardless of how many drop by the wayside during the downturn.

The net, computers and other tools are going to be important in helping business deal with the challenges of the next few years.

So don’t defer your tech decisions; you need to get the most from your high tech investments. Get on the phone to your web designer, SEO specialist, internet provider and tech guy right now, and ask them what you can do to make your business recession proof.

Paul Wallbank speaks and writes on how business owners can meet the challenges of the new economy. A business owner himself, Paul has spent over 15 years helping businesses achieve their potential. He has two computer advice websites; PC Rescue and IT Queries, and appears monthly on ABC Local Radio’s Nightlife program and Sydney 702 weekends.

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