In its second-largest acquisition, Amazon buys the company for $970 million.
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A good example is customer service. Most retailers already know that they are going to lose customers if they don’t have return policies that allow shoppers to conveniently return merchandise. Macy’s, for instance, lets customers who buy items at macys.com return them to any of the chain’s stores if they aren’t happy with the purchase. In contrast, Levi’s online store policy requires shoppers to return merchandise to the manufacturer and limits exchanges at its more than 1,000 bricks-and-mortar locations.
For instance, Web shoppers can exchange a particular pair of jeans for a better size, but they can’t return one style and then select another.
“We can give our customers one-stop shopping on the Internet, and the bricks-and-mortar stores are a tremendous asset in making customers feel comfortable if they want to return something,” says Kimberly A. Miller, vice president, Internet strategies, macys.com, San Francisco. “Retailers also have established order fulfillment systems and a variety of products to offer Web shoppers. Those are assets a lot of manufacturers still don’t have.”
Luring customers in with just the right sales price is another tactic retailers can use to compete against manufacturers. Retailers are experts at pricing merchandise to sell and using sales to make shoppers spend more even when they feel tapped out. For instance, retailers invented the white sale to drum up business in winter, one of their slowest times. And even though consumers took to the Web in record numbers in November and December and shattered analysts’ projections for online holiday sales, that didn’t stop Internet merchants from offering deep discounts on their merchandise beginning the day after Christmas.
“Retailers have to take what they do best and apply it to the Internet if they are going to compete with the droves of manufacturers and wholesalers coming online,” says Melissa E. Bane, program manager and Internet marketing strategist, The Yankee Group, Boston. “They can’t stop manufacturers from going around them, but they can keep up by doing what it takes to outsell the other guy.” •