E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Retailers can win over shoppers at competitors' stores by offering alternatives to a poor in-store selection. This is also the area where stores fail their customers. The point of view of store retailers is simple: I have the product. It's right here, just buy it! But the reality of what shoppers want is different.
Let's go back to the toaster example. On the day I shopped, my local Target store had four toasters for sale. Only three of them were on display, a fourth was stocked on the shelf but not displayed, and one of the three on display was out of stock.
A quick search on Amazon for "toaster" yielded more than 4,000 results. Narrowing my search to "4 slice toaster" still yielded 1,117 results. That's versus the three that I could actually buy in the store.
Does Target only sell four toasters online? Actually, a search on Target.com shows they sell 141 toasters. But were any of those offered or communicated to me in store? No.
With the mobile web, there's nothing preventing a customer from seeking alternatives. In focusing on in-store inventory the store retailer leaves the door open for another retailer to walk in, offer those alternatives and steal the customer.
For web retailers, a word of caution: This is where search results and filtering capabilities become differentiators. It doesn't do any good to overwhelm a shopper by offering 1,117 four-slice toasters if she can't easily narrow down those choices to the one she wants to buy.
Bringing the A-game
Store-based retailers are rapidly building larger assortments online, with far more information about those products than will ever appear on store aisles. But that bias toward getting the consumer to buy the product that's in stock and on the shelf is holding them back—and it poses a major opportunity for more enterprising retailers to come in and steal those shoppers away.
Store-based retailers won't take this encroachment lying down for long. For e-retailers, all that means is if you want to take on retailers at the shelf and you bring your A-game, there's a real opportunity today.
Nikki Baird is managing partner at research and advisory firm Retail Systems Research LLC.