Posted on Tue, Jun 26, 2007
This is a must read article — it could change your business life.
I want to share two relatively new ideas that I predict will become household ways to market and will add money to your bottom line. Sometimes you hear about an item or concept that is considered so HOT and you wonder why you haven’t heard about it earlier. This is the case with these two ideas for me.
The first is a shopping service that specialty retailers and manufactures are really starting to make money with. The service is called Shopatron and can be found online at www.shopatron.com. The reason that I like it so much is because it addresses one of my pet peeves — vendors selling online and competing with the stores that support them. This “retailer-integrated e-commerce solution allows branded manufacturers to accept orders online and fulfill them through their retailer or dealer channels.” In other words, a customer goes to a manufacturer’s website, orders what they like, but the local retailer fills the order.
Not every retailer will have every piece in a manufacturer’s line at any given time, so when the order comes in to the manufacturer, the manufacturer, with the help and system of Shopatron, posts it for all of the retailers that belong to the system and carry that particular line/item. The stores that reply with item availability are then analyzed and the one that it closest in distance gets the order. PRICE HAS NOTHING TO DO WITH THE BIDDING. Now the customer has the choice of going to the store to pick it up or having it shipped by that retailer.
The fee for the service is charged to the retailer, which is between 2% and 4% plus the cost for the credit card charges which is about the same. Shopatron sends the retailer a check twice a month for the purchases. Their fee is very reasonable because it’s found business that the retailer doesn’t have to advertise or market for.
There are two other advantages to getting involved in this service. By allowing customers to come to your store to pick up the merchandise, it introduces new faces to your business that have just purchased from you. One retailer told me that a customer came into pick up a special baby blanket they ordered through the Shopatron system and while she was in the store bought $900 worth of merchandise. That’s a nice bonus.
It gets even better because Shopatron gives you reports on what is selling and what is not. It also reports items requested online that have very few retailers carrying the item. How can you lose? It is truly a win/win/win for everyone. Shopatron boasts that 1,480,770 items have been sold and shipped as of today. Not bad for a 5 year old company. At last a service that’s not about the big box store and is designed for specialty retailers.
The other service is again designed only for specialty retailers. A plush toy manufacturer (that is a company that sells stuffed animal type of toys) has hit a homerun out of the park. The company is Ganz and their concept is selling a character and making it part of an interactive website that 4 to 9 year olds are getting addicted to. The site and toys are called Webkinz. It is a site you join after you have bought your first toy.
It has hundreds of activities and games and ways you can earn points to buy things on the website. The things you are buying are all virtual. It has a newspaper of fun news on it, lots of interesting games to play where you can win points, stories to read, and even your own room to decorate. The points you win enable you to purchase things for your home. Kids that get into it are spending more than an hour a day. Actually I am writing this article from my granddaughter’s house. Alexis is turning 5 years old today and we are here for the big birthday party. She has played with this site for over 2 hours today alone. It’s addictive. It changes the way companies market to kids.
Ganz is expected to do over a BILLION DOLLARS in sales. I first learned about this site in an article last week in USA Today, then last week I spoke at the Kids Today Conference, (a group of businesses specializing in merchandise for the infant and youth markets) and then I came to spend a few days with my grandchildren in Indiana only to see this phenomenon in practice. It’s not just for little girls either. It’s for boys as well.
This is more than just a cute way to market to kids. It is a concept that will be repeated over and over again. Products that have an online experience that enhances the product’s emotional connection will become the new way to market. Watch for them to be refined, reinvented, and multiply into every age group and marketing segmentation. This is more than just fun and games stuff but fun and games are the core component.
Animation and fun characters will become our personal shoppers on the big catalog sites. Landsend has a custom clothing area that is just in its infancy. It will become a new way of creating customer loyalty without the customer feeling any obligation but rather a strong desire to return again and again.
Here is the best part. Ganz does NOT sell to any Big Box stores, discounters, or even any online merchants. They want the customer to purchase from specialty stores. A discount store could ruin the concept and why do that? This is Beanie Babies on steroids. We are talking about a brave new world that blends reality and fantasy to create a very enjoyable place to spend a few hours a day. Move over TV, DVDs, and sadly even books because here comes the future.
P.S. I don’t know about you but I was a big fan of radio. It was always part of my life. I knew the call letters for my favorite country stations, talk radio, sports talk, and sporting event channels. Last week I was asked to fill out one of the Arbitron Ratings Surveys to have me log what radio stations I listened to, when, and how long for one week. I shocked myself that my total radio listening was less than 1 hour for an entire week. (actually it was 46 minutes) Instead I listened to CDs (some were music and others were books on CD), or I listened to my IPod hooked up to either my car or at home. It might have been different if I were traveling during a Red Sox game. Radio helped to build my business but now I would have to think twice before I would recommend it across the board. The one thing that hasn’t changed is that there still only 24 hours in the day. The competition for those hours has increased to unbelievable proportions.
40 years ago Bob Dylan wrote a song that said, “The times they are a changing.” Well not as much as they are changing now. From an independent specialty business’ point of view, the changes are TERRIFIC. If you are a BIG BOX merchant it’s time to go back to your drawing board and start reinventing because you have become the new endangered species.
Posted on Tue, Jun 19, 2007
Wow! You guys never cease to surprise me. Your responses were AMAZING. You uncovered issues that I frankly hadn’t even considered. Actually, I am amazed at this whole use of technology, the sense of community we are creating and just the most wonderful feeling I have to be part of it. My goal is to help make you better retailers and I think some of the points that YOU bring up should do just that.
For those people who didn’t read the original story last week, I invite you to go to www.ricksegel.com/blog to read the article in its entirety. In short, it is a situation where a retailer discovers her key manager and 25 year employee is stealing excess inventory and having her sister sell it on EBay. I gave the following options to choose from but allowed multiple answers:
a. Fire her
b. Keep her
c. Report her and her sister to the police
d. Don’t report her or her sister to the police
e. Tell all of the other employees
f. Don’t tell anyone else
g. Determine the amount of money owed and have weekly payments made
h. Forgive the debt
The only sad part about this whole process is that I can’t share all of the responses. There are just too many. So I am going to feature the most common and most unique responses. Otherwise this newsletter would be 187 pages long; yes that is the exact page count from 27 states and 6 countries. Here we go.
It was almost unanimously (83%) agreed that Betty should be fired. I am not surprised that 83% wanted her fired. I am more shocked that 17% wanted her to stay. The most popular comments were:
- “The relationship would never be the same.”
- “Once a thief always a thief.”
- “This has probably gone on much longer than you think.”
- “Why didn’t Betty come to the owner for extra financial aid first instead of stealing?”
- “Why didn’t she try to sell other things on EBay rather than stolen property?”
- “If Janice doesn’t fire her, she is hurting every other retailer in the world for demonstrating that crime PAYS!”
- “No one is irreplaceable.”
- “Don’t hang on to the past, move on.”
- “Betty is a thief and her sister is a fence. What more is there to say?”
The really interesting thing about the responses is that although there was a clear majority on firing Betty, there is more of a mixed bag when it came to the actions retailers should take. Reporting her to the police, which I thought would be a natural response to go along with firing her, drops down to only 51%. That does NOT mean that 49% said do not report. On the contrary there were only 26% that said not to report; the balance was undecided whether to report or not.
One person summed it up well when he said, “Don’t get the police or the legal system involved. It will cost you more time and money than it’s worth.” “Settle out of court with a simple agreement.” A furniture store owner reported that “Reporting the case to the police was the biggest mistake I ever made because the case went to court and the case lasted 4 days with delays and continuances.”
Here are some other interesting comments:
- “Have Betty sign an agreement specifying how much she and her sister owed, then place a lien on their homes until it is paid.” Hopefully one of them owns a home.
- “First, report it to your insurance company. We all have some type of Shopkeeper insurance that will cover some portion of the loss. Let them handle it.”
- “Have Betty sign an agreement admitting guilt and an agreed to amount to be paid back. Then keep her as an employee on probation. If she even looks at you weird, report her.”
- A similar response was to “Have Betty sign an official letter of resignation and a letter admitting guilt that will be kept in the event it is ever needed.”
- “Refuse to ever give her a reference.” That could just about prevent her from ever working again.
- “Look for a win/win. Everyone makes mistakes. Try to make it work. She could turn out to be your best employee again.”
- One of my favorite responses was, “Pray for her… that is right after you fire her and report her to the police.”
The issue of telling or not telling the other employees was surprisingly close. 54% said to tell and 46% not to tell. I didn’t totally understand this at first because if you are going to fire someone, then use them as an example. However, on the other hand, if you are going to fire them and get some restitution, then keeping it quiet is an option.
Another shocker to me was that forgiving the debt split 50 / 50. The prevailing argument was that you aren’t going to get blood from a stone so why try? But one retailer shared, “I forgave the debt for a signed affidavit admitting guilt. The next week (actually 6 days) after the agreement was signed, the thief won an instant lottery ticket for $50,000. I got NOTHING! Never forgive.”
Other comments were:
- “It’s time you get some surveillance cameras installed in the backroom and the cash register areas.”
- “It’s time to tighten your controls with the price of bar coding systems and technology. There is no excuse anymore.”
- “Never trust one person with everything.”
- “It’s time to show some tough love to your son. By constantly bailing him out, you are enabling him and perpetuating the drug problem. It’s time to grow up.”
- “Make sure that you inform the auction site that this person is dealing in stolen merchandise.”
I could go on and on but I don’t want to makes this too long. The bottom line is this: the problem of employee theft touches all of us. No one is indispensable and to trust any one person with too much can be dangerous. As one retailer from Australia put it, “Treat ‘em like family but watch ‘em like a zookeeper cause you’re the one who will have to clean up their messes”.
On a personal note before reading your responses, I believed that you should first try to determine the amount of the loss, have the employee agree to it in writing and set up a payment plan, fire the employee, and threaten to go to the police if the payments are not made. However, the issue of having the insurance company handle it is perhaps a more viable option. But the idea of putting the employee on a 90-day probational/trial period is also interesting, although I do think that it would take a miracle to make it work.
This process has been awesome. I can’t wait until next month’s case study. Write in your ideas. You are making me work but I love it and I hope you enjoyed. Thank you all for the well thought out comments.
Posted on Tue, Jun 12, 2007
I never realized what I started when I asked for ideas for a case study. You folks have kept me on my toes and have had me do a lot of reading. First, thanks for the all of the entries for this month’s selection. I could have gone with 3 or 4 different ones and I still might use them in future pieces. Second, please forgive me for not responding to every comment and idea. There are just so many that I am having a problem keeping up with my regular work. We are trying to design a better system to at least acknowledge everyone. Thank you for your understanding. Now for the case study;
A Midwest gift/jewelry retailer had been in business for 28 years. The store was owned by a woman we will refer to as Janice for the last 9 years. Janice had worked at the gift shop for 10 years prior to having children and left to be a stay-at-home Mom. When her youngest went off to school, she went back to work at the shop part-time. The store was run by a wonderful husband and wife team whom everyone in town loved and the employees of the shop loved even more. On the way back from a buying trip, the owners were in a terrible automobile accident. The husband was killed instantly and the wife suffered from a broken leg but otherwise was in good condition, other than the severe shock and sense of loss.
Janice and everyone one else pitched in to do whatever they could to keep the business going. When the owner finally returned to work, she quickly realized this was no longer where she wanted to be. So she had a meeting with her loyal employees and told them her intentions to sell the business. To shorten the story a bit, Janice decided to buy the business. She knew it was too much for her but the store had some sensational employees, plus her husband’s company had rumors circulating about moving and perhaps even some lucrative severance packages.
Things went perfectly. They bought the business, paid off the loans in three years, her husband’s company moved and he received one year’s salary and health insurance plus a fully vested pension plan. Janice’s husband, Keith, loved working in the store and loved working with his wife. Life was good.
They had a store manager who was really their right hand assistant in everything from buying, to receiving, to advertising, and even some of the accounting. Betty was a superstar. Betty was a wonderful mother and person and all of the customers loved her. She had worked in the store for 25 years, first part time while she was in school and stayed there after she graduated. Janice reported to me the store would close without Betty.
Betty had 3 children, two were honor students and attended colleges on academic scholarships. Her youngest was a challenge, always in and out of trouble. Recently, he got messed up with drugs and Betty was sending him to one treatment facility after another.
One night Janice was shopping online at eBay when she noticed some of the lines she carried were there. Just pieces, but coincidently the same pieces she carried in the store. Then she looked at the seller and where it was being shipped from. It was being shipped from her town and the seller just happened to be Betty’s sister. There were actually 7 different items being auctioned off.
Janice shared this with her husband because she didn’t want to believe it. They didn’t say anything to Betty. They checked their inventory records but their POS system didn’t always report accurately enough to trust being off one piece here and there. So they waited a few days and put a purple magic marker dot on all of the boxed gifts in the back room. When the seller had some new items, they had a cousin of Janice’s, who lived in another state, buy one. Sure enough, she received the item with the purple mark. Now they had to confront Betty.
Betty admitted to stealing merchandise and selling it. It sounded like it occurred in more places than eBay but they didn’t go down that path at the time. Betty said she needed the money for her son, for lawyers, treatment centers, and to people her son owed money to who were less than honorable types.
Betty promised she would pay every penny back although there was no way of knowing how much she owed. Plus Betty couldn’t even do that because she was barely making ends meet on her own her own. Her husband was on workers comp and was not from the hard workers. Betty begged not to report this to the police.
Janice’s question to all of us is what should she do?
As opposed to last months choice of A, B, or C. I am going to list all of the options (as I see them) and you can create your own combination. Example would be: B, G, & D for an answer.
- Fire her
- Keep her
- Report her and her sister to the police
- Don’t report her or her sister to the police
- Tell all of the other employees
- Don’t tell anyone else
- Determine the amount of money owed and have weekly payments made
- Forgive the debt
Janice’s last comment to me was, “I don’t want to fire her. I need her at the store and if she left, the business could hurt more than the amount she stole. But will our relationship ever be the same?”
Your comments are truly appreciated, not just by me but by a totally distraught retailer that my heart goes out to. If nothing else I learned one new thing and that is our merchandise once stolen has a new way of being resold. I am sure there are some security initiatives that can stop some of this but they will never stop it all. The modern day thief doesn’t have to sell things from the trunk of the car or the back of a truck down a back alley. There are now the auction sites.
This case was the most time sensitive so that’s why I selected it. I can’t wait to read your responses. This should be interesting.
Posted on Tue, Jun 05, 2007
We have all had those customers from Hell. They are never happy. They complain about everything. Our prices are always too high. We never have the right merchandise. They always tell us about a place where they can get it cheaper, faster, and better. We wonder why they keep on coming back. But they do.
I heard from a reader this week which prompted me to write about these customers. Tina Bourassa, from The Scrapper’s Delight, asked about the policy of firing your customer. She related a situation where a customer tried to abuse a coupon that had long since expired. And when Tina didn’t honor it, the customer had a “hissy” fit. Tina felt as if she didn’t want or need that customer anymore.
Do we really want these people as customers of our business? No! But do you fire them? Do you stop marketing to them? A few years ago, Filene’s Basement stores in Boston actually cancelled some credit cards because the customers returned so much merchandise.
Don’t you just feel like yelling out, “YEA, GO GET ‘EM!” But that tactic actually caused more problems for Filene’s than it was worth. Those customers went to the press and the negative publicity gave the store a black eye.
So what should we do with that type of customer and how can you really fire a customer?
Do you actually ask a customer to leave the store, refuse to serve them, ask them to never return, or as Filene’s did, cancel their credit card with your store?
Some consultants say YES and that you should focus your time on the good customers. I am NOT one of those consultants. Just typing words like, “asking someone to leave or refusing to serve” sounds a little too scary for me. It sounds like discrimination and if you do that to the wrong person, get ready for the lawsuits. How would you feel if you were refused service at a store you frequent? The answer is fighting mad.
You can quietly remove their names from your database and stop marketing to them. That’s OK but to go beyond that I fear the remedy might be worse than the problem.
Keep one interesting fact in mind: some of your best customers start off as some of the worst. Why does that happen? For a couple of reasons. First, some people just need to warm up to people before they drop their protective barrier. Once they realize you are OK they fall in love with you.
Second, and equally as important, is the customer who has the bad experience in your store. It can because of a personality clash between them and an employee, a slow special order, an unreasonable return (like after 6 months), or just the frustration of not finding a parking place. It can be anything.
The bottom line is that they are miserable, unhappy, and they are going to take it out on you. The way you handle the situation will determine the life of that customer with your business. If you can show them compassion, turn the negative around, and demonstrate to the customer that they can trust you and what you say, you will win that customer for life.
Every business makes mistakes, but customers will forgive those mistakes if they are handled the right way. Conversely, is the customer always right? NO! But they are the customer and they are allowed to make a mistake.
Will there be some customers who will still be unreasonable? Of course there will. My advice is to not worry about the mule going blind, just load the wagon. Focus on the good customers, not the bad. I feel your pain and hope that helps.
Next week will be the case study. If you have an issue you want discussed, please send it in before Friday. Have a great week!
