The Australian - The Deal - - Entrepreneur - BY MOR­RIS KA­PLAN

A REV­O­LU­TION IS TAK­ING PLACE in on­line re­tail. Sales growth con­tin­ued apace in Au­gust, up 22 per cent year-on-year, ac­cord­ing to the NAB On­line Sales In­dex. And it’s no se­cret that in the past 12 months many more re­tail­ers have taken on­line se­ri­ously – in­clud­ing vet­eran Gerry Har­vey, who started sell­ing his prod­ucts on the in­ter­net late last year.

But what is not widely known is how the suc­cess­ful on­line model is bring­ing cus­tomer ser­vice peo­ple into transactions. We are mov­ing from one- click-to- or­der to­wards a far more hu­man ex­pe­ri­ence, one with real cus­tomer ser­vice.

Ap­pli­ancesOn­line founder and chief ex­ec­u­tive John Win­ning has ex­pe­ri­enced ro­bust growth since launch­ing in 2005 and says his busi­ness model is based on tar­get­ing time-poor cus­tomers who need to re­place an ap­pli­ance.

“Typ­i­cally, we have cus­tomers who al­ready know what they want, whether it’s a fridge or wash­ing ma­chine,” he says. “They don’t need to come into the store to touch the prod­uct; they have the mea­sure­ments; they know and trust the brand. It’s not quite the same as more per­sonal items such as shoes or cloth­ing.

“The big­gest fal­lacy about run­ning an on­line busi­ness is that you don’t need to in­ter­act with cus­tomers. To the con­trary, the Ap­pli­ancesOn­line team ap­plies old-fash­ioned cus­tomer ser­vice to ev­ery trans­ac­tion, and the team has worked hard to repli­cate the best pos­si­ble cus­tomer ex­pe­ri­ence in an on­line for­mat. We aim to re­spond to any cus­tomer query within 11 sec­onds.

“It’s not so much the case that we want cus­tomers to stay away from the phys­i­cal store; rather, we have built the model so that the web­site will give them what they need. Con­sumers are de­mand­ing the con­ve­nience [of on­line shop­ping]. If they know what book they want to buy, they’re go­ing to buy it on­line. It will be cheaper and more con­ve­nient. Our sus­tain­abil­ity is based on dis­cern­ing cus­tomers com­ing back and spend­ing with us and telling their friends about the ex­pe­ri­ence.”

An­other ded­i­cated on­line player with a very high growth rate is Book­topia. Claim­ing his Aus­tralian base as a key dif­fer­en­tia­tor against the mam­moth Ama­zon, Tony Nash and his co-founders have built a vi­brant busi­ness with an­nual rev­enues in ex­cess of $20 mil­lion. “We started eight and a half years ago with a $10-a-day bud­get; it was a side project. Now we have more than 3000 square me­tres of space,” Nash says, adding that be­gin­ning as an on­line re­tailer pro­vided a plat­form for growth.

“We started off hold­ing no stock; we took or­ders and shipped books. It was a sim­ple model. But we have lis­tened to cus­tomer feed­back and evolved. They told us we were slow. We noted that clas­sic, peren­nial ti­tles sold steadily – To Kill a Mock­ing­bird, How to Win Friends and Influence Peo­ple, Napoleon Hill’s Think and Grow Rich and oth­ers. So we started to stock them and de­liver promptly. We com­mit­ted to hold­ing stock, rather than [be­ing] a ful­fil­ment ser­vice. It was quite a break­through.”

For Nash, growth has been about sales. “We sim­ply had to sell more books. You get in­no­va­tive. You get fo­cused. You try all the mar­ket­ing chan­nels – even let­ter­box drops. What works? On­line works. We don’t have Ama­zon’s mas­sive power, but we do have a cus­tomer-cen­tric ap­proach. And we’re uniquely Aus­tralian.”

This cus­tomer- cen­tric ap­proach is the next phase of in­ter­net mar­ket­ing’s evo­lu­tion. It’s about fast ship­ping, strong pack­ag­ing and a “track and trace” ca­pa­bil­ity for cus­tomers.

Book retailing has other chal­lenges; one of them be­ing print ver­sus ebook. “That’s the big­gest trend. How are they [books] go­ing to nes­tle into our life? Self-pub­lish­ing is an­other big one – like Fifty Shades of Grey, which started off as an indie ebook. The book is only a de­vice [for de­liv­er­ing in­for­ma­tion]. And we are ask­ing: How would you like to con­sume that in­for­ma­tion?”

He says that tra­di­tional pub­lish­ing is like a fief­dom, and authors are sub­servient. “With an IT back­ground, I was used to it be­ing the case that you took care of cus­tomers. In pub­lish­ing now, read­ers are gain­ing power through on­line dis­tri­bu­tion and read­ing de­vices.

“As on­line be­comes more preva­lent, peo­ple will check re­view sites and best­seller lists. A book site be­comes like a cat­a­logue. To sur­vive, you must know your shelf. Whether it’s travel or wine, peo­ple want an in­formed view. You need to be in­volved with your cus­tomers. If they are sat­is­fied, they tell other peo­ple.”

Book­topia’s Tony Nash says the de­ci­sion to hold stock was a break­through for his on­line book­store.

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