Is “ONLINE” a disruption? Is “OFFLINE” dead?
What do people think of online vs offline models? More importantly, can businesses afford NOT to go online?
Online is just another channel
Online is not disruption in its entirety. Cheaper, better, faster, more choices is not just due to the “online economy”. People have been advancing for centuries and finding cheaper/better solutions continuously.
The silk road, and the rails made it cheaper and faster. Allowed more goods discovery and more trade.
The invention of the telephone multiplied that effect.
The first flight of the airplane multiplied that effect.
The internet is a mere extension of how goods/services can get discovered but not “delivered”.
There are much more disruptions backend that empowered this phenomenon.
Imagine a local shop previously selling handicraft sweaters. Now with the boost of the internet and being online, they now receive 5,000 orders a day.
Can they meet this demand?? What are all the disruptions required at the backend to meet this demand??
Embracing the “online” disruption without being willing to adopt all the other backend “disruptions” is merely seeking commercial suicide.
certain STRENGTHs & pitfalls
Online channel has the MOST reach. Has the ability to give you the most customers in the shortest time period and has global reach in mere minutes.
However, customer conversion rates (% of visitors ending up buying something) can be horrendous if not managed well. This will lead to mounting marketing/advertising costs where businesses may not find a returning profit at all.
Just think of how frequent do you actually end up buying something after visiting an online website or an app?
Offline actually has the BEST CONVERSION RATE.
Think of how frequent do you end up buying an item when you go into let’s say, Uniqlo? A Supermarket? Popular Bookstore? I would say more than 50% if not closer to 90%.
Should a business go online or offline?
I hope you can see that now, it becomes clearer that they are just sales channels.
It just depends on what products make more business sense being offline and which ones make sense being online. Does the business have products that require high reach and could endure crazy low conversion rates? Or do they have products that require the High Conversion rates that Offline channels can offer and could endure low reach?
So why are offline businesses getting all the stress and coming under such high pressure and seemingly facing the threat of “extinction”?
- They are like the “local handicraft sweater shop example” trying to go online or just merely putting up whatever they were selling offline onto a website and not fixing the backend disruptions required to support it nor understanding that the online market is only suitable for certain products/ services.
- Online businesses are constantly improving and have been improving in the area that they are not good at, which is Conversion Rate. Through the improvisation of sales funnels, technology and proper customer engagement, online customer conversion rate is creeping closer and closer to the high conversion rates offline businesses once use to hold dear and enjoy.
- Offline businesses are not pulling the gap ahead in terms of their edge in customer conversion rates. While online businesses improve their’s from <1%, to 2% to 5% and so on, offline businesses are stuck at their “proud” XX% conversion rates.
So, on one hand, you have a famous offline business (mostly) going into the abyss, facing the “disruptions” of “online” retailers like Amazon, Ebay, Direct Toy Makers going online themselves and etc.
While on the other, take a look at Hamleys Toy shop from the UK.
If you have been to a Hamleys in London, if not Watch the video, as a parent, I challenge you to walk pass this shopfront with your kids WITHOUT entering. And if you do enter with your kids, I challenge you to exit WITHOUT buying ANYTHING.
What’s the difference in understanding their customers between Toyrus and Hamleys? How have one better understood their advantage of being an offline retailer and the EDGE that being offline gave?
Being an offline toy shop isn’t just about being a toy distributor or somewhere that people can come conveniently to buy some toys. It is about being a place where people want to come everyday and feel Happy! Surprised! Creative! Inventive! Adventurous! Excited! Loved!
Hamleys had crew members stationed at almost all four corners of each floor to just PLAY! with kids on all the different toys they carry.
Are you able to observe and differentiate which are the companies that truly understood “offline vs online”?
Thank you for reading
~ to see is not to see