THE TREMENDOUS BOOM OF THE DIGITAL WORLD PLAYERS,..OR THE NEXT ECONOMIC BUBBLE?

Or how leading digital players make business, without making profit..?

By analyzing the major online retailers,..almost all have something in common...they haven tremendous increasing sales figures every year...but do not have... or make profit!

It seems to be part of a mystery, to know the real profits of above companies. 

If they have any profits???

By reading the comments of Coolblue..."that they make many millions of profit last year,..but due to strategic company decisions, it is a secret", by looking to Amazon, being in business for over 20 years, still not making money or Zalando, after 6 years of operating, achieving his first annual group profit in 2014, by mainly reducing its sales and marketing costs in order to obtain above positve results, it is creating a lot of doubts about above...

As independant retailer, for over more than 25 years, I always thought that basic business rules and the end results (profits) are the key and the target, as company to achieve.  .

That controled growing, always went together with strong clear company results. 
In order to achieve investment capital, a healthy business plan was needed..and that you could be proud, to announce every quarter year, your positive company results.

I would like to tell you the story of the "BREAD WAR" in Valencia, Spain. 

About 4 years ago, a local business man, decided to reinvent the bakery market, selling French bread at 20 euro cents, instead of the 1.20 euro. It started as a tremendous success,  He opened sudenly 5 bakeries, selling more than 15.000 pieces a day,..he had more than 150 people working for him. There were long waiting lines, to buy his cheap bread.

By using an aggressive low price expansion plan, killing local traditional competitors, he created a local revolution and lots of enemies.  
Unfortunately, due to his too fast expansion (in order to obtain the necessary volumes), his very low margins and the lack of fresh capital, in order to maintain his increasing production capacity, made him very fragil, for any 'out of control' situation.
Last month, he went bankrupt..leaving tremendous debts.

Above story, makes it clear, that a strategy, based on rapid expansion and low pricing, in order to penetrate and kill your competitors, is not the best and very difficult to maintain on a long term.   
It is amazing to see, that above online retailers, are able to continue to receive the back-up of investors, putting their trust into above companies, without receiving any profits. (after so many years)

Listening to the strategy of Amazon...

,... "they are not into short-term profits", nor "into short term profitability"..it is "all about growing and evolving" and "profits will come later"...

we could ask, for how long, his investors, still will have the patience, to wait for some return.

                    Are we not facing a kind of collective internet trance?

By analyzing the evolution and growth of above companies, we can see varios common points:

- They all started their activities as online retailer, many years ago. It was a virgin market,..

   easy to control,..as there were no other key players. 

- They all made a very rapid expansion. 

- They dont make real profits (comparing with their masive turn-over)

- They are all very secret about their real company results.

- They all started with the idea, eliminating the traditional retailer, delivery right

   at your home, but end up opening physical stores or showrooms, in order to give

   a better service.

- They are heavely investing in worldwide property owned logistic facilities.

- They all started with some small specific owned  productgroup, ending up, being

   a global platform for other brands to sell and or distribute their products.

As we can see, they all benefit of a kind of worldwide internet trance, where everything in 
the future is and will be focussed on digital retailing. Like there will not be any other form of retailing.
A kind of blind trust, to follow above companies and their strategies.

However, when a company does not have real results or any clear profits, 
after so many years, can we not talk about a speculative bubble?

Are they not.....

"Creating a super fast continuously growing project, with tremendous sales figures, covered and misusing this especific worldwide internet mood?"

A kind of internet bubble, a kind of  unusual very prolonged expansion, without any clear profit results.  Selling a project or business, using above mood, convincing investors to follow them untill the land of nowhere?

Lets called it speculacion.

Are we not just talking about future "Overvalued" logistic platforms, offering all kind of products around the world. (not even cheaper than classical retailers)

When they started, they were benefiting of a new unkown situation, which they were controlling. Internet was relatively new. Their competitors were the traditional retailers, not at all prepared for this digital change. 

It was quiet easy. 

"Offering the lowest prices of the market, 24hours, at your home,...backed up with a unlimited creditline."

With the time, they started realizing that above traditional retailers also got informed about internet, that digital retailing is more that just placing products on a website, that you still need physical salespoints, that you need a logistic system in order to serve above, that you can not continuously sell at the lowest price, earning almost nothing and hoping to maintain selling high volumes, that maybe, in order to earn real money, you need also proper products. (some or suddenly launching proper brands)

They tried to replace the global traditional retailer, offering a complete service but were faced, more and more with the reality of retailing. 

You, always, will need physical retail points, a well organized distribution system and a human team.
Offering this services have a cost, you still have to cover.

Today, all mayor traditional retailers have adapted or urging themselve to switch towards this new digital market, having the advantage of the experience of their product segement, possessing physical stores, a well controled distribution systems and a well trained team.

By implementing the latest digital technology, combining with the "savoir faire" and the tremendous experience they possess, they most probably will place above digital platforms on a 2nd plan.

At the end..they are the real retailers.

THUNDERSTORM IN RETAIL LAND.

Or how retailers are been shaken up....

Macy's, Tesco, Vroom & Dreesman, Brantano, Gap,...etc..just some of a large list of retailers suffering in a fast changing retail world.. Some have already failed,..others try to survive,   reorganizing and cutting down the heavy existing cost structures, by closing stores, changing their complete strategy, focusing and our copying some of the more succesfull competitors. 
Often too late.

Being retailer today, is not anymore, how it was yesterday....yes, only yesterday....
In a fast moving consumer market,...where consumers are evoluting much faster than retailers can follow, it is more than important as retailer, completly control the off and online business. 

By analysing the main problems of some of the above retailers, we can detect some very common errors.

- Very boring physical store experiences for the consumer.

- Outdated products groups and business models 

- Too seasonal depending sales situations. (today, a retailer can not depend anymore on a 

   warm winter  or cold summer situation)

- Unmotivated sales teams and a lack of a "culture" mentality in the company.

- The non-existance of a properly owned omnichannel structure.

- Too heavy management estructures, with long time decisions delays.

- Too heavy company cost estructures and very high rental prices.

- Too many venture capital investments situations, losing the real core essential 
   of the purpose of the business.

- The complete lack of a value added, ..."we are different" concept, and most of the time, 
   just focusing on a more continuous "low price" discounter concept image.

It is clear, that due to, the tremendous switch to the digital area, where people are almost 24 hours connected to the mobile or other digital application, (just took the train this morning, and almost everybody was mobiling), the increasing power of some of the world leading e-commerce players like Amazon, Alibaba,...etc..(.which have managed to control all major retail flows and putting the new rules), retailers have to act immediatly by:

- Start integrating the "off and online business" as a company philosophy, 
  tuning both as complementary and vital for the future of your business.

- Leaving the endless "discount" concept philosphy (there will always be one cheaper), 
  moving towards a more innovating and a new "must have" product group.

  Lets  call it "differentiating". Creating an "appealing assortement" by having 
  the right product on the right time.

- Understand your consumer, by using the tremendous internet, smart phone, etc...tools,
  in order to detect, listen and react to your consumer interest and sentiments.

- Getting the pricing right. Today, consumers are more price-aware than ever, 
  comparing prices off and online continuously. 
  There are no secrets anymore, as all market prices are visible and trackable.  
  Immediate actioning is requiered.  

- Controlling your stock levels, by not depending on too seasonal sales behaviours, 
  using a  flexible retail and mechandising planning, controling your main production.
  Using small collections with a fast leadtime, adapted to the lates market trends
  and needs... (one of the best examplas of above is the "quick market" response
  of the Inditex group).

- Controlling your retail rental prices. Often, due to excessive rental prices
  for prime locations, retailers often put themselves into financial problems.  
  A "flagship" can be nice,...but it could be letal for your company too..

As you can see,..above, are just some of the ways to implement in your retail organization, in order to to be prepared and affront major changes in retail land.
However, altough we are confronted lately, with this digital retailing, we should never forget that it is and always will be complementary. (representing often a 5% to 10% of your regular physical sales figures)
We should not forget the importance of the employees, who are the people who connect in between the company and the consumer.  Even online,..they make the difference. 
It is more than needed,.a super motivated team on all llevels of the company, who knows to manage all retail tools and understand the reason to use them, in order to give the best service to their consumers.

At the end, buy using the words of a top shoe retailer in the Netherlands, retailers have to put the focus on the consumer, instead of on the technology.  This technology is very important but it is no more, than a a very helpfull unmissable tool, to make it the easier for the client, to buy your product and to interact on all levels.

People still make the difference.

WE ARE BACK...

                                                                               

Dear readers,

After taking a sabbatical year,
picking up lots of new ideas,
we are back on track,
preparing some nice articles for the blog.
Happy 2016.
So, stay tune.

Thanks.
Leo                                                                            

2015, A NEW START,..OR HOW GETTING YOURSELF MOTIVATED...

2015...A NEW START!

Each year, in january, we are full of energy, ready to forget the previous year, starting with a lot of new and good intentions, plans and projects.  Often, during the occurring of the year, we are losing again our track and are falling often into our typical habits.
Making good intentions is one thing, realizing them is often something different.
In order to maintain above,..here we give you some tips to stay focused with plenty of energy on your real 'New Years' targets.





* SET UP TARGETS: 

As in every company, you need to know where you want to go.  Define general targets for yourself and for your company, write them down. It will be your guide to help you to obtain want you want in your life.  Be careful, stay flexible and be ready to adapt yourself, when it is needed. Be not afraid, to put your targets on a regularly higher level.

*CONTROL YOUR MIND:

A positive mind and thoughts is always more helpful in what ever you undertake.  Avoid negative thoughts. Often when you have a bad day,..it helps to relax and to convince yourself that 'the day after' it will be different. ..And most often..it is like this.

*STAY HEALTHY:

A healthy body is a healthy mind. You can only think clear and take good decisions, when you feel good in your body and automatically in you mind.  Take time,..to take care of yourself,..do some sports exercises..  Your health will take care of you and give you the energy to succeed. A healthy person reflects a healthy business.

*THINK BEFORE YOU SPEAK:

Often, we talk to fast. We talk, before we think.  Can we listen?..Try to control your voice, starting to listen first,..it will help you, to avoid a lot of misunderstandings.  People will feel comfortable with you and you will become clever.

*LEARN FROM YOUR MISTAKES:

If you can listen, you often will understand better and learn from your mistakes.  Nobody is perfect.  Accepting your mistakes, reenforces you as person.

*AVOID NEGATIVE PEOPLE AND SURROUND YOURSELF WITH THE MOTIVATED CROWD:

Negative people are waisting your time. Motivated people give you energy and a guideline to follow their way of success.

*DO NOT BE A PERFECTIONIST:

If you try to be too perfect, you wast your time in details and less important things. You start worrying about everything and automatically not advancing. Just do it. (even if it is not a 100%)

*KEEP YOURSELF RESPONSIBLE FOR YOUR RESULTS:

As in everything, only you are responsible for your decisions, the way you want to go, what you want to do with your life. How and where, you want to lead your company. Nor 'being lucky' or 'God' are the reasons of your well being.

*BROADEN YOUR HORIZONS:

The best way to advance, is try new things,..or things a different way.  It will widen your knowledge, broaden your mind and make your life much more exiting. Avoid passivity, because it will lead to failure.

*RELATIVIZE SUCCES:

Often when you had a success, you become complacent. Even after this success,..you have to keep and or find the same ambitious to achieve a new or better target.  Be carefully, without loosing your roots and the position from where your started.

As you can seen, above very simple tips will help you, to maintain your good intentions and a kind of guideline, to questionize yourself during 2015.

Have a fantastic 2015!

SEASONS GREETINGS.

A MERRY CHRISTMAS AND A VERY HAPPY NEW YEAR FOR YOU AND YOUR FAMILY.

 

WHY SOME RETAILERS HAVE SUCCESS AND OTHERS....OR LETS CALLED 'THE ART OF BEING CHOSEN'

Probably one of the best books about in-debt retail behavior and a must, to understand why customers choose one retailer over another.
Martin Butler, a more than experienced retailer, marketeer and writer has shown with above, some key points to understand the success of some of the key international retail players.

Remarkable...

.....THEY ARE BEING CHOSEN....



A 2 years worldwide retail study, interviewing retailers around the world, asking all..'what was the most important key to obtain above positive result', Martin Butler came to some important conclusions.  Successful retailers have a company mindset of being chosen and are.....

BEING DIFFERENT

Being different is the key to 'stand out of the crowd'. Being different can be in your complete marketing mix offering a unique product, concept or service and a way to be successful. 
Often, being different, are outstanding details. (not always big differences...)





BEING TRUSTED

Trust in a company can come from customers previous experiences with your company, but also  its behavior towards the society in general. A proud and loyal employee reflects trust,...a correct and honest marketing and price policy,...
Being trusted is an action you control. It is a like longterm relation.  Something you build up.  Todays social media is a vital way to distribute above trust. 
Being trusted is something you have to earn. Trust is the way, the people, perceive your company.

VISIONARY THINKING AND CREATING IDEAS

Visionary thinking is the art of looking in front, without seeing the sky. 
Thinking, imagining, creating ideas, visions and projects who one day... will be reality.
Apple would be nothing with the visions and illusions of Steve Jobs.
Often, visions are simple and can be find around the corner. They are the key, consumers choose them.


SHOW THE STAFF HOW THEY APPRECIATE THE JOB DONE

A key to your company success is the appreciation from and towards your staff.  Knowing how and when, to motivate and appreciate, for the work done, opens the door to self motivated staff members, reflecting the trust and satisfaction, as a red line through out your business.
A motivated staff member is a happy and satisfied client.



What have above successful companies en common!

The key of success and challenge start in the mind...lets called it 'THE SUCCESS MINDSET'.

It is all about broadening your imagination. That what, we really believe, most often comes reality. Not be afraid to think bigger, even if we have fear, doubt or compare it with other peoples previous failures or situations. 
Some key factors are needed to succeed.

1. PASSION 

You just have to love what you do.  If you don't enjoy your job, product or service, how can you convince somebody else, to love it and at the end to buy it.  Passion is the thing you could talk about for hours, what you find easy,...what you really want to do....there is no time limit...So,..never go into a business or career, you don't really love! (should be a key definition and a standard question to all young people, BEFORE electing there future study orientation.  
'WHAT DO YOU REALLY LIKE TO DO,...WHAT IS YOUR PASSION'


2. TOTALY SERVICE ORIENTED

The key to success, especially in retail is good service and the base to build up trust and a longtime relationship with your customers.  All todays successful retail companies started small and managed to convince their consumers about their good intentions. The 'good service' principle is the key angle of their business.
Just apply 'personal excellence' to everything as a standard rule.


3. LEARN FROM THE MISTAKES

If you are afraid of making mistakes, your are paralyzed.  Making mistakes is human and the only way to learn and to do it better next time.
All mayor inventors have tried a lot of times, before getting the right result. All mayor retailers have made a lot of mistakes, but have learned to adapt them on time, on the different market situations.

4. GO STEP BY STEP

The key to success is going 'STEP BY STEP'.  About building a successful, profitable and sustainable business.  Often, growing fast is the beginning of the end.  Going step by step, is keeping control on your situation (mainly financially, as often it is the reason why companies lose control about there actions and own decisions)

By analyzing all successful retailers, you will find common points in all.  They had a dream, a lot of passion, made clear goals, supported by a clear action plan and a super motivated staff.  They are persistent and maintain the focus on what they do de best.  They are never ignorant, always open to learn, recharge and know how to adapt themselves. 

'They just invest continuously, to become better in all ways.'

NEW YORK...PROBABLY FIRST PHYSICAL AMAZON STORE CITY.

NEW YORK GET THE FIRST PHYSICAL AMAZON STORE. 

As already informed in our previous posts, Amazon has plans to open its first physical store in Manhattan, close to the famous Macy's.  This kind of showroom, warehouse facility will offer, its, mainly own high tech products like Kindle e-readers, tablets, smart phones,..next to some key other branded products of the Amazon catalog. .(the ones we like to see, try and touch before buying them), offering a 24hours quick delivery same day service.  The store would also function as a pickup and product return  base for the internet orders.

The main idea is getting more detail feedback on its products from the consumers, responding at the same time to a quiet big part of consumers, who buy still more emotional. (like to see and touch, before buying)

Considered as a test case, according to the results,..several similar sales points are planned.

Where Amazon, have shaken up completely, the classical retail market, offering lower prices, buying online, downgrading the physical store to merely, a showroom. (as clients try the product in the store but buy it online), today we see a swift towards a needed physical presence in the market.  Today,  most physical existing retailers have adapted there strategy and offer at the same time a sales point (with well prepared sales staff and good personal service) and the facilities to buy at home through there own website. (but never forgetting there core business strategy,..the physical retailing).
As already mentioned before,...they are fare more ahead ....than Amazon.

The 'Pixmania' experience and failure in Europe, has shown, that selling online, at much lower prices than your physical competitors, having at the same time, a kind of store, showroom in a quiet expensive A1 location,...is not profitable and most of the time fatal for above strategy and or company. The obtained retail margins (due to the selling at very low prices and the tremendous extra costs of the 'return goods' service) does not allow any mayor costs.

Often, the consumer gets confused and you will perceived, as neither good at both.  As always, it is important to stick to what you know the best.
  
At the end you always win, when you do, what you know.