Retail was founded on a very simple principle: to acquire and make available for people that which they could not easily or affordably obtain on their own. Thus, buying wholesale and selling retail was – and is today – a service to the community. Whether the true need of the consumer was convenience or access to something that made life better in some way, the retail business was never about the item for sale. In fact, I maintain that with just one exception, the real product in retail was, and always will be, one of two things: convenience or happiness. The exception, of course, is when it is both.
If you can make life for easier or more pleasant for your customers than your competition can, you will always win. If you doubt this for one second, look at the rise of smartphones. These are items that we clearly cannot live without, except that for thousands of years we did. The price, relatively speaking, is astronomical, and yet there is no market segment that they have failed to penetrate.
Lessons from Zappos and the New Jersey Nets
Not buying it? Consider these examples from three of my favorite business books:
In Delivering Happiness: A Path to Profits, Passion, and Purpose, Tony Hsieh describes the realization that Zappos was not in the shoe business, or even in the online retail business. Once they realized that they were in fact in the customer service business — and made the somewhat frightening decision to be entirely in the customer service business — the purpose, principles and process quickly outpaced the commodity (shoes). As a result, the company hit the magical billion-dollar sales mark three years ahead of anyone’s best projections. And while to many the idea of buying shoes online may still seem absurd, happiness and convenience are clearly a powerful combination.
In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, Michael Gerber uses his conversations with fictitious entrepreneur Sarah about her business All About Pies to illustrate the idea that Sarah was never in the pie business. Rather, she realizes, over the course of many conversations, that she is in the business of caring about the pies she makes, and delivering that care to her customers. That is to say, it is the process, not the pie that matters, because while you can buy a pie just about anywhere, happiness is much harder to find.
In Marketing Outrageously: How to Increase Revenue by Staggering Amounts, Jon Spoelstra describes being hired as a consultant to save the failing NBA franchise the New Jersey Nets. Not only did Jon turn the team around, he took a team that had never sold out a game and sold out an entire season, without a good team. How did he do that? He did it by announcing unrepentantly (despite nearly being fired on the spot) that the Nets were not in the basketball business. Not even in the sports business, he said. Their entire turnaround hinged on the singular idea that the New Jersey Nets were in the family entertainment business — in other words, happiness.
A simple question
So, if you’re one of the many people considering the important role of technology in the future of retail, ask yourself a simple question: Does this technology make it easier, or somehow more pleasant, for your customers to do business with you? After all, you are in the service business, and the only two products you have to sell are recession-proof. So, if people aren’t buying — or buying like they used to — maybe it’s the service that’s waning. Or maybe, just maybe, you’re trying to sell the wrong product.
Elijah May is founder and chief strategist at BrandGarde.
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