Digital Dilemma: Breaking the Vise Grip
In the past I’ve described e-commerce as an elastic band, pulling supplier and consumer ever closer. My wife Kelly recently suggested the metaphor of a vise might be more comprehensive. I agree. Here’s why:
Discussions of showrooming—along with the experience of tech integrators—on the web as the prospect’s price-checking tool could lead us to assume the impact of the Internet is totally on price. But as any good merchant will attest, the buying decision is rarely about price. That’s way too simplistic.
For the salesperson who couldn’t close, the easy out is to attribute the loss of a sale to an unacceptable price. Yet an effective marketer will attest that, when used, research generally proves otherwise. A bold salesperson, following up after the failed deal, usually learns the customers’ perception of a lack of value caused him to walk.
Of course, the easy way to manage that is to negotiate price. But effective combatants of showrooming are learning that dropping price only leads to lower operating margins. Savvy retailers and successful tech integrators know the means to higher profitability is to enhance the consumer’s expectations of value beyond that which the b to c operator can provide.
Value enhancement is a topic much broader and deeper than the bounds of this column will allow us to explore effectively. Worth noting, however, is the fact that the emergence of the Internet as a retail marketplace has changed the value perceptions of consumers worldwide. According to Wikipedia, the first instance of e-commerce took place in “1971 or 1972” when a “cannabis sale between students” was “arranged.” Wikipedia goes on to tell us that the first b to c transaction, in which a consumer placed an order online with a reseller, took place in 1984.
But according to the same account, it wasn’t until April of 1995 that the first secure, web browser-initiated, b to c transaction took place via the Compuserve Shopping Service, in the UK, with the purchase of a book. It’s notable that Jeff Bezos launched Amazon.com in that same year. In the opinions of many marketers and merchants, Amazon can be attributed to have presented the concepts that changed consumers’ perception of value to the benefit of e-commerce in the same way, I contend, that McDonald’s created the fast-food business—meaning, you can lower the price as long as you clearly state exactly what the customer can expect from you. Then you CONSISTENTLY deliver to EXACTLY those expectations.
Like McDonald’s, b to c should really be viewed as a channel within a larger marketplace. The simple answer to how to do an end around the fast food mentality value proposition is to convince the interested customer that you are capable of consistently exceeding those expectations in meaningful ways. Like high-end steakhouses attract customers with higher expectations, CE retailers and integrators need to elevate their value proposition.
Back to Kelly’s vise metaphor. I adopted and enhanced it to create a vision of how the Internet has impacted the “traditional” go-to-market infrastructure. Imagine the vise: a pair of jaws, connected by a long screw spanning the distance between them. One jaw represents the actual factory or source of goods. The other is the consumer. For centuries the two jaws have been separated with a good amount of the screw, between them, exposed.
Over the years, for various reasons, people in various roles (we know these folks as “middle men”) have taken positions on the screw. They’ve helped move goods from the factory to the consumer in exchange for a mark-up. Introduce digital technology (called the Internet) as a source of energy now turning th screw supporting all those middlemen. The screw turns and, like lumberjacks in a logrolling contest, the middlemen are forced to dance. Some fall off.
For others, the Internet cranking that screw—and pulling the factory and consumer ever closer to one another—causes their space on the screw to disappear. What are we all to do? We’ll spend some time considering that in coming installments.
Jeff is the President/Managing Consultant of J Kussard Consulting, LLC. His practice is focused on Brand, Product and Organizational strategy and implementation for CE manufacturers. A dedicated CEDIA Volunteer, Jeff currently serves on the CEDIA Governance Committee
and is among the first to be honored as a
CEDIA Fellow. Jeff can be reached at