During the great pandemic of 2020, more than one curve was bent. While e-commerce has been on a steady incline since 2000, the pandemic supercharged that growth. Unable or unwilling to visit stores, many consumers quickly got comfy with shopping online. Now that vaccines are starting to roll out, the big question is how many shoppers will stick with the point-click-purchase process?
The chart below from the FRED (Federal Reserve Bank of St. Louis) shows the growth of online sales, starting in 2000. The gray columns are past recessions, and the yellow one is the current recession that has not yet reached a point where we can say it’s over.
At our dealership, we have always shied away from selling products (for this article, I’m primarily talking about parts and accessories, I’ll touch on unit sales at a future date) on our website. There were a few key reasons that drove this decision.
- If we are going to do something, we want to be the best at it. There are some big players in the powersports e-commerce space, and we didn’t have the capabilities to compete with those companies.
- Plug and play e-commerce technology was not available to us. Collecting payments is easy, but integrating on-hand inventory with professional listings and up to date images is a lot of work. The drop-in e-commerce modules from the primary industry website providers are bad at best.
- We still feel that customers like to touch and feel products before they buy them. While we won’t always offer the cheapest price, instant gratification and knowing that the product actually fits makes for a powerful closing tool.
- And finally, we still see the opportunity for growing our brick and mortar. There are lots of areas where we can improve. Getting into the online marketplace would just further stretch our resources.
So, if you aren’t yet ready or willing to throw your hat in the online ring, how do you compete with the merchants who inhabit that space? It’s not impossible.
Stocking – Have the products in stock that your customers want. This means monitoring the market, working with vendors to ensure you have the cool new items in stock, and rotating out old inventory for new.
Merchandising – Inventory needs to be clean and well displayed. Just because an employee has great closing skills, it doesn’t mean that he or she is great at setting up and showing off your inventory.
Credibility – Today’s consumers have access to an almost unlimited amount of information. It’s important that your employees understand how products work, and why they are better than the competition. There is nothing wrong with saying “I don’t know” as long as that phrase is followed up with “but I’ll find out for you”.
Returns – Online retailers make the process of returning and exchanging items easy. Many e-commerce retailers will even pick up the cost of shipping (both ways) regardless of why the consumer wants to return the purchase. Commissioned personnel are rarely excited about returns, but it’s part of the process.
Add-ons – Getting the customer in the store is the hard part. Once there, it’s important to maximize every transaction. Locate impulse items where customers have easy access to them (think candy in the checkout lane at the grocery store) and have an incentive for your employees to hit certain “line items per ticket” targets.
Pricing – If ~15% of retail is happening online, that means that ~85% of retail is taking place in the real world. E-commerce retailers have many advantages when it comes to pricing. They can buy in bulk, they don’t need to have a retail space, employees don’t have to be ultra customer-centric, online stores can be open 24/7, there is a long list. E-commerce retailers also have additional costs outside of what brick and mortar operations see. Servers, software and bandwidth, higher transaction fees, shipping (for sales and returns), increased fraud, etc. When only comparing the retail price, e-commerce retailers might hold the advantage. However, having a product that a customer can see, touch, feel and then take home today is the most powerful closing tool. All in, many dealerships can get within 10% of the online price. If the average counter sale at a powersports dealership is ~$120, it doesn’t take the world’s best salesperson to clinch that transaction.
Bargains – Some people just want a deal. I’ve completed research on some of the largest retail merchants. They use technology at a level we can only dream of, but all isn’t lost. Use your no-sale reports to start marking inventory down at graduated intervals. Don’t wait until something is 36 months old before you discount it 10%. Put those items in an area where they are easy to find. Even if you don’t make a profit on the sale of those items, you freed up cash to buy something new, and now have more space for some new items to showcase.
Warmth – Customers like to do business with people they relate to. Even the best built websites don’t have much of a personality. If your customers come in and they are greeted by name, treated with respect, and have a great experience, then they will come back time and time again.
In the mid 90’s, I remember the owner of our dealership expressing serious concerns about the internet, and how it was going to destroy retail. Here we are, 25 years later, still selling motorcycles, helmets, and chain lube. E-commerce retailers are legitimate competition for most powersports dealerships, but the challenges they present are not insurmountable. They will only win if you let them.
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