Once upon a time the technology required to run a shop was highly mechanical. Cash registers whirred and binged, cash draws slid open with a crash, paper docket printers chattered away, and there was a host of ancillary devices such as EFTPOS terminals, barcode scanners and electronic tagging applicators.
Even if you had a background in technology, configuring point-of-sale software was not something to rush into.
One of the greatest impacts of software moving to the cloud is the blurring of boundaries between areas of expertise. Retail is no exception. In the past 10 years the internet has challenged the whole concept of retail – eBay and Amazon were just the vanguard. Now bricks and mortar retailers have to fight against The Iconic, Cudo and Deals.com.au. What’s a shop owner to do?
The cloud is coming to the aid of retail in a big way. A range of cloud apps can help stores present a more modern and professional front, handle stock more efficiently and take the fight to the web.
In homeware, cafes and restaurants, point-of-sale is moving from the till to the tablet. Programs including Vend, Retail Express and Positive Live can run from iPads and Android tablets. It’s not just about looking hip; these apps sync with inventory and stock management databases, accounting programs and other retail apps never before available to small stores.
A good example is business analytics. Many store owners would have lacked the accounting chops to know much more than which products sold best, quarter by quarter. PeopleMine connects to point-of-sale software and produces pretty pictures of highly useful data. An owner can click on a brand, see a list of products for that brand and their revenue contributions.
PeopleMine groups your customers according to their buying interests so a shop owner can send targeted emails for sales, events or discounts rather than bombarding the whole database each time.
Customer loyalty schemes have been a hit in small stores - the humble free-coffee card is a classic example. Perkville can create a virtual customer reward program in a couple of minutes, it claims, without requiring hardware, loyalty cards or long term contracts.
Perkville syncs with a point-of-sale so an owner can see which customers are the biggest spenders and send them exclusive deals.
The most interesting area is the descent of online retailing software into the stores. E-commerce platforms are replacing desktop stock management platforms so a business can track all stock and where it’s sold, whether online or in-store.
Magento is one of the biggest e-commerce platforms and is the leader in Australia by market share (42 percent). It was bought by eBay in 2011 and is used by 150,000 retailers globally.
Roy Rubin, Magento’s COO and co-founder, was in Sydney recently for a company conference. Rubin told Cloud Channel how cutting-edge retailers in the US are creating a fusion between online and in-store “experiences”.
“Often merchants want to create a great campaign or a visual experience where our consumers can try things on virtually,” Rubin says.
Warby Parker is a retail startup in the US which has enjoyed a lot of success in eyewear. It sells designer frames including prescription for $US95 home delivered. The retailer recently moved from NetSuite to Magento so it could explore virtual shopping services.
Warby Parker customers can upload a photo and try different frames on their face, something Rubin called “virtual try-on”.
“Warby Parker have taken out the middleman and they’ve gone direct. They can offer a high value product at a low price point,” Rubin says.
“They can help customers get a feel for the physical frame, take a photo for their configuration, and they send frames to your home for free. It allows them to get a good feel in their home.”
Online retail was only the first step, however. Warby Parker has opened showrooms in New York where customers can walk into a store, view the inventory and try on the physical frames. But crucially the ordering process remains online. The customer uses a kiosk or computer in the store to make the order themselves.
“You don’t walk out with any goods but you get the experience of the brand,” Rubin says.
The Warby Parker model retains the accessibility of a bricks-and-mortar store without duplicating ordering systems, logistics and transport. The downside is that the customer doesn’t get the feel-good retail rush of walking out of a store with their glasses. Time will tell whether customers are happy to wait until the next day.
Most retailers will have the opposite challenge to Warby Parker; they will want to recreate the in-store shopping experience on the web. But how do you do that?
The answer is to ask the same sorts of questions that you would when developing an in-store persona.
“How do you communicate your brand to customers? What kind of interaction and engagement with consumers will differentiate you? It’s basic stuff that retailers that have been doing for generations,” Rubin says.
“How do you merchandise, how do you bundle, how do you create a seamless experience and a differentiated product mix that presents a lot of value to the consumer?”
But a bricks-and-mortar retailer has the advantage of locality – independent bookstores with strong identities have maintained local customers even in the face of Amazon and the Book Depository, for example. An online bookstore must have a very precise selling point for attracting customers away from the industry giants.
“If you’re selling the same things that people are selling on eBay it’s going to be a very difficult business to run,” Rubin says. “If you can find perhaps a different story to tell you’re selling not just a product you’re selling an experience.”
For some retailers, identifying their own brand is a hard task. Smaller merchants struggle to replicate the charm of a boutique homewares shop in the blank canvas of a web page. It’s not impossible, however.
Melbourne handbag retailer Sterling and Hyde was founded by Amy Singe, a former lawyer. She had no retail experience when she opened her shop in Sorrento in 2010 but in three years has built a thriving wholesale division.
In 2012, she launched Australia’s first ‘design your own leather handbag’ service called Sterling and Hyde Custom where women can create their own handbag.
Sterling and Hyde relies on Facebook to generate leads and create a loyal community of customers. It makes special offers on its Facebook page such as 50 percent discounts for the first items of new stock in return for customer reviews.
In North America a niche retailer in rockclimbing equipment has built a niche following among women climbers.
Verticalgirl.com uses large photos to showcase readers doing challenging climbs, which encourages others to climb more – and buy more gear.
After creating an attractive online experience, what comes next?
Mobile, of course.
“It’s really ensuring that you’re serving the customer where they’re at, whether that’s smartphone, tablet or browser,” says Jimmy Duvall, Magento’s head of product. Developing mobile specific sites or using “responsive” web design where a website automatically displays an appropriate amount of information for the viewing size ensure the customer has the same, highly customised experience regardless of platform.
“That’s something that the consumer comes to expect – no matter how I interact with the business I will get the same experience,” Duvall says.
This rings truer in Australia than elsewhere given it has one of the highest penetrations of smartphone device in the world.
The high penetration “presents opportunities in the Australian market that are unique,” Rubin says. Australian retailers are responding by investing in flexible and innovative apps.
Close integration between online and offline stores is another goal. Some retailers allow customers to buy online and pick up in-store or do in-store returns.
This level of logistical sophistication can only work with a unified inventory. E-commerce platforms can already integrate with point-of-sale terminals so that in-store sales are recorded against online stock.
Magento and other e-commerce players are pitching to become the source of truth for retailers.
“We are seeing a lot of retailers using the ecommerce platform as their overall commerce platform. But it depends on how technical the retailer is and how many systems they’ve already got in place,” Rubin says.
Moving a store online? Avoid these mistakes
Magento co-founder Roy Rubin has helped many businesses develop online strategies to fuel their e-commerce dreams. He says there are two common mistakes made by small retailers the first time around.
“Instead of starting small and learning a small merchant will go after the Big Bang approach where they have to do everything,” Rubin says.
Rubin recommends instead putting effort into creating a highly branded experience for a very small project, watching how customers react, and applying those learnings to a broader, staged roll-out.
“You may find that the competition doesn’t have it right and you will find a new inventive way of doing things,” Rubin says.
Another classic small business error is thinking you can do it all yourself. “You do need to leverage the knowledge in the community,” Rubin says. “Find a local partner that is able to work with you to get your sites live or add customised features.” Not only will a partner give you a faster result but you won’t fail at the same mistakes.