Want to start up a retail business? Learn from one of the best
Wednesday, December 3, 2014/
This week I was fortunate to have a meeting with the extremely successful Paul Greenberg from NORA (National Online Retailers Association), and former managing director of DealsDirect, about the ins and outs of retailing.
Paul Greenberg is a pioneer of digital retail. Co-founding DealsDirect in 2004, under Paul, DealsDirect became the single largest online-only retailer in Australia. After leaving DealsDirect in 2013 Paul founded NORA to share his knowledge of what he dubs ‘new retail’, which has technology and customers at its heart.
NORA is an association that delivers networking opportunities, tours and insights for retailers and providers who want to stay in front of the ever-changing retail industry.
I couldn’t resist but to ask if I can get his insights to share, so here we go!
Start-ups have become increasingly cheaper in the Web 2.0 generation. What are five tips you’d give to budding entrepreneurs taking their first leap into e-commerce?
1. Retail is detail – good retailers know that the hundreds of little things they do perfectly is the definition of their success, not the big five things they do.
2. Brand first! Customers will identify with your brand. What makes you different? Do you do demonstrations of the product, or do you put equity in the quality of it?
3. Communication – what channels do you offer for customer service? Multiple touch points can be resource intensive but highly effective in the long run.
4. Social media is great to engage customers and build your brand equity. When communicating, be a human – not a marketer. Customers know you sell products and they may buy them, but don’t tell them to, they’ll just ignore it (and it looks really bad on social media doing shameless self-promotion).
5. That device in customer’s hands that does everything for them. It’s important. Invest in mobile technology and connect with them at any time of the day.
The internet can be a strange place, what ways can newbie businesses avoid falling down the rabbit hole?
All businesses have the same awkward growth stage. Margins, cash flow, staffing, allocating resources, customer acquisition and retention… you can see it’s hard. But the more specific traps to retail are:
- Not having a unique sustainable proposition (USP). How is anyone meant to tell you apart from the competition if you have nothing that makes you shiny and attractive?
- Placing too much focus on the competition and their movements. If you’re constantly looking sideways you’ll never look forward, or worse – a tree you didn’t see in front of you, you’ll hit. Remember, innovation not retaliation.
- Losing focus. Remember when Aesop told you slow and steady wins the race? He lied, sorry to burst your bubble. But it’s true, if the hare hadn’t fallen asleep he would have won – it’s just about maintaining focus.
In the planning stage, is scale or sale the cream to the milk – which should rise to the top?
There is no right answer; it’s circumstantial. But in my vintage, perhaps it is wise to state that, a small profitable business can trump a large business haemorrhaging funds. The only caveat is that small and sustainable is sexy. My grandfather always said, ‘fast growing unprofitable businesses are like eating chicken soup with a fork. It will keep you busy, but you will still be hungry!’
In this economy, what is more important, customer retention or acquisition?
Think of it like a yin and yang scenario. There needs to be a balance otherwise the whole situation will go into chaos. I have seen retailers spend copious amounts of money on customer acquisition and not bother with existing ones. The data shows acquisition is definitely more expensive in the long run, compared to retention. So, as the musical number goes ‘if you can’t be with the one you love, love the one you’re with.’
What was your mantra in the pioneering days of DealsDirect?
The focus at DealsDirect was on a short tight range, with a lot of depth. Though, whilst DealsDirect is known as a pioneer online department store, in truth when it launched it was the precursor to the sites such as Catch of the Day and Groupon.
As we grew, we decided to go towards a wider range. Customers love diversity in range, but they also like impulsivity with things at prices they can’t resist. Discovery is fun!
The first slogan for DealsDirect was ‘Love a Bargain,’ but that changed as the business moved towards range, convenience and value.
Being a retailer
These days the word channel has a lot of weight to it in the retail world, is it important to be an omni with multi in retrograde? What is all the channel stuff anyway?
You know what, retailers should never think in channels, their customers don’t. I believe three pillars lead new retail: technology, customer centricity (data and insights), and a global borderless perspective. The question is then how are you using technology, data and insights and this flat world to achieve your business goals? Are your sales up from last year? Remember the purchase path is non-linear and multiple touch points help inform your customers. So forget channels and keep your full head of hair.
Social media, that elephant in the room, what does it do for retailers?
Never in history has there ever been such an umbilical nature between retailer and customer as there is now. Social media is a powerful tool. But be social, I mean it’s called social media for some reason. Don’t be business-y. They meet sometimes, yes. But delivery and timing is crucial on social media, as are lines and length if you’re going to conduct business on social media.
If you had to place one giant above the rest in retail, who would it be?
Well, considering you mentioned giant, it would be fatuous of me not to suggest Jeff Bezos of Amazon. He has always said ‘start with the customer and work backwards,’ and his business lives that. He doesn’t see Amazon as a retailer, rather the ‘most customer-centric organisation on Earth.’ Priceless.
What is one little pearl you can impart to us from your days with DealsDirect?
There is a lot to say, or impart. I mean, a war cry from the early days comes to mind, ‘pushing pushing.’ It is more about pushing the boundaries than break into a deep sweat. Learning through experiences is a powerful one as well. Though, my favourite has to be failing forward, using those small failures as stepping stones for achieving success.
Paul’s knowledge is legendary and any would-be retailer or new startup, would be wise to listen to his thoughts.
Fi Bendall is the managing director of Bendalls Group, a team of highly trained digital specialists, i-media subject matter experts and developers.