Old Foes Join Forces In Bid To Survive
Sydney Morning Herald
Tuesday July 11, 2000
Online retailers have traditionally shunned real-world bricks-and-mortar businesses but, as David Braue discovered, attitudes are changing and new alliances are being formed.
BELEAGUERED online retailers, once casually dismissive of the old-world bricks-and-mortar business model, are now eating their words as partnering with real-world businesses becomes a mandatory requirement for managing a customer's service expectations.
Online retailer WishList.com.au last week became the latest online vendor to tie up such an alliance, joining petrol retailer and convenience store chain BP Australia to improve delivery of its range of gifts and collectables.
From August, WishList customers will be able to choose to have their orders delivered to their local BP service station, where they'll be stored in a locked room. When the goods have arrived, customers will get an email or message on their mobile phone and can pick up the order at their convenience.
Present delivery methods such as Australia Post or TNT force customers to find a way to meet business-hours couriers in order to receive goods ordered online. By contrast, all of the 250 inner-city BP sites initially scheduled to handle WishList stock are open 24 hours, seven days a week. BP has more than 1,200 properties nationwide, which will ultimately give WishList local after-hours delivery to most parts of Australia.
Since the packages are scanned at each point in the delivery process, WishList.com.au business development and strategy director, Paul Ronalds, says the new system will improve the visibility of products down the supply chain.
``To date, once orders left our warehouse, we had fairly limited control over the progress of our order, unless the customer rang us and told us they didn't get it. But this deal gives us pretty much full control over customer service way past our warehouse. It's solving the last-mile problem."
Higher shipping volumes could also see the BP delivery option become cheaper than conventional counterparts, Ronalds adds.
While a revenue-sharing model will give BP some financial benefits from handling WishList inventory, BP e-commerce retail marketing manager Greg Beilby admits the company's bigger goal is ``to increase frequency [of visits] to our network. When customers get there, we'd like to be able to deliver other products and services that they want. WishList are an online convenience play, and we're an offline convenience play. This is about trying to reposition our brand in consumers' minds".
Such partnerships are becoming more and more frequent as e-tailers cope with the challenge of improving their inventory management and customer service.
Online retailer dstore, for one, has maintained a partnership with sporting goods outfit Rebel Sport since its inception in order to facilitate customer returns. Computer retailer Harris Technology is expanding its virtual store into the real world using manned kiosks installed in K mart and Target stores. And last month, CD retailer Chaos Music tied up a deal with electronics retailer Strathfield Group that will give it a stronger foothold in the real world.
A failure to shore up business fundamentals is proving fatal for some online vendors. Last week, an opportunistic David Jones revived its online hopes by buying out once buoyant retailer TheSpot, which operated online toy, beauty and health care stores and earlier this year secured funding from Amazon.com and Fairfax online subsidiary F2.
But F2 recently reneged on the funding, leaving TheSpot in a vulnerable position that was exploited by David Jones, which launched an experimental shopping site several years ago but had been in online limbo ever since. It has now shut down TheSpot's subsidiary sites, gutted the company's staff and will repurpose TheSpot's e-commerce infrastructure and relaunch it.
Vincent Sweeney, CEO of Deloitte Touche Tohmatsu's startup ePark, says such events prove real-world companies are still positioned to be highly relevant in the e-commerce age. ``Tying up bricks-and-mortar with e-commerce is an ideal solution, and was always a bit expected," he says. ``TheSpot's situation was more unfortunate; it would have been more rewarding conceptually if David Jones had bought TheSpot's business. But going forward, I think alliances like this [BP and WishList] are going to be very common and make a lot of sense."
© 2000 Sydney Morning Herald