How Valuable is Retail Presence?

Customers often ask us where they can find us in retail, and my first reaction would be why on earth would you want to be shopping in retail?

Then … flashback and I realise Singapore is still stuck in a limbo of old and new. The old model of business, brick and mortar, retail malls, with all the malls in the city and the heartlands, retail is never too far away. As such, the convenience of everything has made e-commerce a topping on the cake, rather than the cake.

In China, where I lived for 10 years, retail was not as accessible and hence, when e-commerce cape along, it was embraced with open arms. Imagine also millions of disillusioned white collar workers stuck in a job they hate, pushing paper and now window shopping online. E-commerce was came at the perfect timing and place.

Now, back to my online business in Singapore.

So, many customers have asked about retail presence and we went about hunting for that.

We found retail to be expensive, like super expensive! Brands would be paying on average 30-50% of the product price just to be on the shelves. On top of that there would be additional logistic cost, joint marketing cost, etc.

The brands returns are minimal.

The retail outlet outlets are average.

The landlords of the malls benefit the most.

What’s the point of retail then, when brands can sell direct to customer and transfer that savings to them as discounts or free shipping?

You might argue that the 30-50% listing fee can be treated as marketing cost, as you get brand exposure. Well, that percentage is too high and inefficient. Malls and retail are passive modes of marketing, whereby you wait for customers to come to you, rather than you going out to find the right audience. So, if the retail outlet is unable to bring in traffic through their own efforts then retail is, IMO, a waste of time.

However, retail works in some instances. It works when brands need customer to experience the product or the brand. Learning to cook, teaching how to use a product.

For example, my wife and I recently bought a Thermomix, and the process to buy one was through a cooking class. You wouldn’t be able to buy one if you did not participate in a cooking experience. We were brought through the process of cooking a range of dishes from soup, buns, vegetables, dessert and drink. All within a span of 2 hours. Hence, we experience the power of cooking with a Thermomix, and the speed and convenience it brought into our life.

So, if it’s just the regular product you have been using over and over again, do you really need to scrutinise it again in person, in retail?

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