New Store? I'll Get You a Cash Register!
Updated: Jan 22, 2021
In 1975, the average number of years a company spent ion the Fortune 500 list once they made it on, was 75. By 2020 that number was down to 15! More remarkable is that half of all the companies on the Fortune 500 list in 2000 are out of business.
Going out of business is only one and possibly the easiest way, to exit the Fortune 500! And it's the quickest one!
Some businesses are not so lucky, dying more slowly; lingering long enough for their death march to be a death wail! Remember Barnes and Noble? They had a 150,000+ square foot store on 18th Street right off Broadway in New York City’s trendy Union Square neighborhood. I used to love to visit that store and sometimes went into the city just to spend the day there.
But they wouldn’t let me shop there nor ride the subway to get there in my pajamas and so now, I just buy my books from the couch.
The penalty for not allowing me to shop for books in my jammies? A fall from a high of around 350 to their current spot at number 685 on the Fortune list!
On the drive home from Florida, I listened to “Subscribed” by Tien Tzuo. Tien was the Chief Strategy Officer for Salesforce, the $17Bil CRM giant. After the check cleared, he left to found Zuora which provides software support services for subscription-based e-commerce sellers.
Think “Harry’s Razors!”
For $5 per month Harry will send you "on the regular," fresh blades for your scruffy cheeks. Make it $10 and he’ll include the shave cream and the post-shave moisturizer. You keep paying and Harry will keep all your hairy parts well groomed.
You all get how these subscriptions work so I won’t bore you on the details. But let me bore you with the accounting!
Every month on the first, BEFORE the business of the month has even begun, Harry knows exactly how much money he is going to make!
Accounting for these web-based businesses is forward looking!
That must be the new math! Because in my 32-years holding the checkbook at Tremont Paint, my family’s 112-year-old New York City independent paint stores, I was only able to look one direction: backwards!
Knowing what my revenues would be for the month before the month began would have been a neat trick! Not as neat as being able to adjust my overhead to a level appropriate for the revenue I knew was coming in! That certainly have made my life easier.
If your doctor is looking forward, she’s giving you a blood test! If she’s looking backwards, she’s giving you an autopsy!
Both are medical procedures…but there’s a difference.
Part of the “looking forward” advantage Harry has comes from a unique business model: subscriptions. While I don’t see paint being sold via subscription anytime soon (though maybe decorating services?), the data that supports your business in today’s economy will need to come from the same source Harry uses: their website! Because whether you’re selling paint or subscriptions for blades, the greatest source of data about your business will be your website!
That’s not e-commerce by-the-way. It’s your website, there’s a difference.
The e-commerce segment of your website will only tell you what your customers are buying. Important information but it’s just the beginning! If you want to know what is inspiring your customers to buy, you’ll need website data! Where are they coming to your site from, how much time do they spend on each page, what pages they visit, etc.
The Good Ole Days!
Remember when you used to tell customers at your counters about the pitfalls of selecting colors on a phone? Quaint advice from a time when buying a car, house, clothing or a month’s supply of razors all required a pen! Try telling someone who just trusted their phone to find a house and get a mortgage that they can’t trust that device to select a pink for their daughter’s room.
Picking colors and finding inspiration has moved online! And that gives a tremendous advantage to the brands who provide that inspiration online where the consumers are! If you think that people are going to find inspiration in a Pinterest post which features a paint available at Home Depot and then put their phones down, call you, ask what your hours are, drive down to your store when you’re opened, you may be expecting too much from consumers.
The brand they seek now, is the service they want! If they want the color in a post they saw on Pinterest, that's the brand and store! They’ll just click the link and POOF……
You’re Barnes and Noble! Still around, but MUCH smaller!
And so, it’s not just e-commerce which dealers need to invest in. Dealers will need robust websites which allow for integration with social media and other tools for communicating with consumers while also providing inspiration.
Think of it like this: your website is your color rack, your peg hooks, your displays and decorative features that will make people think “give me that!”
E-commerce? That’s just your cash register.
Your wouldn’t build a store with nothing in it but a cash register and expect it to be successful would you?