In the last few days, the world has turned upside down for many retailers and especially, of course, for all retailers who primarily generate their sales in the stationary sector. More or less from one day to the next, almost 100% of the turnover is lost, but the costs remain for the time being.
Even if many dealers now switch to short-time working and possibly can arrange deferments or even rent payment waivers with property owners, many industries have the problem of inventory. Seasonal items (fashion) or goods that quickly lose value (consumer electronics) are just two possible scenarios here, where the aim is now to quickly sell off stocks in order to build up as large a cash cushion as possible. It cannot be assumed that the current situation will be resolved within a few weeks and regardless of whether it is valid for 2 or 6 months, for many it is a matter of bare existence.
This is where a business model that had actually already been declared dead comes back onto the stage: the shopping club. In your own online shop, you probably can’t cut prices in half that easily because of agreements with manufacturers or other reasons. Within a closed user group in an online shop, which may only be open for a few months, you can quickly start a sale without complex processes and usually without major sanctions on the part of the brand manufacturer.
Let’s take the example of a mid-sized textile retail chain that has 40 brick-and-mortar stores that are now affected by the shutdown. Most employees can be put on short-time work and rents are deferred or partially waived. Now it’s all about turning those full warehouse shelves into cash quickly and getting as much room to breathe as possible.
Shopping club in 14 days
The shopping club is a closed online shop platform. The aim is to operate a shopping club with attractive offers under the retailer’s brand, in our example a textile retailer, along the lines of the Zalando Lounge or Brands4Friends. The principle is similar to that of a shopping TV channel.
And it works like this:
- Regular sales promotions are offered.
- At the same time, between 20 and 30 products should always be offered with a significant price advantage.
- On the start page of the online shopping club, the visitor initially only sees the reference to the shopping club and which products are offered with which price advantage.
Exemplified here by the Zalando Lounge:
Only after a successful registration by means of e-mail address, Facebook or Google login and the agreement that the customer will be informed by e-mail about current promotions, the visitor gets access to the promotions.
Assortment & Offers
50% of the offered products
“Branded items 20% below Amazon/Zalando&Co”
These items may be transitioned into the retailer’s normal 10% discount campaigns following the sales promotion at the club.
50% of the offered products
“Hobo items from warehouses and brick-and-mortar stores.”
Procedure & systematics of the “Club”
As I have already described in detail, the offers are only accessible to registered users. A promotion has a fixed duration, e.g. 4 weeks. However, the goods will not be shipped until the end of the sale and within 4 weeks. This procedure offers the advantage that the enterprise resource planning does not have to be connected in an MVP phase. This approach also facilitates logistics and customer care handling. In addition, it is possible to define a “minimum sales quantity” for a promotion. Only when this quantity is reached does the “sale” occur. For example, you offer an Adidas sneaker for a price 20% below market price. However, the “sale” only happens when at least 500 customers order the sneaker. With this strategy, you create additional “social shopping” components for promotions that can drive sales.
Product data maintenance, prices & availability
Each promotion is to be advertised in the form of an individually designed, but predefined shopping world based on 3-5 “templates”. The retailer either enters his 30 to 50 products manually in the backend or uploads a csv with the data. If necessary, he shoots photos with his smartphone and assigns some attributes. In general, the shop solution manually defines how many items can be sold from a promotion, and the gross sales price is also defined here. An exchange of product data, prices and availabilities with a connected merchandise management system will not take place. Inventory management within the promotion quota defined manually in the shop takes place in the shop.
Payment, Shipping & Logistics
Due to the already described fast MVP approach regarding shipping and orders, the collected orders at the end of a campaign are simply downloaded as CSV export from the shop and imported manually or via CSV import into your shipping solution. Payment has already been secured in the shop, so it’s just a matter of managing the shipping process.
The key factor that defines the success of this short-term immediate action is to generate sales as quickly as possible.
How can retailers attract customers to your shopping club quickly and in sufficient quantity?
Many retailers already maintain Facebook and Instagram accounts – they use these to reach their regular customers and, if applicable, invite them to explore the new shopping club with a coupon. It’s an opportunity for many merchants now to finally collect data from their own customers, as they won’t let customers into the club until the customer leaves the email and agrees to receive emails in the future. The prices have to be so radical that the offer will be spread virally through social media by customers. In addition, our sister company, the KlickPiloten (Google Premier Partner and Facebook Marketing Partner) can support you so that you can achieve your first successes within a few days:
Budget estimation and time schedule project realization
Based on the fact that we define the creation of your online shopping club on one of the established online shop technologies with maximum dynamic as well as pragmatic processes, it is our goal to make sure that your new shopping club goes live within 2 to maximum 4 weeks. According to the short runtime we are talking about a small 5-digit investment frame until going live to take a first version live and generate sales and thus liquidity. Because we rely entirely on cloud-based technologies, our monthly licensing and hosting fees are in the low to mid 3-digit range.
CEO NETFORMIC GmbH & Author