Recently I purchased two products from two separate online retailers. The first item was a TV and the second item was a Smart Phone.
Both online retailers touted their ability to deliver significant savings to the customer (i.e. me) due to their low cost business models. And to be fair, the prices on both products were far lower that I had seen in traditional retail outlets. Additionally both online retailers provided free delivery. So in summary, the proposition to me was brilliant. I was purchasing well known products, through reputable online retailers at below market prices and I did not need to leave the comfort of my lounge chair. How could I go wrong????
Retailer 1: The TV
The website gave the option to choose the delivery date. I purchased on a Monday and chose to receive the product 2 days later on the Wednesday. At 10am Wednesday morning I received a call from the delivery driver saying he will be at my house at approximately 12 to 12:30pm. At 12:30pm my new TV was delivered.
Experience Rating - Excellent
Probability of repeat purchase - High
Retailer 2: The Smart Phone
After I purchased the item, I received a confirmation email that included the line "Products listed as "In Stock" are usually dispatched within 3 business days." 3 Days came and went very quickly. In fact 7 days came and went very quickly. I called the order inquiry line.... and was asked to leave a message. Then I sent an email, to which I received a response saying "There have been slight delivery delays on some Samsung phones in the last week. We pride ourselves on the speed of our service and delivery and almost always our Canon, Apple, Nikon and Samsung products are dispatched within 48 hours. There have been some airline issues for International flights ...." yada yada yada. Long story short, my phone will be delivered next week - 15 days post the purchase date.
Experience Rating - Crap
Probability of repeat purchase - Low
Now lets break this down into a very simple value chain analysis. (Note: Please do not email me saying this is not a proper Value Chain. I understand this. This is merely for illustrative purposes).
|Retailer B: Smart Phone|
|2||Price product and highly competitive rates||Achieved||Achieved|
|3||Provide comprehensive and easily to navigate on line retail environment||Achieved||Achieved|
|4||Accept payment for product (nice way of saying take upfront payment)||Achieved||Achieved|
|5||Provide delivery window||Achieved||Achieved|
|6||Deliver product within specified time frame||Achieved||FAIL|
This is an excellent example of how failing in execution can minimize one's competitive advantage. Here we have two like businesses with similar business models. And yet one has an significantly increased probability to generate further income from its customer (me).
Why is this? In a previous article (Under promise and over deliver) I quoted Tom Peters, "Formula for success: under promise and over deliver". In the case of Retailer B, simply delivering would be a win (sorry I could not resist).
The reason the the final outcome, that is repeat purchasing, is so different is the ability to execute the total Sales process.
Sales is not simply getting extracting money from a buyer. It is understanding the total value chain that is required to generate repeat purchasing. The inability to execute against any step along the Sales value chain reduces a company's competitive advantage. In the case of Retailer B, as a consumer would you care about the problems with the international flights or the outsourced freight supplier i.e. the retailers logistics. No, as a customer you would care about making sure the product you have paid for arrives on time. Quite simply the customer expectation is "deliver what is promised"!
It does not take a genius to develop a strategy of selling high volume product at competitive pricing. However it does take great execution to deliver a competitive advantage.