The fight for the regions: How to online store to win against an offline retailer

Timofey Shikolenkov , director of marketing and business development in Audiomania

Active work with the regions is what retailers should pay special attention to. On the one hand, this is an opportunity to bring e-commerce in Russia closer to Western standards and give regional customers a feeling that they are not “second-rate” customers, but interesting and necessary for the store.
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On the other hand, the process of organizing sales in the regions, like any other non-trivial task, involves a number of “pitfalls”.

Whom do we attract

Even now, many Russian online stores continue to operate within a single region: most often these are large cities and adjacent territories. Often, traders explain their selectivity by the desire to “start small” - such an approach in e-commerce can hardly be considered effective. If an online store is struggling to increase conversions, regions can become one of its most reliable sources.

Particular attention should be paid to those who do not live in large regional centers - it is this group of customers that is ensuring the growth of the “paying” Internet audience (everyone who wanted to connect to the network and make online purchases in relatively large cities has done this for a long time).

Residents of the regions often don’t buy online not because they don’t have the money - it’s simply unprofitable for them to pay a price for delivery that is comparable to the cost of the product itself: you yourself would agree to purchase a product on such conditions that is not essential goods for you without which you could well do?

Most potential buyers, in this case, think this way: it is better to replace goods from an online store with an analogue that can be bought offline offline, or wait for a trip to the nearest location, where there is more choice and prices are not so high.

It would seem that in this case, it turns out that online stores, who have decided to penetrate the regions, will inevitably encounter powerful resistance from local offline retail and, possibly, lose. However, we were able to show in our experience how to stop competing with local networks - a little more about that later, but for now let us tell you how it all began.

How to attract

Attracting buyers from the regions is far from such a difficult task as it may seem at first glance. Many in the Russian segment of e-commerce complain that we have, they say, not America, and the infrastructure is not developed enough to easily arrange deliveries to any part of the country. With this, of course, you can not argue, however, as in any situation, this one has its pros and cons.

Yes, it’s impossible to build an extensive delivery network “at the click of the fingers”, but think about whether you need delivery in its ideal version - with your logistic service, door-to-door service or network of outsourcers who will take all the trouble to build this system from start to finish?

Very often, the problem is not that the current conditions are bad, but that the entrepreneurs themselves want "either ideally or in any way": you will not be able to offer customers services equivalent to those from Amazon, but you can at least make for your customers something. And this “something” is likely to be much more than “nothing”

The undoubted plus of the current state of affairs is that the Internet buyer in Russia (especially in the regions) is not spoiled by convenient services. It is enough to show minimal attentiveness to the needs of your potential customers to earn their trust and respect - simply because your competitors are either not interested in this segment at all, or are subject to all the same mania "to take only what you can do perfectly."



We in Audiomania , for example, started with the creation of a simple and convenient delivery calculator - it would seem that it could be simpler and more logical, but this service allowed us to distinguish favorably from our competitors in the eyes of regional buyers. For a start, it turned out to be enough for customers to simply understand how much the delivery to their region will cost, what the delivery options are, how much time the product will spend on the way, depending on the chosen transport company, where you can come for the goods, if delivery to a particular location is difficult.

It is important to emphasize : such a calculator is a relatively easy-to-implement product (we have about a month to create the first version - for more details on how we created it, read here ).

In an environment where most Russian online stores still prefer to be limited to a textual description of the delivery conditions, the ability not to look for your settlement in the “X-Y Zone from the regional center” and quickly calculate various options (again, not necessarily very cheap) distinguish you from your competitors. Not because you created your extensive logistics network, and not because you radically changed the approach to the process: you just made the life of your customers a little easier and more convenient.

It is very important to understand : when you, as one of the market players, cannot radically change the existing physical infrastructure, you should start small and think about what changes you can organize “on the client side”. This is a simple and obvious step, which is probably why it is so often ignored by retailers who are accustomed to the “tricky moves” and “secrets” of increasing conversion.

In our case, this approach has paid off - and on such a scale that is not mentioned in the guides to “secrets of e-commerce”: the calculator brought a 300% increase in the number of orders from the regions.

However, the calculator is not the only thing that an online store can do for its customers in the regions. If we talk about e-commerce "in the best traditions", when delivery costs the buyer for free, then this format can be implemented in Russia - if the process is thoroughly approached. At the time we in Audiiomania decided to conduct an experiment and now we deliver goods worth over 10,000 rubles for free all over Russia (with the exception of remote regions), as well as to Belarus and Kazakhstan .

On the calculator page, the buyer automatically sees as a free option (in this case, we choose the specific courier service for the delivery ourselves - and this is usually not the Russian Post) or paid and chooses the most convenient format for them. On the one hand, this is how we lose some amounts on delivery (the threshold value of 10,000 rubles is relatively small compared to our average check and excludes the possibility of “hidden earnings” for free delivery).

On the other hand, we attract a loyal audience: even if our client does not choose the free option, for him the very fact of such an opportunity says a lot to the company. And since free shipping to the regions is practiced by a very small number of online stores, this approach can become a serious competitive advantage, both in comparison with other online stores and in comparison with offline.

Why regional retailers are not always your competitors

Above, we talked about how to make online retailers closer to regions, including remote ones, by the retailers themselves. However, many businessmen have a fear that all such efforts will be meaningless: online will not withstand competition from local offline stores, customers' habits, which by default will be used to buy in the old-fashioned way, cannot be changed. But here too much depends not on external conditions, but on your own efforts.

For example, Audiomania sells home audio equipment of Hi-Fi and High-End class: it would seem that it is extremely difficult for users to purchase this type of product online - the purchase is not cheap, the customer should definitely listen to what a particular set of equipment sounds like: in such conditions, we must inevitably lose to stores that have listening rooms and shops in the region.



Outdoor speakers Penaudio Rebel Three

However, the reality is that our competitors based in the regions often have problems with assortment planning. But at the same time they are ready to bring anything under the order. Without a good understanding of how this will suit the client, working as a simple “order table”.

In this situation, an online retailer will benefit from providing expertise of a level that a regional client will not find in his city. If you can promptly advise a potential buyer, tell him not only about the technical characteristics of the product, but also give a comparative assessment with other models on the market, based on practical application.

And this is achieved only due to the vast experience of listening to different acoustics and equipment, communication with representatives of manufacturing companies, excursions to the production. Your level of work with the client, even if online, will exceed the offline stores by an order of magnitude, where the buyer will at best be shown a review from the magazine and repeat what is written on the packaging or in the product description.

Conclusion : if you want to compete with regional offline, make a bet on your staff of consultants. They may be much smaller than what is required for an offline store (and especially a chain store), while in fact they will work in a much larger area, among a larger number of potential buyers. Do not be lazy to invest time and money in the education of consultants: make them real experts.

Thanks to this approach, we were able to "unfold" the situation with regional sales in our direction: our customers know that they will not find the necessary level of consultants in regional stores who spend many hours in listening rooms to put aside in their head an understanding of how this or that sounds acoustics complete with different electronics and when playing a particular musical genre. But what about the listening rooms? After all, buying goods “by recommendation” (even by a very good recommendation) in the case of our specifics is still not the best solution for the client.

And here the qualifications of our employees are to our advantage: regional customers of large sets on the advice of consultants buy a plane / train / bus ticket and come one day to our salons - to Moscow or St. Petersburg, where there are all the necessary conditions for selection. What is 3-6 thousand rubles in comparison with the risk of buying something wrong for a hundred or two hundred thousand? Insurance, ensuring that the acquisition does not become a major disappointment, which will have to look at every day, and really turn into a pleasant part of life for many years.

For the regions that are beyond the Urals, such a trip will cost more, but there is practically no alternative. The capabilities of local vendors are even more limited than those of their colleagues from the European part of the country. Of course, for the client this option is not the most comfortable. But in combination with our expertise and completely different possibilities, it gives the buyer confidence that the costly acquisition will not disappoint him.

Conclusion : if you have expertise that takes you to the level above regional players, customers (if necessary) will be ready to come to you, in order not to buy a “cat in a bag”. Although the option with listening rooms and expensive audio equipment in general is quite exotic for retail and most online stores will not have to resort to such tricks - it will be enough just to be able to professionally approach the question of solving a client problem.

By the way, the idea that by paying for goods in an offline store, the buyer gets it immediately (or at least several times faster than when buying through the Internet) is also far from always true - at least in the case of stores from regions. The fact is that, in an attempt to adjust the assortment policy, regional stores are forced to reduce the amount of goods stored directly "in the shop window".

Therefore, if the buyer needs a product that, in theory, is, but in practice is not available right now, the store has to buy it. And for this you need to negotiate (with a distributor or wholesaler), pay, wait until “from the other side” they send it. In addition to the cost of the delivery itself, the store also has to incur temporary costs - and not only comparable with the delivery from the online store, but also exceeding it.

On the other hand, we, unlike small regional retailers, can prepare goods for shipment to the region within 5-10 minutes from the time of order, by the evening it arrives at the transport company’s terminal and goes to the recipient region at night. Delivery in 2-3 days is a common thing now, if the client is located in a major Russian city or is located near a million-plus city west of the Ural Mountains.



Small showroom of Audiommania on m. Electrozavodskaya

How to stay ahead of local merchants without having your own offline store nearby

Another scenario is the creation of a network of regional offices or stores. This format may seem promising, but we decided to abandon it in favor of the development of an online store and delivery to the regions: we will explain below why.

The fact is that it is impossible to cover the whole country or at least million cities with the same level of service that is really required in the case of selling Hi-Fi and High-End equipment. No company has yet succeeded. And the matter here is not at all in very expensive goods that need to be carefully selected and selected for each other.

A buyer of a pair of speakers needs an assortment of equipment that allows them to choose from at least two or three options that are suitable for the client based on their premises, as well as musical and sound preferences. It is also important to consider the equipment that the customer already has. This imposes certain requirements on the assortment, which must be presented in the store (not to mention the service - but this was higher).

And here questions begin. Is it possible, with a profit for business, to organize a network of full-fledged stores with the necessary assortment and service? So that it would be possible, without being sly, to recommend to a client this or that solution, guided by his individual conditions, and not just by offering what is available. In the current situation - it is unlikely.

A huge number of display cases of acoustics and electronics also need to somehow implement. And, of course, this is done with a very big discount. And, if so, where to get profit? The current level of demand in the regions makes it impossible to get it. Even at least go to zero.

It turns out that at least in this segment, e-commerce has a huge advantage over the network of regional offline stores: both from the point of view of the buyer (the range is large enough, the level of service does not depend on where the customer lives), or from the point of view of the seller (such a business -model is much more resistant to risk).

At the same time, even the range of an online store should not be of a cosmic scale. For example, Audiomania assortment is 10 times smaller than our nearest competitor, but we believe that it is enough to satisfy the needs of every lover of high-quality sound. Except in rare cases where the customer is an ardent supporter of a particular brand with which we do not work. In other cases, we provide a sufficient selection of carefully selected options that are well versed.

findings

1. Customers from the regions are an excellent source for increasing conversions. Do not underestimate them and treat them as if they are not sufficiently solvent or "not worth it to mess with them."

2. It is not necessary to do everything the same way as, for example, in the USA, in order to provide customers from remote regions with a level of service that is an order of magnitude superior to the capabilities of competitors: it is enough to provide customers with a convenient and clear interface and delivery prices that are adequate for the purchase price. Well, if your task is to win a loyal audience, which will come back to you again and again, think for yourself the possibilities of free delivery. Think of it as an alternative to additional investment in brand awareness: perhaps this promotion format will do more for you than another ad campaign.

3. Do not be afraid to compete with offline stores in the regions. With the right approach, expertise and the level of service that regional players cannot provide to their customers may be on your side. In our case, this level is so high that customers prefer to come to us, if necessary, rather than buy where they are closer. Do not skimp on the formation of a team of professional experts that will advise your clients: attract the best employees and give them the opportunity to learn and develop. These people will not only increase the value of your brand, but also allow you to bypass competitors from “traditional” retail, who cannot afford to hire only top experts at each store.

4. If you have your own warehouse, and you have correctly organized its work - consider that you can surpass a regional retailer with a small assortment of goods "in stock" in the speed of delivery of goods to the buyer. He will have to place an order with the distributor, and you will be able to accept and process the purchase many times faster. Small retailers in this case can sympathize: either they force customers to wait, or inevitably incur costs because of unrealized goods.

5. The development of our own regional network of representative offices is not always justified: in this case it is very difficult to meet our own high requirements for assortment policy and quality of service. At the same time it is important to understand: to place high demands on the assortment - it does not mean purchasing a huge amount of products in the most diverse categories. It is important to carefully select the goods and thoroughly understand their specifics: then, with the assortment several times smaller than from competitors, you can “fray” like with other online stores, and with offline retail.

In Russia, there is a perception that domestic buyers go to the Internet for cheaper, lower quality and generally questionable products, wanting, first of all, to save money. And expensive purchases are acquired exclusively “in the old fashioned way”, in large offline stores. We in Audiomania on our own experience refute these stereotypes - and if there are more companies operating on this principle in domestic e-commerce, the entire industry will benefit from it.

PS Our blog on GT .