Companies Diversifying Platforms to Stay Relevant Isn’t Always a Good Thing

In the beginning of June 2017, online fashion business resource Business of Fashion reported that Condé Nast’s e-commerce platform initiative, Style.com, would cease trading operations and redirect users to Farfetch, a more experienced high-end, luxury online marketplace. The creation of Style.com was intended as Condé Nast’s glossy segue into the digital world. Style.com was supposed to be proof that the conglomeration could pivot and succeed beyond the struggling publishing industry.

The shuttering of Style.com is a huge admission that maybe not every retailer or industry player should exist in multiple channels. Condé Nast has conceded, to more than one publication, that their expertise in content hadn’t translated, as they had anticipated, into a seamless and effective e-commerce platform. There are different skill sets required in maintaining a seamless e-commerce site, one of which is a polished business model and execution strategy. That e-commerce expertise is what Farfetch’s marketplace platform does have.

The main point of why traditional stores enter the digital world and vice versa is to meet the demands of where their customers shop. However, Condé Nast entered the e-commerce game late and without really understanding the business model of e-commerce. Style.com was set up as a third-party operated marketplace, but its website layout was far less intuitive and appealing than the websites of the products themselves.

Additionally, the glossy pages of Condé Nast’s various publications advertise expensive luxury fashion and beauty products. Why would a Style.com visitor risk spending thousands of dollars on a product that they could not physically look at or feel? Luxury brands like Burberry, which are featured in the pages of Vogue and Vanity Fair, have incredibly excellent brick-and-mortar stores that promise concierge, white-glove in-store experiences. Such an environment cannot possibly be replicated when a user is staring at a computer or mobile screen to make an online purchase.

Even mega e-commerce organizations like Amazon crossover into the brick-and-mortar specifically because of that inimitable experience. Women’s Wear Daily echoes that thought: “The key to the survival of traditional retail is using the one weapon that online-only models don’t have: a network of existing stores … In order to keep up, brick-and-mortar retailers are increasingly harnessing their existing infrastructure to provide a seamless experience across their online and in-store networks. That’s the way shoppers shop, so it’s the way retailers should operate.”

Cross-Channel Failures

Companies that fail when crossing channels do so because of “e-commerce cannibalization,” according to National Real Estate Investor. Essentially, it’s a matter of having too few eggs in too many baskets. Sales and market share can only be stretched so far, especially when that significant of a change requires a lot of energy, strategy and fine-tuned leadership.

  • Nordstrom

    Its e-commerce play has resulted in an initial dismal payoff, according to the Motley Fool. However, that has given Nordstrom the opportunity to fine-tune its customer-facing strategy and better utilize mobile app and mobile browser technology.

  • Sears

    Sears became a mess of unfocused e-commerce growth and strategy after the organization decided to chase after a digital presence. According to Business Insider, “Sears stopped reporting e-commerce growth in late 2014.”

  • Blockbuster

    Blockbuster’s scramble to catch up to the convenience of Netflix was too little, too late. A few years before Blockbuster went bankrupt, CEO John Antioco authorized the discontinuing of late fees, which just happened to be a significant part of the company’s profits, and the launch of Blockbuster Online. He was consequently fired by the board of Blockbuster and his actions were reversed, in an attempt to increase profitability.

Cross-Channel Successes

Companies successfully cross channels when they identify their weak points and use technology and business models to update traditional or existing business strategies.

  • Amazon

    There’s not much more to be said about Amazon’s successful foray into brick-and-mortar. Their physical bookstores performed well enough to spur on Jeff Bezos’s decision to buy out Whole Foods’ 465 existing storefronts.

  • Best Buy

    Best Buy took a decidedly e-commerce approach to their fulfillment strategy, according to Women’s Wear Daily: In the spring of 2013, Best Buy turned 50 retail locations into supplemental e-commerce distribution centers. “By 2014, all Best Buy locations doubled as distribution centers … Best Buy now averages shipping speeds faster than Amazon’s standard (non-Prime) orders.”

  • Walmart

    It is far too early to determine whether Walmart’s e-commerce strategy can effectively transform the mega-corporation into a viable e-commerce player. However, the gung-ho attitude with which they dove into the e-commerce strategy space and snatched up e-commerce stores like Jet.com and ModCloth speaks leaps and bounds about their commitment to excel in today’s age.

So what?

Because of the stiff competition that the e-commerce playing field has brought upon brick-and-mortar stores, physical stores must focus on improving the in-store experience. Otherwise, they cannot compete with the convenience, efficiency and discretion offered by digital storefronts. However, e-commerce stores are taking note of in-store environments and benefits via “pop-up shops.”

Multichannel is how things are going, which means that businesses that are purely brick-and-mortar or purely e-commerce will falter. There are just too many demographics and potential consumers that they will miss out on, should they only stay in one lane.

The compromise, however, is instead of just diversifying or abandoning poorly performing channels, businesses need to invest in technology that will meet the customers and supplement whatever element is missing.  

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