Last wednesday when we had our great web 1-2-3.0 entrepreneur dinner, we talked of many things and in the course of conversation one of us mentioned Sarenza, which raised €4M a few weeks ago.
Some expressed doubts about the concept and even when I pointed that Zappos, the US leader, was hugely successful ($600M sales this year, ie 6 Millions pairs of shoes sold), there was still some skepticism.
Let's just face a reality : the average shoe shopper has to visit 6 or 7 stores to find what suits his/her needs, simply because no single store carries out enough brands/models/sizes.
Therefore, tell your audience that you have a fantastic choice covering all needs, offer a 12 month free return policy, mention your low prices (if necessary), acquire credibility and brand awareness, and by definition you have a perfectly sound commercial proposition, fundamentally rooted in customers' very needs and concerns.
There's a simple truth : when you neatly satisfy customers' needs, when you are able to precisely articulate why your offer will find a positive echo by customers, you have a winning proposition. End of story, no debate there !
Retail concepts are about understanding customers' very needs and offering a packaged solution to those. That's why I have always been impressed by the great retailers of this world, be it Sam Walton, Ingvar Kamprad, Marcel Fournier, Gérard Mulliez or the Albrecht brothers : they are people who can read in customers' minds, hearts and souls.
Back to Zappos, or other retail and e-commerce concepts, the only true question lies in the economics of the model. Can you make a decent living by fulfilling your commercial promises ? Carrying a large choice, offering a 12 month return policy, setting up a great knowledgeable customer service, creating a "store atmosphere" with attractive content, building brand awareness and credibility, all of that erode your gross margin. Zappos is a killer commercialy-wise, has a fantastic service level, but after 6 years of operations profits are yet to be seen.
Once you have validated the commercial concept and the economics of the model, the story just starts, as there are then 2 other things which may later kill you : competition and poor execution !
Zappos figures are impressive !!!
Posted by: Daniel | September 17, 2006 at 09:20 PM
What's also very impressive is the size of the category : not only there's Zappos in online shoes, but also shoebuy and shoemall which are also specialists. It's definetly a hot category.
Posted by: Fabien | September 17, 2006 at 09:29 PM
Fabien, you're right, it's a hot category and there are others.
Posted by: Michel de Guilhermier | September 18, 2006 at 10:42 AM
Exactly. As I announced on my blog a few weeks ago, Amazon is about to open this business with his own stock and catalog after 2 years working with partners like Zappos or Nordstrom. After Gap and some others, it's clear that this business is a real opportunity. But there is for sure an important need of cash before breakeven.
Posted by: Francis | September 26, 2006 at 09:34 PM