Can retail compete against online?

Unrealistic

I needed to buy a couple of small kitchen appliances. Normally, for anything that can be sent through the post, I would just order online and be done with it. But I decided this Christmas to try to do some more spending in Galway to contribute to the local economy so I priced these items online and also on the website of a certain Galway retailer.

The Galway retailer was 5% more expensive than the delivered cost of ordering from Amazon.co.uk so I went into the shop planning to negotiate that 5% off in order to spend locally. When I went into the shop I was surprised to find that the prices on the shelves were 13% higher than on their own website (and 18% higher than Amazon). The offered to give me a discount on the store price but that was still above their website price. When I pointed this out the offered to sell to me at their website price but presented it as if they were doing me a special favour by doing so. I told them I was only interested if they would match the Amazon price but they said they couldn't do that so I went home and ordered from Amazon.

Are margins for retailers really so tight that they can't afford to drop 5% to match Amazon or are they just worried that if they do it for one they'd have to do it for everyone?

If they really can't compete against online stores then how are they going to survive in the long run?

Sponge Bob

OK so it arrives banjaxed and you then have to post it back to England at a considerable cost. So good luck there.

01902

Costs are so much higher for a bricks and mortar store, staffing, heating, lighting VAT vs UK etc. A local retailer would also not get such a good cost price as Amazon (economies of scale) so can't match their price. You also have to remember you are paying for a service you don't get online.

That said they should of updated their website with current prices.

Mrs OBumble

There's also the small matter of market segments. Plenty of people out there without credit cards, or not able to read well enough to use the interwebz.

Unrealistic

Sponge Bob wrote: »

OK so it arrives banjaxed and you then have to post it back to England at a considerable cost. So good luck there.

I've had something arrived once that didn't work. Amazon paid the cost of posting the item back to them and had a new one in the post to me before I'd even sent back the broken one.

Unrealistic

01902 wrote: »

Costs are so much higher for a bricks and mortar store, staffing, heating, lighting VAT vs UK etc. A local retailer would also not get such a good cost price as Amazon (economies of scale) so can't match their price. You also have to remember you are paying for a service you don't get online.

That said they should of updated their website with current prices.

Agree the costs are different but it's not all one way. Amazon has to pay to ship items individually around Europe which has to be quite a bit more expensive than a shop in Galway ordering in a container load to their store. Also, Amazon has to charge Irish VAT so no difference there between online and local.

I just don't see what additional service I'm getting from the local retailer in this situation. For purchases like this you don't rely on what a biased salesman tells you in the shop. You do a bit of research online and have your decision made before you even go into the shop. The only 'service' I got today was 25 minutes faffing about while they tried to figure out their own pricing contradictions.

Unrealistic

Mrs OBumble wrote: »

There's also the small matter of market segments. Plenty of people out there without credit cards, or not able to read well enough to use the interwebz.

Agreed but in the target market for the two products I bought today I'd say most potential purchasers have a credit card. It's also the case that percentage of the population who aren't net-savvy is on a steady decline to zero.

I can understand that there are some products that will always be bought face to face but I think in segments like electronics/appliances the opportunity for bricks and mortar retailers to charge significantly more than online sellers is going to disappear.

GalwayGaillimh

Amazon are a class act, anything bought between now and xmas can be returned up till the end of January for a refund if you dont like it. Very hard for a bricks and mortar store to compete with an offer like that.

uberalles

Wonder what it will be like when there are no retailers left and amazon etc rule the retail world

inisboffin

I know a lot of people who 'wouldn't shop online'. Some never. Some of them are even under 30!

There are relatives who have at least another 20 good years in them who are computer illiterate (but far from illiterate - it's not about reading, it's computers themselves). They have never used a 'computer' (except perhaps to send a telex!), never mind shop online. So although people like them will fizzle out, it won't be today or tomorrow.
As to the younger people, some are simply more kinesthetic - they need to touch something before they buy it, or it won't be the same. Others like the experience of shopping itself, going in, talking to someone. It's like those who hate to read a newspaper online. For some it's down to another social act.
Beer is cheaper at home, why go to a pub. Not quite the same comparison, but you get the connection.

BhoscaCapall

If a Galway based entrepreneur wants to set up an online store offering competitive prices then I'd be happy to support him or her, but you're having a laugh if you think I'm going to be ripped off under the pretence of "supporting the economy". At the end of the day these people have more money than me so I really couldn't give a toss about their diminishing profit margins.

Also 'old' people who refuse to learn how to use computers need to cop on. Look how much archaic crap young people are forced to learn that they will probably never use (probably because a computer now does the same task better).

beardybrewer

Lots of good points being made above. I would normally be the last to pay more to support local/Irish as I don't have that luxury of money to waste. But even I would pay 5% more. Like going to the corner shop for your milk and bread, you pay a bit more for the convenience. First and foremost, you have it in your hands today. No hassle with receiving parcels or worries of returns. That said, ship to work and ensure the seller is indeed Amazon (the seller is a filter on the left hand side once you've drilled down to a department). Amazon's return process is easy and they eat the return cost.

So, in summary, I have no pity for the small players who can't compete. I'm aware I'm inviting conglomerate domination, but sure this has been going on for years. We already send loads of money back to the UK this way.

However, that attitude is on the assumption of bad selection, bad prices, and bad service that was especially prevalent during the boom years. While many businesses have reacted at different levels to the downturn you have to give credit to those who brought down costs, offer great service, and aren't behaving like the boom years greedy bastards who were indifferent to losing your business as there was another sucker born every minute. Would I pay 5% to support them? Hell yes, I'd pay that and a bit more. But it doesn't change the fact that online is so damned convenient. Small business or huge conglomerate, those who don't move with the times and embrace what the public wants will not survive.

01902

Unrealistic wrote: »

Amazon has to pay to ship items individually around Europe which has to be quite a bit more expensive than a shop in Galway ordering in a container load to their store.

I would completely disagree with this. Amazon have the power to but thousands of units drastically reducing the cost price of the item, again they ship thousands of items for far less than me or you would pay. A local shop would be looking at possibly fifty units and pay the maximum cost price. Don't forget the crazy wage difference between UK and Ireland, that is the real killer!

snubbleste

No.

deecaz

Tbh over 5% I would have bought it in the shop.

Particularly as amazon, show prices including UK vat but charge Irish vat rates at checkout and the approx 2% charge on your credit card for paying in sterling. I can't see how you saved much?!

van_beano

Can any high street retail compete with online shopping really?

My example been: recently looked at a pre-owned used Playstation game in a well known music store, I scanned the barcode using the wonderful scanning facility on the Amazon App and discovered I can buy it brand new on Amazon for cheaper than the pre-owned one.

There are loads of examples I'm sure, I get bike tyres (Conti Gatorskins) from Amazon for about €7 cheaper than in the shops. The same price difference for water filters. It may be only small savings but over time the savings add up. Have never had any trouble with Amazon, if I ever need to contact them then their Customer Service is fantastic. eBay is a different story and I avoid them now.

Fair enough you've to wait a few days for the items to arrive but that's only a small sacrifice.

cfeeneyinterior

deecaz wrote: »

Tbh over 5% I would have bought it in the shop.

Particularly as amazon, show prices including UK vat but charge Irish vat rates at checkout and the approx 2% charge on your credit card for paying in sterling. I can't see how you saved much?!

Exactly. I would say if the same shop in galway fired all the staff. Rented a warehouse out in Ballybane with then only haveing 10% of the staff and heating, insurance costs, etc they could easily shave more than 5% off the price and kick amazon ass.
BUT they are employing Galway staff, paying Galway Retail Rates, also offer the service of allowing you to change an item easily if damaged, warranties etc.
5% is ridiculos unless you are buying something for €1000's in value. Shop local as much as you can. If you can save alot of euros go online naturally but don't expect the shop to match Amazon or some lad sitting in his shed with zero overhead's price.

challengemaster

01902 wrote: »

You also have to remember you are paying for a service you don't get online.

What service is this?

Most of the time when I'm looking to buy anything, I'm far more educated about the product than any of the sales people in the shop. Some staff can be rude, ignorant, pushy or just not care. And yes, there are others who will do anything to help. But, most of the time, I really don't see any value in this "service". Particularly when places like Amazon take away the needless interactions and annoyances and streamline the process, and offer a better service on pretty much all levels.

flynnlives

this is the biggest challenge Irish SME's face. Buying stuff online is fast becoming second nature. Latest stats iv seen say that 75% of Irish households will have a smartphone by end of year.
70% of people use their smartphones whilst watching TV and they search and browse goods and services locally.

The SME sector have ignored the internet for years but things are quickly changing. Alot of SME's are adapting but sadly the vast majority are still ignoring it. Amazon and other online retailers are cleaning up. I remember people reading that littlewoods where mad to sell all their stores and go online only, look at them now.

Unrealistic

deecaz wrote: »

Tbh over 5% I would have bought it in the shop.

Particularly as amazon, show prices including UK vat but charge Irish vat rates at checkout and the approx 2% charge on your credit card for paying in sterling. I can't see how you saved much?!

The price I was comparing against was the Euro amount with Irish VAT so it was apples for apples.

cfeeneyinterior wrote: »

also offer the service of allowing you to change an item easily if damaged, warranties etc.

As has already been said above Amazon are a pleasure to deal with in this context. Take a look at the forum on boards dedicated to a certain big box retailer that has a couple of outlets in Galway and you might change your mind about whether being able to walk into a shop rather than sending something back in post is a actually an advantage.

deecaz wrote: »

5% is ridiculos unless you are buying something for €1000's in value. Shop local as much as you can. If you can save alot of euros go online naturally but don't expect the shop to match Amazon or some lad sitting in his shed with zero overhead's price.

The saving was €25, which means the cost to the shop (exclusive of VAT) would have been €20. Maybe for you €25 is nothing but to me it's an amount worth trying to save. But even then it was more a matter of principle than just about the money. Instead of just clicking 'Buy' on Amazon I was prepared to take the time to go into town and into their shop, to spend money on diesel and parking, and endure city centre traffic. I wasn't looking to get a better deal in return, only asking them to match the alternative deal I already had. I don't believe that their profit margin on this sale was only €20. Yet they chose to let a €500 sale walk out the door rather take a €20 hit on their margin.

It doesn't have to be that way. When I bought a couple of large appliances last year I didn't have the option of Amazon because of size but there are discounters both sides of the border who will deliver to Galway so I priced what I wanted and then went to another well know Galway (electrical) shop. They matched the prices I had found online and did another couple of things that actually count as providing a service so I have been back to them again and they will always be my first port of call for this type of purchase. Similarly, a well known Galway builders providers matched online prices for me two weeks ago on materials for a large DIY job I'm working on.

ScumLord

Unrealistic wrote: »

Are margins for retailers really so tight that they can't afford to drop 5% to match Amazon or are they just worried that if they do it for one they'd have to do it for everyone?

Pretty much, you can't expect a small store to compete with the prices a huge multinational like Amazon. Amazon can purchase thousands more of the product giving them huge discounts. They also have much, much lower overheads.

Unrealistic wrote: »

Agree the costs are different but it's not all one way. Amazon has to pay to ship items individually around Europe which has to be quite a bit more expensive than a shop in Galway ordering in a container load to their store.

I very much doubt that, Amazon would be generating so much post that they have undoubtedly arranged special discounts with the shipping companies.

The advantage of shopping locally for international goods is you get it straight away, you get to see it in person before you buy. I've bought number of goods online based on a picture and was completely disappointed when I seen it in the flesh.

An additional 5-20% wouldn't be a huge mark up considering the expenses the shop would have, from a higher initial cost of each product, higher shipping costs, storage costs, staffing costs. They simply can't compete with the low prices of Amazon.

fingerbob

I worked at Maplin for a few months. It was one of the few high street stores that continued to do rightly throughout the recession (this is in Belfast btw). The place was ridiculously overpriced on most things but still there was always customers in spending hundreds.

Ties in with what someone said earlier about a distrust of the internet. We had a load of older people in who just preferred to shop that way and the others were just people who needed things urgently and couldn't wait for delivery.

01902

challengemaster wrote: »

What service is this?

Most of the time when I'm looking to buy anything, I'm far more educated about the product than any of the sales people in the shop. Some staff can be rude, ignorant, pushy or just not care. And yes, there are others who will do anything to help. But, most of the time, I really don't see any value in this "service". Particularly when places like Amazon take away the needless interactions and annoyances and streamline the process, and offer a better service on pretty much all levels.

Sounds like online shopping is perfect for you then. Other people like the service bricks and mortar stores offer and the convenience that it offers. For this their is a premium that people are happy to pay.

Mrs OBumble

Ironically, shopping on-line is inconvenient for me:

Often there's no one at home during the day, at our house and at the neighbours (such as they are in inner-city apartments). I work for a multi-national that doesn't allow staff to have things delivered to the office. And I don't have a car, so even getting to the An Post depot during lunchtime is a PITA.


Re all young people will be using computers: the last international comparison survey I saw was from 2009, and it showed something like 17% of 15 year old couldn't read. I'm kinda picking they won't be using the internet to buy things anytime soon.

Discodog

Yes they can........ sometimes!

I will always buy locally & I am prepared to pay a bit more. I bought a particular torch in Galway at the same price as it was online.

But there can be huge differences. DeWalt boots on special offer in Galway, reduced from €160 to €130 & the same boots were €60 online.

Also my experience is that Galway shops can be far worse when it comes to returning faulty goods.

biko

There's two issues here as I see it. OP trying to bargain with a retailer because the item is cheaper online. And general shopping online versus local shops.

They probably have a tight margin anyway but tbh I'd be pretty pissed if some guy walks into my shop and tries to get prices down to online levels. As said before, the overhead is much much higher for real shops than online warehouses. There is also the benefit of buying the item immediately instead of waiting.

BhoscaCapall

I bet Galway retailers are delighted that the An Post collection office is barely even in the city of Galway meaning many people who miss a delivery have to book time off work and then rely on the joke of a bus service we have. Or that loads of people are still stuck using 20th Century 'Laser' cards which don't work with 99% of websites.

biko wrote: »

There is also the benefit of buying the item immediately instead of waiting.

There's also the benefit to the retailer of having made a sale. Unless they're making a loss (and even a small loss on one sale might be worth the goodwill and future custom) the only reason to refuse it is if they're sure someone else is willing to walk in and get ripped off, and judging by the non stop whinging from fatcat business owners apparently that isn't happening.

pleasant Co.

BhoscaCapall wrote: »

I bet Galway retailers are delighted that the An Post collection office is barely even in the city of Galway meaning many people who miss a delivery have to book time off work and then rely on the joke of a bus service we have.

When ParcelMotel's galway drop points are sorted people will at least have another option, even if there's a small cost involved.

johnmcdnl

uberalles wrote: »

Wonder what it will be like when there are no retailers left and amazon etc rule the retail world

Online stores will compete with each other to have the best price/customer service so customers will choose their store over another store? What do you think will happen?

Most of the stuff I buy is far cheaper and far more convenient for me to buy online so I do so. However if it was only 5% more expensive in store and I was in the shop already I probably would support the local shop out of convenience for myself as well as to support the local store.

Little My

Nope.

I bought an infant car seat last week from kiddicare.com online. It was £177.87 including delivery but the same carseat is €315 (£250ish) from a Galway baby shop.

They didn't have it in stock anyway so I'd have had to order it into the shop or order it online from them anyway (which would be free delivery as far as I know.)

Discodog

pleasant Co. wrote: »

When ParcelMotel's galway drop points are sorted people will at least have another option, even if there's a small cost involved.

The easier option is to get to know your neighbours & postman.