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MORE E-SHOPS ARE LAUNCHING BRICKS-AND-MORTAR OUTLETS – AND VICE VERSA

Shopping in the virtual and physical worlds

SHOPPING over the internet has its pros as well as cons, as does using bricks-and-mortar shops. To satisfy the appetite of online shoppers as well as those who prefer to touch what they are buying, an increasing number of shops are extending their operations either into the virtual or real worlds. Apart from benefiting from synergies this expansion brings more channels to sell products, something that has become a necessity in the current globalised world.

Some well-known Slovak stores are expanding their online presence.(Source: SME)

SHOPPING over the internet has its pros as well as cons, as does using bricks-and-mortar shops. To satisfy the appetite of online shoppers as well as those who prefer to touch what they are buying, an increasing number of shops are extending their operations either into the virtual or real worlds. Apart from benefiting from synergies this expansion brings more channels to sell products, something that has become a necessity in the current globalised world.

Gorila, Martinus and Hej are just some of the online outlets which have recently opened or significantly extended their bricks-and-mortar presence. On the other hand, Nay, Datart and others are extending their online presence and improving the services they provide electronically.

“These are two completely different worlds,” Jozef Dvorský, the executive director of the Slovak Association of Electronic Commerce (SAEC), told The Slovak Spectator. “But from the viewpoint of the customer a higher rate of trust is the biggest advantage.”

Dvorský said that customers know the brands of specific internet shops when they see them in the real world, and their willingness to shop with them is several times higher than with unknown internet shops with which they have no real experience. There are also other synergic effects from the viewpoint of the e-shop, especially in terms of relations with suppliers, marketing and advertising.

“Opening a bricks-and-mortar store was a natural path for Gorila.sk since customers have wanted a shop and a place there they can pick up their goods,” Ján Laš of Beyond Media, which operates the Gorila.sk e-shop, told The Slovak Spectator. Gorila.sk specialises in books, music and films.
Gorila.sk says its experience of running a physical store is good so far, and notes that many of its customers use the shop to collect goods, as well as choose further items for purchase.

According to Dvorský, traditional online shops are taking the opportunity to open bricks-and-mortar stores in particular as a marketing tool to build and strengthen their brands and provide an opportunity for personal collection of goods ordered via the internet.

According to a survey conducted by Heureka, as many as 60 percent of Slovak online shoppers use cash on delivery as their method of payment, followed by a bank transaction (17 percent) and card payment (11 percent). Five percent of shoppers go to the offices of the company to collect and pay for the goods they ordered, Heureka reported in late February.

Running a bricks-and-mortar shop is not cheap so online shops tend to use such outlets as supplementary distribution channels.

“But the assortment of goods in the bricks-and-mortar shop of a ‘classical’ internet shop is usually much slimmer, and their focus, from the viewpoint of sales, order numbers as well as the future, remains on the internet,” said Dvorský.

Hej.sk, a member of the Internet Retail group comprising nine internet retail shops in the Czech Republic and Slovakia, believes that a bricks-and-mortar shop removes two main reasons that people give in surveys for not shopping online. These are the inability to check goods before buying them, and the complications of resolving a complaint via the mail.

Hej.sk said it is pleased with its experiences to date operating actual shops. After running three bricks-and-mortar shops in the Czech Republic, it opened its first physical store, Hejhouse, in Bratislava in January.

“Our experiences are more than positive,” Hej.sk marketing manager Jitka Součková told The Slovak Spectator, referring to its Czech stores. “This is why we have brought this concept to Slovakia. Based on our internet estimations, personal collection in our shops should increase by as much as 97 percent compared with 2011.”

This trend is also operating in the opposite direction, with physical shops opening or extending their online presence.

“In these cases merchants from the world of bricks-and-mortar shops usually want to address the new, dynamically developing sector of internet clients, as this way of selling dominates more and more and provides a better prospect for growth,” said Dvorský. “This is because sales via the internet have a global character and are not restricted by limits stemming from the locality where the store sits.”

Dvorský added that classical shops regard the internet as an opportunity to better use their investments in existing infrastructure for the next stage in their companies’ development. They are also eager not to fall behind wider developments in the market.

Customers of Nay, an electrical appliance retailer, have been able to shop online since 1998. In December 2011 Nay launched a revamped e-shop as part of a multi-channel strategy.

“Since the launch of the new e-shop the visit rate to our website has increased and is continuing to grow,” Hana Búgelová from Nay’s marketing department told The Slovak Spectator. “Customers use our website as an easy and fast source of information about goods, assortment, prices and services. Afterwards they can decide whether they need to see the product or get advice, or obtain it as quickly as possible.”

Búgelová says the biggest advantage compared to other online shops is that Nay’s customers can collect goods within three hours at any of its 26 shops across Slovakia.

Pricing policies may differ

The primary advantage of shopping online is that prices are typically below those in traditional bricks-and-mortar shops. This is mainly due to the savings online shops can make on premises and staff. It results in various pricing policies, says Dvorský, adding that these are also affected by shops’ long-term strategies.

“There are shops which prefer development of their internet presence for the future and try to actively act and encourage customers to focus on this distribution channel via lower prices,” said Dvorský. “Other shops prefer to leave prices the same in their e-shops as in their bricks-and-mortar shops in order that customers, after looking at the e-shop, do not feel cheated when they visit the real shop and find higher prices. This strategy therefore leaves the selection of shopping method up to customers without affecting their shopping behaviour.”

According to him, both these approaches are legitimate and the decision about which one to choose depends on the operator’s future plans.

Customers of Gorila.sk can find some differences in prices, but Laš said this is not a pricing policy, rather a reflection of Gorila’s two different storage sites. He said differences may also reflect changes in suppliers or recent price changes. While changing prices is an easy process in the e-shop, in real shops such procedures are very time consuming.

Nay does not regard shopping in real and online shops as belonging to two different worlds.

“On the contrary, our effort is to bind them together as much as possible and to offer customers the opportunity to combine the possibilities of the internet and of bricks-and-mortar shops during their shopping, according to their liking,” said Búgelová. “Because we do not differentiate between our real stores and the e-shop, also our pricing policy is the same [in both distribution channels].”
Hej.sk also keeps its prices the same in the real and virtual worlds.

“There is no reason to put online or real shoppers at a disadvantage,” said Součková.

Topic: IT


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