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How Will the Average Merchant Survive?

Over the past year or so, I have written numerous pieces in this space extolling the virtues of the New Economy and the power of the Internet. Today, you can buy a car, get a home mortgage, or plan your next vacation while never leaving the security of your kitchen table. So-called electronic merchants are vigorously competing for your business and that drives down prices, and should, rightly, scare the dickens out of traditional merchants everywhere.

You know who they are; the people that own the stores, own the inventories, pay the rent, hire employees, and generally have been, and I suspect will continue to be, the heart and backbone of even this New Economy. So, the question is, how can a traditional merchant compete today against these electronic interlopers who have come from nowhere, don't pay rent, don't have a bunch of employees and probably don't make you pay sales tax for what you've purchased. On the surface, it seems an unfair fight.

I have to admit, the last three or four books I've purchased on various subjects have all been purchased over the Internet. It's so easy; no crowds to fight, no parking, you just type in the name of the book you're looking for (invariably it is priced 25% or 30% cheaper than the bookstore), give your credit card number, punch a button, and two days later it arrives in your mailbox. How much easier can it be?

But a recent experience of mine holds out hope. I was standing in front of a bookstore, and there in the window were literally hundreds of a specific book that interested me, piled in pyramid fashion, with the dust-cover open on one of them so I could read the subject matter. It was perfect. I walked in the store. It was crowded. I couldn't find a sales person. There were hundreds of copies of books just out of my reach in a window display, but I couldn't find the book on the shelves! Finally, I found a sales person and explained my predicament. He walked over to the big window display, reached in, got a book and handed it to me. But then he showed me where I had to go to buy it. It was a big desk with two people behind it, and more than a dozen people standing in line waiting to check out. I looked at my watch-by that time I had eaten 25 of my 30 available minutes-and handed him the book back and said, "Forget it, I'll buy it on the Internet at home tonight."

Well, I didn't get to the Internet that night. The next morning, my wife needed to pick something up at the neighborhood shopping center, and there again was another bookstore. In we went. This time a young sales person almost greeted us at the door, asked if he could be of help, and when I related the title of the book to him, he thought they had two copies. He took me to the shelf, handed me a copy, and my wife and I began to browse. Six books and $150 later, we left the store.

Therein lies the difference and the advantage that local merchants still have. The Internet tends to be very order-specific. You log on, enter a title, buy a book and you're gone. There's little else there to tease you. Oh sure, they have their Internet pages and displays, but it's not the real thing. It's sterile, and not much fun.

My message to local merchants is simply this; the way you compete against the quick, easy uncluttered Internet is with SERVICE. People still like people, still have questions they'd like answered, and still want to "test-drive" the merchandise before buying. For now, the Internet cannot provide these advantages, and so, local merchants, take heart. I really don't think the Internet can run you out of business. It may change the way you do business, it may put pressure on your margins, but if you'll react competitively and play to your own strengths, which are, or should be, YOUR EMPLOYEES AND THE SERVICE YOU GIVE, I think you'll be just fine. But make no mistake about it, the world has changed and if you don't recognize it and don't play to your strengths, this still relatively new electronic commerce has the potential to bowl you over.

(Tom Butenhoff is a First Vice President with J. E. Liss and Company, Inc. in Milwaukee. The views are his, and not necessarily those of Liss Financial Services or the Job Connection/Hiring Network.)

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