MONEY SHOP
Running an Internet Shop S
ome of you may have read about the disparity between costs on running an Internet site and a bricks and mortar shop. While, in the early stages
of the Internet this was not an issue as the High Street was still the go to place for most customers. In the last five years this has changed beyond all recognition and will continue to change.
Shops are trying to adapt by having all sorts of different ways of selling.
They still use their physical shop. They have their website which may or not be transactional. They also have Click and Collect. Obviously, if you are a virtual retailer, apart from the costs of your website and running the administration to ensure you get an excellent reputation for delivering on time, you do not have the problems of carrying stock. Once an order is placed you can then, in the worst case scenario, go to your supplier, who in many cases will deliver to the customer and invoice you. If I were starting from scratch now and was not so old!! I would not have a physical shop and its extra costs.
This I believe is a major issue for the tax system. In an ideal world the
Government would scrap business rates for the High Street, but that is not going to happen. Town centres could have 2-4 hours of free parking to encourage the customer to come into town, rather than clicking on their apps! Two to four hours free parking would be fine – any longer, traders will park all day for nothing, which is counterproductive.
If the Government is not going to waive business rates, what can do to
make it fairer for the retailer? I believe it is inevitable there is going to have to be an Internet tax in future. Well, we have an insurance tax and an airport tax! However, the Government has to tread carefully to avoid hitting a small or medium sized company. Initially, the tax should be directed to trade online with a turnover above £500,000 a year. It should be a graduated tax, so it is fair both to the High Street and the Tech entrepreneur. I would have thought a tax of 1%-3%, depending on turnover.
It will also concentrate the minds of the companies who offer free postage
or collection on unwanted returns. This is particularly relevant to footwear, as around 20- 25% of all Internet sales are returned. If the customer is paying to return they may think it worthwhile to go to try the product on.
Currently, the advantages of the Internet make it within 14-28 days an
absolutely ‘no risk’ purchase. The product is so much cheaper to buy online as the costs, as I said, are obviously lower. The customer, who is sufficiently savvy, can purchase a product online in under five minutes, so why would they traipse to the High Street with the hassle (and expense) of parking their car.
36 • FOOTWEAR TODAY • OCTOBER 2018
Yes, I agree, some people see shopping as a leisure activity, but for many it is all about saving time - and they do not even have to carry the item home. It arrives at their door within 48 hours – they are not obliged even to keep it, if they change their mind within 14 days!
The next five years are certainly going to be a major challenge for the
traditional High Street footwear retailer. There is no doubt that the ‘library style’ shop which most shoe retailers have is not going to attract the customer of tomorrow, they will need to provide, what the Press describe as, “an experience.”
As with many things the online market has moved so quickly and in many
cases has become, if not a monopoly, very close to one. I do not need to do a survey, but I reckon at least 95% of the people reading this will have bought several products from the biggest online company (myself included). The big question for the future is what are shoe retailers going to do to combat the rise of the Internet? I think the town centres in twenty years from now will not have any of the traditional shops, as the younger people, who have grown up with smart phones click for the majority of purchases.
As retailers I think we need to completely change and work with
manufacturers and suppliers, maybe even have some rules. Whereby, if a local customer goes to a supplier direct, the stockists of the product in their nearest town should get a percentage from the supplier. If it was done sensibly, I think it would please both the retailer and the supplier, as it cuts costs for both. The retailer would have to carry less stock and the supplier would have cheaper distribution costs. The Internet is here to stay, we have to embrace it!
I fear it is too late for our generation, as we are playing catch up! The next
generation will need plenty of imagination to come up with business models that work for the 21st century. I hope this gives you a little food for thought.
If you would like David to look at your business costs, he promises that if he cannot save you any money you pay him nothing. But for every pound he saves, you pay him 15 pence.
If you want to learn more, email David on david@fdickinsonfootwear
.co.uk,
call 01229 580654, or visit www.fdickinsonfootwear
.co.uk
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