Navigating the New Retail Landscape by Alan Treadgold & Jonathan Reynolds

Author:Alan Treadgold & Jonathan Reynolds
Language: eng
Format: epub
ISBN: 9780198745754
Publisher: OUP Oxford
Published: 2016-06-09T16:00:00+00:00

(iii) Selling in a different way

We noted in Chapter 1 that the Millennial shopper in particular regards shopping as a ‘digital first’ activity which may, but very often will not, have a physical store component. Xiaomi has tapped into this reality. Xiaomi does not own any physical stores. Rather, it goes to market entirely online. Its own Mi.com website is its main channel to market and already the third biggest e-commerce website in China. (When Xiaomi bought the mi.com domain name for US$3.6 million in early 2014 it was the highest price ever paid in China for a domain name—certainly expensive for a domain name, but not for a flagship piece of retail real estate.) Hugely successful flash sales are a big part of how Xiaomi goes to market. In India, Xiaomi initially sold its Redmi note tablet only through flash sales on Flipkart (‘The online megastore’), before it was made more widely available, but still only through online platforms. In the first flash sale of the Redmi note, the 50,000 units in stock were reportedly sold out in just six seconds.30 On 6 April 2015, Xiaomi celebrated its fifth anniversary with its Mi Fan Festival. This included an online shopping day that broke the world record for most mobile phones sold on a single platform in twenty-four hours—a remarkable 2.1 million devices.31

Xiaomi also talks to its customers in a different way to many businesses. The business’s extraordinary growth has been achieved without any investment in conventional advertising. Rather, word of mouth, digital, and social media are its main communication vehicles. Again, this points to a reality that Millennials in particular need to be engaged in a different way which, happily, is likely to come at significantly lower cost for a brand and be much more effective than traditional mass media.

Dynamic pricing is already very commonplace online (prominent examples include Uber and, of course, Amazon), but third-party price optimization businesses such as Boomerang Commerce with its Dynamic Price Optimizer, are successfully incorporating this capability into retail categories from office supplies to department stores—yet the principle is not without controversy.21 Retailers considering deploying it need to think carefully and act with integrity. The online travel service, Orbitz, controversially tailored its prices based on the device users were employing to access its website when it found that Apple users would pay US$20 to US$30 more for a hotel room than other device users.22 There can also be a suggestion that prices in-store become inflated artificially to fund discounts that are only available to those with a loyalty card. Multi-tiered programmes can be still more controversial. Dorothy Lane Market, an upscale grocery chain in Ohio, implemented customer-specific pricing through its DLM Club. Different prices were charged to a number of different customer groups, the effect of which was that the majority of all discounts available in store went only to the top 30 per cent of Dorothy Lane Market shoppers, to the considerable disenfranchisement of the other 70 per cent.

As well as delivering

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