2
Nov
12

Online business will benefit from aggressive retail cross-selling

I am sick of shopping at retail stores (Putting aside mom-and-pop stores). I like going down the street to buy something, but I can’t buy a candy bar anymore without being offered a warranty, two magazine subscriptions, and a credit card. The cross-selling situation is getting to the point where I and others avoid shopping at retail locations. I avoid going into a number of stores simply because I don’t want to deal with being offered a bunch of crap that I don’t need. I have no problem saying no, but i just don’t want to have to. I bought a laptop from Circuit City, a while ago, and I had to literally walk out of the store for the salesman to stop adding the warranty to the bill. I’ve known more than ten people who’ve been talked into several hundred dollar warranties because they were pressured into buying them. They were hardly any improvement on the manufacturer’s warranty. In the past few months I have been observing other people’s reactions to this retail mess, and I’m certainly not the only one who is sick of it.

Lets compare up-selling online and in retail.

Online:

Extended warranty options:

None

1 Year – $99

2 Year – $150

1 Year w/On-site Repair – $150

2 Year w/On-site Repair – $200

etc…

Retail:

Salesman: Would you like to purchase an extended warranty with your laptop. We have an on-site warranty that covers an accidental damage for an additional $200. A serviceman will come to your house and fix your computer.

Me: No thank you. I don’t need a warranty

Salesman: Even if you drop your computer and it gets destroyed, or you spill something on it, it’s covered.

Me: No that’s fine, I don’t want one.

Salesman: It even covers upgrades. If you need to upgrade your RAM or hard drive, it will need to be done in a static-free clean room, and this warranty covers that.

Me: Just the computer, no warranty. (thinking: this guy is full of S–t)

Salesman: OK, so you total comes out to $1096.78, and I added the one year warranty, instead of the two year.

Me: You’ve got to be kidding me, I’ll just go somewhere else.

I don’t think that this is an unfamiliar scenario that people encounter at many of these mega-retail stores. It seems like every publicly traded retail corporation has at least 15 different offers, warranties, bells and whistles, plus a charge card and three of four co-branded credit cards, and we all absolutely need them just to survive.

How online businesses benefit:
Online businesses are going to get the fallout from people getting sick of being cross-sold, and up-sold on everything. Unfortunately many of those businesses that aggressively push the extras are the same websites where their customer will end up in the end. What I love about the internet, is that the mega-retail stores, rarely have the best deals and best service when it comes to ecommerce. The internet is still an open marketplace for almost every industry, while the retail environment is all but closed for many business types.

Obviously the convenience that online businesses offer is a selling point in itself. In the retail world, shoppers don’t have the ability to click a link to instantly get out of a store. They have to sit through some lecture about a warranty or accessory, and then do it again at the next store they go to. Online business is still growing a lot, and retailers have definitely taken interest in the online competition. Manufacturers have the ability to limit prices which stands to benefit strong brands a lot.

Just as traditional media marketing is failing, I think that traditional retail will also start to fail, and those super-retailers are going to be the ones dragging the whole system down.

My advice: Whether you sell online or in retail, be in business for your customers and not for the money. It’s the only way to stand apart and stay competitive!

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12 Comments:
  1. Al 2 Nov, 2007

    Totally agree, it can get so annoying! This isn’t happening on online stores yet, but even when it does I think it’ll be easier to just ignore it and go ahead with the purchase.

    Regards,
    http://iamcreating.blogspot.com/

  2. eCommerce Web Designer 24 Nov, 2007

    Good article. You’re right. Online stores have the advantage becuase customers don’t feel that massive guilt trip when saying no.

    However I can’t see many customers choosing the web over traditional store shopping, solely because of aggressive salesmen. I think customers are getting better at saying no to cross selling. It’s happening so often these days that people are getting used to it and learning how to deal with it better.

    From the business point of view, it’s understandable why there’s soo much cross selling going on. It would be a wasted opportunity if a customer just bought shoes, and the salesman let the customer leave the store without telling them that they also sell shoe polish. The issue is HOW it is done. It needs to be done with tact, and leaving the customer with plenty of opportunity to say no. Maybe giving them a leaflet or inviting them to return if/when they’re ready to purchase that fantastic polish.

    Aggressive salesmen prey on ‘weak’ customers. If they sense (they’re like wolves) a customer is unsure about the extra purchase, they hound them.

    I must admit, I’ve never had any problems with aggressive salesmen. I deal with them by looking them in the eyes, cutting them off mid sentence, and saying firmly “No thanks!”. I’ve never had anyone continue their sales pitch.

    But that’s probably because i’m a 6ft 3in black man.

    ;)

  3. Linda Bustos 15 Dec, 2007

    AMEN!

    There’s a particular electronics chain here in Canada that’s notorious for this. Last time I bought a laptop there the saleslady practically begged me to buy a warranty. I left the laptop there overnight for them to install the operating system etc. and when I sent a family member to pick it up, the sales lady was almost crying, saying she was so worried that I didn’t buy the warranty. She said they get laptops coming back ALL THE TIME with broken hinges etc. I asked her “are you saying you sell crappy product?”

    I posted about it on a forum and one of the members replied:

    “Well I worked in [store] when I was 22 – 23 and a college student. I worked in Audio, Video, Communications, and Computers.

    In their work culture they don’t consider a sale a complete sale if the customer is not sold PSP (back then called CSP) and Accessories. Those who sell products alone are losers, and have to attend early morning meetings for training. Training sessions consists of a set of humiliating lectures ( many [store] managers are not highly educated people, that was hard on university and college students working there )”

    I buy all my electronics online now :D

  4. Crowdstormer 18 Dec, 2007

    I completely agree that this is a major advantage internet stores have over physical (?) ones. Although this alone is unlikely to convert someone completely to online shopping, it’s definitely one of a few factors that making buying over the internet advantageous over going to the shop itself.

  5. Bernard 14 Feb, 2008

    One thing that will also drive people towards online shopping and away from retail is the service level you get with online shopping. Service levels for retail shopping is generally shockingly low. With online shopping the merchant has to offer good service, as this in integral to his sales process. However, retail stores believe people will continue to shop with them, even if they offer low levels of service.

    Regards,
    Bernard
    [url=http://www.woozashop.co.za]WoozaShop Online Cart System[/url]

  6. Casey 9 Sep, 2008

    You are right in store salesmen can be pushy… but don’t forget to mention that websites use the same cross sell/up sell technique and it’s much more effective!

  7. Yes, I am agree with you.Online business stores have a lot of benefits than just physical store.Internet marketing plays an important role in sale of any thing.

  8. Yes, I am totally agree with you.But there should be a marketing plan to make online successful business.

  9. Online Businesses 8 Sep, 2009

    Nothing will beat one’s own branding in the long run. Most manufacturers now have either websites that direct visitors to partners for online sales or to off line solutions besides giving serious thought to blogging too. In the end, individual brands and reputation will win on internet retail.

  10. excellent article and great advice. thanks for sharing both

  11. The traditional business model cannot be sustained when weighed against the Online Business model. Property, Plant, and equipment costs kill old fashioned brick and mortar shops.

  12. The way we see it, the consumer has become more savvy when it comes to planning purchases. If I know I need something and I can wait a few days, why not let the mail deliver it and I can get on with my business.

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