BRANDOOGLE

Tag: blog

  • It’s Midnight on the Internet

    It’s Midnight on the internet…do you know where your brands are?

    The honest truth is, that for most of us, the answer is no. Like the naïve parents of teenage children, we don’t precisely know where brands are, but like to think that all is well. It’s not until the phone rings at one in the morning that we realize that hoping things are alright and knowing things are alright are two very different things.

    The internet revolution has changed consumer behavior forever, and managing brands has never been more complicated. Less than a decade ago, opening a retail store took months, cost tens of thousands, if not hundreds of thousands of dollars, massive infrastructure, and a ton of inventory. After all this effort, and getting the best location, most retailers really only had a market penetration of about eight square miles. Today, an on-line store can be set up in as little as four hours, and requires as little as four thousand dollars in start up costs. The infrastructure is outsourced, the inventory is drop shipped by the manufacturer, and the market penetration is over 300 million people.

    This new retail landscape has made it exponentially more difficult to control brand presentation and brand messaging. In the old world, the brand would only be available in the most exclusive storefronts, prominently displayed, and sold by a knowledgeable and friendly sales staff. Controlling brand messaging was a relatively simple task in bygone days. No need to worry about being in a bad store, in a bad neighborhood, on the bottom shelf in the back of the store next to the day old donuts.
    Today, without good brand control mechanisms in place, the metaphorical equivalent is happening every day to brands. In order to control the brand, and the brand message, brand oriented organizations MUST know where there brands are being presented on-line. Otherwise, that call that comes at one in the morning maybe your top retail customer telling you “you’re out, because your brand is out of control.”

    Solid brand control is hard work and requires a coordinated effort. That said, it always starts by knowing where and by whom your brand is presented on the internet.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat showrooming using a proprietary suite of software and services.

  • The Fall Showrooming Season

    There is no better place to witness the fall color season than Michigan. In my back yard I am extremely fortunate to have a number of large maples of different varieties that change into a cornucopia of colors during a six week period. The view is simply spectacular. That said, I am also very unfortunate to have a number of large maples in my back yard.
    As the first leaves begin to change, I can already feel the blisters forming on my hands in anticipation of the hours, days and weeks of raking ahead. This year, however, will be different. I will be outsourcing the work to a specialist who uses automation to accomplish the job more thoroughly, faster and more affordably than I could do it myself.
    There has always been much discussion in our house about the most effective/efficient way to get the leaves up, as well as the hourly pay rate. (If you have teenagers, you are no doubt aware of how their preference is to spend a lot more time talking about how to do the work that actually doing the work.) Over the years we have bought an arsenal of “improved” rakes, added labor, worked in teams, etc but all these efforts have yielded only minor incremental improvements. The upshot is that there are simply too many leaves to be raked given the limited resources of time and labor.
    Last year our neighbor hired a contractor to gather up the leaves. The contractor brought in a “modified” mower that functioned as a leaf vacuum. The neighbor’s yard was leaf free in less than 30 minutes, and his cost: $25. We spend that much time getting out rakes, tarps, bags, and discussing strategy.
    While watching the Leaf-Vac at work, I saw a strange parallel to raking leaves and retailer strategies. I spend a lot of time talking to retailers about how they determine if the products they are offering in-store can be found for lower prices on-line. Invariably, the task is not at the top of anyone’s list, and is in fact, quite the opposite. Most people try to avoid it like the plague. In the absence of automation, the research is completed one SKU at a time, copied into spreadsheets, sorted, filtered, and eventually reported on. By the time reports are generated, the data is out-of-date, and essentially useless. What an incredible waste of resources. This process is the metaphorical equivalent of picking up leaves one at a time. No wonder nobody is volunteering to put this task at the top of their list.
    Monitoring on-line pricing is not the core competency of any brick and mortar retailer. Their competency is retailing. There is no question, that understanding competitive pricing is a very valuable asset to any retailer. However, this work can be much better accomplished by specialists who can deliver much more thorough results in a fraction of the time, and at a fraction of the cost of trying to perform this task in-house. Retailers would be best served by re-directing the time and talents of the people currently assigned these tasks to projects that help grow the business.

  • How Showrooming Impacts Earnings

    Showrooming is no longer a sideshow. For C-Level executives it has become the main event. The extensive press coverage of the demise of Best Buy was a wake-up call for both brands and retailers. Showrooming is not just simply a nuisance, it can actually bring down a major retailer. The fact that both Target and Walmart, two extremely savvy retailers, now match internet prices is some indication that the Showrooming phenomena now has the attention of management at the most senior levels.
    The internet press made no secret of the fact that a number of items purchased at Best Buy could be purchased on-line at significant savings. Overnight Best Buy became the poster child for showrooming. What happened next went largely unnoticed in the popular press. Some rather bright earnings analysts created a financial model to try to determine the impact the decision to match internet prices would have on Best Buy’s earnings. The news was not flattering. Investors, upon reading and understanding the earnings analysts report, headed for the exits. They gave a serious “thumbs down” on Best Buy management’s decision to match internet prices. The rest, as they say, is history. Well documented history. Clearly Best Buy management made a series of miss-steps over the last few years, but it cannot be denied that the showrooming phenomena played a significant role in the ultimate downfall of this once iconic retailer, and darling of Wall Street.
    Showrooming impacts earnings. How earnings will be impacted is a function of both the scope and complexity of the showrooming challege, as well as how management chooses to address those challeges.
    Can the showrooming impact on earnings be predicted? To some degree: Yes. The earnings analysts have already proven this. However they had the significant advantage of a ton of information innocently provided by others in the retail research world. Can your organization predict the impact that showrooming will have on your earning? Maybe.
    We recently tested this theory. We created a mock brand organization that sold to retailers. We then designed three possible scenarios based on three different Showrooming Risk Profiles™. Due to space and time considerations, we’ll presume that the Showrooming Risk Profiles (SRP) were graded as high, medium and low.
    In the first scenario the organization was rated at having a medium SRP. The impact was losing placement of the 5 best selling SKU’s at their top 5 retailers. Sales dropped 5.3%, and earnings dropped 20.0%.
    In the second scenario the organization was rated as having a low SRP. The impact was that they picked up 5 new SKUs at their top 5 retailers because they demonstrated to the retailers that they had a much better SRP than their peer group. Sales increased a modest 1.1% and earnings increased a healthy 4.0%
    In the third scenario the organization was rated as having a very high SRP. The impact was losing their 3rd largest retail account. Sales dropped 7.3% and earnings plummeted by 27.8%
    A similar exercise was run for retailers with various SRP scores. The results were very similar.
    The message was clear. Even a little bit of showrooming can have a significant impact on earnings. That’s why showrooming is no longer a side show, but is now the main event.

  • The Showrooming Scorecard

    “If Showrooming is so pervasive, why aren’t companies doing more to combat it?” This is a question we are hearing more and more. Companies, be it brands or retailers, realize that this problem is reaching epidemic proportions, yet seem to be doing little to change the dynamic. Why?
    We can’t manage what we don’t measure. And we don’t know how to measure showrooming. Until now.
    It is possible to define an objective measure that is applicable to both retailers and brands. Essentially we need to measure the “risk” of being showroomed. How likely is it that a customer will see our product at retail and then choose to purchase the item on-line at a discount?
    The risk is a function of several factors
    • How many of the SKU’s being investigated are available at both retail and the web simultaneously?
    • How many web sites are discounting the product?
    • How many products does each web-site carry?
    • How deeply is each SKU being discounted on-line?
    There are probably other factors that could refine the metric, but the above factors are clearly the ones driving the risk. Only once the showrooming risk is measured, can the management of that risk be addressed.
    Two companies with an identical showrooming risk profile™ score may have very different underlying causes of their risk. Understanding the numbers behind the numbers is the key to managing the risk. Imagine two golfers return to the clubhouse after playing 18 holes of golf. Each shows a 103 on their scorecard which, among serious golfers, would not be considered a very good score. Before the golfers work on improving their game, they need to understand what is wrong with their game. One may have trouble getting off the tee, and one may have trouble putting. Two very different problems, but yield the same total score.
    It’s the same with the showrooming risk profile™ score. Knowing the score is only the start, understanding what is driving the score is where the real improvement begins. Is it a single web site that is deeply discounting, or is multiple web-sites with moderate discounting? Or is it something else entirely?
    Now that we have a metric, who should we hold accountable for managing that metric? The organization. The underlying causes, and solutions to showrooming risk can be found across the organization from purchasing to IT to sales. When showrooming risk is a corporate metric the corporation will work together to manage that risk. We are all responsible in some way, large or small, for helping improve the profit of our organization and the same can be said of our role in managing showrooming risk.

    David Coleman is the founder of Brandoogle, a company that is focused on helping retailers and brands understand, measure and manage their showrooming risk. He can be contacted by e-mail at dcoleman@brandoogle.com.

  • The Great Showrooming Showdown

    That right. It’s coming. Showrooming is no longer just a minor business nuisance, it’s becoming a life altering change in the lives of traditional brick and mortar retailers. And they’re not taking this change sitting down. They’re coming out swinging. Brands that are involved in Showrooming will be shown the door by their top retail accounts.
    Are you prepared for the showdown?
    We’re all aware of the relatively recent change in pricing transparency that the internet has brought to the lives of consumers. They can now go into retail stores, evaluate products, and from the leisure and comfort of their own home (or mobile phone) purchase the desired product for 40% off what they would have paid at retail, on-line. Great for consumers, bad for retailers and brands.
    Retailers, by and large, have had some difficulty understanding the role that they play in the consumer buying experience since the advent of the internet. Many thought originally that it was just a novelty, and were slow to develop, and dedicate resources to managing this channel. Things have changed. Traditional Brick and mortar retailers now have a much better understanding of the web, and the opportunities and challenges it presents.
    Showrooming is perhaps the single greatest threat most retailers have experienced in a generation. Not since the advent of the Yellow Pages “Let your fingers do the walking” tag line that encouraged consumers to call stores for the best pricing, have retailer seen such a dramatic change in consumer buying patterns. Fingers are still doing the walking, but that’s about the only thing that has remained the same.
    Retailers know that the key to their survival in this new age, is to understand the impact “Showrooming” is having on their business, and then taking actions to address it. In the not so distant future, retailers will determine which brands, and products, they are being showroomed on, and those brands will no longer be welcome in the store’s assortment.
    If you are a brand or a retailer that doesn’t fully understand the extent of showrooming within your business, finding a trusted partner to help you measure this problem is the first step in addressing the problem.
    The Great Showrooming Showdown is coming. Are you prepared?

    Brandoogle is a Showrooming Solutions Company. We help brands and retailers understand, measure and manage their showrooming risk exposure. Software, Services, Solutions…We’re here to help.

  • Showrooming is the New Shoplifting

    Showrooming isn’t technically a crime, but if you ask many of my clients they think it should be.
    Each year, showrooming costs retailers tens of millions in lost profits. Showrooming is when someone purchases a product online after researching it in a brick and mortar store. Last year, $42.3b was spent online and a large percentage of those sales were from showrooming. While exact numbers are difficult to determine, it’s clear that brick and mortar retailers are facing a critical challenge. Everybody showrooms. Who among us hasn’t seen an item in a store, checked prices, purchased it online, and then gleefully bragged about our savings to a friend?
    Unfortunately, my retail clients don’t share that same joy.
    By some estimates, as much as 48% of visitors to brick and mortar retailers are showrooming them…and doing it in plain sight.
    Showroomers aren’t hard to find. They are usually the person scanning items with their smartphone, punching a few keys, and then walking straight out the door—usually with a smile on their face. The problem can be even worse for retailers of high end, highly technical, or complex products. Their staff is swamped answering questions on product features and functionality, yet rarely closes a sale.
    Well-established brands with high-value, high-margin items are the most lucrative for online flea marketeers to exploit. Margins can be shaved with lower, overhead structure and customers can be reached easily through the Internet.
    Retailers can be at fault too. “We Match Internet Prices!!!” is not a leadership strategy, a marketing strategy, or even a pricing strategy. It’s a retailer’s suicide note.
    Yet despite this looming menace, most retailers don’t know where to begin. Most retailers ignore showrooming altogether. They tend to spend their time and money fighting tangible threats like shoplifting. Yet, shoplifting only occurs in a fraction of 1% of all store visitors. Showrooming threatens a retailer’s existence.
    What is a retailer supposed to do?
    The answer is to fight back with a comprehensive battle plan…a plan that appreciates the changing retail landscape. Some ideas:
    1. Understand which high-value, high-margin items are likely candidates for showrooming.
    2. Learn how the product assortment and pricing stacks up against Internet vendors. Showrooming only occurs when a product is available in the store AND on the web. If it’s not on the web, the retailer is not going to get showroomed.
    3. Track the pricing and distribution of items online. Identify potential challenges. Identify the sources of any showrooming.
    4. Have frank discussions with branded goods vendors. Remind them that retailers still make up the lion’s share of most product manufacturers sales and profits and if they wish to be part of the assortment tomorrow, they must clean up their Internet presence today.
    5. Monitor over time and be vigilant. A clean product line can be showroomed in a matter of weeks.
    6. Don’t be afraid to take action. Whether you pull a product line, pursue a legal strategy, or simply host a frank “sit down” with a supplier, don’t be afraid to be aggressive.
    Unfortunately, there is no “silver bullet” to fix the showrooming problem. It’s going to be a complex and labor intensive fight. But it can be won. Retailers and their high-end brands still have a lot to offer that the Internet does not. The key for retailers is recognize those differences, understand that showrooming is a problem, and adapt their business models to aggressively compete in this changing landscape.

    David Coleman is the founder of Brandoogle, an online brand protection company and has nearly two decades of supply chain and brand management experience serving Fortune 100 and Fortune 500 clients.

  • Brandoogle Launches Website

    Brandoogle Launches New Website

    March, 2012 – Brandoogle is pleased to announce the launch of its new website. This new, online portal provides users with a full overview of Brandoogle’s capabilities and cutting-edge software as well as highlighting the many challenges facing brand owners, retailers, and licensees in preserving online brand equity.

    Founder David Coleman hopes that the site will not only highlight the critical challenges facing online brand managers but encourage companies to take a proactive approach in online brand positioning. “We want our site to be a forum for sharing ideas and identifying emerging threats to brand equity. We want to educate retailers, licensees, and brand owners that there is a immediate and growing threat to their brand equity and that they need to take action,” says Coleman.

    Coleman, a veteran brand management and supply chain executive with nearly two decades of experience, and his staff will also provide the site with regular commentaries, blog postings, and discussion topics which will illuminate issues relevant to brand executives.

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