Tuesday, November 23, 2010

E-tailing's beautiful argument

I'm not positive, but I'm fairly certain that random pedestrians–not paying customers–don't stroll in and out of Amazon's buildings all day long, clogging their toilets, breaking their toilet paper dispensers, and stealing their soap pumps.  I'm also fairly certain that few people have decided that Amazon's buildings are a good place to sit down and read a magazine or take a nap while they're drunk.  Or high.  Again, I can't be sure, but I'm pretty confident that no ever successfully wheedled, guilt-tripped, intimidated, or threatened their computer screen into giving an extra parking validation or into accepting an expired coupon.

I've seen lots of talk about how online retailers don't have the same overhead that brick-and-mortar stores have, and they have lower labor costs, etc.  There's one aspect that isn't talked about very often, at least not in brutally honest terms. 

E-tailers have a barrier that keeps out the 20% that aren't worth anyone's time.  You have to have a credit card and you have to be savvy enough to use a computer.  That means they can focus on the 80% who are interested in exchanging money for a good or service at the listed price.  They don't have to deal with people whose only interest in any given store is as a place to have a nice bowel movement or a good nap.  They can focus on the 80% who actually want to, you know, buy stuff.  They can deal with the 80% of consumers understand that haggling is not a generally accepted practice in American life instead of the 20% who think that a wink and a smile or a raised voice and threat to "speak to your supervisor" justifies the off-chance of a 50¢ discount.

Once upon a time, a customer could bang a can of beans again their shopping cart and noisily tell a clerk, "I'm a loyal, paying customer!"  There was a pretty good chance they'd get a discount on the dented can, or the scuffed book, or whatever it was.  I'll be amazed if there comes a point in my life where I can't go to some kind of store and buy a loaf of bread.  At the same time, I'll be amazed if I can still go to a store and buy a new book, poster, or movie in twenty years.  I'll be shocked if clothing stores look anything like they currently do a couple of decades from now. 

The shift from X% vs Y% in the online% vs brick-and-mortar% ratio is going to keep moving.  But I just started wondering how much of that is driven by retailers realizing that some customers just aren't worth chasing.