11 Oct 2014

Addressing the Selection Problem with Physical Shops

One advantage of e-commerce, we’re told, is the huge selection of products you can choose from. What would it take to bring this to physical shops?

Obviously, you’d need far bigger shops. This means probably only one huge shop per city, instead of several smaller ones. Or, at any rate, fewer.

This can be a shop that focuses on a particular type of goods, like photography. An example is Samy’s in San Francisco. Or it can a hypermarket that offers anything and everything.

This huge shop can’t probably be located in city centres or other areas of the city where real estate is expensive because it will be huge in size [1].

But it still needs to be well-connected, if people are to show up. And travel farther to show up, because there’ll be one huge shop in a given city.

That means a shop near a metro station or motorway exit. Not any station but one with cheap real estate around it. That will the best of both words — easy for customers to reach, but affordable to run.

And if people are going to travel farther to reach the shop, they may want to buy more items at once. This will, in turn, mean free home delivery above a threshold, like ₹1000 or $100. You come, and you buy what you want, and it will be delivered to your house.

If a certain product is not available, they should take an order and ship it, so that users are not put off after traveling a long distance. The customer should be charged only on delivery.

The shop should have at least one demo piece of every item, so that customers can see the product even if it’s not available immediately for purchase. Being able to see the product is one of the unique advantages of a physical shop. Don’t sell the last unit.

The shop will also need enough people to help customers choose the right product for their needs [2]. Again, that’s one of the advantages of shops, and loosing out on that defeats the point of a physical shop.

Then, the shop will need a lot of marketing to the target audience in the city, like photographers in Bangalore. Everyone who wants to buy a camera or other photography gear should be exposed to this shop.

But, with all this in place, I see no reason why physical shops can’t offer a huge selection, like online shops do. I hope the economics works out.

[1] But probably not as huge in revenue or profits, because a shop that offers fewer items can and will offer the most popular items. When you add relatively unpopular items to offer a larger selection, they are by definition not going to bring in as many people. So a shop that offers 10K items won’t generate twice as much profits as a shop that offers 5K items. This in turn means that these huge shops won’t be able to afford premium real estate.

[2] E-commerce sites can also get better at this. Why can’t I look for phones with screens that have at least 400 pixels per inch? This is exactly the kind of mechanical task that computers can do, saving hours of human time, or having to ask a salesman. All it takes is comparing one field in the specs against the given number.

Flipkart does a much better job than Amazon at helping you find the phone you want. You can ask for phones that have at least a 5-inch screen, running a particular OS (Android), and that too a particular version of the OS (KitKat), with support for dual SIMs and FM radio, and cheaper than ₹18 K. This is amazing. As another example, I was looking for glossy paper for my printer, and I able to filter by glossy paper.

All e-commerce sites should let you filter and sort by any of the specs. Filtering and sorting do different things, of course: filtering eliminates products that don’t meet your requirements, and sorting merely changes the order based on what’s important to you. Both are important.

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