Why should you read an article about Motorcycle Superstore? Because it posted $43 million in online revenue in 2008, and enjoyed double-digit growth in 2009 while the rest of the powersports retail industry was starting to struggle? Because it gets high approval ratings from 150,000 customers on Shopzilla/BizRate? Or perhaps it’s because you believe Superstore and other online retailers are siphoning away your in-store business?
The most important reason to read up on Don Becklin and Motorcycle Superstore may be because his (and other e-tailer’s) business is just as much a part of the retail channel as the 30-year-old brick-and-mortar dealership. Complain about them all you want, but online retailers aren’t going away — and if you want to stay in business, you’d better learn how to compete against them.
It may seem simplistic to consider Superstore a PG&A retailer that sells through a new sales channel to a much wider (actually, global) customer base. But Superstore carries the same brands as traditional dealerships and orders from the same distributors and vendors. Becklin worries over stocking, inventory, marketing, advertising, employee morale and productivity, and keeping customer satisfaction scores as high as possible. He may not have a newsletter, but he does run www.motorcycle-usa.com.
In short, he’s doing everything you’re doing, only on a larger and grander scale.
In an exclusive interview with Dealernews, Becklin says there’s a huge misconception about the role a company like Superstore plays in powersports retailing, and it has to do with the customer conversion rate. Superstore’s volume is gargantuan, but most people visiting the site don’t buy anything.
Here’s evidence: In April, the Superstore website hosted 1.5 million unique visitors and nearly 6 million page views. If Superstore’s sales conversion rate is about 3 percent, as Becklin states (versus about 30 percent for a traditional brick-and-mortar retailer), 97 percent of visitors (1.45 million) leave the site without ever clicking the “buy” button.
What does this mean? According to Becklin, it’s due to the same reason consumers go online to research the particulars of, say, a new home theater system before venturing to their local Best Buy to purchase it. Superstore, he says, is a research tool for visitors who want to investigate and compare products before buying them elsewhere.
It’s this point that Becklin believes gets lost in the online-vs.-brick-and-mortar argument. “Consumers are still doing an awful lot of shopping locally, but the Internet, first and foremost, is a great research tool,” he says. The Internet has empowered consumers to make purchase decisions based on their priorities. “The consumer is in control,” Becklin notes. “If a consumer is browsing my website on a Friday and is going riding on Saturday or Sunday, guess what? Whatever he needs, he’s not going to buy from me because there’s no conceivable way I can get it to him. If he’s gathering information, he can become informed. And if he needs it right then, he’s going to go someplace and make that purchase, and traditionally that’s going to be a local dealership.”
Becklin says consumers will buy from Superstore and other e-tailers when it makes sense for them to do so — for example, if they have the time to wait for their product to ship. So it’s this very point — along with the fact that an e-tailer never has face-to-face interaction with its customers — that gives traditional retailers an advantage over online stores, he says.
“I know the majority of people who visit my website aren’t going to buy from me. If they’re going to buy online, I hope that they buy from me. And if they’re going to research and go buy in their area from a local retailer, there’s not a whole lot I can do about it,” he says.
Indeed, many dealers see Superstore’s business model as a threat, just as they did mail-order. But Becklin wonders whether people consider the Web to be more powerful than it actually is. Add to this a struggling U.S. economy, and the issue is compounded.
“The traditional retail channel is still significantly bigger than the e-commerce,” Becklin says. “People may look into the gray cloud of the Internet, and because they see all these big websites or listings on Google, they may assume one thing. It’s easy to think that something you don’t understand is the boogeyman. But in reality we’re talking about discretionary products sold in an economy that’s the worst since the Great Depression. We’re seeing sales go down.
“Are the Internet guys really taking it from the brick-and-mortar retailers?” Becklin adds. “To a certain degree that may be true, but there’s a variety of factors contributing to the sales slowdown. It’s really easy to assume the customer is going elsewhere, when in reality the customers may just be getting more frugal.”
Becklin believes most traditional dealerships have an edge over large e-commerce sites but don’t take advantage of it. With cash tied up in flooring costs, many dealers have chosen not to stock deep on parts and accessories. This only sends the customer elsewhere.
“[A customer] took a trip to come down to your store,” Becklin explains. “Now, does he really want to place an order, then go home and wait for it, and then drive back to pick it up? Especially when he knows he can go on the Internet, place an order, and have it delivered to his house.”
“The customer isn’t so naive as to believe that he can only order [the product] by walking into somebody’s store. Everyone knows that you can place an order online and have it delivered. If that process is easier and less hassle and is priced in a similar fashion, then a consumer will make that decision,” he says.
To compete effectively with e-tailers, Becklin says dealers must optimize their product mix and enable customers to see, touch and examine the product in person, and buy it then and there. A dealer can then form a relationship with the customer that will bring him back into the store. Becklin also runs a 5,000 sq. ft. brick-and-mortar store in Medford, Ore. He doesn’t provide service, or sell vehicles or OEM parts. Given that Medford has been hit hard by the recession, he doesn’t have much foot traffic. There’s little incentive for customers to walk through his door unless they know exactly what they want. It’s a far cry from the online world.
“They are two separate entities,” he says. “It’s funny, but we actually experience the same struggles with the retail store as what traditional retailers are seeing, because we’re in the same boat when it comes to that channel.”
This story originally appeared in the Dealernews June 2010 issue.<?i>