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E-Tailers Testing Physical Stores

TWICE: We talked about the challenge of explaining and selling connectivity to consumers. How does Crutchfield convey complex concepts like this on the site and in the catalogs?

Rick Souder, Crutchfield: Nothing beats a demo in a store to get people excited, but we have a natural number of people who are interested in this area, and we are seeing them come to us from search that has been indexed to our content. And we do talk to a lot of people on the phone. Just a typical question:

“Do you have music on your smartphone?”


“Well, what do you do with it?”

“I listen with some earphones.”

“Would you like to have that in every room in your house? Or would you like to take that out on the deck?”

Dave Workman, ProSource: In the audio category, like many other categories, there is a very symbiotic relationship between brick-and-mortar retail and online. But in these categories that Rick is mentioning, where you have to bring customer awareness up, we really do need a physical presence, the way RadioShack, Best Buy and others are out there with quality displays.

Consumers will ultimately choose where they want to shop, and that is what we are seeing out there. But a showroom is necessary when you are bringing something to life. Ultra HD is another example of that. There has to be a physical presence in the marketplace for some of the categories to gain traction and awareness with the consumer. We are seeing that more and more with some of the new technology.

Ben Hartman, VP CE, I would add that consumers are starting their search for products online, and there are actually some really tough questions that they have. Online can be a great venue to answer questions and help customers figure out how to use products. When you come to Amazon, for example, and you are trying to figure out how to use connected audio, or if you are trying to figure out Chromecast, there are hundreds of reviews and Q&As to answering questions that customers have.

When you get the product, you want to figure out how you are going to get the audio. With Amazon, we are showing customers how Amazon Cloud Drive works. We are integrated with other services as well, explaining how they all work. Online can be a great place to explain all of this stuff, and it is the right customer — it’s the customer who is shopping online and shopping from their phone that is the one using the latest audio streaming technology.

Soren Mills, chief marketing officer, Newegg North America: There’s a lot of new technology and because it is confusing, the community on the site helps provide information and some confidence to the customer who is newer to the category. Are these things going to work together? How do I make all of this come together and have the best experience? The community can help support that and can show you what the right products are and how they work together.

Also, as technology broadens its footprint in the house with additional products, we are getting an additional customer: females. For a lot of years we were predominantly male-oriented, and we’re broadening out from a 90 percent male customer base to more of a 70/30 split.

These are important parts of an expanding and growing market, which to me is positive for where we are going with consumer electronics.

TWICE:Do online retailers need a physical presence as well?

Hartman: We are always looking at new ideas and ways to innovate.

It’s great to hear about all of the innovation that is happening in physical stores. There’s a lot of innovation that is happening online. Retail is a big business, and there are going to be big winners.

There’s a place for companies that are adding value for customers in brick-and-mortar, and that is good. We have what we think is a good offering for customers: fast, free shipping; convenience; research; and good prices.

But there is not one customer and there is not one customer at one point in time. There is a time and place for customers to shop in different ways. Between all of the innovation happening in retail and all of the new and exciting products, it is an exciting time in consumer electronics.

James Merck, brand marketing director, Newegg North America [joining in the conversation]: We opened our first hybrid center last year to bring together the retail experience with an online experience. People who come in to pick up an order get to see about 90 products that are the latest and greatest. The center is staffed by customer service agents who are extremely fluent in being able to discuss the products and answer a lot of questions.

We are expanding that to a couple of other of our distribution centers throughout the year. We see people coming in and asking questions about how things work and looking at the 4K TVs, playing the Xbox on the 4K TV, really testing things out and getting fairly objective answers we hope from the customer service agents, not presenting a particular brand. We see customers responding very well to this, as they pick up their goods and get the rest of their things.

TWICE: And Crutchfield operates two retail stores.

Souder: Yes. We recently replaced an existing store, but it is a totally new concept to try and bring the Internet to life within a retail environment, to be able to demonstrate a lot of products and technologies without having to have a lot of inventory and a huge physical footprint. It’s an early prototype. We are excited about it.

TWICE: Will we see more of it?

Souder: We’ll open another one in a smaller format just to experiment with size later this year, and after that who knows where it will go.