Nonfood Talk: A new soapbox?

A fledgling e-commerce site is eyeing the health and beauty care category. Traditional retailers need to pay attention and initiate some strategies to fight back.

By Seth Mendelson

They say they will be able to offer consumers fast service, convenience and good pricing on a whole range of products that will be stocked at three warehouses across the country and transported by nine shipping carriers. They say that most orders will arrive the next day and shipping will be free. Also, consumers visiting the website will have the opportunity to browse and compare products based on prices and other factors.

If history is any guide, it will never work. As such flops as pets.com have shown, consumers want immediate gratification. Consumers are simply not going to use an Internet service for products that they usually need immediately and can quickly drive over to the local store and pick up. Plus, shoppers like to feel the products and read the packaging. Internet sites don’t let you do that.

On the other hand, it may work very well. As we have discovered, consumers are eager for e-commerce sites that make sense. Amazon.com is the leader in this category and not only in books. The site has captured the attention and imagination of consumers in a large number of categories, including many general merchandise and health and beauty care segments, by offering a wide assortment of products, excellent service and cutting edge pricing. Today, Amazon.com has moved into contention with Wal-Mart and others for first place in consumers’ minds. The result has been more sales, many of which have been stolen from traditional brick-and-mortar retailers.

It should be noted that diapers.com, according to reports, has successfully captured a share of the diapers market, robbing traditional retailers of sales from a steady and extremely profitable category.

If company officials play their cards right, soap.com could be the next Amazon. And, that could be very bad news for any brick-and-mortar retailer in the HBC business. The bottom line is that consumers are very open to using the Internet for almost all of their needs but, thus far, no one has developed a e-commerce website that makes any practical sense for HBC sales.

The jury, of course, is still out whether soap.com will be the one to create the right mousetrap for HBC sales through the Internet. The site differently seems to address many consumer needs and, according to insiders, is easy to navigate.

But, eventually, someone is going to get it right and start convincing consumers that they can purchase their health and beauty care products online instead of at the store. When that happens, it is going to result in a big decline in volume and profits for traditional retailers.

So what is the next step for traditional retailers? Needless to say, these retailers should be developing their own e-commerce sites to stay ahead of the digital curve. At the same time, they need to understand that price remains the main reason for consumers to even consider buying product on the Internet. Therefore, it is very important that retailers make sure they have the right product and the right price point to keep their current shoppers from looking for alternatives.

E-commerce sites are definitely coming. But they do not have to be a game changer. That is up to retailers to determine.

Seth Mendelson can be reached at 212-979-4879 or at smendelson@groceryheadquarters.com.

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