Monday, November 06, 2006

If the shoe fits... sell it.

Buying a pair of shoes online. It seems to be a topic that when you first turn and tell your neighbor about it... they give you a "deer in the headlights look" and say... "but how can you buy a pair of shoes without trying them on? I would NEVER do that."

Well... someone is doing it... as a matter of fact... a LOT of those people are doing it. Footwear is one of the fastest growing segments of online retail. Growing at 15% the Online Footwear Market is estimated to be a tidy little $5.5billion by 2010. Compared to the rest of the Footwear retail segment, that's pretty significant given that even in the best of times... shoe retailers off line are grinding out 5% store for store gains each year.

There are a LOT of competitors in this space... ranging in age from 7-10 years for the older players... to this month for the latest competitor: Piperlime.com (from GAP.com)

What do they all have in common? They all offer a selection that at this point is impossible to match in terms of depth of sizes, and styles, in an offline shoe store. This is not too unique in terms of any retail experience, Best Buy and Circuit City can't possibly stock all of the electronic goodies they sell, for example. But, shoes are a unique piece of apparel. There is an emotional bond with footwear that is definitely unique, and VERY strong. Consequently, there is a high bar that the online footwear purveyor must clear in order to provide a superior customer experience in the market.

The entry of GAP into this foray isn't really as much of a validation of online footwear sales (zappos.com has done that all by itself thank you very much) as it is a signal, that retailers with adeptly integrated and flexible eCommerce platforms, and a positive customer experience led by those platforms, have a good chance to succeed in niche markets quickly.

You might remember that about a year ago, GAP literally shut down its online operations to re-tool them from the ground up... in order to "get direct right." They caught a lot of flack for it
and for a while... the standard measures of success trended downward but after a while, you know what happened? The success started to come back to them, in multiples. This flexible new platform allowed them to launch a world-class online footwear store in 5 months total. Their entry into the online footwear business is just a case study in re-tooling your efforts around what your customer wants, and having the flexibility to meet their needs in a matter of a quarter, and not a multi-year effort. I think I might have commented on that somewhere :-)

Unlike many of the corporate retailers, GAP understands that you have to be centered around the customer's success. What is a more natural combination than shoes with clothes? Zappos.com has talked about it... but not really succeeded. It is hard to imagine them working on it much given the success they've had on footwear only. Bluefly has done some of it but has focused only on footwear that applies to its high-fashion niche. Shoebuy.com has tried bags as has shoedini.com. Marginal success with both of those. Perennial 3rd placer Shoes.com really hasn't tried an integrated approach much, instead focusing on trying to be the an eCommerce engine for the rest of the Brown Shoe Company Brands (like LifeStride, Dr.Scholls, and the soon to be released Bass. ) or niche sites with little or no following (bluefiresports.com, luxuryshoes.com, etc.). Retailers like LandsEnd and cataloger LL.Bean have their niche-related footwear. But... at the end of the day GAP sells everything from Jeans to Dresses, and can now pair the footwear with them to match. They've got the best platform for success in the online footwear market, and really pose the first credible threat to zappos.com's sales juggernaut. If GAP can succeed at integrating its Piperlime with its offline efforts (things like instore returns, etc.) then I think you have the makings of a real challenger in the online shoe market.

Care to comment? Try the MEEBOME widget if I'm online, or post a comment to the blog. They're always welcome.
cheers!
.bb

3 comments:

BT said...

I personally believe that Gap is going to have a tough time competing against Zappos. First, Piperlime is a huge departure from the traditional Gap business model. Gap has enough problems in keeping their core business profitable/growing, and now they are stocking other manufacturers merchandise (something they have never done before) and they are selling only through the web. I personally believe that Zappos has a better, more efficient e-commerce platform and one of the highest customer satisfaction rankings on the web (Bizrate.com). Gap has their work cut out. BTW, Zappos is now offering apparel, and accessories including sunglasses, watches, socks, jeans and other clothing.

BT said...

I personally believe that Gap is going to have a tough time competing against Zappos. First, Piperlime is a huge departure from the traditional Gap business model. Gap has enough problems in keeping their core business profitable/growing, and now they are stocking other manufacturers merchandise (something they have never done before) and they are selling only through the web. I personally believe that Zappos has a better, more efficient e-commerce platform and one of the highest customer satisfaction rankings on the web (Bizrate.com). Gap has their work cut out. BTW, Zappos is now offering apparel, and accessories including sunglasses, watches, socks, jeans and other clothing.

onlineretailguy said...

Good points BT and I admire Zappos' dedication to customer satisfaction. However, all may not be as it seems when it comes to some of their "rankings." Also... I still have an inherent belief that the multi-channel approach will in the end benefit the customer most... gives them the BEST tool in the overall spectrum of customer experience... choice. Zappos doesn't have stores. They tested kiosks and failed miserably at them. In terms of technology and distribution systems... Amazon is number one overall. Zappos has built their's from the ground up... using open source and writing tools when they've needed them. Nice approach for a $10m website. They've proven it extends to $300m. But what happens when the talent raid starts... and they start losing the people that built it. That will be interesting. That's going to happen right about the time they get close to that Billion in sales. Also... don't believe the hype about the Zappos profit... they turn a profit but... just barely.

Gap's direct business has been very profitable... and they've started to again right the ship in terms of product selection, focus, etc.

It will be interesting times... again I think the best thing Zappos has going for them is proving that you can generate sales with superior customer service in the online environment... we'll see in the long run how the profit thing works out for them.