The Online Price Pain for Interior Wholesalers

The Online Price Pain for Interior Wholesalers
April 21, 2016 angela

The Online Price Pain for Interior Wholesalers

As the interiors e-commerce market flourishes, it could create the impression that wholesalers are also benefiting from the online momentum.

Of course, there are certain advantages such as the increased exposure online, the viral opportunity of social media sharing along with products most likely reaching a global audience. Let’s not forget the convenience of goods arriving at a customer’s door – no travel required. And for the client, there is usually a price advantage with online shopping.

Sounds plentiful, right?

Well, not if we consider these “benefits” against a wholesalers other suppliers – the brick and mortar store.

Now this is not a “which is best” brick and mortar vs. online debate, it is one purely of price and how controlling product pricing is an ever-increasing challenge for wholesalers.

Let’s look at some recent stats:

The 2016 PwC Total Retail Global Report who surveyed 23,000 consumers across the globe reported that “we may live in the age of value – but price is still king.”

The report also revealed some local stats finding that 47 per cent of Australian’s buy online because it is cheaper with a further 40 per cent buying online for convenience.

The report labelled consumers as “survivalists” and “selectionists”.

“For survivalists, affordability is at the core of future purchase decisions. For these shoppers, discounts and deals are critical,” the report read.

“Selectionists, on the other hand, maintain an appetite for brand and a distinctive store experience.”

Unfortunately, when it comes to price for the survialist or the selectionist, prices can be “drastically different” as interior designer Crystal Amesbury explains it.

Sydney-based Amesbury reached out to a few local wholesalers to explore this topic with me.

“Physical stores are a proven powerful selling tool, but the want for a bargain and convenience is causing damage where there wasn’t before,” she explained.

“If a wholesaler is choosing to sell to both brick and mortar stores as well as online retailers, they run the risk of alienating their storefront retailers by having them undercut by the low overhead online retailers”

Pricing Pain for Everyone

Price is a significant deciding factor for most customers, particularly for larger or more luxurious purchases.

A click of a mouse button is usually an affordable and seamless transaction and from a client perspective, the product is in their hands but from a wholesalers view, it can damage supplier relationships.

“Unfortunately in this scenario, if a physical storefront, who purchases up front, physically displays wares with stylised vignettes and showrooms starts losing customers for a particular product, then they’re not going to re-order from that wholesaler,” explained Amesbury.

“In turn, the wholesaler loses a massive advocate for their product.”

A product placed in front of customers remains important, especially as brick and mortar enjoy a revival with Amesbury warning that price differences will see the wholesaler eventually lose visibility, money and customers over time.

“Wholesalers who lose physical space in front of customers will then need to depend on online retailers, who generally don’t purchase stock in advance (for example drop shipments) and who are also not investing in pushing the product in the same way.”

Showroom styling remains an added cost to suppliers

Showroom styling remains an added cost to suppliers

Online Shoppers are Price Driven

Sure, some shoppers are time poor and seeking the convenience of a product delivered but research continues to demonstrate that consumers head in store for product research before making a purchase online – a price-driven decision.

“Price is usually the leading factor for someone shopping online, said Amesbury.

“Even though visually you may think you’re comparing apples to apples you’re not, because you’re completely missing out on the detail and tactile quality that handling a physical product provides.

“This, in turn, leads to the consumer picking something similar, and usually cheaper and inferior in comparison to a boutique wholesale item with a higher price point.

Why Not Go Direct?

Cutting out the middle man seems like a logical solution for wholesalers however Amesbury advises its only a temporary one.

“Whether wholesalers choose to eliminate retailers all together and become self-sufficient in retailing their own products remains to be seen,” she said.

“However, in saying that, wholesalers then miss out on the guarantee of minimum orders or spends that they put in place to keep production running and predictable.

Exclusive In-Store Gains

As the market saturates, customisation for products, unique materials and exclusivity is a growing demand with consumers keen to see these items in person.

“Not being exclusive will make it difficult for a wholesaler to push their luxe quality if no one sees their product,” said Amesbury revealing that it could lead to one of the greatest losses: the “impulse buy”.

“With so much promotion done via social media, a product found and loved in a store will invoke so much more emotion than an inventory image on a website,” she added.

“How many times do you see people snapping something they like in a store that is beautifully styled amongst other complementary products to sell a story, compared to a screenshot of a stock image?”

Future Predictions

It’s not quite a war, but it is a topic that certainly needs attention. A solution also shouldn’t need to see wholesalers choosing to supply to either online or brick and mortar.

“If a wholesaler was only supplying online retailers this could prove to be fruitful with a wonderful marketing plan, but humans are tactile and sometimes the feeling of something is all it takes to convince someone of owning a product,” said Amesbury. “It changes that feeling of “want” to a “need” instantaneously.

“Physical stores can combat the competition by having their products listed online as well however this is an upkeep that eats away at their bottom line,” she suggests.

“However, they do have the bonus of providing their customer of the option to visit ‘in-store’ to experience the product, before purchasing.

“Only time will tell which retail style wins out in the end,” concludes Amesbury.

Written by Crystal Amesbury and Angela Fedele

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