Several months ago, I received an invitation to take part in an online focus group for a well-known electronics retailer. I like shopping at their stores and have also been happy to buy from them online with great satisfaction. So, the marketing nerd in me readily signed up to give my point of view.
Well, last week I completed their latest questionnaire about my shopping habits and what type of products I have historically purchased online. I won’t bore you with the intimate details of my shopping habits but I have scored significant deals on shoes, vitamins and my favourite perfume by using diverse retailers.
The questionnaire delved into my online buying habits and asked if any of those purchases were from U.S websites. The company also wanted to know if price, breadth of merchandise or a better returns policy had impacted my decisions? I answered “yes” to all of them. Now, here is the question that left me scratching my head. Would I consider buying those same non-electronic items from this electronic retailer via their store or online. And if the company did expand their products beyond electronics would I see that as a negative? In fact, I actually wondered why a focus group was being asked to comment on that type of strategic business decision.
The decision to add new product lines where there is no common thread requires a thoughtful consideration of various factors including the financial and logistical. A diversification strategy can really put a strain on your company and credibility. If there are untapped opportunities for your business, and ultimately your customers, the addition of new products makes sense.
A quick scan of the North American retail landscape shows a lot of players. Amazon is arguably the most successful pure-play online company in the world successfully selling digital products alongside cosmetics, shoes, clothing and garden tools. In addition to great customer service and an easy return policy, Amazon’s success is ultimately based on reducing their overhead and selling to consumers more often that not at a lower price. Consumers get that. That same business model has also allowed Wholesale Clubs such as Costco and Sam’s Club to also offer a wide product mix. And department stores are also accepted for selling “everything” under one roof albeit not always at the best price . So, if there are many retailers selling a product mix, why did I hold this particular electronics retailer to a different standard? Can consumers perceive a product differently depending upon the retailer? Is that why some companies are able to sell a range of disparate products with credibility and others fall short of the mark.
It takes time, money and the ability to consistently deliver on your promise to build your brand. So, if you have invested in becoming the destination for all things “electronic” the addition of new products outside your core become a distraction. Would you actually buy a can of paint if it was on display in the fresh produce section of a supermarket? Although it would be convenient to centralize my shopping in one place I still would not do it. And I suspect unless there was a good reason, most grocers would be equally resistant.