So, you think you can take on the internet

I was astonished when I heard it and remain so now, several years later.

Some years ago, some small online retailers told me that they were struggling to get hold of some stock because their suppliers refused to supply them.

It appears that in an attempt to put the upstart online startups out of business, a number of traditional retailers had threatened their suppliers that they would take their business elsewhere if they supplied online-only retailers.

That’s right.  A significant number of traditional retailers were essentially blackmailing their suppliers by threatening to withdraw their business.

And apparently many suppliers, fearing the significant impact on their predominantly traditional retail sales, complied.

And it appears this cynical attempt to bring down online retailers hasn’t gone away.

Death to retail space invaders!

Just recently I was having a discussion with a former traditional retailer who repeated the story.  It’s just that this time, she was one of the culprits making the threats to her suppliers.

I couldn’t really believe my ears as she espoused her rationale.

“Why should people who have invested so heavily in setting up and running their shop in such a competitive environment compete with people who have a computer and some garage space?” she asked.

“These Johnny-come-latelys without any retail experience whatsoever come along and start stealing our business!  Its just not on!”

Admittedly, I was somewhat lost for words.

When I eventually strung some words together, including some that sounded like “restraint of trade”, I tried to explain a number of alternative points of view.

Reasons to be cheerful

First, just because you are selling online doesn’t mean you don’t need retail experience.  In fact, those with retail experience should be able to trounce the newbies because they fundamentally understand customer needs and how to service them, albeit traditionally.

Second, I opined that there was nothing stopping the traditional retailers getting online before these upstarts and actually prevent them stealing their business in the first place.  This ‘clicks-and-mortar’ approach was proving very popular because it literally offered customers the best of both worlds.

It also provided more assurance knowing that there was a physical outlet you could touch, feel and visit if you needed to.

Thirdly, the biggest threat came to them came not from small online retailers but from large multinationals who no supplier in their right mind would not do business with

Few beat the internet

And finally, as much as many have tried, few have succeeded in defeating the internet and its new way of doing business.

For example, while the major record companies may have shut down illegal music sharing service Napster, they eventually had to not only reinvent the way they did business to survive, but turn to the digital maestro himself in Steve Jobs to work out how they could still make a buck out of it.

And try as it might to try and compete with the Amazons and iTunes of the world, global book and music retailer Borders left their online play way too late and eventually went out of business.

A multitude of sins

But I’m not sure what disturbed me most about this former retailer’s comments.  Was it her closed-mindedness about this growing and fascinating new channel to market?

Or was it her at worst illegal or at best plain nasty ploy to use what amounted to dirty tricks to put her online competitors out of business simply because they chose an alternative channel to market to the one she grew up in?

Perhaps it was that she had fundamentally turned what should have been a wonderful opportunity for her business to grow her market into a sinister threat?

A win with GST on imports?

Of course, she isn’t alone.  Traditional retailers have invested heavily in trying to fight the internet.  For example the long, hard and ultimately recently successful bid to have GST imposed on imports into Australia of under $1000 in value.

Whilst this ruling may appear to level the playing field for local retailers, the reality is that Australian consumers are saving a lot more than 10% by buying offshore so it is bound to have zero impact.

If only they had spent this time and money on learning more about the advantages the internet could bring their business instead of trying to prevent it, they may have had a much more profitable outcome.

For example, focusing on non-price benefits like fast delivery, assisting the local economy, having a local physical presence, ease of returns etc etc.

Whilst they might celebrate this apparent victory in the short-term, it really has only delayed their inevitable decline due to an attitude of fighting the powerful internet instead of embracing it.

When it comes to fighting the internet, it’s really become a case of caveat venditor.  Or seller beware!

In addition to being a leading ebusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond.