The current argument that online shopping is going to kill the “brick and mortar” stores may seem like news to most, but to those of us in the speciality retail area, we travelled that path many years ago and the damage has already been done.
Many years ago I used to own a popular Magic Shop in the CBD and, even in the 1990s, my customers had started to discover that it was often cheaper to order their goods by mail from the USA.
When I would order a shipment of books and magical apparatus I would not only be hit with a barrage of taxes and import duties, but I’d also need to ship it in the most inexpensive (slowest) way possible. Once it arrived my shipments would sometimes get held up in Customs for inspection and I’d need to drive to Tullamarine to collect them and sometimes pay additional charges. Finally, I’d have to add a mark up on top of what I’d paid for the goods to cover the costs of high retail rental, electricity, wages, shop upkeep etc.
On the other hand my customers could write, phone or fax the retailer in the USA and once their cheque cleared their order, being small and inexpensive, would be shipped inexpensively by air and bypass customs and the associated duties and import taxes.
Now, with the advent of the internet, customers are able to order directly online by credit card and have their order arrive at their doorstep within two days.
One or two Australian magicians have embraced this technology and set themselves up as local online stores. They have no physical shop, no stock, no expenses whatsoever. They simply publish a full and extensive catalogue online and, when the customer places an order, they order the items from the wholesaler who ships them out to them within a few days. The store then sends them on to the customer after adding only 10% to the wholesale price as their mark-up.
Any retailer knows that this sort of business model is impossible to compete with, no matter how good your customer service is.
In fact, I discovered very quickly that people would come to my store to see the tricks demonstrated, to get the tips and professional advice, and then they would order them online.
A few times they would bring in faulty items they’d received and try to exchange them claiming to have bought them from me!
There were, only a few years ago, five physical magic shops in Melbourne. Now there are only two, and one of those will be gone within a year.
Interestingly enough, the Australian online magic shops which hastened the demise of their brick and mortar counterparts, are now crumbling under a new challenge. The wholesalers themselves are setting up online retail outlets. Some are simply eBay stores offering magic and books for the same wholesale prices they sell to retailers, and sometimes even less!
Why are they doing that? Partly because, as the brick and mortar stores die off they are making smaller and smaller orders, but also to counter a glut of “knock off” items being sold online through eBay at even lower prices.
As soon as a new magic item is manufactured and marketed, factories in China (often the same ones that are manufacturing the original item) start churning out unauthorised copies and selling them at even lower prices direct on eBay.
The impact that all of these factors have had on the single speciality market of magical equipment has been devastating to the traditional brick and mortar outlet.
Now we are starting to see the same thing happening in the general retail sector and, understandably, the business owners are panicking.
Is there a solution?
They can drop their prices but they can never compete with a business that has such lower operating expenses.
They could offer better customer service to attract the customers, but that still won’t guarantee the customer will purchase from them instead of online.
Music stores have been replaced by the instant delivery system and unlimited online catalogue of iTunes.
DVD rental stores have been replaced by instant download services like Netflix.
And both of those outlets are gradually being replaced by illegal downloads and file “sharing”.
As for the Magic Shop, and the delight of walking into a virtual Aladdin’s Cave of wonders and mysteries, that’s disappearing too.
It’s going to take more than magic to conjure up a solution to this problem.