Friday, September 11, 2009

Companies that defi"e"d the online sales model

While "Apple" the big computer and i-tune giant has never really shunned away from innovation and coming up with some of the most coveted products in last few years, it's becoming more and more difficult to call it's name as just one product wonder. Starting from Mac they have come a long way where the i-phones and i-tunes are doing wonder in the cellular phone market. They lead and the rest of the world follow in any new technology they decide to incorporate into their products.

I would have loved to write more about the range of apple products and how each and every of those products in their own way have really changed the market outlook towards that product segment altogether, but to do justice to the Title I would rather shift to the core. While Apple has never really entered into price wars and most of their home and business laptops and PCs are sold at the same price in the retail market or online, but the innovation that they have really brought is by not relying entirely on the online channel and also by not relying on retailers to sell there products along with those of several other competitors. And this innovation was that of the "Apple store" which they decided to launch in 2001. Though slowly but gradually "Apple Stores" have become the talk of most of the tinsel towns - where people if they don't go for shopping at these stores they at least are told to pay a visit to these stores for the sheer craftsmanship that has been put to create these stores. But the financial figures really have a much more positive story to tell. From reporting losses in 2002 and 03 the store profits have grown exponentially YOY, startling from a profit of $39 m in 2004 to $1.33 b in 2008 - four years has been a great turnaround. Although this number is still just 1/4th of the total profits through all the channels (pls note that these are profits figures and not sales or revenue), but it's a lot higher than any other player in this market. Also it's certainly worthy to note here that this also is accentuated by the fact that over last 8 years Apple has built assets worth $1.69b because of these stores, which plays a big role always in improvising their equity stance to the investors always.

Now what led to this success - Forward thinking, Innovation, Solving the complexities approach or just being different to keep your brand identity. I would sum them all and give it one word "Adaptability". While Apple always wanted to be positioned different because their product was a lot different than any of the nearest competitors viz. IBM or Dell, but their products were certainly complex too, because of a unique blend of combo offer of hardware and the OS together. And that was the reason online channels or normal retailers were not able to tackle the questions by the consumers and this was leading to a lot of dissatisfaction. And though the product itself was it's strength the simple complexities were being a bane and that brought the need of the self managed stores - a need to adapt to several situations.

Today's Apple stores have come a long way, starting a new roadmap in the journey of computer manufacturers and marketers- the stores have become a lab, a training centre and people are willing to go there and talk to the learned salesman come trainers and learn about several new products, solutions that they all want to incorporate into their lives! Kudos to Apple for being where they are and it's leadership in the form of the founder and CEO Steve jobs, their marketing leader Phillip Schiller and the Retail channel expert Ron Johnson and many others who have really changed the outlook of the retail industry by formulating this idea.

To mark an end to this conversation I would say Microsoft's hiring of Apple's Ex VP of Retail is a testament of what Apple has done and how others are vying to emulate the same model!

The intention of this blog was certainly not to get one company centric but there was so much to talk about Apple that I could not get into some other examples at all. I would want to expand this further in some of the subsequent blogs, where I would be talking about the Restaurant and Catering business and the Entertainment business which are 2 biggest industries which though having tried several gimmicks have still not gone "e"way and probability of that happening in the near future still lays low, because of the nature of industry and the basic human nature!

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