Costs (and benefits) of showing prices on your website

I often get asked if furniture retailers should show prices on their websites.  While most online consumers want and expect to see prices, showing them poses clear risks and challenges for retailers.  Ultimately, this is a strategic decision and it is important to understand the implications.

SHORT TERM VS. LONG TERM
Let me begin with the assertion that most brick and mortar furniture stores will be better off in the short term with websites that focus more on helping people conduct research than on making online purchases.  This may not be true for pure dot com retailers, for small ticket and easy to ship items, for mattresses and other item type purchases, or for exclusive items that a customer cannot find elsewhere.

Eventually, showing prices on furniture websites will become necessary.  Since so few furniture retailers have acceptable websites today, I think many companies will be better off to focus their limited resources on attracting customers and showing more products.  For a discussion on this topic, see my previous blog “The Two M’s of Making Money with a Furniture Website.”

WILL PEOPLE PURCHASE FURNITURE ONLINE?
The verdict is still out about how much big ticket furniture will actually be purchased online without some store and/or salesperson involvement.  Buying furniture can be complicated, and many consumers need professional help.  Online purchases of big-ticket furniture remains relatively low when compared to total furniture purchases and when compared to online purchases of most other product categories. 

FOCUS ON CUSTOMER RELATIONSHIPS NOT PRICES
As the Internet becomes a more important part of furniture shopping, we will see two types of winning strategies:  low price and high service.  The Internet will turn many furniture purchases into commodity type transactions. Those companies who implement the first websites first can and will win some of this business, but it is unlikely to be sustainable over the long run as margins shrink.  Most retailers will need to compete, by focusing on service. 

Here are five reasons why you should think twice before you show prices online:

1.  CUSTOMER PROFITABILITY
Online customers who come in contact with a sales professional or come into the store will have significantly greater profit potential as a result of higher close ratios, bigger order sizes, more repeat purchases and fewer problems. Showing prices online will often mean forfeiting your opportunity to interact with potential customers.  Whether you decide to show prices on your website or not, I believe that most furniture stores will be better off if they incorporate their salespeople into the online selling process.

2.  PRICE CAN AND WILL BE USED AGAINST YOU
Do you really want to give your customers (and your competitors) the tools they need to beat you – to cross shop and drive margins out of the business?  If you don’t know what I’m talking about, see any of the comparison-shopping sites that display a list of retailers, who sell a particular item, sorted from lowest delivered price to highest.  Posting your prices can make it easy for others to beat them.

3.  MANY INVENTORY SYSTEMS DON’T MAKE GOOD WEBSITES
Data structures from POS/Inventory systems typically make "lousy" websites.  These applications were not designed to run customer-facing websites.  They were built to manage inventory and financial information.  This data was entered to be used by company employees - not by customers.  Very few furniture retailers have the kind of customer friendly descriptions and product classifications to create a useful website. 

4.  DON’T COMPETE WITH YOUR SALESPEOPLE
You can expect greater success and buy in for your website if your sales associates view it as a tool to help them rather than a competitor that will steal their customers and commissions.  Displaying prices and encouraging customers to use a shopping cart can send a mixed signal to your sales force.

5.  HIGH IMPLEMENTATION & INTEGRATION COST
The cost to purchase and implement software that links a website to many furniture retail POS/Inventory systems can be high.  In addition, displaying prices can require a fair amount of maintenance if sale prices change frequently.  It goes without saying that prices online and in the store should be the same. 

TRAINING YOUR SALESPEOPLE IS KEY
A successful website will give you access to customers at an earlier stage in the shopping process.  Salespeople who provide price quotes need to have a long term focus.  They cannot expect web leads to close as quickly as in-store leads.  Use website price quotes as an opportunity to start a quality dialogue and to earn email signups.

PART 2 – WHAT IS THE RIGHT WAY TO SHOW PRICES ONLINE?
Since online pricing will most likely become necessary at some point, I will discuss this subject in Part 2 of this blog.  I think you will agree that some approaches are better than others.