And how to avoid the same fate.
Did you hear the one about the retailer who depended 100% on people walking into their shops to buy their goods? That wasn’t in the 1980s. It’s the story of how UK fashion retailer Primark is suffering right now.
BBC News put it this way: Coronavirus: Primark sells nothing as retailers struggle.
“From making sales of £650m each month, since the last of our stores closed on 22 March, we have sold nothing,” Primark boss George Weston said.
Why is Primark in such a hole? They have no online sales channel. That’s right. Primark is stuck in a pre-internet mindset and has no immediate way to make money during the lockdown. I hope they have a massive war chest because Primark could be another fatality in the bloodbath on the high street.
And it’s all their own fault.
Clearly, for Primark, online is not a cultural fit, and they fled the internet after barely dipping their toes in.
The perils of a single sales channel
Before we say Primark’s example doesn’t apply to us, we need to think about our own businesses. We need a robust mixture of potential revenue sources if we are going to survive the crises the world throws at us.
Retailers need to be able to sell online through their website and social media, but what about if you’re an internet business? Do you rely on Organic traffic from Google and other search engines? Or does most of your business come from social media?
I’ve seen many small and not-so-small businesses that pin their hopes on sales from Facebook. That’s where their customers are, they argue. Fair enough, but what if those customers were no longer there any more?
OK. The people are not going to disappear. But Facebook could increase its advertising costs so that your COA (Cost of Acquisition) spirals to a level that you can no longer make a profit.
You may, completely unknown to you, break some obscure rule you’d never got round to reading in the Ts & Cs, and then you find your account suspended. Or worse. You do read all through the Ts & Cs, don’t you? And, even if you did, are you sure you understood all the legalese?
Depend on one platform for your business’ prosperity, and you’ve relinquished control of your business’ profitability to someone you don’t know and have no reason to trust.
Be aware of who owns your chosen platforms. If you’re using Facebook and Instagram, you shouldn’t feel that you’re safe from something going amiss with your presence on the platform. Facebook owns Instagram, and if one account gets into trouble, your account on the sibling platform may also be vulnerable.
You need to be careful where you put your eggs.
You must diversify
Spread the risk. So if something goes wrong with your Google rankings, you could take up the slack elsewhere — in social media, pay per click or any of your chosen sales channels.
But there is — as always — a gotcha. Don’t spread your marketing too thinly. You need to invest properly in your chosen channels and platforms. A few pounds spent each month on Google Ads or paid social is unlikely to yield much. Neither is a 200-word blog every other month.
If you have the marketing resources — expertise and budget — then go ahead and invest widely. But if you don’t, perhaps you need you to restrict your targeting to Google Ads, a couple of social media platforms and regular quality blogs. The precise mix will depend on your business and customers, of course.
If you’re a bricks and mortar business, you may want to include some more traditional media, too. Handbills and door drops can work well for local businesses, for example.
If you need help in shaping your business’ online future, get in touch with me — email [email protected] or phone 44 (0)7973 208824.