Pier 1 Abandoning E-Commerce
Written by Evan Schumanbackground-image: url(“/images/copy/Pier1.jpg”); background-repeat: no-repeat’>
In an against-the-trend move, Pier 1 will shut down all of its online operations, focusing solely on select physical locations.
“We are exiting all non-Pier 1 stores activities,” Pier 1 president and CEO Alex W. Smith told Wall Street analysts on the company’s first-quarter conference call, according to an Internet Retailer story. “We are exiting the e-commerce and catalog business.”
The move may not be permanent, however, according to a report from Marketwatch, which quoted Smith as saying that pier1.com will continue, but purely for marketing. “We’re not saying this is forever,” Smith said. “We’re just saying this is where we need to be today.”
Although the trend is a push toward a unified merged channel–combining online and offline–when having to choose one over the other, online is typically seen as being less costly to operate. The other major retail chain to have similarly pulled back has been TJX, which pulled back from its E-Commerce efforts for T.J. Maxx and HomeGoods in late 2005. But there’s a connection: Alex Smith had been a Senior VP at TJX when TJX pulled back from E-Commerce and this is the same Smith who today runs Pier 1.
-Marc
July 1st, 2007 at 9:23 am
My money is on this being a permanent move, and not for the reasons one might suspect. Pier 1, like TJX, has a business model that relies heavily on opportunity buying. This is fundamentally at odds with the merchandising, planning and backend operations required to run a profitable e-commerce division. Even if they were financially healthy, Pier 1 probably has no good business (literally) selling online.
This idea is more deeply explored at: http://blog.productblazer.com/2007/06/29/when-backward-is-forward/
July 1st, 2007 at 9:47 am
Richard makes an excellent point, namely that it doesn’t make sense for every brick-and-mortar retailer to sell via E-Commerce any more than it’s necessary for every E-Commerce site to invest in a physical storefront. The ProductBlazer link he referenced eloquently gives some good business model examples where online fails the logic test.
But …. you knew there was an imminent but, no? …. it’s the particulars in this case that makes the argument. For the majority of retailers, it truly does make sense to support as many channels as possible (in-store, Web, mobile, call center, catalogue, etc.) and to integrate them as seamlessly as possible.
It’s also important to distinguish selling via E-Commerce (which may not make sense for every retailer) from having a Web presence. Even if it’s just a jazzed-up brochure site, I can’t thing of a reason why a retailer wouldn’t want to have resources dedicated to maintaining an effective Web presence.
August 29th, 2007 at 4:13 pm
I can’t think of a bigger mistake for Pier 1. In an age where everyone is turning to the internet, Pier 1 is taking a step backwards. “Against the trend” is putting it mildly. I believe it’s pure madness.
With internet shopping, they would have had access to customers anywhere in the country, by contrast, they don’t have stores in every city. Stores close – internet is 24/7. You can certainly browse an online store and impulse buy, but you don’t have to get dressed or drive to a store, to do it. It’s instant gratification, if the store is done properly.
If Pier 1 didn’t see enough activity on their website, it was because most items were unavailable, and customers grew frustrated. I count myself among them. Because Pier 1 was probably shipping from their store inventory, or very select warehouses, they weren’t taking advantage of the wider demographics their stores couldn’t reach. Availibility of items was checked by zipcode, and 9 times out of 10 they were out of stock in your area.
Additionally, no coupons or gift certificates could be used on the site. A huge mistake, as it’s a great way for a customer to make up for paying shipping fees. Instead, they blocked customers at every turn, and made shopping online difficult.
Pier 1, no matter where you sell, you’re either all the way in or you’re out. I don’t think you understood internet shopping to begin with. Your competitors, like Pottery Barn, Crate & Barrel, etc., thrive online because they understand how valuable it is. Maybe it’s best that you’re out until you can truly commit to a web presence, and all the opportunities it brings. I’d be glad to show you how.