Shopatron is in a unique position in the music instrument industry. It is searching not only for retailers, but also for manufacturers to use its online platform. The company, led by CEO Ed Stevens, has grown expeditiously in its first couple of years in the MI space. In just a few years, the California company has grown to 40 MI manufacturers and more than 800 retailers are on board. We spoke to Stevens to find
out what has led to the growth, why Shopatron is perhaps something advantageous in which to take part, why some manufacturers have yet to sign on and what the future might hold.
Before we answer those questions, it's important to find out what Shopatron is. "Shopatron is a way for manufacturers and retailers to increase their online sales,"said Stevens. "The great thing is it helps a manufacturer serve consumers when they go to their Web site, but it also supports and drives sales through the retailers. We have a presence in more than 35 industries."
So why should you, as a retailer, be interested in Shopatron? "No. 1 is money sales," said Stevens. "Retailers get sales they wouldn't otherwise get. Customers do go to manufacturer Web sites looking to purchase products. When a customer agrees to purchase a product from that site, a retailer fulfills the order. No. 2 is the retailer gets the actual customer. When the order is fulfilled by a retailer, the customer then knows a nearby dealer has the product in which they are interested. It
also allows the retailer to market to that consumer in the future by e-mail and regular mail. Third, the retailer gets to see what's selling. When you participate in Shopatron as a retailer for these 40 manufacturers, you get to see what sales are available every day. My parents are independent retailers. That was a major reason why I founded Shopatron. As an independent retailer, one of your biggest challenges
is knowing what to buy. You have some tools for that. Those include attending trade shows and reading magazines such as this one. But even with that information, buying mistakes are still made. No amount of information is too much when it comes to buying trends. The secret of Shopatron for retailers is knowing what's selling. You don't even have to fulfill orders with us to get that information."
Manufacturers pay to join Shopatron. Retailers don't pay unless they actually fulfill an order. If so, they pay a commission fee. Fee or not, Stevens said it's clearly worth it to join Shopatron. "Retailers absolutely get more sales because these customers were buying from someone else," Stevens said. "If the customer were loyal, he or she wouldn't be looking to purchase a musical product from a company Web site.
Therefore, these are customers who are previously not loyal to the local music store.
You're either earning a new customer or roping in one who is not loyal to you."
The Price is Right
Pricing can always be a touchy subject in our industry. How is the price of an instrument or accessory determined? "The manufacturer sets the price it wants the consumer to pay," said Stevens. "The customer agrees to the price before placing the order. Then, the order goes into the Shopatron Coex Freedom system. Every day, orders stream in from the participating manufacturers and are dropped into this 'bucket.'
The retailers look in the bucket, see the orders and can stick a flag on the orders they want to sell. The retailer doesn't win the sale right away. We don't give it to the first person who says he or she wants to fulfill the order. We give anyone a fair chance at the order. We send out e-mail alerts. Then, we pick the closest person who agreed to sell the product. The price cannot be altered throughout the process. A retailer can give extra consideration, such as a free accessory in addition, if they like, but that generally doesn't happen because the customer agreed to the price and it's considered to be fair." Clearly, Shopatron has plenty of room for growth. North of 10 percent of U.S. retailers have joined Shopatron by our calculations. Forty manufacturers is a small figure, considering more than 1,400 companies exhibited at NAMM in January. Why have
some manufacturers been hesitant to join Shopatron? "Some large companies are wondering if they can sell products directly to the public in the future," said Stevens. "But it's telling that few, or none, have done that. We argue that music is an industry that desperately needs local retailers. It's a fallacy to think an industry driven by sound and the tactile feel of an instrument can thrive without local retailers thriving. I am a passionate believer in retailers. Some companies are hesitant because they feel that, once they start, it will be difficult to stop partnering with retailers on Shopatron. They feel they can do nothing and, maybe,
Shopatron will go away. Manufacturers don't want to sell direct to consumers to hurt anyone, but they know they need to take care of consumers on their Web site. They are kind of stuck. Another reason is simply some companies are indecisive."
End users are quickly grasping new technologies. The recent release on the iPad 2 is one example. Smart phones are everywhere. Does that change the future of e-commerce in the music industry? "Customer experience is the key," Stevens said. "And that is evolving rapidly. It has to improve rapidly in order for the music industry to thrive. The music industry will definitely survive. The question is, what will make it thrive? From Shopatron's point of view, if I had one magic wand I could wave, I would say that everyone has to provide a better customer experience for shoppers. We just released Shopatron 3.0. The goal is to dramatically upgrade the customer experience and communicate the importance of customer experience to manufacturers and retailers. Companies like Amazon.com and Zappos are redefining the customer
experience and dramatically changing the expectations of retailers for service. That includes speed of delivery, speed of responsiveness, selection and payment methods that are accepted, plus more. All those things are rapidly moving in the consumer's favor. The consumer has more control over his or her experience than ever. And that will continue to be the case."
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