Sales of each of HMV’s core offerings have fallen. They have seen falls of 10% in CDs, 8% in DVDs and 12% in computer games.Business analysts have been quick to pinpoint where HMV have failed; The HMV Group are paying the price for failing to embrace the internet much sooner.
E-commerce companies trading in CDs, books and computer games are winning out against high-street focused retailers like HMV.
3 advantages of e-commerce fulfilment over high-street retail stores are:
1. Warehouse space is cheaper than retail meaning you can hold more stock which increases product availability.
2. Less value on the brand. Searches are product-led and dedicated online businesses have mastered search engine optimisation techniques so they can generate more traffic from product searches than established retailers, simply by serving finer and finer niches.
3. Shared e-commerce fulfilment costs as many contract to 3rd party logistics companies (3PL) so they can get fulfilment economies of scale.
E-commerce fulfilment experts the Hut Group recently acquired failed high-street retailer Zavvi. The plan to turn it around is based on removing the operating costs created by retail space plus fulfilment and applying the advantages of e-commerce fulfilment, “Great customer service, increased product availability and lower price points”, Matthew Moulding, CEO of The Hut Group. Simple really.
As the recent snow in the UK fell, it was suggested that it could favour the high street retailers as customers shopping online faced concerns about e-commerce fulfilment getting through. Quite the opposite appears to have happened, HMV stated that snow had “significantly affected footfall in stores”. Let's see the final figures at the start of 2011.