Posted by: seanmalstrom | March 29, 2012

Direct Line To Consumer is the Future

Here we read a story that says Best Buy implodes and is closing many stores across the U.S. What to make of this?

“It is because,” says a snarling reader, “of the Internet. Best Buy is the show floor for Amazon.”

That is a very shallow view of this situation. Of course, Internet sales are eating into the brick and mortar stores. But why?

“Because the Internet is wonderful and is full of unicorns that poop skittles.”

What type of answer is that? Why is the Internet wonderful? Do you have an answer, Snarling Reader? Well, here is one:

The Internet allows two things. First, and this cannot be understated, there is less taxation on the Internet sales. Imagine all the taxation that goes on with a brick and mortar product. There’s the property tax, the various sales taxes, etc. One of the reasons why brick and mortar is more expensive than the Internet is not because “Internet is a Unicorn that poops skittles” but because it is not a level playing field in the realm of taxation.

The other major thing the Internet allows is a Direct Line to the Consumer. “What does that mean?” asks the Confused Reader. It means that a product can bypass all middlemen and get straight to the consumer. “But there are Internet stores online like Amazon.” True. But even then, many of them allow products a direct line to the consumer.

“But why can’t I say ‘Digital Sales are Everything’?” A good example why you cannot is the Apple Stores. The Apple Stores are performing very well, and they are brick and mortar. The reason why Apple Stores exist is to give Apple a direct line to the consumer. Before, Apple products suffered because they were showed off in retail stores next to third rate hardware. The retail stores had no interest in showing off the Apple products well. So Apple needed to create a direct line to the consumer.

Nintendo suffered a similar problem with the release of the NES. Retails stores would not display video games well. Nintendo’s solution was to create a store within a store, the World of Nintendo (I still remember the pipes and green lights to this day).

Direct Line to the Consumer has been successful in other fronts as well. AM radio in the United States was revived entirely due to Direct Line Advertising.

Youtube video makers and other online entertainment sites would be wise to start up their own Direct Line Advertising and not rely on Youtube ads or Google ads. There is also much more money and stability this way as well.

Take Gamestop for example. Gamestop’s rise was that it allowed a line to video game merchandise to be sold in strip malls and gave greater access of gaming to suburbia. However, Gamestop is in a decline. “It’s the Internet!” cries a reader. “The Internet is killing Gamestop!”

No. What’s killing Gamestop is that it is becoming more and more of an obstacle to the consumer and video game relationship. It’s not that gamers hate brick and mortar game stores, it is that they love having a direct line to the product without the middlemen and bad salespeople.

One thing I hate about Modern Gaming is the breaking of the direct line between consumer and game developer. When I beat Ultima V, the game told me to mail Lord British and tell him my accomplishment. Which I did.

What was so much fun about PC gaming was the connection between the gamers and the developers. The developers, of course, did not call themselves ‘developers’. They saw themselves just like gamers as everyone else. Many PC game companies arose through establishing a line to the consumers away from retailers (before the Internet became popular). id Software and Epic Megagames used to be shareware based which meant mail based games.

Part of the rise to Minecraft was Notch’s direct line with his consumers.

I’m convinced the reason why many gamers feel gaming has gone ‘corporate’ is because they sense they no longer have that direct line with the company. They see PR people and various gates. “But this is how big businesses work, Malstrom,” says a reader. No. That is how old businesses work. Direct Line to Consumers is the future.


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