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Retail hacking

December 1, 2010

Diamond District

The latest Wired has a great piece by Matt Schwartz on what he terms “retail hacking”.

He describes a confluence of forces that have given rise to the emergence of consumers who will devote hours to hacking the system to get deals and how this world has been made accessible to masses of consumers through the efforts of new players like Groupon and Living Social.

Groupon’s genius, is to to take the time consuming and previously unattractive world of coupon shopping from the striving fringes of culture and make it mainstream cool. Getting a deal on Groupon is nothing to be ashamed of, instead, it’s something you brag about. This is the reason Goggle is so interested in buying Groupon for billions of dollars.

Schwartz describes the emergence of the new deal-driven consumer- “the retail hacker”.

“Take a step back, though, and what Groupon represents is something
far bigger. It’s the mainstreaming of a new current in American
consumerism, an attitude born of the Internet’s DIY ethos and nurtured
by the hard economic times. One might call it retail hacking:
the reconception of shopping as not just a full-time job but a contact
sport, a scrum in which consumers increasingly refuse to buy on the
terms dictated to them. A whole network of so-called deal-hunting sites,
each with a large and devoted community, has sprung up for users to
trade inside tips about little-known bargains; the largest of these
sites, SlickDeals, has more than 700,000 registered members.

In this passionate consumer underground, techniques for chiseling a
few percentage points (or more) off a sticker price can quickly spread
to millions of shoppers. The process of selling a DVD player or even a
new razor to the growing ranks of self-educated buyers is becoming as
tortuous as selling them a new car., a continuously updated
list of direct customer service lines and telephone-prompt guides, is
undermining the ability of companies to resolve calls with automated
systems. Consumers who have learned to haggle on prices at large chain
stores—Target, Home Depot, Best Buy, and more—share their stories and
methods on sites like the Consumerist, a blog that has become a hub for
retail hackers. When Ely Rosenstock, a 29-year-old social media
consultant from New York, wanted to cancel his Verizon service and buy
the new iPhone, he found a loophole that let him leave his two-year
contract with no termination fee; after he made this argument stick with
Verizon customer service, he posted a detailed how-to video on YouTube
that has been viewed more than 180,000 times.”

The article implies that the way we think about selling, about deals and about pricing probably all needs to change. The forces of Web 3.0, “The Crowd”, consumer empowerment and frugality are all coming together to create a radically new environment.

This is an environment that’s forcing both brands and retailers to think differently about how they sell.

Posted by Ed Cotton

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