Leveling the Playing Field with Perfect Information

Robert Marshall

One of my colleagues on this forum addressed the perfect storm of change that is striking the IT environment. The trends converging to cause this atmospheric disturbance includes everything from how people will be managed, to new sources of funding, how the enterprise is structured to the way IT is migrating to being more OpEx oriented. Mobility, the rise of cloud computing and demand from emerging markets are adding to the complexity of the daily life of the IT executive.

For retail businesses, this perfect storm of trends is causing a disturbance of another kind: The proliferation of smartphones and the explosion of product information on the Internet is upsetting the traditional balance between buyer and seller. From their PCs or mobile devices, consumers can gain an almost perfect set of data needed to inform their buying decisions.

In a perfectly competitive market, anything that may impact a buyer or seller’s decision-making process is known and understood. This is known as “perfect information.” But what happens to your company’s business model when the buyer has more information than the seller?

Here come the know-it-alls
Perfect information can be illustrated by reviewing the car buying process. Today, prospective buyers can go onto the web and research everything from how much of its value a car will hold to how often it will go into the shop for repairs. They can check to see the dealer’s cost of a new car or check sites like Craigslist for local price comparisons on a used car. When standing at the dealership looking at a used car, it only takes a few taps on the smartphone to find out on CARFAX how many people have owned the car or if it has been in a major accident.

While consumers can find most of the relevant information to a buying decision on different sites, you are going to begin to see more aggregation of this information available in one location. Already, on Amazon, for example, you can shop for a product and get price information, details about the product, and a star rating as well as reviews by others who have bought the same item—essentially a form of social media.

Maybe soon, we will see restaurant review sites start to include nutrition information along with critiques of food quality for the health conscious foodie.

The Economist Intelligence Unit (EIU) recently conducted a global survey among more than 500 C-suite executives. Dell sponsored this extensive research, and one of the things we found was the essential need for IT leaders to innovate in the face of change. When you look at the implications the trend toward perfect information presents to brick-and-mortar retailers, the CIO has a great opportunity to proactively lead in how the business responds.

Level the showroom floor
We have already started to see the challenges the perfect information trend has on existing business models. For example, look at the impact to Best Buy of so-called showrooming? Retailers quickly caught onto this trend, where someone shopping for a home theater system at a Best Buy store can use the sales person’s time and the expensive facility to experience the product first hand. Then they go online with their smartphone while still at the store and decide whether they can buy it cheaper from Amazon or another online retailer, which may offer free shipping. One thing the company has done successfully is to build up it’s own online offering, which was essentially an IT initiative.

However, what other innovative initiatives could IT offer the C-Suite at a retail business faced with the challenges of perfect information. Consumers armed with a smart phone and hours of research before ever stepping foot in the store are now sidestepping their salespeople. How can IT help to ensure a level playing field by delivering the same information available to the shoppers to its sales staff?

This is where innovation comes into play. One obvious place to innovate is to provide new tools to arm salespeople with more information than what is available to the consumer, and in this way influence the buying decision. For example, a sales person in a tire shop could use a tablet with an app that takes personalized information about the consumer’s driving habits, or what tire others in the local area with the same model car have purchased, and recommend a tire to suit their specific needs. Alternatively, IT could even propose innovative business models, such as a new form of shopping experience more akin to a bazaar where the parties negotiate, and the salesperson is readily aware of prices currently being offered by online retailers and other competitors.

Quick Reaction:
What examples have you seen of companies responding to consumers having more information about the product than their sales people?

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