While people are buying more of the products and services they use online, over 90 percent of purchases are still done the old fashioned way — in person at a local store. But how do you get more of those folks who are using Amazon.com to do their product research, to come to your store when they want to “buy local”?
Matt Chosid, CEO and founder of PriceLocal, shares how his new service streamlines the process of customers moving from their online Amazon research activities, to their neighborhood store to buy the things they want. And why he calls it a “judo move” to use Amazon’s product searches into store traffic and customers you can market to long after the single transaction is completed.
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Small Business Trends: Tell us a little bit about your personal background.
Matt Chosid: I was in-house counsel at Borders, the bookstore, for about 12-and-a-half years. I saw good times there, I saw bad times. I
ended up running legal department during the bankruptcy. That’s what provided the impetus for PriceLocal.
Small Business Trends: What exactly is PriceLocal?
Matt Chosid: Imagine if you’re browsing in Amazon and you could buy that product at a local retailer at the same price. By doing that, you’re supporting the retailer that is employing your neighbor paying taxes in the community.
It’s not about putting Amazon out of business at all. There are plenty of times when you want that product right now, but you don’t want to pay a delivery charge. With PriceLocal, you get the product at the Amazon Prime price, and you’re able to pick it up the same day. A lot of times you might be willing to wait a couple of days for the product to show up. Every once in a while you want that product or you need that product right now. PriceLocal helps the customer do that and still get it at a fair price.
Small Business Trends: You’re called PriceLocal, but actually one of the keys to this thing working is search, and how when people turn to look for products, it’s not necessarily Google they’re turning to.
Matt Chosid: Right. It turns out that 44 percent of online product search is done on Amazon. Less is done on Google. I think it’s in the 30s. The customer is doing an enormous amount of search behavior on Amazon … 44 percent. But Amazon is not doing 44 percent of sales. In fact, online sales only account for 7.5 percent of total sales. The customer is going to Amazon though to research products. Once they do that, if it turns out they want to go buy that product today; so they have to jump off Amazon and try to go figure out where they can find it.
The idea behind PriceLocal is to short-circuit that process and to dovetail into the reverse show-rooming, or web-rooming activity that’s going on. Let that customer find the product they want, then easily press a button and say, “Hey, who has this locally and is willing to sell it to me at the Amazon Prime price?”
Small Business Trends: It sounds like when it comes down to it, people want their stuff. When they buy it, they want it as quick as possible.
Matt Chosid: Research indicates they’re the happiest the moment they press that buy button. They want it, and they want it right now. That’s why 20 years into Amazon, people are still buying 92 percent of the stuff they buy in stores. People are surprised by that number, but that’s really what it is. People like dealing with the retailers where they can go talk to somebody, touch it, feel it, really learn about the product.
Small Business Trends: It seems, according to American Express, not only do they like that moment when they push the button online, but they actually like buying from somebody who’s local.
Matt Chosid: American Express has done some research that says 93 percent of consumers like to support their local businesses. What people say and what they do are sometimes two different things. What PriceLocal does is makes it really easy to support your local businesses, because the Amazon price is not the lowest price out there, but it’s a fair price, and it’s a transparent price. It’s well-known. Like I said, 44 percent of online product searches is on Amazon.
It’s not the lowest price out there, because Amazon bakes a ton of their shipping costs back into the price. They can use PriceLocal to support their local stores and find a place where they can go get it right now. It’s really not a detriment to those local stores because that price really isn’t quite as low as it used to be.
Small Business Trends: From a consumer’s standpoint, they download a plug-in for their browser. Once they do that, they’re able to start shopping on Amazon like they’re doing their searches for products like they typically do. When they come to the product they’re looking at … maybe they read the reviews on Amazon and say, “This is the one I want,” then what happens?
Matt Chosid: Then they press the PriceLocal button, and a request goes out to their local participating retailers in that product category. Those stores receive a text. They click on it, they open up their PriceLocal web app, and they can respond and say, “Yes, we have that.” The consumer will get a coupon for product at the Amazon price. They can say, “We can order that,” and the consumer would get a coupon saying, “The store is willing to order that product for you and sell it at the Amazon price.”
One of our test retailers said, “What if I don’t have that exact item, but I have something really similar to it? What can I do?” We actually added a button based on that feedback called the “similar” button. If the retailer receives this request in and doesn’t have it, they can research right there in their PriceLocal app for a product they have that’s similar, and they can offer that item at the Amazon price. If they don’t have anything, or they don’t want to offer any offers back, there’s a fourth button where they can say, “We don’t want to do that,” and the customer doesn’t receive anything. It’s completely anonymous. They don’t know that the retailer said no.
Small Business Trends: On the retailer’s side, I guess the big draw from their perspective is, it’s like you’re sending them leads, and they have an opportunity to say, “We want to pursue that,” or, “We don’t want to pursue that.”
Matt Chosid: That’s exactly right. We’re sending them free leads, and they get to respond and decide. They get to see all this traffic that’s flying out over their heads right now that they’re not seeing and get to participate. It’s a neat way for a local retailer who’s not online to become sort of an omni-channel retailer and get access to web traffic.
Small Business Trends: I guess the other thing about it is, the first time one of these folks come in … print off the coupon, come into the store, and get that product, it also is basically the opportunity to build a long-lasting relationship outside of what you’re doing with PriceLocal. They can have a direct relationship. Whereas, if you sell something on Amazon, Amazon still owns the customer, basically.
Matt Chosid: Exactly. It’s terrible. Amazon gets all of the data, Amazon charges the small retailers 18 percent of the sale. You’re exactly right. They get to build that relationship with the customer. What’s interesting about it is … It’s not like the customer was thinking about this store and then went and tried to find a coupon for it. They were thinking about a product. They were loyal to Amazon. They were researching there. Then they found out, “I can get this from this other store.” Then that local store can go and build a relationship with that customer. Hopefully, the customer will come directly to them the next time.
Small Business Trends: Matt, from a business perspective, how can a local store who’s trying to sell their goods and may be feeling the pinch that Amazon has put on them… How can they work with you to get those customers to come in and buy the products from them?
Matt Chosid: It’s very easy. They go to our website, getpricelocal.com. If you scroll to the bottom, there’s a big banner that says, “Retailer sign-up.” They go and sign up. It’s really a five-minute-or-less process. We really optimized the process for retailers to sign up. They would get relevant requests in that process. They can spend a couple of extra minutes and add some additional things after they sign up. They can add a list of their brands if they really want to narrow things down. We don’t necessarily recommend that, because they could probably see all of the requests that are coming in their product categories at that time. You can go to getpricelocal.com and sign up in five minutes or less.
Small Business Trends: The bottom line is: They’re able to work with you to get customers that already know what they want and already have an agreed upon price to come in and get that item as soon as they can get over to the store.
Matt Chosid: That’s the bottom line. Once they sign up, they don’t have to do anything other than keep their phone in their pocket. We will send them a text if we get a customer who is looking for a product in their product category. They can respond to that customer, and we will send them right over to their store.
Small Business Trends: From that point on, they own the relationship with the customer. They can ask the customer to sign up for email and start directly marketing to them. That hits home with you to a certain extent, because you … Borders, which was one of my favorite stores. I spent hours in Borders. You know what happens sometimes with Amazon and local stores. This is an opportunity for local stores to leverage the power of Amazon to help build their businesses.
Matt Chosid: Yes. We think of it as a judo move a little bit. Amazon has a huge search audience. That can be leveraged a little bit. There are plenty of times when people are doing that search… Sometimes they’re going to buy it from Amazon, but there are lots of times … more times than not … that they’re just doing their research. As small retailers, we can do that judo move and leverage that audience a little bit, and get them into our store.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.