Why digital isn't that different to physical after all

By Eric Huang

April 9th 2014 at 1:16PM
UPDATED April 10th 2014 at 11:02AM
Why digital isn't that different to physical after all

Made in Me development director, Eric Huang, explains why consumer behaviour is virtually identical across channels.

I always liked the idea of owning a bookshop. And now I do – sort of. At Made in Me, we’re the people behind Me Books and Me Comics, apps that are also digital bookshops. And what we love about these digital stores is that we have the luxury of being able to experiment with pricing and promotions without the expense and risk in printing POS or carrying excess stock.

What we’ve learned so far:

•    Items at front of store – featured on in-app banners or at the top of the list – sell more.
•    Discounting works best on slow-selling items. Top-selling SKUs will sell more volume at lower prices, but not enough to make more money.
•    Offering packs and bundles increases sales dramatically.
•    Licensed titles  - brands – are the best sellers.

None of this is revolutionary. What surprised us is that the sales and marketing mechanics in our digital shops are the same as those that drive sales at physical retail. And it’s fascinating the way many people who are masters at bricks and mortar retail forget everything they know about consumer behaviour when it comes to a digital shop.

When launching a physical product, sales and marketing teams are masters at organising promotions and deep discounts on the item on the week of launch. This is a standard bricks and mortar practise. Every consumer knows that the best time to buy a new book or toy or CD is at launch.

We wanted to replicate this strategy in our digital shop. Publishers balked. ‘You can’t discount digital books,’ one digital product manager cautioned. ‘You’ll devalue the book.’ If that’s the case, why do publishers fund 2-for-1 promotions at book chains? Wouldn’t these discounts devalue physical books the way our proposal allegedly devalues digital ones? Not according to this publisher. “Digital is just … so different.’

Another common retail strategy is to convince as many retailers as possible to carry your product. If this product is a toy, the focus isn’t just on the toy trade. You’d want listings with mass market merchants, gift shops, garden centres: anyone who will carry your SKU.

When we met with publishers to acquire titles in our digital shop, many were worried about supplying us. ‘We would love to have our ebooks in your digital shop,’ they’d say, ‘but because they are already available via another digital channel, we’re concerned your shop will cannibalise sales.’ In the physical world, no sales person would deny stocking an outlet because another shop in the same town already carried that SKU.

The word ‘digital’ has some dark, dark power on many people. A designer once told me that she wasn’t comfortable working on digital products because she didn’t know how to code. She didn’t know how to run a press, either, but had no problems creating award-winning book covers. She was also quite happy to tell me how she would’ve changed the ending of a film she saw over the weekend, despite never having made a film in her life.

As creators, sellers and marketers of consumer products, our skills in the physical world are equally valid in the digital world. We already know the best strategies because consumer behaviour is virtually identical across channels. Popular themes like pirates and fairies are the same no matter the medium. Let’s not be intimidated by the supposed mystery around ‘digital’ – whatever that means. Let’s not forget what we already know when we look away from an FSDU and onto a mobile phone. Browse and shop online. Tap an app and play with it.

It’s not that different after all.