HMV in administration: Why didn’t it nail the online music market?

High street retailer HMV announced last night that it would be going be into administration, much to the disappointment of thousands of Britons who hold fond memories of the chain.

However, whilst the overarching brand and iconic Nipper the Dog logo hold something of a nostalgic poignancy for many members of the public, the likelihood is that most had not purchased anything from an HMV store – or even walked through the doors of one – in quite some time.

Why? Simply put, HMV waited far too long to jump on the online bandwagon – and when it did, it couldn’t come up with an offering to see off competition from rivals such as Amazon.

The future’s digital

The benefits of e-commerce are obvious to even the smallest business owner. These days, running an online business allows you to operate with lower overheads, fewer geographical limitations, a quick buying and selling process, and the potential for your consumers to browse and buy your products 24/7 – something which a physical retail outlet cannot possibly maintain.

As Neil Saunders, managing director of Conlumino, a retail consultancy, summarised: “Whilst many failures of recent times have been, at least in part, driven by the economy, HMV’s demise is a structural failure. In the digital era where 73.4% of music and film are downloaded and bought online, HMV’s business model has simply become increasingly irrelevant and unsustainable.”

What’s wrong with HMV’s website?

HMV does have an online offering, but under the surface of the seemingly well-structured site, there are a host of issues which lead to poor customer service, and ultimately a negative reputation. On customer feedback site, HMV’s online offering has an average rating of 1.5/5 stars, with many customers citing problems such as late deliveries (particularly for pre-orders), too-high prices, numerous errors with the checkout process, and the inability to use gift cards online.

In contrast, Amazon has an average rating of 3.8/5, with the majority of customers praising the value for money, customer service and high quality website that the brand offers. HMV’s main competitor offers lower prices, quicker delivery times and a clear, easy to use website with all of the information a buyer may need – so it’s unsurprising that they are the consumer’s first choice. Ultimately, whether you’re operating online or in person, the key is to make the entire retail experience as enjoyable as possible for the user – a maxim which HMV’s website could not fulfil.

Why retailers need to get e-commerce right

HMV is not the only retailer to have fallen into the trap of thinking that simply having a website is enough to put them at the forefront of online shoppers’ minds. Previously popular retailer GAME recently closed down 227 of its stores, no doubt due in part to the fact that their stores were unable to match the prices on their own website.

One could be forgiven for thinking that the retail store model is not viable and all retailers should begin to operate solely as e-commerce operations, but this is not the case. Some retailers, particularly fashion outlets such as Topshop and department stores like John Lewis, have succeeded in creating a comprehensive, customer friendly brands which combine contemporary, user-friendly websites with excellent in-store service. It’s not a case of ‘either or’ when it comes to physical stores and e-commerce. Rather, the 21st Century needs to use both in an intelligent, customer-focused way.

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