Monday, November 5, 2012
The $200 Question
Wrong. These boots are a big deal because that price isn't at Nordstrom or Nieman Marcus, or even Amazon. It's at ShoeDazzle. Yes, I'm talking about the formerly subscription based $40 per month shoe club. Several months ago they started offering many things at a higher price - $42.95 to $59.95. This was met with lots of complaining from their members, just as the same had happened when Sole Society started the same price changes last winter. Women began to buy the higher priced items, some begrudgingly, others only when they had discounts available, some even happily. I guess this made ShoeDazzle think that if customers would pay $50, then they'd pay $200. How you make that leap in logic is beyond me.
The thing is, this could have worked for them, and it may still. But there was a huge marketing fail here. The entire "Designer Brands" line was launched without any prior notice, no mention of what it really was, and not even so much as a simple email campaign. The assumption by existing customers was that these were ShoeDazzle shoes that would be packaged as such. However, after talking to my contact over there, I found out that these have nothing to do with the ShoeDazzle name, and are merely sold by them. They are not rebranded, they will come in their original designer-labeled box, and are genuine designer products at (slightly) reduced prices. There should have been a big marketing roll out detailing all of this, but they totally missed that boat. This will not be the new norm over there either. The "Low Stock" label is NOT a conspiracy to make it look as though they're selling like hot cakes. They only ordered a few in each size as a test run. Depending on how these sell, they may add more 'real' designer goods later.
I think the big story here is who, exactly, these higher priced items are geared towards. They sure as crap aren't meant for the ones that refuse to spend more than $40 on any shoes, and they really aren't meant to make the girls that shop in the Penny Saver or on the Groupon site happy. These are geared towards two types of clients: the existing customers who aren't so hung up on the $40 price point and also spend 'real' money on 'real' designers on 'real' websites and stores, and new customers who routinely spend more than $100 on shoes elsewhere, and will gladly buy these or the other offerings in the collection that range from $60-$200, as long as they're reasonably priced for what they are. Those particular ladies aren't going to be on the site for the $40 stuff, most likely. They're looking for real materials and names. While I'm sure ShoeDazzle would love to see them grab a pair or two of the 'cheap' stuff with their $140 Chinese Laundry pumps, they'll make their money even if they don't.
It remains to be seen how all this is going to play out. It could potentially bring in higher end customers that buy higher margin items while raising their profits. It could also weed out a lot of existing customers and cause them to ultimately lose money on the lower end stuff. But, the business of business is profit, and sometimes a company has to think outside the box to accomplish that. It may work or it may not, but I give them props for trying. As for me, I'm not the least bit enamored with the inaugural line, but if they end up with something I like at a better price than I can get anywhere else, I'll be all over it. I'm an addict, remember? It doesn't matter where I get my fix, as long as I get it. And I think ShoeDazzle is banking on there being more women like me.