Effect of Online Musical Instruments Stores on their Offline Counterpart
In the 6th lecture on Information goods of the Information Strategy Course, the example of Radiohead’s album was given; the album they sold with the Name Your Own Price mechanism. Next to it being an innovative pricing strategy, especially at that time, an interesting observation that was made about the sales of this album in subsequent research was about the impact of those online sales on offline sales of the album (Bourreau, Dogan and Hong, 2013). Apparently, even though the online sales had been really successful, the offline sales remained unaffected by all of this.
This got me thinking about the possible effect of online sales on offline sales in a related area, namely musical instruments. The effects of digitization and the use of internet have been mentioned throughout the course, and some of those I will discuss in relation to this topic of musical instrument stores (MIS).
First of all, the reach of traditional brick-and-mortar MIS has increased, because of the possibility of online sales and the ease by which they can get to the customer and the customer to them through the internet. For a certain part of the goods MIS offer this has a positive effect; take for example guitar strings: I usually buy the same pack of guitar strings whenever I need them, so there is no need for me to go to the store, I could just order them online and have them delivered right to my home.
A threat to the brick-and-mortar MIS is the fully online MIS, which does not have the costs of a physical store, has the same reach online, and because it does not need a warehouse in close proximity to the customer, it could stock products in a low-cost area. In the guitar string example: I now am able to search online for the store that offers the guitar strings I am looking for at the lowest price, and still have them delivered right to my home.
Going to the physical store is not a requirement anymore to purchase goods from that store, which at first glance seems like a big advantage for customers, like it would be for many types of stores. However, one very important aspect of musical instruments is that you play on them, meaning a requirement for a physical connection. Even though the internet has many powers, it does not allow you to physically hold the instrument you are looking for, and exactly that physical connection is needed for the customer to determine product quality.
So this is a big advantage for offline stores, right? Again, at first glance it might seem so, but I think the offline store is still at a loss here. What I myself usually do when I am looking for a guitar or related products, is that I go to the offline store, test the product out as long as they will let me, and then look online where I can get it for a good price. Here, the offline store sort of helps the online store, without getting anything in return. The offline store provides service, it lets you test all their products, but it has no actual guarantee of a return.
When I searched on Google for research similar to the one done about Radiohead’s album, on this topic of MIS, I got no relevant results. It might be interesting to find out how (much) those online MIS actually influence offline sales, and how the actual dynamics of service and physical connection play out.
Ling, T. (2014). Information Strategy Session 2: Information Strategy.
Ling, T. (2014). Information Strategy Session 6: Information Goods.
Bourreau, M; Dogan, P. and Hong, S. (2013). Making money by giving it for free: Radiohead’s pre-release strategy for In Rainbows.