Continents Apart Blog

Web retailers took market share from stores during the Great Recession, and the biggest mass merchants were the biggest winners online.

Thu, 10 Jun 2010 01:25:00 GMT

Web retailers took market share from stores during the Great Recession, and the biggest mass merchants were the biggest winners online.

Mark Brohan

Research Director

Tough times left plenty of stores with empty cash registers and only thinly stocked shelves last year, but when consumers did shop it's clear they spent a lot more of their

time and money online. Sales of the 2010 Internet Retailer Top 500

strong evidence that in 2009, even as catalog and store sales

slumped, consumers still used the speed and convenience of

online retailing to do more of their shopping.

As a result e-commerce sales grew last year while total retail

sales fell. The increase in online retail sales was modest

compared to the first decade of e-commerce when the

market was growing by 20% and more each year. But the

Internet remains the retailing industry's only growth area.

Last year total e-commerce sales increased 2% to $134.9

billion from $132.3 billion in 2008 while total retail sales

declined year over year by nearly 3% to $2.07 trillion

from $2.13 trillion, the U.S. Department of Commerce reports.

Permanent shift

The fact that e-commerce sales grew while total sales fell

underscored the permanent shift by consumers to more

Internet shopping. With even more options such as mobile

commerce making shopping online quicker and easier,

many consumers avoided trips to the store. Instead they

flocked to the Internet to find which online retailers had

the cheapest price, best deals and most product information.

"People still have to shop for necessities and last year the

web was the bargain hunter's best friend," says Nikki Baird,

managing partner of research and advisory firm RSR Research.

"Even if they just shopped for the basics, consumers still did

more of their buying over the web."

This year's Top 500 Guide reveals several trends that emphasize

consumers' continuing shift to online buying and the gains of

large retailers:

The Top 500 retailers' sales grew 8.7% to $126.38 billion in 2009 from $116.28 billion in 2008.

The Top 500 completed an estimated 601.8 million sales in 2009Ñup 2.9% from 585.1 million in 2008.

Total traffic to the Top 500 increased year over year to 2.58 billion monthly visits from 2.10 billion

visits in 2008.

Web sales now account for 6.5% of retail sales, up from 6.2% a year earlier. Retail sales include general merchandise, but exclude restaurants, gasoline stations and fuel sales.

The web grew for most chain retailers while comparable-store sales fell. For 26 of the 50 biggest chains, e-commerce sales grew while comparable-store sales dropped. For 11 others, the web

grew faster than or didn't decline as much as comparable-store sales.

The Top 100 grew 9.1% and the smallest 100 grew 2%, further evidence that big online retailers

are taking market share.

In 2009, every Top 500 merchant group with the exception of catalogers posted a gain in web

sales. But the merchants that grew the fastest were web-only retailers.

Led by Amazon.com (No. 1), the combined web sales for all Top 500 web-only merchants grew

19.8% to $42.94 billion in 2009 from $35.83 billion in 2008. In 2009, despite the tough economy,

Amazon's sales grew 28% to $24.51 billion from $19.17 billion in the prior year. In comparison,

total sales for Wal-Mart Stores Inc., the biggest chain retailer, grew only 1% to $405.04 billion

in 2009.

Amazon dominated online retailing last year by accounting for 19.4% of all Top 500 sales and

57.1% of all web-only merchant sales. In 2009 Amazon grew 14 times faster than the entire

e-commerce market because Amazon had the brand, low prices, product innovations and

variety of merchandise that resonated with online shoppers.

Three years ahead

Despite its size, Amazon.com also continued to execute better on customer service and merchandising than many

other online retailers. In October, Amazon made shopping even easier for its big metropolis shoppers by

introducing same-day delivery in New York and six other major cities.

Last fall Amazon also introduced an updated and more affordable Kindle electronic reading

device that can be purchased online and shipped to more than 100 countries. It also

upgraded its mobile commerce program with one-click shopping. And Amazon made the

biggest online retailing acquisition of recent history when it purchased Zappos.com in July

for almost $900 million in cash and stock.

"Amazon easily has a three-year lead in deep thinking around some of the most important

aspects of e-commerce," says Scot Wingo, CEO of ChannelAdvisor Corp., which helps

retailers sell through online marketplaces such as Amazon and eBay. "Amazon is first

and foremost a retailer. They have teams of people that are organized by category, that know the category extremely well and focus on buying products, working with vendors and expanding the selection for that space."

Amazon was the Top 500 market leader everyone else chased in 2009. But even without Amazon,

the remaining Top 500 web-only merchants made a strong showing by growing sales year over

year 10.6% to $18.43 billion from $16.66 billion.

More customers, more products

For some online-only retailers such as Netflix Inc. (No. 14) it was a bigger customer base that drove

sales in 2009. While rival Blockbuster Inc. (No. 34) increased its online business by 5% last year to an

Internet Retailer-estimated $552.7 million and announced plans to close up to 960 under-performing stores,

Netflix grew revenue 22.4% to $1.67 billion. Netflix also increased its number of subscribers by 31.6% to

12.36 million from 9.39 million.

Other web-only merchants counted on their expertise in niche merchandising to grow in

2009. In 2005 Diapers.com (No. 85) was a start-up that finished its first year with sales of

$2.5 million. But in 2009 Diapers.com used aggressive merchandising and a growing

customer base of soon-to-be parents and parents with young families to grow sales

104.5% to $182 million from $89 million in 2008.

Last year Diapers.com expanded its products to include a wider variety of formula, strollers,

car seats and clothing. The company also attributed its growing sales to an increasing base

of several hundred thousand shoppers and fast fulfillment that includes free overnight shipping

to two-thirds of the U.S. and two-day delivery to the rest of the country. "We make life a little easier

for new parents," says Diapers.com co-founder and CEO Marc Lore. "That means carrying everything

they could possibly need or want, getting it to them faster than anyone else, charging low prices and

delivering the best customer service."

Big get bigger

Web-only retailers grew the fastest but it's clear that consumers gave the most business in 2009

to the merchants with the biggest brands: the Top 100 retailers. Last year the sales of the Top 100

e-merchants grew 9.1% to $108.93 billion from $99.8 billion in 2008. The biggest 100 also

accounted for 86.2% of sales in 2009 compared with 85.8% in the prior year.

By contrast, the combined revenue of the Top 500's 100 smallest merchants

companies with annual e-commerce revenue of $10 million to $17 million

increased by only 2.2% to $1.42 billion from $1.39 billion in the prior year.

The smallest 100 merchants also represented just 1.1% of all Top 500 sales,

compared with 1.2% in 2008.

In 2009 some of the biggest Top 100 retailers grew by going after new segments

of web shoppers while others continued to invest in better technology, product

development and new web site features. Staples Inc. (No. 2) grew web sales

27.3% to $9.8 billion from $7.7 billion and spent part of 2009 going after more

technology decision makers at big companies and small businesses.

Staples, which controlled about 56% of the Top 500 online office supplies

category in 2009, in the fall rolled out Staples Technology Solutions, a new

e-commerce unit that delivers business-to-business products and information

technology services to small and medium organizations and Fortune 1000 companies.

With a bigger and more integrated e-commerce base, Staples grew its Internet sales

last year while online revenue declined for its close competitors. Sales at Office

Depot Inc. (No. 5) fell 14.6% to $4.1 billion and 10% to an Internet Retailer-estimated

$2.77 billion for OfficeMax Inc. (No. 7).

Laser focus

In previous years when the U.S. e-commerce market boomed, web retailers found it easier to

attract new customers and grow. But in tougher times, the Top 100 retailers that grew the

fastest last year did so because they focused on their best online customers and generated

sales by offering lots of merchandise, plenty of deals and a better web shopping experience.

For instance, by offering more affordable merchandise from well-known designers

and celebrities, Kohl's Corp. (No. 43) clicked even more with its core shoppers of

women ages 25 to 34 and increased web sales 38% to $491.5 million in 2009 from

$356 million in 2008.

Another retailer that grew by offering a superior web shopping experience as well

as must-have consumer electronics and gadgets was Best Buy Co. (No. 10). While

the combined web sales of all Top 500 computer and electronics retailers grew only 4%

to $23.80 billion in 2009, e-commerce revenue for Best Buy increased year over year by

20% to an Internet Retailer-estimated $2.45 billion from $2.05 billion.

BestBuy.com grew last year because it had the affordably priced cell phones,

notebooks and flat-screen TVs consumers wanted most. Best Buy also gave its

best web shoppers more reasons to keep shopping BestBuy.com by updating its

online loyalty programs with features that provided members with personalized offers

based on their preferences, better reward certificates in electronic form, and access

to more members-only online communities and forums.

Unequal distribution

While some Top 100 retailers posted strong sales, not every big web merchant grew last year. Web sales at

Costco Wholesale Corp. (No. 15) declined 5.9% to $1.6 billion from $1.7 billion as the tougher economy caused

even Costco's more affluent online shoppers to rein in their spending on big-ticket items. Other Top 100 retailers whose e-commerce sales dropped last year included: Dell Inc. (No. 3), down 6.2% to an Internet Retailer-estimated $4.53 billion from $4.83 billion; Liberty Media Corp. (No. 11), which includes QVC.com, down 13.9% to an Internet Retailer-estimated $2.38 billion from $2.76 billion; W.W. Grainger Inc. (No. 19), down 5.5% to $1.37 billion from $1.45 billion; and Williams-Sonoma Inc. (No. 26), down 8.7% to $943 million from $1.03 billion.

While web-only merchants had the biggest increase in online sales across all categories, chain retailers and consumer brand manufacturers also posted higher combined web sales. Top 500 retail chains grew collective web sales 6.6% to $49.80 billion from $46.71 billion. Top 500 consumer brand manufacturers increased their combined e-commerce sales 3.8% to $15.30 billion from $14.74 billion. Only Top 500 catalog companies posted a drop in sales last year, declining 3.1% to $18.32 billion from $18.91 billion in 2008.

Among most Top 500 retail chains it was clearly the web and not stores that produced any growth in sales last year. In 2009, it was the specialty apparel merchants, especially those that catered to more cost-conscious and web-savvy younger shoppers, that posted some of the best e-commerce results among chain retailers. Web sales for Aeropostale Inc. (No. 118) grew year over year 48.1% to $129.0 million from $87.1 million while Internet revenue for The Buckle Inc. (No. 217) rose 45.3% in 2009 to $52.3 million from $36.0 million.

E-commerce also generated the only growth for several chains, including Macy's Inc. (No. 20), Gap Inc. (No. 23), Toys 'R' Us Inc. (No. 37), Saks Inc. (No. 45) and Foot Locker Inc. (No. 52).

E-commerce made the biggest difference at Macy's. The Internet channel for Macy's grew year over year 19.6% to an Internet Retailer-estimated $1.24 billion compared with a decline in total revenue of 5.6% and comparable-store sales of 5.3%. The growth in e-commerce sales is becoming so important to Macy's that in June 2009 CEO Terry Lundgren told Wall Street analysts that over the last two years Macy's has shifted its annual capital improvement budget away from stores and to the web. "A bright spot in our business is the Internet," Lundgren told analysts. "Over time the new store sites and new mall construction sites are going to take longer to become a reality. In the last two years we have particularly focused on our investment in the dot-com infrastructure."

In 2009, Gap had e-commerce sales of $1.12 billion, up 8.7% from $1.03 billion in 2008. In comparison, total sales fell 2.3% and comparable-store sales declined 3%.

At Toys 'R' Us, which has acquired four online brands such as eToys.com through bankruptcy auctions in the past two years, web sales rose year over year by 3% to an Internet Retailer-estimated $515 million while total sales fell 1.2% and same-store sales declined 3%.

In 2009 web sales for Saks rose 13% to an Internet Retailer-estimated $430.0 million from $380.5 million in 2008. Total sales fell 13.5% while comparable-store sales slipped 14.7%.

At Foot Locker web sales rose 6.8% to $344.0 million from $322.0 million in 2008, while total sales dropped 7.3% and comparable-store sales decreased 6.3%.

"The web is only going to grow in importance to chain retailers and it's clearly what many of the biggest brands should be making their top priority," says Lauren Freedman, president of consultants The E-tailing Group. "The chains that are making the biggest commitment to the web now will be the ones that are best positioned for growth as the economy rebounds."

In the past, consumer brand manufacturers took a wait-and-see attitude to selling direct over the web to the public, but in 2009 the manufacturers that grew the most online did so by diversifying and launching even more branded web sites. Crocs Inc., the fastest-growing consumer brand manufacturer and an online retailer, now sells dozens of styles of its own footwear on Crocs.com. That product diversity, which Crocs (No. 151) plans to augment this year with more drop-shipping options for other retailers that sell its products, helped grow web sales 103.7% to $89 million in 2009 from $43.7 million in 2008.

Online exposure

Another manufacturer with a rapidly expanding e-commerce business, Jones Retail Group Inc. (No. 219) grew in 2009 by opening a new web store to showcase one of its most recognized brands. Jones, which grew web sales year over year 60.9% to $51.5 million from $32 million, launched an e-commerce store for its Anne Klein brand in April. In 2010, Jones also was making plans to launch ShoeWoo.com, which Jones says will showcase all its shoe brands not previously sold online. "There is great opportunity for growth in the Internet business," Jones CEO Wesley Card told Wall Street analysts on a year-end earnings call. "ShoeWoo.com is going to expose our remaining shoe brands to web selling for the first time."

Many online merchants found various ways to grow web sales in 2009. The fastest-growing Top 500 merchant, Golden Eagle Coins (No. 289), took advantage of rising consumer and investor interest in precious metals to increase web sales 306.2% to $31.5 million last year from $7.8 million in 2008. Another specialty apparel retailer, Express Inc. (No. 144), used the web to appeal even more to its core audience of trendy clothing shoppers in their 20s and 30s. As a result, e-commerce revenue for Express grew 238% in 2009 to $95 million from $28.1 million in 2008.

Struggling catalogs

If there was one group that struggled in 2009 it was catalog companies, where sales, collectively, were down 3.1%. In the early days of e-commerce catalog companies with their direct marketing base were positioned better than many other merchant types to reap the rewards of selling online.

But a number of Top 100 catalog companies' web sales dropped in 2009, including CDW Corp. (No. 9), down 5% to an Internet Retailer-estimated $2.47 billion from $2.60 billion; Musician's Friend Inc. (No. 38), down 3.2% to $513.6 million from $530.6 million; 1-800-Flowers.com Inc. (No. 40), down 14.7% to $498.5 million from $584.1 million; and PC Con-nection Inc. (No. 44), down 9.1% to $468.6 million from $515.7 million. The fastest-growing cataloger was once again Green Mountain Coffee Roasters (No. 96), which increased web sales year over year 49.5% to $166.4 million from $111.3 million.

Web sales at some catalogers such as PC Connection declined as consumers and small businesses reduced spending on personal computers and related information technology. Now for many catalogers the race is on to cut back on conventional direct marketing and invest even more in e-commerce.

Just a few years ago the web accounted for less than one-third of all revenue at PetMed Express Inc. (No. 101), a cataloger and web retailer of pet medicine and supplies. But in 2009 web sales increased year over year by 14.8% to an Internet Retailer-estimated $158 million from $137.6 million and accounted for more than two-thirds of all revenue as the company migrates away from mail and phone orders to e-commerce.

If they are to stay competitive, other catalog companies will need to expedite their online business plans, says Mark Lee, CEO of the Mark Lee Group LLC, a catalog and direct marketing consulting firm with clients that include Crutchfield Corp. (No. 108). "Many catalogers have been battered by rising print and mail costs and that's had a big negative impact on their total operation," Lee says. "But their customers are going more online all the time, so if catalogers want to even stay in the game they have to become just as sophisticated and nimble as everyone else."

More growth ahead

As 2009 ended, it was becoming clear that e-commerce will remain the retailing industry's vehicle for growth. There also are early indications that web sales will grow at a much brisker pace in 2010. First quarter sales for Amazon.com, for instance, grew 45.8% to $7.13 billion and the Q1 MarketLive Inc. and ChannelAdvisor indexes of their customers' online sales were up 14% over a year ago.

Further, the shift to even more mobile online retailing will accelerate. Already more mobile commerce sites are changing how consumers shop using the web. The number of Top 500 retailers with a mobile commerce site that allowed shoppers to find products, read customer reviews and complete a purchase shot up to 53 from 34 in 2008.

As consumers spend more time using the conventional Internet and the mobile web to shop how they want, when they want, and involve their family and friends in the purchase through Facebook and Twitter, the online retailing landscape has already undergone a permanent change. "The future of retailing is anywhere and anytime e-commerce and not how big is your store or catalog operation," Wingo says. "Most web retailers just survived the great recession, but now the race is on to capture the always web-connected consumer."

Drop Shipping 101- Avoid the Common Mistakes and Dropship Scams- As seen on GetThatWholesale.com and eZines.com

Mon, 29 Mar 2010 21:07:00 GMT

Before you decide where to get products to sell on your eCommerce site, find out what you are really getting yourself into! Do you think top 500 eCommerce sites buy lists, pay memberships or deal with middleman distributors? NO! Then why should you? eCommerce & Drop Shipping expert Steven J. Husak gives some key pointers regarding selecting your suppliers and watching out for scams that take advantage of new online entrepreneurs.

It never fails to amaze me about these ’services’ that charge to buy drop ship sourcing lists, or membership fees or want you to buy from their warehouse (like there is any profit left for you after that!)

Wikipedia defines drop shipping as: “Drop shipping, a retailing practice of sending items from a manufacturer directly to a customer.”

Like it says, from the manufacturer. Not a middleman distributor. Not a company that sells you a list of drop shippers. And certainly not anybody that charges you fees to do business with them.

There are too many scam artists to count in the drop shipping industry. Some of the biggest own multiple sites that sound like legitimate, independent, unbiased information sources when all they want to do is direct you toward their own website while trashing their competition.

Some of these sites offer you a month or two free if you join…well, after you spend countless hours posting the products on your site are you really going to not pay whatever they want you to pay each month to keep them on your site? So you pay them for the honor of selling their products for them!

Then there are the guys that sell you a website already loaded with their products. If they are legitimate they charge you for the site and a small monthly hosting fee and allow you to add other products and if you choose to remove all of their products you can, because you own the site.

How about the folks that want to sell you SEO (Search Engine Optimization) to drive traffic to your site, promising to get your site to the top of your category on search engines such as Google, Bing and Yahoo. Ask yourself this…if they sell hundreds of these sites and promise everybody top positioning on the search engines, exactly how do they manage that? If you believe that I have a bridge in Brooklyn to sell you!

Find a legitimate drop ship sales rep. Just Google “Drop Ship Rep” or “Dropship Rep”. See if they are a legitimate rep group or want to sell you a list or a membership. Legitimate sales reps don’t take your money, they are paid by the factories that they represent.

Find suppliers that do not charge you handling fees, drop ship fees, application or membership fees. A good drop ship rep will have an strong relationship with the manufacturers that they represent. If something goes wrong with an order they can get it fixed very quickly. They are paid by the manufacturers represented and will not be dealing with ‘distributors’.

Real drop ship reps set up the website owner to DEAL DIRECTLY WITH THE MANUFACTURER or IMPORTER. No middleman. The manufacturer will then ship directly to your customer. If you have your own UPS and/or FedEx account you can take advantage of any discounts available by having the shipping charges put on your account. This also makes tracking even easier for you and the consumer. “Dropship Companies” want to ship for you and charge you for the full UPS or FedEx charges and pocket whatever discount you may have gotten if you had your own account.

If you are paying handling fees, monthly membership fees and paying full shipping costs to a wholesaler that also had to make a few points on the goods they handle, how do you expect to be competitive?

Do you think top 500 eCommerce sites buy lists, pay memberships or deal with middleman distributors? NO! Then why should you? Think big or you’ll never get there! As soon as a supplier wants to charge you for anything except the goods you sell, be afraid. Be very afraid!

S.J. Husak is CEO of Continents Apart, LLC and is rated as an expert columnist by ezines.com.

Continents Apart LLC is a national, independent sales organization specializing in working with national and regional accounts within the home furnishings, gift, garden/patio and licensed sports products space. Their focus is on direct to consumer, commonly known as drop shipping or dropshipping.

S.J. has worked and lived across 3 continents in furnishings and gift industry for over 30 years. He'd rather be a baseball coach.

What do those folks at Continents Apart do?

Thu, 04 Mar 2010 22:57:00 GMT

For the customers

Continents Apart, LLC is a national, independent sales organization that specializes in working with national and regional accounts within the home furnishings, gift and licensed sports products space. Our focus is on direct to consumer.

We work with catalogs, television home shopping and internet accounts. While all three channels have their differences, the goals and challenges are very similar. Your customers do not have the ability to touch and feel the product, so it is our job to help you present it in the best possible light. From there we work to make sure that our vendors provide customer delight by delivering the product in perfect condition on or before the date they expect to receive it.

We give you access to thousands of drop ship skus without the need for you to search the world for products that can be drop shipped. We have this down to an art, providing spreadsheets with all shipping, pricing, descriptions, hi-resolution photography, shipping in two business days unless otherwise noted, and you will know the exceptions before you place that product on your site. Tracking promptly provided. Blind shipping. Up to date inventory reports…We know this business because this is the only business we do.

While it’s nice to speak in ideals, it’s important to know that you’re working with the industry’s most experienced team, a team that can adapt to the rapidly shifting paradigms as our industry evolves. Trends, technology and even sources are constantly progressing. We pride ourselves in making sure we’re ahead of the curve.

Our team works with some of the largest names in lighting, furniture, rugs, art, accessories, gifts and licensed sports products. All are familiar with the special needs of larger drop ship accounts, and all of them have the ability to drop ship direct to your customer.

Our channels of distribution tend to set the pace for the rest of the industry. That being the case, your needs are bound to be the first to change. We see ourselves as your advocates with the vendors that we represent. In many ways we look at these changes as challenges, and use our extensive knowledge of our vendors and our upper management contacts to work to find a solution that will meet your needs.

We look forward to learning the intricacies of your business and helping you achieve your objectives.

For the suppliers

While we are constantly seeking new products to represent, please be aware that we are extremely selective about who we work with.

If you do not currently offer drop shipping but want to move into the fastest growing retail channel without carrying new inventory, we offer free or low cost consulting to get you up and running. In most cases we only request our travel expenses.

You should know upfront, that we fight for the needs of our clients. Developing this channel of distribution requires a serious commitment from both of our teams as well as your company. We typically work with a member of your executive management team, and have a more accessible point of contact for daily operations.

We currently work with over 600 online and catalog retailers and the list is steadily growing.

Continents Apart, LLC chosen as exclusive drop ship reps for Checkolite International

Sat, 20 Feb 2010 18:07:00 GMT

"Agreement includes the lighting lines that are under license to match several national brands including Delta Faucet, Moen and Price Pfister in addition to Checkolite brand, IHome, Home Design and Lightstyles including the Murano Glass pendant lighting program."

Press Release

Contact: Steven J. Husak

Phone: (941)350-5019

Email: info@ContinentsApart.com www.ContinentsApart.com

FOR IMMEDIATE RELEASE

3 P.M. EDT, February 19, 2010

Continents Apart, LLC chosen as exclusive drop ship reps for Checkolite International

SARASOTA, FL, FEBRUARY 19, 2010: Continents Apart, LLC, http://www.continentsapart.com billing itself as, “The first national rep group specializing in drop shipping for home, gift and garden products” has come to terms with Checkolite International http://www.checkolite.com as their exclusive drop ship representatives.

According to 30 year industry veteran CEO Steven Husak, “Continents Apart is delighted to represent Checkolite International. This gives us the lighting lines that are under license to match several national brands including Delta Faucet, Moen and Price Pfister. In addition we will have their Checkolite brand, IHome, Home Design and Lightstyles including the Murano Glass pendants lines. Further, it offers a terrific compliment to several of the lines we currently represent as well as a few in the pipeline to debut over the next 45 days.”

ABOUT CHECKOLITE INTERNATIONAL

Established in 1947, Checkolite International Inc. is a world leading supplier of fashion forward lighting designs- committed to creating truly compelling and comfortable Home Decor for our consumers. Based in Jersey City, NJ, The company designs, and manufactures residential and commercial lighting products for national and global distribution. We manufacture a variety of products which include: Indoor decorative lighting, Outdoor decorative lighting, Track lighting, Work Lights, Utility Lighting, Juvenile Lighting and Portable lighting.

COL currently maintains licenses with the following brand names iHome, Price Pfister, Moen, Home Design, Lightstyles & Delta Faucet. We encourage you to browse our website featuring our products and services. Discover why COL continues to offer strategic partnerships to our customers by offering innovative lighting solutions for the last 60 years. More information is available at http://www.checkolite.com

ABOUT CONTINENTS APART, LLC

Based in Sarasota, FL, Continents Apart, LLC is a national, independent sales organization that specializes in working with national and regional accounts within the home furnishings, gift and licensed sports products space. Our focus is on drop shipping channels. Our markets include online, catalog and TV retailers. More information is available at http://www.continentsapart.com.

-End-

What's That Smell?

Mon, 25 Jan 2010 21:13:00 GMT

There's an old saying, "If you're not the lead dog in the pack, the scenery never changes." Neither does the smell.

Now obviously we cannot all be the lead dog in the pack...or can we? We can all be the lead dog, or at least use modern technology to strive for the front of the pack.

Have you seen erosion in market share in addition to the downturn in sales volume? Have you had consumers come into your showroom and when the salesperson makes a follow-up phone call they discover the customer bought on-line?

So, here is the scenario...you provided the showroom for the consumer to touch and feel and get the warm fuzzies. Your sales staff showed the features, advantages, benefits of the product. And they bought on-line. And maybe even for the same price that you were selling it for.

They got free shipping, maybe you charge $60 to $125 to deliver. And forget about your opportunity to get add-ons like protection programs and lamps, wall art and other accessories.

The same price??? Why would they buy for the same price or maybe even a little bit more? Is it really more?

Your sofa
$1199
delivery 75
sales tax 84
Total $1358

Same sofa on-line
$1359
free freight, no sales tax because the website has no presence in your state.

Now there's nothing you can do about the sales tax...and that's unfair. And the fact is they are paying less on-line, but not by much. And they have no store to go for help if there's a problem.

So why did they do it? First, they went online looking for a lower price. When they found the same product for the same price they thought, "why drive back to the store, I'm already home and I will get that same price...click, click."

Now, if you only had invested in that e-commerce site, the convenience of shopping on-line would be there to save your sale. You can even have your salespeople register their customers so they get credit for the sale. And you can actually show a larger selection, especially add-ons such as lamps, accessories, etc by selling drop ship lines in your site.

Still not convinced? How's the view...and that smell!!!??? Maybe the smell of losing a sale needlessly. And that stinks!

Why aren't more small and mid-size retailers using the on-demand business model?

Mon, 25 Jan 2010 21:16:00 GMT

While store-based retailing grew an anemic 1.4% in 2008, the 500 largest on-line retailers grew 11.7% in 2008.This is even after factoring in that eBay reporting that U.S. gross merchandise sales (excluding autos) dropped 7.7% last year to $21.6 billion.

Here's the reason why, and how to apply the on-demand supply method to any retail business...

Let's say that like most Americans you live where the winter is cold. Gasoline is $4+ per gallon, there is snow or ice on the ground, and you have holiday shopping to do.

You can get into your 4 wheel drive that gets 14 MPG and drive in traffic to the nearest mall, risking your life on those icy roads.

The mall parking lot is very full, so you have to park a considerable distance away. You trudge through the parking lot in the freezing cold, fight the mall crowds, make your purchases over the course of four+ hours... Schlep your packages back through the mall parking lot in the freezing cold, put everything into your crossover vehicle and fight the traffic just to leave the mall parking lot...and then even more to get home, again risking a crash on the icy roads.

You get home, bring your packages into the house. You can gift wrap them now or find a suitable hiding place.

Now for the today's consumer's version of this story.

They go online. They can compare prices and see thousands of products in a few minutes, make their selections, even have them sent gift wrapped to the recipients in many instances. A few days later their selections arrive at their door, often at a perceived savings, because mall rent, store staffing and warehousing inventory is very expensive and didn't need to be factored into the price.

Wow, now they even have more quality time with their family during the holidays!

This was the scenario for millions of Americans during the last holiday shopping season, when over 25% of all retail purchases are made in a 6 week period. More to factor in...the majority of e-tailers do not keep inventory. They have the goods drop shipped from the manufacturer/wholesaler/importer's warehouse direct to the consumer. It has all of the e-tailer's tagging and packing lists. When new goods or improvements, price reductions, etc are made they can make the changes with a few key strokes, not paying store personnel to make those changes and waiting for the latest and greatest products to arrive. They also can take instant advantage of post-holiday price reductions without selling stocked merchandise below cost just to unlock valuable dollars.

This is the future of retailing.

How can that small to mid-sized "bricks and mortar" retailer (the industry term used to describe retailers with a physical presence rather than being on-line) compete with the Walmarts of the world in today's economy?

Well, one of my clients, a small chain of lighting stores now only shows samples in their showrooms and tells their customers that their order will come to their door within 5 days. They don't have warehousing and inventory costs, they don't get stuck with 'dogs' that will not sell until they are reduced below cost. They buy on demand.

They were so encouraged by the new business model that we developed with them with that they now opened a website carrying all of my products and it now accounts for 60% of their business, a business that grew 50% last year.

The future of retailing or the past, you choose. Can you spell D I N O S A U R ?