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Retailers Gain Edge Online

Jun 1, 2007

Wholesale websites have transformed the buying process for many independent retailers. In addition to displaying and offering products for sale at the merchants' convenience, many websites now provide marketing tools and features to help retailers boost profits.

When Shavonne, a company based in Etowah, TN and billing itself as the world's largest jewelry wholesaler, first established its website 11 years ago, there were just 50,000 internet websites, according to Donald Gist, the company's founder.

"Now, there are more than a million," he says. His company has more than 1,000 active retailer accounts, and 90 percent of all sales take place over the Internet, according to Gist. The company executed 14,000 shipments from web orders during the past year.

But at Shavonne, these are no remote, arms length transactions. Gist, who has operated the company for 51 years, handles all major accounts personally, and his staff has an average level of experience of 16 years. Staff members are always available to interview buyers by phone and custom configure an assortment for each account's individual marketing area, according to its customers' age, income, pricepoints and other demographic distinctions.

"If, after a retailer customer has reordered a few times, he or she finds a few items from the original shipment that aren't selling, we'll replace them," Gist says. He also says that the, "Win win protection program," has only been used by 1.6 percent of his retailer customers. "Because of our staff's experience and expertise, the first shipment is better than 98 percent correct for the retailer's market."

DollarDays International LLC, Scottsdale, AZ, is a true one stop source for retailers. While that certainly applies to product availability, it also includes a host of marketing and other tools to help retailers succeed. Beginning with the product assortment, the company carries about 30,000 different items, covering all merchandise categories. DollarDays has more than a million registered accounts, according to Marc Joseph, president.

"A thousand new customers register a day," he says, and the number one customer base is independent retailers. "Vendors don't send reps to stores any more, and shopping trade shows is extremely expensive for an independent retailer," he says. "They have to leave their business, which is often a hardship, travel and scour about 3,000 booths to determine what to buy and who to trust.

"The internet is the next channel of distribution for closeouts," he contends. Joseph, who routinely surveys his customers, says there are five things they want and need. Price is important, and DollarDays delivers good pricing with a mix of one third each: quality closeouts, everyday basics and seasonal merchandise.

The large assortment and reach to all categories makes it a one stop. In addition, retailers can buy product by the single case, "Which gives retailers an opportunity to try out a product, without making a large investment," he explains.

Customer service, Joseph contends, is also critical. "The internet, by itself, is a cold place," he reasons. Many of the DollarDays inside team have owned businesses and are available for guidance 14 hours a day. "They take the place of salespeople who used to visit stores," he says, "and they know what is selling best where." They also can provide advice on everything from pricing to display.

Joseph also offers evidence of the value of the Internet's 24/7 access. He says, "We get as many orders late in the day as we do at midday." This is confirmed by other Internet wholesalers.

Sunglasses wholesaler, Mass Vision, Rochester, NY, made the Internet the foundation of its business from the start. Owner Anthony Masiello says, "Most of our orders come in over the weekend or late at night." His company provides 24 hour personal customer service.

Dan Mottsman, a principal of Western Express Inc. in Bridgeville, PA, also says, "We get a lot of overnight orders. That's when retailers have the time to really look over our hundreds of different products and make sound buys."

His company specializes in Western apparel and accessories, including closeouts. The company has been in business for 29 years and has been on the Internet for the past 10. Mottsman says that now approximately 50 percent of his company's business is done over the Internet.

"At least half, often as much as three quarters, of our orders are in the inbox on Monday mornings," says Scott McMillen, owner, with his wife, of Michelle and Scott's Wholesale Import in Memphis, TN. "About 50 percent come in after business hours."

"Most of our retailer customers are independents, and they can't wait on customers while they are shopping for product," he reasons. Of his company's total accounts, he says, "about 60 to 65 percent are what we consider Internet customers, and many of them deal with us only over the Internet."

Registration at all of these companies' websites is free. Retailers only pay for product. At the Shavonne site, retailers register under one of five levels. The levels are organized according to the retailer's typical size per order, and discounts on merchandise get larger as the level rises.

The opening level is for $250 in merchandise, Gist says. At level three, the order is for $985 in merchandise, and the discount is 66.66 percent off wholesale. At level five, which calls for an order of $5,500, goods are discounted 75 percent.

"The retail valuation of level five," Gist says, "is between $22,000 and $25,000, and level five is our second most popular level." Retailers that begin at lower levels can move up, of course, and Gist says most do.

DollarDays International will help a retailer actually set up a store, including fixtures, products, promotional items and sound advice. This is not a franchise, just one of the many ways the company helps its customers succeed, according to Joseph.

It will also develop a website for a retailer customer. For a set up fee of $199, "Retailers can create a website using their own name," he explains. "We do all the back end business and the retailer pays a commission on product from us that is sold over the site."

The website can (but doesn't have to) import DollarDays' product. The retailer establishes the selling prices. "It gives a small retailer an opportunity to sell to the world," Joseph points out.

Typically, a DollarDays retailer customer marks up product between 40 and 60 percent. "When we evaluate products," Joseph says, "we ask ourselves: What can it sell for at retail? If it doesn't allow for a good return, we don't take it." Another advantage of wholesale web buying is the ability to see product. For these Internet wholesalers and many others, the website is the company catalog. Gist says Shavonne had more than 1,000 product changes last year. A print catalog is not only costly, eating into the prices he charges for merchandise, but also inevitably out of date. Therefore, he has a 154 page catalog online. Retailers can see every item, and each is shown with a description.

"A print catalog of fashion merchandise can be obsolete almost before it's printed," says McMillen. Because websites can be updated frequently, retailers have more assurance that the product they see is available.

"If an item initially comes in seven colors, and an eighth is added, we can put a photo of the eighth up on the site right away," McMillen says. "Unless something is extremely popular and selling out quickly, the buyer can be reasonably sure that anything on the website is still available. When something sells out, we remove it."

A self described, "techie freak," McMillen created product photos for his website with a video camera before digital cameras were available and reliable. He says his company pioneered the use of digital product photos on a website. Now he not only shows a photo of every in-stock item on the website, he also allows retailer customers to use the images for free. They can load them onto their own website or print out for promotional use.

All these wholesalers also note that the website allows them to offer frequent special programs to their retailer customers, often on quick notice. They also alert customers to new products and special promotions and packages via email. "We send emails to our customers once a month," Mottsman says of Western Express. "And we don't share our lists with anyone," he emphasizes. Customers can also get more frequent emails on request, he adds.

Because many of these wholesalers cater to smaller, independent businesses, they will ship small quantities. Mass Vision has no minimum order, except that its products are sold by the dozen. Masiello has configured a mixed dozen package, which, "Is very popular for buyers who have limited space, but want to add the high profits of sunglasses to their store."

Michelle and Scott's Wholesale Import requires a minimum order of just $50, and it can be for an assortment of product. Often this gives the retail buyer an inexpensive way to try out new product before placing a larger order.

All these wholesalers have learned lessons from web experiences with retailers. They are constantly adding enhancements and tweaking sites to make it easier for retailers to shop confidently and conveniently. "First and foremost, we make the site easy to use," says Mottsman. "It's product driven and easy to navigate," he explains. "We don't have fancy, distracting backgrounds. We try to make sure that it's very functional and gets buyers where they want to go quickly and easily. We are considering adding some enhancements, but will make sure they don't slow down the buying process," he promises. They are being designed to speed buying and decision making.

While enabling their retailer customers to broaden their business, these wholesalers acknowledge that what's good for the customer has been good for their own businesses, too. Shavonne, for example, "Has active customers in 31 countries," Gist says.

Western Express has also gone international via the web, Mottsman says. "The internet has also broadened our base considerably in the U.S., as customers become increasingly computer savvy."

"The internet allows us to get to a lot of different and new customers," McMillen adds. "We've absolutely extended our reach here and worldwide." Small wonder they all say they're in business to help their customers succeed. The evidence is shown on their websites, which combine marketing expertise and guidance, with products at good prices.

The following companies were interviewed for this article:

Marc Joseph, president
DollarDays International LLC
7575 East Redfield Road, Ste. 129
Scottsdale, AZ 85260
Toll Free: 866-969-7742
Tel.: 480-922-8155
Fax: 480-922-3764

Anthony Masiello, owner
Mass Vision
740 Driving Park Avenue
Rochester, NY 14613
Toll Free: 877-609-9968
Tel.: 585-254-3910
Fax: 585-254-4847

Scott McMillen, co-owner
Michelle and Scott's Wholesale Import
4957 Summer Avenue
Memphis, TN 38122
Tel.: 901-767-0838
Fax: 901-843-2498

Donald Gist, president, founder and CEO
1065 Country Road 660
Etowah, TN 37331
Toll Free: 800-373-7464
Tel.: 423-263-2222
Fax: 423-263-2001

Dan Mottsman, principal
Western Express Inc.
300 Villani Drive
Bridgeville, PA 15017-3480
Toll Free: 800-245-1380
Tel.: 412-257-5020
Fax: 412-257-5022

Topic: Business Strategies

Related Articles: sales  marketing 

Article ID: 239

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