Presentation on theme: "SOURCING THE KEY TO INFINITE ISLE SUCCESS David Verette"— Presentation transcript:
1 SOURCING THE KEY TO INFINITE ISLE SUCCESS David Verette Vice President, Partner SalesGood morning..My name is David Verette and I am the Vice President of Partner Sales. My organization is responsible for establishing formal relationships with Retailers, Grocers and Distributors that can benefit in partnering with SPS Commerce. There are many reasons why retailers partner with us, especially as they pursue omni-channel retail strategies.Before I turn it over to our speakers I’d like to share a few observations to set the stage for the next fifty minutes.
2 SPS Commerce Annual Retail Benchmark, RSR Research What are your top investment priorities in 2013?Expand product assortmentE-Commerce advancementsLast year we partnered with RSR Research to conduct our first annual retail industry benchmark report.The report was based on responses from over 300 top executives in the retail industry.In the report survey, we asked retail executives about their top investment priorities for 2013.By a large margin, two of the top three priorities directly tied to the sourcing question—our topic this afternoon.Two of the top three priorities were to (a.) expand product assortment and (b.) make advancements in e-commerce.Over the 11 months since publication, our experience proves these priorities again and again as we work with retailers as they execute strategies to expand product assortments in e-commerce.But during this time, we also found that retailers experience two major challenges when pursuing these goals.2
3 Increased ComplexityOmni channel & e-commerce strategies requires more complex levels of technical integration from vendors.Live inventory feedsRich product dataCarrier integrationReturn processesFirstly, the notion of expanding assortment to achieve the coveted ‘endless isle’ involves a dramatic increase in complexity. The dynamics of drop-ship and other e-commerce sourcing methods demand new skillsets from vendors! No longer are vendors only being asked to process bulk orders for DC shipments, or pre-packing by store for direct to store shipments, but in this business, vendors must provide rich item data, live inventory feeds, and have the facilities and necessary processes in place to fulfill an order size of 1 direct to the end consumer.These new required capabilities make it difficult for retailers to find new products.Because it’s not only about product fit anymore.It’s also about the technical capabilities required, to deliver the right product in the right channel.
4 Increased VelocityEndless-isle retail initiatives demand exponential growth in online assortments.Typical business goals: annual SKU growth of %Reliance on drop ship due to capex limitationsTraditional retailer sourcing & merchandising organizations are difficult to scaleThe second challenge is the demand for greater speed. To be successful, these strategies require radical, not incremental, goals.While I have numerous examples, a recent one is a Leading Apparel and Home Product retailer that we worked with who had an e-commerce vendor count in the ballpark of 40. They came to us for help expanding their product assortment by 400%. Other retailers we’ve worked with this year had strategic goals to double the number of products on their .com site in 2014.But there are two kinds of limitations that make it difficult to scale at these kinds of velocities.First of all, CAPEX. Growing retailers already struggle to stay within capacity for their traditional distribution and fulfillment centers.Secondly, would be their existing organizational scale! Traditional merchandising and technology teams (who are usually already stretched thin) are hard pressed to double or triple their output to meet these strategic goals.So in my experience in working with retailers that are embracing various omni-channel strategies that include drop shipping and endless isle, it is no small feat to say the least. The most successful retailers find creative ways to circumvent the complexity and capacity barriers to successfully execute these strategies.
5 SESSION SPEAKERS Justin Stevens, Quirky Jim Sustar, President, Trademark GlobalNow, for the rest of our time, we’re going to hear from two companies that supply new products to retailers every day. We’re looking forward to the contrast as we learn from their perspective.Justin Stevens makes the cloud happen for organizations. He's been connecting people and companies to the power of cloud based business tools for a decade. He has lived and worked overseas in five countries on three continents in a variety of industries. Justin brings a broad understanding of how business operates in the real world and how technology can empower organizations to master their competitive advantages in the marketplace. He currently works with Quirky, a social product development company, building enterprise infrastructure with cloud solutions.Jim Sustar is President and Co-founder of Trademark Global. He is the driving force behind the development and growth of the company through his leadership and focus on sales, pricing, marketing, and overall company direction. His implementation of aggressive pricing strategies, product branding, and innovative online Marketing has led Trademark Global to become a pioneer for its role in the e-Commerce ecosystem.
21 OVEREXPOSED Our Products and Prices were all over the Internet BUT…. NOT with the INTERNET RETAILERS that were experiencing the HIGHEST GROWTH RATE.Our Products were over-exposed and our retail prices were compromised.21
22 e-Commerce Sales Channels 3rd Party Marketplace SellersIndependent Web StoresMass Market Dot ComsFlash Sale SitesT-shirt Frenzy – OCProducts – Rikki Night LLC22
23 3rd Party Marketplace Sellers In the early years Trademark sold through 3rd party marketplace sellersFast To MarketMassive Exposure on Amazon & eBay and other MarketplacesUse Product Data Feed23
24 This became our Targeted Sales Channel Mass Market Dot ComsLate to the PartyRapid Growth with no end in sightThis became our Targeted Sales ChannelISSUES TO OVERCOME:Mass Market Dot Coms Would NOT take a Data Feed of all of our productsIf Products were overexposed and retail prices compromised, in most cases the Mass Market Dot Com buyers would either refuse to list it or would be undercut by Marketplace Sellers limiting revenue and/or profitability.24
25 Decision Time!Taking our talents to the mass market dot coms25
26 Action Stop Selling to 3rd Party Marketplace Sellers Example:Our products sell to Amazon directly, so the Amazon Marketplace is covered and we no longer needed 3rd Party Sellers.Amazon tries to undercut their own 3rd Party Sellers so the message was clear to us: Sell to Amazon directly!Stop Selling to 3rd Party Marketplace SellersStart Selling to Mass Market Dot Coms26
27 BUILT FOR GROWTH The Mass Market Dot Coms… Reach more customers Preserve Retail MarginsExpose our Brands in a high profile way which helps to build brand awareness.27
28 INDEPENDENT WEB STORES Lost in the ShuffleNiche Websites, Specialty Shops where Service and Selection are king and not necessarily all about prices.Mimicking the Real World, Internet Specialty Shops have found a home with a very loyal customer following.These online retailers that are very important to Trademark.What are we looking for in an Independent Web Store?28
29 What are we looking for in an Independent Web Store? NOT….(NOT Retailers with a LOW COST motif)Low cost retail compromises our pricing modelSo the “SELL EVERYTHING” discount store niche is DEFINITELY NOT what we are looking for in an INDEPENDENT WEB STORE.29
30 INDEPENDENT WEB STORES LOOKING FOR SPECIALTY SHOPS:Specialize in One Product CategoryService Over Discounted PriceLoyal Customer BaseFollow MAPP pricing30
31 Pricing StrategiesM.A.P.P. Pricing (Minimum Advertised Pricing Policy)Trademark is Moving To MAPP PRICINGMost Retailers Favor MAPPMAPP eliminates 4th Party SellersMAPP Enforcement must be swift and severe31
32 PromotionsWith MAPP in play the landscape is clear for promotional pricing to be successfulDaily DealsPrivate Sale EventsFull Product Line PromotionsFront Page BannersCategory BannersBlastsTop Search Engine Position on Retailer’s Site32
33 RULES FOR PROMOTIONS1. Limited Time – Limit the promotional period for the Retailer.Daily Deals, 3 Day Events, even 1-2 Week Sales are OKDo NOT Allow long events which will hurt MAPP unless Liquidating Inventory2. Increased Visibility – Barter Promo Discount for Increased VisibilitySupplier Discount is effectively “paying” for extra visibility so find out EXACTLY what and where the promo will take place. Banner, Blast, etc….3. Lower Retail Price – Retailer Should Participate in DiscountIf Supplier gives a 15% Discount on Wholesale Price then ask the Retailer to participate by matching to make it a 30% Sale off the Retail Price.4. Track Promo Sales – “Was it Successful?”Keep Track of sales performance and leverage that information to run similar promos with other Retailers and to repeat that promo at a later date.33
34 Summary Product Development Sales Channels Opportunity for Independent Web StoresPricing Strategies34
35 Sell Everything To Everyone? As suppliers & retailers we need to:Know who we areKnow our roleEverything To Everyone? No.Instead, we can be everything to someone!35