Online retailers start their business with the expectation that they will be focused on sales and marketing. Until they get drowned by operations.
The core business of every retailer is selling. The vast majority of the sellers start their companies because they want to sell products. They have marketing and sales skills and want to put them to use. But the reality of an online retailer brings a totally different set of complexities.
After starting with a good product idea, the seller has to source the product (usually abroad), develop product specifications, negotiate with suppliers (usually off work hours due to time zones), follow up on production, inspect the final batch, contract a freight forwarding company, follow up on freight, provide documentation for customs clearance, decide on storage locations, among many other tedious tasks. And, suddenly, the seller is spending more time with operations than with marketing and selling the product.
Then come more difficulties. The seller learns that retail is a capital-intensive business. And, more than that: due to the extreme competitive nature of this business, which is exacerbated by the democratization of access brought by marketplaces, margins are usually very narrow.
To differentiate a product and make it feasible you have to create more value and be more efficient than the other companies.
Value-creation means working on multiple media channels to build a brand, which is a full-time job on itself. A lot of companies don’t give this the necessary attention. Making a decent margin with the sale of generic products is almost impossible, unless you achieve a very high volume of sales. Making your product recognizable is the best way to sustained sales.
But even if you succeed doing that, you still need to be efficient in your operations to be successful. And this is where most online retailers fail.
Supply-chain has always been a complex subject. In the competitive world of online retail, it becomes even worse.
The profit of a product doesn’t start with the sale, but with its purchase. Knowing what is the right product to be purchased, what is the right location to send it to, what is the ideal date of arrival at inventory, and what is the most balanced quantity, is the first step for any successful retailer.
More than that, making sure that the product has high-quality from manufacturing to the delivery to the final client is also mandatory. Without that, not only reviews will generate a huge impact in sales, but also the high rate of returns will eat up all the potential margin.
Lastly, the single most important item to pay attention to is the total purchase cost of the product (including freight to final inventory location). If a product is purchased at the wrong price or if its supply-chain is inefficient and costly, there is no way to make it feasible at such a competitive environment. If you are not doing it right, your competitor is.
At Flieber, we allow online retailers to go back to their origins and focus on marketing and sales again. With a hands-on approach, we take care of the operations, giving full visibility to the process and turning our clients into decision-makers. No need to deal with suppliers in China in the middle of the night; no need to follow-up with freight forwarders to make sure that the products will arrive on time; no need to find last-minute alternatives to solve a problem that will delay the delivery. Leave the headaches to our experienced team and enjoy being an online retailer again.