PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Selling only what they know best and flying under the radar, extreme niche retailers are finding success on the web.
A guest wants to buy a couple a mixer for a wedding gift. More than 150 sites sell mixers and the guest can buy from a retail brand name she trusts or from a retailer that has a store near where the couple will live so they can return it easily.
Eight years later, Junior drops the glass mixing bowl while scraping out the remnants of Mom’s cake mix. Where does Mom find a new bowl?
If she goes online and types in “small appliance parts,” she’ll find Kansas City, Mo.-based Mar-Beck.com, an extreme niche online retailer that carries a long list of appliance parts-including bowls for mixers that are 8 years old and even older.
Mar-Beck is one of a new type of retailer finding success on the web-call them Extreme Niche retailers. And as they look at the carnage of dot-com retailers who spent millions trying to create national brand names, they are happy to stick to their niches. “Extreme niche is a word we like a lot,” says Robert G. Wheeler, president. “Words like ‘little’ and ‘small’ really don’t explain what we do.”
And it’s been so far, so good for this obscure retailer because Mar-Beck’s business is doing more than breaking even. “We make a profit on every sale,” Wheeler says.
From small appliance parts to specialized compilations of children’s music, to garland head wreaths and vacuum bags for any type of vacuum cleaner, extreme niche items are selling online. Though the items might seem mundane or far-fetched, the Internet is fast becoming the premier place for consumers from around the country and the world to find these wares that most likely are not available from their corner store.
Extreme niche retailers can succeed online if they follow some basic rules about retailing and keep in mind that they will never become another Amazon.com, although they might become the biggest player in their niche, says Leigh Duncan, manager of public services at McLean, Va.-based KPMG Consulting Inc.
For one thing, the retailer must have a core competency that is unique and for which there is market demand. Building on that, the retailer must clearly define the niche it is serving and keep in mind that it is a niche and not be seduced by visions of grandeur. A second rule is that the niche retailer use relationship marketing extensively, which means sending personal e-mails with each order and even hitting the road to meet customers at special events-tactics that larger retailers are unable to do. And finally, a niche retailer must make sure it has resources to support a good customer experience on the front and back ends, which means deliveries are on time and customer service is ultra-attentive.
Consumers may shop at extreme niche retailers because they can’t find the goods anywhere else, but these retailers have to keep in mind that providing a good shopping experience goes a long way to helping their grassroots marketing efforts, as well as creating the potential for repeat business, Duncan says. If they meet those criteria, there’s no reason they can’t succeed, she says.
As far as extreme niche expertise goes, no one knows more about vacuum bags than Greg McClellan, owner of VaccumBags.com, Lincoln City, Ore. McClellan started in the vacuum cleaner business 20 years ago, when he managed and owned repair shops. He saw an opportunity to move some of his store’s business online in 1997 when the Internet started taking off. He launched as an informational site with a toll free number for consumers to call in orders, then began selling online in the summer of 2000. “Vacuum bags are one of those products that are hard to get for a lot of people,” McClellan says. When he converted to a sales site, McClellan stocked bags from 25 manufacturers. That has since grown to more than 50. To make sure business would be worthwhile online, McClellan charged 60% more than what he charged in his store. “I wanted to make sure I covered myself,” he says. A measure of the need that his niche fills is that his volume has continued to grow since he went online-even with the higher-than-offline-store prices.
Selling children’s music is a successful niche for Redway, Calif.-based Music For Little People, whose web site www.mflp.com is slowly building its customer base. The site, which complements a catalog that goes to more than 1 million homes, generated $100,000 in sales, 3% of the company’s revenue, in 1999, its first year online. That trend is continuing, according to President and COO Sheron Sherman, who says that in 2000, online sales grew to 7% of revenue. She expects that number to grow to as high as 12% this year.
Be sure to wear ...
Wearing flowers around your head is not for everyone, unless you participate in Renaissance re-enactments, you’re in a wedding or maybe planning a special Halloween costume. Focusing on such special occasions is what has made Hamlin, Pa.-based GarlandGirl a true extreme niche online The company makes custom, handcrafted head wreaths for all occasions from holidays to weddings. What started out as a traveling business that visited Renaissance fairs around North America is evolving into a web Mecca for decorative flower headdresses. The 4-year-old company, which was funded with $50, last year grossed $100,000 and is overhauling its web site with new, more detailed product photos and switching web servers to accommodate a growing customer base, says Lynda Bashoor, president.
Bashoor has 10 part-time employees. It started taking wholesale orders via its web site in March to supply specialty head wreaths and hard-to-find dried flowers to such offline niche players as Norwegian heritage stores, an account Bashoor said she worked on getting for a year.