In its second-largest acquisition, Amazon buys the company for $970 million.
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Taking care of customers
Olson adds that ordering from DollarDays.com, which she often does late at night, saves her time during the day to tend to customers and other store-keeping chores. It also provides for ease of managing her orders through self-service administrative features that let her print out an order record after making a purchase, then tracking the shipment online and checking its details against the order record-all without having to place calls to wholesalers. “I don’t have to use business hours to do business with suppliers,” she says.
Olson will occasionally travel to a consumer products trade show to see vendors and products personally, but she says the quality of product images and descriptions available online makes frequent trade show visits unnecessary. “We get a pretty good idea how good a product is by viewing it online,” she says. “There have been a few times I’ve been disappointed because a product wasn’t the quality I expected, but that’s been a small percentage. Most of the stuff I’m happy with it.”
As happy as Ortiz and other retailers are with their online buying experiences, the biggest challenge to online wholesalers is to broaden their market among the large majority of retailers who continue to source products through more traditional wholesaling, Joseph says. “The downside of the online wholesale business is having to convince the rest of the business world how easy the Internet is to use,” he says. “Our biggest competition is the more traditional wholesalers, our biggest challenge is how to get more offline buyers online.”
Yet Joseph says he does no offline advertising, but focuses mostly on building word of mouth through strong customer service and merchandising. “It comes down to the basics of retailing, having the right product at the right price at the right time,” he says. “Our home page changes every day with new product offers. We have to be sharp with merchandising and make sure we’re priced right.”
Online wholesalers must also rely on human interaction in customer service as well as special support programs to attract and keep customers, he adds. “You can’t be a customer service slouch and wholesale on the Internet,” Joseph says.
Indeed, online wholesalers are resorting to old-fashioned personalized service to stay in the mind of customers. Olson of 4 Quarters Dollar Store says online wholesalers will frequently call just to touch base. “A lot of times they call me to ask how things are going and if I got the last shipment OK and if I’m happy with everything,” she says. “They also call to tell me when they plan to have special promotions, or tell me to wait a few days to order to get a better deal. It makes me feel better about doing business with them and makes it more likely I’ll keep going back to them.”
Williams of Big Gib Store says he’s had similar personal contact. He adds that he feels that online wholesalers are more likely to treat small retailers with the same respect as larger retailers, regardless of the size of their orders. In one case after he had sourced about 300 sweaters from DollarDays.com, the online wholesaler called to alert him that the sweaters were used merchandise that had been shipped by mistake. “They took the sweaters back and credited us for the entire amount, even including the dozen that we had sold,” Williams says.
Others competing in the online wholesale consumer products market, including Overstock.com Inc.’s OverstockB2B.com and eBay Inc.’s Wholesale Lots section on eBay.com, are offering incentive programs geared to attract more small independent retailers into sourcing products on the web.
EBay is planning to offer this year an inventory financing program for wholesale sellers, and it also plans to provide improved site navigation from eBay’s home page into its Wholesale Lots consumer products section. “We want to make it easier for buyers and sellers to find each other,” says Jordan Glazier, general manager of eBay Business. Wholesale Lots accounts for a “sizable proportion” of eBay’s business-to-business sales, which also include sales of office supplies and industrial equipment and which totaled $2 billion last year, he says.
Search marketing here, too
Overstock.com plans to introduce this year special services to small merchants including a commercial credit card program and health insurance programs in association with Advanta Corp., though Overstock has yet to set a date for launching those services, a spokesman says.
Wholesalers also need to develop effective Internet search marketing strategies, including testing the most effective keyword combinations and linking to frequently visited sites. Joseph notes that DollarDays has grown its number of customers ten times since 2000, and that most find his site through web searches for keywords of products preceded by the term “wholesale” as well as through listings on aggregator sites like WholesaleCentral.com.
Other wholesalers also say the web has caused a noticeable jump in customers. “50% of the business we attract online are people we never sold to before,” says Jeff Rosen, marketing director of PriceMaster Corp., a wholesaler to thousands of convenience stores and other small, independent retailers. While PriceMaster has provided more than 2,000 products for large convenience store chains, it’s now moving those same products-non-food items like photographic film, aspirin and Chapstick-to new kinds of retailers through PriceMaster.com, which gets much of its traffic through a connection with WholesaleCentral.com. “It was a nice surprise to us that we could attract mom-and-pop non-c-stores,” Rosen says.
Scott Sumner, president and CEO of Sumner Communications, which owns WholesaleCentral.com, says the site nearly doubled its number of wholesale-retail buying sessions in March, to 781,388 from 404,500 a year ago. The site hosts more than 1,400 wholesalers, who pay $199 every six months to conduct trading sessions. That fee includes 100 keywords for use with WholesaleCentral’s site search engine. It also sells advertising spots throughout its site with fees ranging up to $1,500 per month.