Second 500 retailers cover a wide variety of market segments
Jon Love , Associate Editor, Research
Launched in 2004 as a one-man operation, compact-sized products retailer Minimus.biz set out to satisfy the market for travelers and campers tired of over-packing regularly sized products like condiments or cosmetics. After publicity from several blogs and national TV helped the retailer’s sales to surge, founder Paul Shrater quickly realized his 500-square-foot storage facility would not be enough. In the first few years after its launch, the retailer grew its storage space and its web sales exponentially.
Now approaching its 10th anniversary, the company employs 30 people and stores its 2,500 SKUs in 30,000 square feet of warehouse space. It also offers pick-and-pack services to smaller businesses and partners with brands, like all-natural detergent manufacturer Grabgreen, to help miniaturize their products. While web sales have been flat over the last year because of to a slumping economy and an increasing number of wholesale orders that are researched online but placed over the phone, Minimus’ 2013 web sales are on pace to grow again, Shrater says.
The company’s initial core market was travel, but Shrater says new shopper segments appear every year, like picnickers and outdoorsmen. “What you’d expect our site to be is only a part of our business.” Customers come back to Minimus, No. 839 in Internet Retailer’s 2013 Second 500 Guide, because of its unique product offerings and its strong emphasis on customer service. Paying strong attention to detail has earned an “excellent” rating from customer service analysis firm Stella Service.
Minimus is one of many niche retailers in the Second 500 finding and developing new market segments, several of which have shown strong growth in sales.
Another Second 500 retailer, TipsyElves.com (No. 987), a web-only merchant of “ugly” Christmas sweaters and accessories, started in 2011 with little more than an idea to serve a small, but noticeable, group of shoppers looking for a specific item. Co-founders Evan Mendelsohn and Nick Morton saw the re-emergence of a niche market first hand as they attended several “ugly Christmas sweater” parties every holiday season during and after college. In its first year, TipsyElves’ sales totaled about $370,000 and grew by more than 130% in 2012 to almost $900,000, with nearly 80% of those yearly web sales coming in December alone.
Mendelsohn says that the company has plans to expand its product offerings, and has launched two other “ironic fashion” e-commerce brands—Extreme80s.com and FannyPackAttack.com—but will never lose sight of its primary niche market.
The common thread linking these two Second 500 companies is the fact that neither started with major funding, a large staff, or the intention to serve a broad e-commerce market. Both merchants simply identified a small market segment that needed to be better represented online, started an e-commerce site, and since launching online have continued to grow their business. Other such Second 500 examples include light bulb retailer BulbAmerica.com, TV replacement parts merchant ShopJimmy.com, hybrid car parts and accessories seller JuicedHybrid.com, ATV parts and accessories dealer GearUp2Go.com, and Bluetooth headphones retailer JayBird.com. All of these niche merchants grew their sales by at least 89% in 2012.
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