Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
Retailers can be competitive without giving away margins.
Web retailers can succeed in wobbly economic times by maintaining margins and managing operations carefully. The key is to avoid slashing prices—and profits— to beat the competition, Dave Redlich, CEO, of office supplies retailer ReStockIt.com told attendees last week at the Internet Retailer Conference & Exhibition 2011 in a session titled “Weathering the ups and downs of the new economy.”
“We control what we can control,” Redlich. The company’s value proposition is built on free shipping for about half of more than 200,000 products, a wide product selection and a 110% low price guarantee.
ReStockIt wants to “wow” its customers through those methods and has done so through four years of steady growth without sacrificing profits, Redlich said. “Watch the competition, but run your own race,” he said. “Margins keep the lights on.”
Despite ReStockIt’s low price guarantee, few customers take advantage of it. Just offering the guarantee helps keep customers coming back, Redlich said.
Part of succeeding in a tight economy is closely managing all aspects of a business, and for that e-retailers need a strong, accountable team. “’Move the deck chairs’ if you have to,” Redlich said. “If you do have to get rid of somebody, look inside and see if someone else can do that job.”
The web retailer also conducts what ReStockIt calls daily “huddles,” of about five minutes for staff to discuss the previous day’s sales numbers. Redlich also conducts weekly and monthly meetings, but the daily confabs can help spot trends and enable quick action.
To help supplement its workforce of 26, ReStockIt, No. 354 in the Internet Retailer Top 500 Guide, also hires paid interns every summer.
When money is tight retailers also can lean on manufacturer partners, to set or revise payment terms, to help with cash flow. Redlich recommends going back to product makers to seek better pricing on specific items to fit planned promotions or events.
ReStockIt devotes considerable resources to nurturing its human capital, and shares a certain level of company financials with them to keep them attuned to company goals and the progress toward them. Redlich urged attendees also to monitor their own health as managers and to convey the importance of—and concern with—employees’ health.