Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
The boat supplies retailer uses ChannelAdvisor’s automatic repricing tool.
Web sales for Northern Marine Electronics have at least doubled each year since its founding in 2008. But until this year, the online-only boating supplies retailer, which operates its own e-commerce site and sells on Amazon.com Inc. and eBay Inc.’s online marketplaces, hadn’t seen results anything like its sales growth on Amazon, which are up roughly 700% since the beginning of the year, the retailer says.
Northern Marine, No. 921 in the Internet Retailer Second 500 Guide, works with e-commerce services provider ChannelAdvisor Corp. to sell its products on eBay and Amazon, and ChannelAdvisor’s repricing tool has driven much of the growth on Amazon this year, say founders Christine Rutemiller and Thomas Morford.
Here’s how the repricer tool works. For each product the e-retailer sells on Amazon, Northern Marine analyzes its shipping costs, the price it paid the supplier for the product and the 15% cut that Amazon takes from each sale. Using that information, the couple tells ChannelAdvisor the minimum profit it will accept for each product. The vendor’s software then automatically scans the retailer’s Amazon product catalog and prices each item up or down so that Northern Marine is the lowest-priced supplier for each of its products. If other suppliers lower their prices below Northern Marine’s minimum acceptable profit margin, the tool stops lowering the retailer’s price and notifies Northern Marine that another retailer has priced a product below its minimum acceptable price.
“Over the last two years we’ve been growing on Amazon by adding products and tuning into what shoppers are buying,” Morford says. “But with the addition of the repricer, we noticed a big boost in sales. A lot of times it’s only a few pennies that make the difference in winning the Buy box.” The Buy box refers to the space where Amazon features marketplace sellers with the best prices for each product.
A focus on its marketplace strategy has been key for Northern Marine, as roughly 86% of its total sales are from eBay and Amazon (of those sales, 28% are from Amazon and 72% are from eBay). In the coming months and years, Northern Marine is aiming to build up sales on its e-commerce site, where the retailer can have complete control over the entire buying experience, say Morford and Rutemiller.
Part of that effort includes working with ChannelAdvisor to boost its paid and inventory-driven search ads. Inventory-driven search ties a paid ad on Google to a SKU number, and includes a check of whether that item is in stock. So if a shopper is searching for a particular SKU or item name that Northern Marine offers has included in its inventory-driven search program, an ad will appear in Google Search results saying something like, “We have your SKU in stock and 10,000 more like it.”
In addition to working with ChannelAdvisor on paid search and marketplace strategy, Northern Marine also uses its shopping cart and web store technology, which is built on an ASP.net platform. The e-retailer paid ChannelAdvisor an initial set-up fee of about $4,000 to have its inventory uploaded into its system, Morford says. It also pays ChannelAdvisor a flat fee monthly of $650 for use of the software, plus around 1% or lower of its total sales, Morford says.
The pricing structure was agreed to in 2007, so it's possible charges have gone up since, he adds. ChannelAdvisor would not disclose specific pricing details, and says contracts are negotiated on a case-by-case basis.
Northern Marine brought in $2.4 million in sales in 2011, up 172% over 2010.