Retailers shift their ad spending from TV, radio and print ads to digital ads.
Simms Fishing is a manufacturer and web-only retailer of angling supplies.
Based in sales-tax-free Montana, fishing products manufacturer Simms Fishing Products waded carefully into e-commerce waters last year so as not to rile its wholesale market of 450 specialty retailers. Even though it was not required to charge sales tax in any state, it decided to collect it from customers nationwide when it launched its first e-commerce site in December 2012. That way, Simms Fishing avoided undercutting its resellers’ prices on its own web site.
On the flip side, however, the retailer worried whether charging sales tax would deter consumers and thus sink its new venture into online retailing. “We had no idea what would happen when we came out with sales tax, if it would be like a nail in our coffin,” says Rich Hohne, manager of digital marketing. “But we wanted to remove any competitive advantage we might have against our specialty retailers.”
Indeed, Simms has also avoided free shipping offers in favor of “not very competitive shipping rates,” and it always charges consumers full price for products, Hohne adds.
Surprisingly, he says, Simms’ e-commerce sales have been far stronger than expected. Although the privately held company doesn’t report sales figures, first-year web sales “will dramatically beat our projections,” he says. “We’ve surpassed our sales goal by 75% so far this year, and project to double sales year next year” over 2013.
The new e-commerce sites don’t appear to be taking away from the company’s wholesale business, but instead are helping to build its brand by offering products that may not be available in stores, Hohne adds. “We can’t expect our retailers to carry the full extent of our product line,” he says. Simms will offer online about 19 sizes of fishing waders, while a retailer may offer only a few, he notes.
Simms deployed the first of three e-retail sites last December after considering e-commerce platforms on both the licensed and software-as-a-service, or SaaS, models. SaaS enables a retailer to rent Internet-hosted e-commerce software from a technology vendor without having to run the software on its own servers. But the retailer chose the licensed option, with the open-source Magento Enterprise platform from X.commerce Inc., a unit of eBay Inc.
Open-source technology lets developers access the software’s base code to make any modifications they need. The Magento Enterprise edition, which Simms deployed with the help of Lyons Consulting, starts at an annual fee of $15,550. Hohne says that feature of Magento allows Simms greater flexibility to customize its three sites, which serve its wholesale customers as well as consumers: SimmsDealers.com, for its specialty retailers; SimmsPro.com, for professional fishing guides and government agencies; and SimmsFishing.com, for consumers. Deploying all three e-commerce sites took about nine months, Hohne says.
Another advantage of Magento, Hohne says, is that clients also have access to software plug-ins from a broad community of developers. Simms, for example, uses a Drupal Commerce content management software application for managing the multiple pricing tiers it offers on its three e-commerce sites.
While deploying Magento, the retailer also launched Avatax sales tax collection software from Avalara Inc., enabling it to collect tax from the 45 states plus the District of Columbia with sales tax laws. The software also prepares records for filing state tax returns and for remitting tax revenue owed to each state. Avalara’s software starts at a few hundred dollars and scales up depending on a retailer’s number of transactions, Avalara says.
Magento and Avalara also connect to Simms’ Microsoft Navision back-end financial and inventory management software, which updates accounting and inventory records as orders are placed online or through one of Simms’ specialty retailers, Hohne says.