By Steve Rowen, Partner
1/8/2008
The dust has settled on Holiday 2007 sales. And by all accounts, the year proved to fulfill predictions that e-commerce would hit record percentage of holiday sales (PR Newswire puts the total at 29.2 Billion, up 19 percent from just last year). But what can we learn for the New Year?
We took the opportunity to interview Ty Simpson, President and Founder of TysToyBox.com, to help identify and confirm what some of the hot trends for e-commerce 2008 will be. Ty’s only sells licensed products, and is the official store for many of the brands it sells. Eighteen months ago, Ty’s had 20 brands, and is currently at 108. The company well exceeded its own sales expectations for November and December.
Look for More Outsourcing
The first thing Ty shared with us is how fewer small and mid-size retailers really desire to be handling their own e-commerce activity. “People don’t want to build their own websites anymore. A retailer may build a beautiful website with brilliant architecture and navigation, but what about marketing? What about customer service? These things take tremendous effort, and tremendous know-how. You want someone who understands your business, not a technologist, running your website. We’re talking about a fully outsourced model.”
Ty’s has also formed a partnership with New York-based vendor CommerceHub to connect retailer and manufacturer together in a drop-ship method. “We can’t increase our SKU count while still bringing in so many CDs, DVDs and costumes, which is why we want to drop ship more of the commodity items we sell.”
Look for More On-Demand Products
Simpson tells us, “Surprisingly, we sell more apparel than we do toys and games.” He continues, “Apparel is easiest to source, and we’ve piloted multiple on-demand products in the apparel category.” Simpson points out that because the brands he is selling are under existing license, Ty’s on-demand service is quite different than those of such sites as Zazzle.com, where users can design anything they wish. However, “Newer brands, as opposed to established licenses such as Star Wars or Spongebob, are quite open to providing on-demand functionality within set parameters. As a result, we try to create a transparent experience for the customer, where the customer doesn’t actually ‘create’ a shirt or hoodie sweatshirt design, but rather purchase one we’ve put together for them. The Doodlebops characters are one line we’ve been piloting this option with, and it’s been quite successful.”
Another trend he sees for 2008 e-commerce falls directly in line with RSR’s belief that retailers simply cannot differentiate themselves by offering bland, commoditized products. “At this point, manufacturers are only serving the mass market. And while, in the past, we found ourselves buying things for the mass market, all of the products we’ve sold over the past years – CDs, DVDs, and costumes – they’ve all been commodities. So we’ve offered them, and they’ve sold well, but we never sank a lot of money into it.
Instead, Simpson points to one of the most exciting trends to meet public demand with unique, interesting products. “We’ve put all of our money into Private Label Merchandising.”
The Big One: PLM Will Dominate
He explains, “There is so much low hanging fruit for products that people are going online to find. First, products that used to be on the shelf – such as Barney products - these can’t get shelf space any more. But they still sell. So we’re seeing success with brands that can’t sell in mass retail, but also ones that can are simply too new or cutting edge for mass markets. And that’s where PLM holds such tremendous opportunity.
Such goods include products from The Wiggles and The Doodlebops, while Simpson is also branching out into older fans’ merchandise, including the red-hot Hannah Montana and High School Musical lines. “The demand for skus of niche products simply outnumbers brick-and-mortar retailer’s physical limitations. So while customers may be able to find the Hannah Montana comforter set they desire at the store, they then purchase the matching pillows they can’t find through us.”
What do you think?
Editor’s Note: Please keep an eye out this quarter, as RSR will release both its Multi-Channel Retailer and Private Label Merchandise reports.
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