February 2008
Table of Contents
Featured Interview: Wes Lapioli - Doba Merchandising Account ManagerInterview By Jake Sabey - Education Specialist Instead of a featured article this month, I decided to interview Doba employee Wes Lapioli. Who is Wes Lapioli, and how would an interview with him benefit you? Wes is an important communication source between online retailers and Doba. I feel his experience, role, and methods discussed in this interview could assist in the progress of your online retail business. I usually record my interviews to use as a reference to go back to. The interviews I record are very informal and not usually accesible to the readers; however, I though it might be beneficial (and fun) to share the recorded interview as well as a summarized-written version. To listen to the full recorded interview with Wes Lapioli, click here. Thank you for taking the time to read and/or listen, and a special thanks goes out to Wes for letting me pick his brain. Enjoy!
Wes Lapioli - Doba Merchandising Account Manager As Doba's Mechandising Account Manager and an eBay Certified Consultant, Wes Lapioli is a vital communication source between onilne retailers and Doba. Before coming to Doba, Wes worked in the Search Engine Optimization (SEO) field as a coach and account manager. He has experience in giving web site consultations, building landing pages, managing pay per click campaigns, and writing press releases and other content. In his spare time Wes enjoys being with his family, playing the guitar, writing music, building web sites, and making flash based cartoons. With that said, lets get to know Wes a little bit more. Jake Sabey: Your title is Merchandising Account Manager, what exactly do you do as a Merchandising Account Manager? Wes Lapioli: The role of merchandising account manager varies in responsibilities. Business development is probably the easiest way to explain it. I work with certain groups of retailers to handle their day to day merchandising matters with Doba. I am the liaison between certain retailer groups and Doba’s marketplace department. I also stay on top of ecommerce trends to share proven merchandising strategies, techniques, and specials with retailers to increase their sales and profits. JS: Through communicating with different retailers, what type of concerns surface and how do you address them? WL: The concerns of Doba members are dependant on where they are in their respective businesses. Someone who is just starting out is usually concerned about selecting good products, price, where to sell, and making a profit. All of these are addressed by Doba through the many articles and resources designed to help people get started. My word of advice on all of these concerns would be to treat everything you do like a business. Doba is a business investment with less inherent risk than other methods of getting inventory. Doba can be one of the most vital components to success for a retailer, but it is entirely dependant on the work you put in to it. The more you act like a professional business the better chances you will have of being successful. WL: The concerns of higher level retailers (usually those who own their own ecommerce sites) are very different from start up businesses selling on Ebay. Their number one question is – How can I effectively get your product data to integrate with my web site? Currently the most effective way to do this is by using our data export tool. Doba’s catalog allows you to filter by price, category, brand, supplier, and other inventory options. Once you have applied the filters you can save the search and export the product data. JS: Through your experience, what kind of advice would you give the retailers you deal with? WL: I believe Doba is a revolutionary platform that has incredible value to internet retailers whether they are just starting up or they are just looking to expand their existing inventory a little. All businesses have their ups and downs, and if most people will push through the rough times and learn from their failures they can end up seeing marvelous results. Again I think the trick is treating everything you do with Doba as a business. JS: Looking ahead, what types of goals do you have to improve the individual retailer’s business as well as improving Doba. WL: (summarized list from interview)
If you would like to hear more of Wes's insights, click here to listen to the recorded version. Here are some articles that will provide more information to the topics discussed during this interview:
For additional reference material on other business related subjects, search the Doba Knowledgebase and stay tuned for future issues of the Doba eNewsletter and Elite Seller Report. About the Interviewer:
Jake Sabey is an eBay Certified Consultant and an Education Specialist for Doba. Jake's educational strategies and methodologies help online retailers meet and exceed their business-related goals. Prior to working for Doba, Jake was a team leader, supervisor, and trainer for Toys R Us, Sinclair Oil, SBC, and AT&T. Partner Highlight
Logoworks Marketplace Spotlight: Virtual Inventory Versus Owned InventoryBy Jeff Knight, Vice President of Marketplace Whether or not to carry inventory as a strategy seems like a fairly simple question but can be tough to answer in practice. For this month's article, I wanted to explore the topic and explain why it's not always as simple as we initially think. For our purposes, I will refer to products the retailer owns prior to the consumer sale as "core" inventory and products that are ordered from suppliers after the consumer orders as "virtual" (or "drop ship") inventory. Risk vs Reward On the simplest level, "core" inventory consist of products the retailer purchases, has shipped to a location, and uses to fulfill consumer orders directly. Core inventory can represent a significant financial risk to the retailer because, obviously, if the inventory does not sell or must be sold for less then the retailer paid, then the retailer loses money. However, along with the greater risk, the retailer has potential for higher profit margins on the transactions assuming that they were able to negotiate better pricing for the quantity. Carrying physical inventory can also give the retailer more control over various aspects of the business such as how quickly orders are shipping, how products are packaged, what shipping carrier is used, what inserts are included in the packaging, and more. As for "virtual inventory", it refers to products the retailer doesn't not have in their physical possession. Typically the retailer displays the products via a website (or catalog), the consumer places an order with the retailer and the retailer in turn, places an order with the supplier who fulfills the order directly to the retailer's consumer. The retailer assumes less risk for the actual product costs because they aren't placing an order with the supplier until they have received an order. Does this eliminate all risk? No, the retailer can still face fraud, disputed transactions, carrier damages, or lost packages, to name just a few; however, by following good business practices and partnering with reputable suppliers, the headaches can be managed. For the reward portion of the equation, the retailer generally accepts a less negotiated wholesale price and associated costs, but they also keep their cash free to work on other aspects of their business while still making margin on the sale. In a nutshell, the more risk you are willing to take, the more potential reward you can reap or vice versa. Nearly all of today's most successfull retailers accept varying degrees of core inventory risk and balance it with virtual inventory. In other words, they have a mixed inventory models. Retailer Lifecycle For the retailer just dabbling with their first eBay listing, the concern may be simply finding products they want to sell. The risk of buying products in bulk is completely unreasonable. This "start-up" retailer has many aspects of their business strategy to work through (including sourcing), and to take on risk without some market visibility/intelligence is an unnecessary risk. Drop shipping for the retailer starting out is as much a research process as it is a means to making margin. Ideally, both goals are accomplished, but even if you do not sell a single item, at least you didn't have to buy a pallet of products to find out that they wouldn't sell. On the other side of the spectrum, a big box store buys in huge volumes and is able to maximize their return based largely minimizing their costs. However, you would be hard-pressed to find a big-box retailer who depends solely on inventory found in their warehouses. All of them use various forms of drop shipping, consignment and custom orders to hedge their risk and offer greater choice to the consumer. Understandably, a big box chain and the eBay seller are in different places in their retail evolution and have different thresholds of risk; however, as small retailers grow their business, it often makes sense to evolve from a pure drop-ship (virtual inventory) model to using a mixed model. Smart Strategies Recently, Jeremy Hanks (Doba founder) and I were at the Las Vegas World Market speaking with retailers. Two of the retailers we spoke with have been extremely successful and even find themselves in the Internet Retailer Top 500. Both described their inventory strategies as "100% drop-ship" and neither has a physical warehouse; however, as we talked more it became apparent that they both still employed element of a "core" inventory strategy. In one case, the retailer capitalized on highly specialized custom orders combined with "white glove" delivery and installation. In other words, the retailer places orders with a manufacturer for custom-manufactured goods that they are completely obligated to purchase, even if the transaction goes bad. In some cases, they have to pre-pay a portion of the order but are not able to collect the complete payment from their consumer for several weeks until the furniture has been delivered. Their average sales price is around $2000. It wouldn't take very many bad transactions to find your business in a precarious position at that price. However, the retailer is making a calculated risk--they have intelligently targeted a consumer who is highly committed to the sale and the margin potential is very high. When, however, the same buyer wishes to purchase a lamp and a wall hanging to go with the custom made furniture, the retailer relies solely on more traditional drop shipping. The other retailer leveraged their buying power while still being 100% drop-ship. By taking a calculated risk based on their projected sales for a particular item, they negotiate a better price and make a contractual commitment to the product. This is how it works: The retailer estimates the number of a products they will sell based upon their previous sales (i.e. last month), combined with seasonality (spring = home buying trends) and compare it against their traffic (i.e. they have advertising running on yahoo shopping) and they make a commitment to sell "X" number of units from the supplier in a given period. In turn, the manufacturer gives the retailer a better price and exclusivity to the product, knowing that the retailer is financially and contractually committed. The items are still shipped out individually from the supplier to the consumer and are still considered "drop shipped." Both retailers have creatively found ways to maximize their drop-ship models by infusing some of the risks of carrying "core" inventory. While not all retailers may be at the exact stages where these specific strategies make sense, the examples illustrate creative solutions of intelligently managing the risk ratio of inventory. Similarly, every retailer should be looking for ways to maximize return--whether you physically ship the products or not. Every product, category, and brand is slightly different. As a retailer, you need to be looking for ways to take calculated risks. At times this means buying bulk and shipping out of your basement. Other times it will mean leveraging rebates and incentives for your traditionally drop-shipped sales. Remember, there are no "freebies" and there is always a cost involved in reselling the goods. Retailers who expand beyond simple product cost calculations and zero-risk mentality find themselves in a better position to be successful long term. About the Author:
As the Vice President of Marketplace, Jeff Knight is responsible for all aspects of the merchandising strategy, supplier acquisition, and vertical category management and fulfillment operations of Doba's marketplace. Prior to Doba, Jeff was Director of Merchandising for Overstock.com where he developed the growth and management of the Computer and Home Office category. Jeff's background includes merchandising and technology leadership roles at DealDeal.com and BCI International. He earned Bachelor and Masters of Arts degrees in Communication from the University of Wyoming. Partner Highlight
e-onlinedata Member Q&A: "I heard eBay made some changes. How do they affect me?"Bill Cobb, President of eBay North America, announced some important changes that will significantly affect both buyers and sellers using their marketplace. Here are some of the changes that were announced earlier this week: Pricing Incentives for Sellers Feedback
Sellers Standards For a more in-depth look on the recent eBay changes, look for a featured article in the upcoming February issue of the Doba Elite Seller Report. We Want to Hear from You! Want to see your question featured in the eNewsletter Member Q&A? Well we want to hear from you! Please email education@doba.com if you have any non-account related questions or topics you would like us to write about. If you have questions concerning your Doba account, such as billing, product or order questions, please search our knowledgebase site content or contact our Customer Support. Partner Highlight
eBay
Stores Supplier Information: New Suppliers Added to the Doba Product CatalogStarting an online business is relatively easy. Making it a success takes hard work and the right mix of products. To help you achieve your business-related goals, we recently added 4 new wholesale suppliers and manufacturers to the Doba Catalog (bringing the total number of Doba suppliers to 221), including: Dali - Manufacture of, one-of-a-kind, true Mongolian rugs. Jackson - Manufacture and distributor of porcelain, jade, bronze, leather, and lacquer table lamps, lampshades, and accessories. Turtle - Manufacture of consumer electronic casings, for an active lifestyle. Warhall - Distributor of Frazada blankets.
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