On July 24th, Exceed Network held another well attended and highly informative Boardroom Series event. From Wholesale To E-tail was hosted by Rafi Chemtob, founder and CEO of Blue Cherry Group, a premier digital marketing agency located in New York City. Topics included how to start and grow a ‘business to consumer’ marketing division, why adding this B2C component is so important, as well as what tools one needs to launch and sustain this integral part of a modern business.
Chemtob started by making the well known yet important point that all industries are moving digital, even the wholesale industry. “Consumers used to walk into a store and purchase a product. Not anymore. Everything is done online now. Physical location doesn’t mean much” said Chemtob. This leaves a lot of wholesalers, who typically operate from physical locations and through business to business connections, overwhelmed with the the challenges of creating a digital identity for their brand. To highlight the change in the market, Chemtob pointed out that in the 1980s and 1990s, there were roughly 300 retail businesses like Macy’s, TJ Maxx and other popular retailers with which wholesalers could do business. But through consolidation, mergers, and the power of online retail, by 2015 that number shrank to a scant 85 retailers with which to do business. “The number of retailers,” Chemtob assured the packed room, “will continue to decrease. This means it’s time to launch your own website, your own storefront on the internet.”
One of the main reasons for fewer retailers, Chemtob pointed out, is Amazon. “Their market share in almost all product categories has grown exponentially over the past twenty years. They are the dominant online player” said Chemtob, who then used this opportunity to ask how many people sell their products on Amazon. A few hands were raised. Then he asked how many people sell exclusively on Amazon. He was happy to see that nobody restricted themselves to just Amazon. “That’s great, because selling on Amazon isn’t selling online. It’s selling your product on a retail site called Amazon.” The difference is important. He explained that while Amazon may be a great bridge to going online, it comes with pros and cons. Some of the pros are quick profits, no back up facilities, no customer service and a small barrier to entry. Everything is taken care of by Amazon. The cons include the sobering fact that Amazon can shut down your business without warning at any moment. You have no guarantee of a relationship with Amazon and you have no control over your marketing or your product. “With Amazon, your destiny is not in your hands” said Chemtob. Another large problem with doing any business on Amazon is that you are “essentially competing with your factories. There are many cases where you see your factory selling your product at the price you bought it for. This is very bad. In short, Amazon is not a long term solution” said Chemtob.
Chemtob then gave overall context for online branding and marketing. For many years, brands had a ‘one way conversation’ with their consumers. They hired a marketing firm, crafted a message and sent it out into the world. Then, they hoped the consumers would like the message and buy their product. “In recent years, brands have changed how they market and brand by having a two way conversation” said Chemtob. “This is the new way to market, a two way conversation that engages the consumer. Victoria’s Secret and E.L.F, major brands, are known to put products on their Facebook pages and ask users to comment or vote on what they like. They use that feedback to produce the products their audience wants. The market is now one giant focus group and every company, no matter how small, must engage with their market.”
Chemtob then discussed the ‘social megaphone’ that is both new and very powerful. “The beauty of the social megaphone, sites like Facebook, Yelp, Youtube, Twitter, Instagram, is that it’s not that hard to be a sensation online anymore. Most brand influencers became influencers within the last two years. So too, building a brand online isn’t as difficult as it used to be.” To drive the point home about social media, Chemtob shared a staggering figure. Jetblue spends 90% of its marketing budget on social media alone. “Because that’s where the people are. Consumers are using social validity, in the form of reviews and opinions, to guide their purchases. As retailers, or e-tailers, we need to be directly involved in that process.” Chemtob went on to discuss brand influencers and how they can sway an audience toward a product, which increases sales. The equation, assured Chemtob, is simple. “If you have a quality product with positive reviews, you will see a spike in revenue. And, I know this is a bold claim, but I believe that any brand who does not interact with their consumers online will not be around in five years.”
Toward the end of the discussion Chemtob brought the conversation back to wholesalers, his audience. He said that many wholesalers don’t have the ability to ship ‘onezies’, or, one item per order, and that “it is key to be able to ship one product, to break up prepacks and to accept returns. You must be flexible these days. Consumers expect to be wowed. If you don’t wow your customers with free shipping, a quality product and a great price point, someone else will.” To show the importance of internet presence, Chemtob ended with something as simple as a brand name. “A brand name, no matter how great it sounds or how much you paid for the domain name, means nothing without good marketing and a strong online presence. You can’t treat online like it is not part of your core business anymore. Online is everything. Market engagement is everything. Without a strong marketing scheme, without customer engagement, no matter your business, wholesale or other, you will not succeed in the online e-tail space.”
To watch the full video of Rafi’s talk please click here.
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