Thursday, March 02, 2006

Online Retail Strategy

Strategy and Business has a great article this month on what works for online retailing and why. The synopsis that I gleaned from the article is to sell products that:

1 - Don't require large amounts of customer support.
2 - Don't require re-packaging for shipping (or one step better, can be shipped directly from the supplier to customer).
3 - Sell products with long product lifecycles.
4 - Sell products with a small number of SKU's.
5 - Sell products with low return rates.
6 - Sell products with predictable selling volumes

They roll these characteristics together into their term "cost to serve". Of course if selling was as simple as limiting your sales to products conforming to the list above everyone would be selling the same 10 products. Part of business is tackling the risk with one or more of those variables to turn a profit. We had a saying at one of my old companies (that serviced other businesses) whenever something was difficult to implement: "if it was easy to do, we wouldn't be hired to do it".

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