A company’s most important asset is its customers.  They are extremely expensive to acquire, but keeping them happy is incrementally inexpensive.  Happy customers buy more product and stay in programs longer.  They are more responsive, and potentially purchase large multiples of product, or higher margin deluxe versions.  They are your best advocates.  What is the lifetime value of a happy advocate?

My first job after university was as a program manager at The Danbury Mint (MBI) overseeing various collectibles (dolls, plates, ornaments, die-cast cars, etc).  Most programs were sold as a one-shot, then converted in-shipment (and through follow-up mailings) to the rest of the series (typically a collection of either 4, 8 or 12 items).  The customer acquisition cost often exceeded 50% of the retail price, and on larger series could be 200%.  If a customer only bought the lead item, the amount of profitable marketing available was minimal.  Through conversions to the rest of the collection, the average customer purchased 2.2 to 2.7 products in a four-item program.  This additional margin allowed us to mail deeper inside, as well as, more outside lists.  Since lead customers were so expensive to acquire, it was vital that we treated them like gold.  It was essential that products shipped quickly, with packaging that would enhance the customer experience.  This was a fantastic educational experience on the lifetime value of a customer.

Direct Response is a fantastic medium that can ramp-up quickly and effectively in a test-expand approach.  Unfortunately, too many marketers focus only on the short term, with a one and done mentality; they often ignore the longer-term value of customers at the expense of immediate profits.  Think more from your customer’s perspective.  Have diligent inventory management so that shipments are never delayed and make sure to regularly ship product to yourself.  How does the product arrive?  Are the proper additional offers enclosed in package?  Is the unboxing experience impressive to your customer?  Is he incentivized to reorder?  Is she incentivized to tell a friend?

Treating the customer well may be slightly more expensive today, but invaluable for tomorrow.

Amazon has been a fantastic deflationary source for consumers, however it is also constantly squeezing seller margins.  Fees, as a percentage of Gross Selling Price, have increased every year since 2009. In 2009, Amazon fees totaled less than 20% of the gross selling price for most third-party sellers.  Now, nearly 10 years later, Amazon fees have risen to nearly 35%.  Since most third-party sellers are unable to increase prices to offset the majority of these fees, margins are constantly under pressure.

Sellers can combat some of the increasing Amazon fees by more effectively managing their inventory to reduce monthly and long-term storage.  Sellers can also redesign certain products to reduce weight and optimize shipping expenses.  However, sellers ultimately have no choice, but to accept the Amazon fee increases.  The margin squeeze has caused valuation multiples of Amazon only businesses to drop significantly over the last several years, especially sellers of staple white-label items.

Several years ago, sellers could offer white-label products, optimize their listings and enjoy year-over-year growth due to the increasing Amazon audience.  However, Amazon is directly capturing an ever-increasing share of white-label products (from batteries and charging cables, to bedding, luggage, and recently small appliances and apparel).  Amazon only had a minor share (or even zero share) of these markets a few years ago, but will control the vast majority of each within the next couple of years.

The speed of this transition is rarely talked about, but will make an amazing case-study in the future, as Amazon is capturing, virtually, entire category after category.  Differentiated, proprietary products were beneficial for third-party sellers in the past, but now they are an absolute must to thrive on the Amazon platform.

Update:  The New York Times published an detailed article today (July 23, 2018) on Amazon capturing increasing market share of white-label products.  How Amazon Is Winning the Online Retail Game. Again.  A few snippets below:

The results were stunning. In just a few years, AmazonBasics had grabbed nearly a third of the online market for batteries, outselling both Energizer and Duracell on its site.

The company now has roughly 100 private-label brands for sale on its huge online marketplace, of which more than five dozen have been introduced in the past year alone. But few of those are sold under the Amazon brand. Instead, they have been given a variety of anodyne, disposable names like Spotted Zebra (kids’ clothes), Good Brief (men’s underwear), Wag (dog food) and Rivet (home furnishings). Want to buy a stylish but affordable cap-sleeve dress? A flared version from Lark & Ro ($39), maybe in millennial pink, might be just what you’re looking for.

Amazon is utilizing its knowledge of its powerful marketplace machine — from optimizing word-search algorithms to analyzing competitors’ sales data to using its customer-review networks — to steer shoppers toward its in-house brands and away from its competitors, analysts say.

#Amazon  #DirecttoConsumer  #Private-label  # AmazonThirdParty  #AmazonSqueeze

 

View story at Medium.com

Invisible Influence: The Hidden Forces That Shape Behavior, is is another well-written, fun read by Johan Berger.  We underestimate the social influence of others on ourselves, yet we acknowledge its influence on others.  Through various research studies and quirky experiments, the book discusses how everything around us influences how we act, even if we don’t realize the impact.  Invisible Influence discusses how people imitate each other, as its safer to choose what has already been chosen by someone else, and this popularity can be self-fulling.  That restaurant must be good since its always crowded.  (This lasts until its oversaturated and eventually falls into the Yogism: Nobody goes there anymore, its too crowded).  Invisible Influence is an excellent companion to his bestseller Contagious: Why Things Catch On published in 2013.

Invisible Influence also touches on how successful products are often ‘similar but different’ than prior successful items.  This matches a personal mantra of offering customers more of what they are already buying.  If a customer is making a purchase they obviously like the item, therefore the next questions should be:  Do they want multiples of the item, Do they want the item in a different color (or format), Would they like a deluxe (or miniature) version of the item, Do they want complimentary/symbiotic items?  When we introduced Obama Coins years back, the original item was $10, but through offering additional strong similar and complementary items, we were able to raise the revenue per order to $66.

Below is a short animated introductory video to Invisible Influence:

Previously many established third-party sellers profited significantly from Lightning Deals and Hot Deals in the past as Amazon did not charge for the promotions until the summer 2016.  The number of promotions was limited and only available to established sellers. However, in August 2016, Amazon changed its policy, opening the promotions to virtually all sellers and charging a fee per promotion.  The effectiveness of Lightning Deals and Hot Deals has dropped notably since due to considerable decreases in revenue achieved per deal, as well as the increase in the variety of products offered.

Prior to the policy change, it was not unusual for a promotion to achieve in excess of $5,000 in sales.  However, a study of 580 deals run in the 1st half of 2017, showed an average of less than $500 in sales per promotion.

Tenth Successful Transaction Sourced by Little White Dog inc for SCS Direct Inc in the Past Four Years

Little White Dog inc is honored to announce the addition of Cooks Choice to SCS Direct’s Housewares portfolio.  Cooks Choice, creator of numerous innovative products for grilling and home cooking, should be strong fit in SCS Direct’s growing housewares brands.  SCS looks forward to continuing the longstanding relationships Cooks Choice has developed since its founding in 26 years ago.

Little White Dog is proud to have worked with SCS Direct on its acquisitions of Cook’s Choice, Bentology, Kuissential, CucinaPro, SVAN, MD Essentials, Fasta Pasta, Itzbeen Innovated, Camerons Products and FlyeBaby.  Little White Dog continues to search for additional strategic partners with proprietary, quality products and strong retail distribution that can enhance SCS Direct’s platform.

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It is truly amazing how much we take for granted.  In January, I visited Guatemala with my wife, Emilia.  Guatemala, her home country is beautiful and the nature is amazing.  People often do not have a lot but, they are genuinely happy, appreciative, and creative.  Whenever she visits, she brings a couple of suitcases full of clothes and toys to distribute (always coming back with just a carry-on).  In January, we brought a few suitcases of clothes and toys.  We even filled a piñata with toys for kids.  The joy the kids showed when receiving the small toys was amazing, but the happiness we received watching them was priceless and unforgettable.

During the trip we met two boys who had made a creative banjo, simply by cutting a piece of wood, and wrapping guitar strings around a crush soda can.  Their creativity was impressive and inspiring.  We wanted to bring more toys and supplies to Guatemala, and thanks to SCS Direct Inc, we were recently able to accomplish this.  When I told the stories about Guatemala to Howard Greenspan at SCS, he asked if we wanted to go to SCS’s warehouse to go through product returns and take whatever we wanted.  We found toys, baby supplies, and all sorts of products that we packed onto a pallet.  Thanks to SCS’s generosity, there probably was about $10,000 in products.  We repacked all of the toys and other products into about a half dozen blue plastic containers and arranged for their shipment to Guatemala.  In October, Emilia went to Guatemala and distributed the toys and other items.  Everyone was extremely appreciative and everything will be used to its fullest.  Some of the teachers are even using the Hatch-em eggs as weekly prizes for kids who do well in school.

We were even able to get Ukuleles for the boys who made the creative banjo.

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Seventh Successful Transaction Sourced by Little White Dog inc for SCS Direct Inc in the Past Two and a Half Years

SCS Direct Inc. Increases Housewares Portfolio With the Purchase of Kuissential

Connecticut Company Acquires Specialty Kitchen and Coffee Housewares Brand

TRUMBULL, CT–(Marketwired – March 01, 2016) –  SCS Direct Inc., a consumer products company based in Trumbull, CT has recently announced the purchase of Miami-based, specialty housewares company Kuissential.

Established in 2011, Kuissential is known for offering high quality and innovative coffee products and kitchenware at a reasonable price. The brand’s unparalleled customer service, through direct, open dialogue with consumers continue to attract a loyal customer base.

In 2015, Kuissential created a successful Kickstarter campaign to raise funds for the production of a patented manual coffee grinder known as the EvenGrind 2.0. This new manual burr grinder is designed to yield a much more consistent coffee grind size at a fraction of the price of electric conical burr grinders. The Kuissential line also includes specialty kitchenware and coffee gadgets such as Milk Frothers, Coffee Drippers, French Presses, Juice Extractors and Bread Machines.

Howard Greenspan, President of SCS Direct Inc. stated, “I was attracted to the business because of its superior product line and how they perfectly complement our existing housewares portfolio. SCS Direct plans to further the brand’s mission of exemplary customer experience and integrate into the continuously evolving market of coffee consumers.”

Greenspan’s plans for Kuissential include furthering the functionality and enhancing the look of the EvenGrind 2.0 prior to its launch; upgrading product packaging of the entire line; enhancing brand awareness and offering this formerly “internet-only” product line to national retailers in order to expand to a mass consumer base.

The former owners of Kuisssential, Alex Cacciamani and Andres Fernandez commented on the sale:

“SCS Direct understands Kuissential’s vision and commitment to customer satisfaction. We feel they are the perfect team to grow the Kuissential brand to the next level,” said Alex Cacciamani.

Andres Fernandez added, “I’m very proud about what we were able to accomplish with Kuissential and grateful for all the help received along the way. While it was a difficult decision to move on to new projects, we know we found a perfect new home for Kuissential with SCS Direct.”

SCS Direct’s arsenal of housewares products are growing rapidly. In addition to Kuissential, the company owns several best-selling houseware brands such as Camerons Products, CucinaPro, Good Cooking, D’Eco, Fasta Pasta and Simple Cups.

The Kuissential transaction was sourced and negotiated by Little White Dog Inc. based in Norwalk, CT. Kuissential is SCS Direct’s seventh successful transaction in the past two and a half years, including CucinaPro, Camerons Products, Fasta Pasta, MD Moms, Svan and Itzbeen Innovated. Little White Dog continues to search for additional strategic partners with proprietary, quality products and strong retail distribution that can enhance SCS Direct’s platform.

Link to Press Release:

http://finance.yahoo.com/news/scs-direct-inc-increases-housewares-110000809.html

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