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Profile: eCommerce Owner on Benefits of Niche Retailing

Profile: eCommerce Owner on Benefits of Niche Retailing

Many ecommerce merchants occupy niches within an overall industry. Spotlight Retail is one of these merchants, but in Spotlight’s case, it occupies 20 individual niches around one corporate umbrella. The entrepreneur behind Spotlight Retail is John Montague, the organization’s owner and daily manager. We recently spoke with Montague about his organization and about the merits of market selling.

PeC: Spotlight Retail focuses on several different niche ecommerce websites. How many different sites do you function?

Montague: We now operate 20 specialty ecommerce websites that are finished and launched. We’ve got about five more in development. Our more long-term aim, or at least in the following year, would be to hit about 50 websites at the end of 2009.

PeC: You have chosen to operate unique websites versus, say, Amazon.com, which has many products under one website. Tell us why you picked the market site route versus one, larger site.

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Montague: we attempt to appeal the very nature and heart of Internet searching. Everything is extremely keyword unique and if you only think of Google’s home page for example, it is really nothing more than just a logo and a text area. So, we attempt to produce sites around that particular idea and that’s shown to be quite beneficial for us for all the obvious reasons and even occasionally the not-so-obvious explanations. As an example, it is easier in the long term to reach a greater organic placement. When you consider the various search engines, it is really simply merely to create the most relevant search results for the end consumer and there is not likely to be an ecommerce website that’s likely to be relevant for that particular search query than ecommerce website specializing in that specific niche.

So, breaking up everything into separate websites, we look at it from various angles, but certainly in the natural side of things, it certainly helps and although organic positioning takes some time, we feel like we will be better positioned as we develop and populate through the Internet than a bigger mall-type site like Amazon. In the [pay per] click side of things, this is again in a specific market, we believe it pops from the page and stands out to the searchers when matched up against other advertisers. When you consider it, you could basically trump a enormous retailer who spent fortunes through the past few years in branding themselves by simply isolating your goods into a niche-specific site, making yourself seem more like the authority on the product compared to this enormous retailer.

When you discuss Amazon.com, I suggest these are websites which have a SKU count in the seven, or even eight, figures. These sites become increasingly impossible we believe to browse and provide very little specialization in a specific category. I’d probably say just along those same lines, I guess the only shortcoming we’d have with our kind of business model is that we certainly do not cast a very broad net. We do not appeal to a large portion of Internet searchers since our sites are so special. However, once we do catch a lead and all of the prospects that do get caught in that web are very, very highly qualified since they know just what they want and they click on our website. So, after doing lots of analysis on the end of things, we feel that we’d sooner have 100 highly qualified leads that lead to our website than 100,000 generic unqualified and even randomly generated prospects.

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PeC: Tell us a little bit about your own background. How did you become involved with ecommerce? When did you start Spotlight Retail?

Montague: I graduated from Fordham University in New York, moved down to Florida… to work for a hotel business in the hospitality sector, which was tremendously valuable to me in the ecommerce world due to how careful they are to customer support. While still working with this hotel business, I developed the initial site selling water sports equipment. It was 100 percent a part-time, garage design operation at the point and then 1 thing immediately led to another.

We started adding an increasing number of products to that 1 site and this is where we chose to expand and have a little bit more vision in the business moving forward into the future and that is where we developed Spotlight Retail. A whole lot of the relationships we developed early on opened up more and more doors with goods which are entirely irrelevant to the water sports group. That is when we actually even back then saw the value of providing simplified niche-specific ecommerce websites. So, again, we incorporated the Spotlight Retail title and we started branching off into individual websites, but it all started a long time ago with only 1 water sports site.

PeC: What was that?

Montague: The water sports website premiered in the summer of 2003.

PeC: Your growth is wonderful. You mentioned that you run now 20 distinct sites, niche websites, with more inclined to come. About how many products do you run across those 20 distinct sites?

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Montague: Total individual SKUs between most of the websites are most likely close to 10,000 at this stage and each website is different. That is the collective sum of all of the websites, but we have websites with less than 50 SKUs and we have websites with several thousand SKUs. I believed it is not really a matter of SKU count. I mean you find a good deal of different e-tailers out there simply throwing as much as they could at the wall and see what sticks.

I think there is a real loss of quality there that is unfortunate. Although more SKUs I guess lead to more traces in the water which could potentially lead to earnings, there is a real fine line there to cross between putting together a high quality site and correctly representing these SKUs and only mass uploading anything you can, but you can and hoping for the best. We do not worry too much on our SKU count, but I think at this point we are likely right around 10,000.

PeC: With all those SKUs and with each the sites, you have to have given a fair amount of thought to the platform which you are operating on, to assist with the backend logistical issues of your company.

Montague: The cart itself is named Product Cart and it is published by Early effects. We did months and weeks of study in assessing which solution was likely to be the best fit. Now, we might have spent a tremendous sum of money in the seven figures, millions of dollars, to have a customized solution put together for us and then we just started looking at the pre-packaged solutions available in the marketplace and it was not long after finding Product Cart we understood that, one, it pretty much served as a complete substitute to having to cover that sort of money for a customized solution and two, the backend tools that it provides far outperformed any other solution that we had researched on the way. So, Product Cart is your shopping cart applications that we use. As I said before, the logistics of our business model is slightly harder, but with having all our sites operate on the same platform, they could very easily speak to one another and we have managed to centralize all our back-end processes.

PeC: Talking of logistics, do you meet everything yourself?

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Montague: We are likely right now on a 70/30 split. We stock about 70 percent of our sales and we drop-ship roughly 30%. Much of the drop ship, however, is re-drop-shipped with vendors that we really inventory products out of and it might just be at the given time or from inventory, so we have it shipped directly from the manufacturer. An overwhelming majority of our shipments come directly from our warehouse.

PeC: Have you got some advice for smaller retailers?

Montague: I believe there are definitely a few undeniable elements that enable an ecommerce merchant to flourish and succeed or sadly to die of a fast death. In my view, customer service is definitely number one and not too far behind it would be cost controlling. Those are the two top things I would recommend ecommerce merchant business owners to actually be in the forefront of the efforts. With respect to client service, in the end of the day, the one thing you’ve left is the word and the customer service that you are able to supply. I have seen a lot of these e-tailers come and go across the way and I am shocked at how business owners let this aspect of the business to slide away.

From the cost commanding side of things, I think it’s probably among the greatest common denominator that puts people out of business also. I mean you will need to be constantly aware of your operating expenses at all times. You’ve got to comprehend the meters which are continuously running and you need to know about every single one of these. Therefore, it’s actually controlling those costs because they add up very, very fast.

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