Niche marketers reap the benefits as online sales soar
Since 2002, when specialty retailer Shoes to Dye For launched online sales, it has become one of the top-ranking national retailers in this category. From a first-year revenue stream of less than $200,000, totaling 20 percent of the business, its Internet sales today top $700,000, or 70 percent of the total.
Shoes to Dye For is just one of many smaller niche market retailers cashing in on increased consumer confidence in shopping online. Since 2004, online merchants have gone from a minority of retailers to a majority, according to the Washington, D.C.-based National Retail Federation. Online sales have also bolstered many retailers’ holiday season revenues.Seventy-seven percent of online retailers indicated that their sales increased substantially in ‘04 on the Monday after Thanksgiving. Online sales retailers have been finding their "Cyber Monday" sales to be on the rise for the past several years, the NRF says. Despite concerns about consumer confidence, Cambridge-based Forrester Research Inc. reported that US online retail sales for the 2005 holiday season are expected to reach $18 billion, a 25 percent increase over 2004. At press time, results for the ‘05 season hadn’t been tallied, but if consumer polls taken before the holiday regarding how people planned to shop come to pass, results should be consistent with predictions, the NRF says.
Shoes to Dye For operates two separate online sites and has experienced exponential growth. Its revenues have increased by 30 percent annually as a result of online sales, says co-owner Ronald Davis.
He runs the company with his wife Lisa, and markets to two distinct, but related online markets. DyableShoestore.com sells bridal and evening shoes, tiaras, and evening accessories and second site Promshoe.com sells similar products to high school-aged shoppers.
This year, the company received the first-ever Massachusetts Retailers Association "Excellence in Retailing" award in the E-Commerce category.
The resistance to online shopping that existed three years ago is rapidly changing as customers embrace the concept, Davis says.
The greatest risk the business has encountered is in international trade, particularly in collections and credit card fraud. But the overall percentage of such sales are successful, making the sector "definitely worth considering."
There are also some niche-market benefits that aren’t as obvious. For example, because few weddings take place in the winter months in Massachusetts, business for Davis’s shop dropped to almost nothing during the cold season. But online, the company is now reaching national and international markets where weddings are in full swing in warmer climates. "Online opened up markets that wouldn’t be there for me as a New England-based company," Ron Davis says.
"The more specialized you are, the more [online] sales opportunity you are going to have," he says. Customers clicking into a niche business are searching for a company’s unique offerings, and those clicks are more likely to turn into sales. Contrarily, online selling of highly accessible but low-margin products such as cameras, TVs or electronics is likely not to be profitable.
Soon, retailers without some online capacity will have difficulties, says Davis. The web can help almost every business, whether just providing address and directions, or full e-commerce. People search for information differently now than they did a generation ago. "If people need an address of a phone number for example, they Google it." So even a basic informational web site is a good marketing tool for small retailers.
While large national sites such as Seattle, WA-based Amazon.com are doing tremendous business online, smaller niche operations are using their Web site as a marketing tool to drive interest to their product, says Bill Rennie, public affairs director for the Boston-based Massachusetts Retailers Association.
Customers expect to see some kind of online component where they can go and check out a retailer’s product line, he says. An online presence is a way small businesses can show off their offerings, incentivizing customers to visit the physical store — one of the main selling points of having a Web site, Rennie says.
Kim Ciottone can be reached at kciottone@wbjournal.com
WBJ Web Partners
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