6) Covering ALL Your Bases - the Double-Tier Product Line

 

 

 

Retail ecommerce customers expect instant gratification. In-house Extranet Supply Depot customers don't. In either store your first product tier is obviously Staple Goods. An Extranet Company Store can add the second tier product line - your organization's Custom Order Collection. Rejoice! This is where you can have great fun and success with minimal risk and no investment.

Retail ecommerce customers expect instant gratification. In-house Extranet customers don't. Extranet customers, being affiliated with your organization, are not entitled to immediate service if providing that service is inefficient or costly to the company. Instead, they just have to plan ahead. It is entirely proper for them to give you three or four weeks to deliver products that you don't keep in inventory - as long as you offer a great selection from which to choose. So your first product line tier, as always, is Staple Goods. The second is the Custom Order Collection - stuff that will take a few weeks to deliver. That's the one we're examining here.

Why Bother? - Here's why you need to create a Double Tier Inventory by adding a selection of Custom Order items to your Extranet Company Store & Supply Depot.

• Double-Tier Inventory allows you to offer a huge range of carefully selected options without bearing the cost of merchandise.

• Sooner or later units of your organization will need the unique items in the Custom Order Collection. (Just not often enough to justify keeping them in inventory.)

• If your Company Store doesn't supply these items, an outside vendor will.

Here are real world examples of the Custom Order Collection in action - including some you may have encountered yourself.

How To Do It - There are tens of thousands of great products that can be enormously - but infrequently - useful in your organization's marketing programs. This is where you can go well beyond tried and true Staple Goods - your Custom Order product line really needs to be a collection of unique items - probably several dozen. Remember to include items that range from the freebie price range to the upscale price range.

Partnership - Don't even consider establishing a Double-Tier Inventory Program unless you are in a solid relationship with an expert product sourcing and development agency. A really experienced agency can open all sorts of product doors for you - yet remain completely grounded in the principles of effective brand management. Working together, here are steps you will be taking.

The Cost Of Doing It - You'll offer a huge collection of approved products without having to invest in inventory. But graphic designer time and shopping cart management time will be involved. And there will be pre-production costs - screen charges and the like for prototypes. So expect a bit of direct and indirect cost to produce the Custom Order Collection. Done right - the Double-Tier Product Line avoids increasing your inventory cost while building a greatly increased product line, greatly increased market impact and greatly increased revenue.
You can expect members of your organization to give you three or four weeks to deliver products that you don't keep in inventory - as long as you offer a great selection from which to choose.

The Result Of Doing It - We know of one Company Store that sells about $1.5 million annually. It carries an inventory investment of approximately $80,000 which it bumps up a bit during peak seasons. A little more than half of annual revenue - about $800,000, comes from Custom Order Sales. That revenue required no prior merchandise cost - although there is an annual expense of less than $10,000 in samples and prototypes.

Most Extranet Company Stores can have similar results - proportionate to their size.

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Last Update: 07/16/04