IRCE: How ReStockIt.com is Growing in a Volatile Economy
Sporting impressive growth numbers — from just over $1.1 million in annual revenues in 2004 to projected revenues of $26.6 million this year — ReStockIt.com hasn't only weathered the storm of one of the most difficult economic environments in 80-plus years, it's thrived. What's its secret to success? Company CEO David Redlich addressed that question and more in a session he led yesterday at the Internet Retailer Conference & Exhibition in San Diego. Here's a recap of what Redlich had to say:
“Keep an eye on your competition, but you want to run your own race,” said Redlich. That means identifying differentiators between you and your competitors. For ReStockIt.com, those differentiators include a commitment to customer service — the retailer boasts a NetPromoter score of 74 — an auto-replenishment ordering tool from Order Groove and competitive pricing.
“You spend so much money on acquiring customers these days, you need to spend some time retaining them,” Redlich said in reference to ReStockIt.com's auto-replenishment tool.
While it's important to be competitive on pricing, there's no benefit in getting into a “pissing” contest with your competitors over price, Redlich said. “No one wins” in that scenario. “Margins keep the lights on, not revenue,” he added. Sell based on your value proposition. If your brand consistently appears within the top three rankings on Google for its primary keywords, you have the ability to charge a little more, Redlich said.
The Value of Diversity
Diversify the traffic to your e-commerce site via multiple channels — e.g., paid and organic search, affiliates, social media, mobile apps, etc. Doing so will enable your brand to be able to withstand a drop in traffic from one source without a significant impact to the company's bottom line. ReStockIt.com counts over 3.5 million unique visitors to its site annually from a multitude of sources, said Redlich.
Diversity isn't only important for web traffic but for your product line as well, Redlich said. ReStockIt.com offers over 200,000 products and that number is growing, with new categories such as restaurant supplies and cleaning supplies introduced recently. Offering a vast array of products helps ReStockIt.com capture long-tail sales and get the margins it's looking for.
“You constantly need to be feeding the machine with more products,” Redlich said. Once you've established a top-selling product, someone is coming after it, and it's most likely Amazon, he added.
Invest in Your Team
In order to be successful in retail, as is true in any industry, it's critical that you surround yourself with a talented and experienced team. For ReStockIt.com, a cultural fit with the company is the No. 1 thing Redlich looks for in employees. Here are some more of Redlich's thoughts on building a successful team:
- Move the deck chairs when needed, especially in a down economy. This means getting rid of employees that aren't working out and training employees in multiple areas so that they're flexible and can transition from one job to the next.
- Use interns. ReStockIt.com has a summer internship program for college students that's yielded talented employees.
- Have daily “huddles.” ReStockIt.com's team meets each morning for a brief meeting/pep rally. The prior day's numbers are discussed and key performance indicators are reviewed, among other things.
- Consider “open book” management. This refers to sharing company financial information (some, if not all) with employees. ReStockIt.com uses this tactic and believes it helps employees to feel more invested in their work.
- Set employee goals on a weekly, monthly and quarterly basis. Incentivize employees to reach those goals.
- Prioritize your employees’ time to have them working on the most impactful projects. This often means pulling employees off of one project to have them work on another more immediate need, said Redlich.
Cash is King
You must understand your available cash flow at all times, Redlich said. ReStockIt.com uses color-coded reports to manage its balance sheet. Another good idea is to develop a strong relationship with your bank. Redlich advised getting a line of credit as an insurance policy, noting that you don't pay for it unless you use it.
Creating partnerships with your vendors can help you better manage your cash flow, Redlich noted. Opportunities such as getting a discount by paying your monthly bill early, working out a schedule to pay late if you need more time and being able to negotiate pricing on specific items can all arise from a strong vendor/retailer relationship.