Tag Archives | e-commerce

E-Commerce is the New Black

You may have heard the phrase, “[insert color, thing, etc.] is the new black”. It stemmed from the fashion industry in reference to the color. Ever heard of “pink is the new black?” Black has always been a traditional, stylish color that will never go out of style. That’s why today, we’re saying the e-commerce is the new black. As the Internet as evolved and technology has improved dramatically, we see the Internet becoming a more prevalent opportunity that needs to be sought out by every company.  

The Internet is just one external source that could have a dramatic impact on your company. Are there any other factors that you may be missing? Click here to access our free External Analysis whitepaper.

e-commerce

What is E-Commerce?

Simply put, e-commerce is the transfer or selling of products or services via the Internet. When built well, it can integrate your supply chain management, customer service, inbound sales, online transactions, etc. As a result of e-commerce platforms, many business owners around the world are able to sell while sleeping. The Internet world has connected people from all around the world together to address a specific issue. For example, we have built this website full of content and we connect with people on the other side of the world daily.

But how does e-commerce make (or not make) your life easier? Unless a technology disaster occurs, you will always have a platform to sell on. Even if your local market tanks (like we experienced with the recent oil & gas crisis in Houston), then there are still potential buyers not impacted by an industry/economic crisis that are wanting what you’re offering.

In addition, we only live for a certain amount of years. We see business owners unexpectedly pass away, and unfortunately because they didn’t have any e-commerce platform or web presence, their company becomes non-existent. As a financial leader, you need to invest in the next generation of your company. There’s a reason why so many companies are investing in their online presence. It’s because that’s their “succession plan“. Obviously, a Chevron or Apple would have a succession plan if anything were to happen to its leadership. But they have also heavily invested in their online presence.

Monetizing Your Website

One of the primary components of e-commerce is that a site must be monetized. It used to be the case that websites were just pretty brochures, right? But websites have changed for the better. Retail stores are being closed because their online presence is so strong, they can cut the overhead that comes with having a building. Training is no longer available in a classroom, but at the touch of your fingertips. Working at trade shows, conventions, or other markets? Now, you can do the same amount of sales everyday by using your online presence.

Monetizing your website comes in multiple forms. For example, a site could sell real estate to ad platforms or to other companies that have similar audiences. Affiliate marketing is also a viable way to monetize your site. You can also sell your own widget, whether it’s your e-book, a product, 1-hour consultations, etc.

When you take advantage of opportunities because you are actively seeking them out, you get ahead of your competitors. Stay ahead by downloading our free External Analysis whitepaper.

e-commerceE-Commerce Business Models You Should Consider

As a financial leader, it’s important to be in tune with what’s going on in the world and how your business reacts to it. Successful companies do not continue to do the same thing for X amount of years without reacting. Even in the past several years since the 2008 recession, we have seen companies dramatically change to adapt to the changing economy. As a result, you should consider how having an e-commerce business model can improve your numbers. Let’s look at several e-commerce business models to consider if you haven’t already yet done so.

Freemium

When companies apply the freemium business model, it allows them to offer a portion or a limited amount of time in their product. For example, Canva is a design site that allows people design graphics easily and without needing any training for free. They make their money by only offering a limited amount of free templates, icons, etc. and showcasing all paid templates, icons, etc. A typical person would not subscribe to a graphic design service because there is a learning curve associated. But this company made it easy to buy into because they allow people to enter in their product.

Subscription

In comparison, a subscription model is when a company charges a customer the same price monthly/annually for their product or service. This typically automatically renews until the customer cancels the subscription. Furthermore, this recurring revenue is a very attractive feature to a prospective buyer of your company.

For example, the SCFO Lab is a subscription service. For only $37.90/month, subscribers are able to access the tools, checklists, and resources one would need to be a successful financial leader.

Wholesaling

While wholesaling is often seen in physical businesses, we have seen it grow as an online business. This is a great way to move more units of inventory and increase the amount of cash flow in your company.

This also relates to dropshipping. Simply put, dropshipping is where a customer buys off a website. That website offsets their liabilities by paying another company to deliver the requested product. So the website becomes an intermediary between the shipper and the end user. This is very common in the retail industry.

White-Labeling

Another popular e-commerce business model is white labeling your product. For example, a software company created this incredible dashboard. Their customers are marketing agencies, and those agencies wanted a dashboard for each of their clients.  So that software company sells the shell of their dashboard so their customers (the marketing agencies) can customize their dashboards to reflect their branding. Those agencies are able to bypass creating their own program, but their clients don’t know the difference.

Why Everyone Should Be Using E-Commerce

In some form or fashion, every company should be applying e-commerce to their business. In 2018, it’s an assumption that if you are in business, then you have a website. Instead of leaving it as an asset that isn’t making money, strategize with your marketing and sales team how you could generate sales and make money off of it.

Furthermore, e-commerce isn’t the only thing you should be looking at as an opportunity. Click here to download the External Analysis to gear up your business for change, find other opportunities, and identify threats/obstacles to avoid.

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Black Friday

See also:
Traditions Turned Financial Fluctuations
Improving Profitability – Fuel for Growth
Product Life Cycle Stages
Beware of the J Curve

Black Friday

In America, Black Friday is an event that is not only the most shopped on day during a typical year, but it also generates huge sales.

“Only in America do people trample others for sales exactly one day after being thankful for what they already have.”

~Author Unknown

Black Friday Definition

The Black Friday definition is a retail store sale that occurs the Friday after Thanksgiving – an American holiday in November. Many consider this event to be the kick-off to the Christmas shopping season. Many retailers, such as Walmart, Kohls, Kmart, Macy’s, Express, and other major retailers, open their stores in the early hours of the morning to receive the first rush of customers. Door busters, sales, huge discounts, and giveaways are all part of this event.

The History Of Black Friday

Let’s look at the history of Black Friday. Black Friday originated in 1952 as the start of the Christmas shopping season. Because many states in the United States considered the day after Thanksgiving to be a holiday as well, retail shops realized that there were enormous amounts of potential shoppers available during this four-day weekend. But since 2005, this event has launched into record numbers for sales, shoppers, etc. For example, sales dropped for the first time since the 2008 recession in 2014. Yet, sales boasted $50.9 billion over that weekend.

Although not all states in the United States permit workers to work on national holidays or even the day after Thanksgiving, companies have broken many boundaries to take advantage of this rush of customers. Over time, retail stores and e-commerce platforms have expanded on Black Friday to include Cyber Monday. It’s become a tradition to many.

Cyber Monday

Because Black Friday became such a hit, online companies created another shopping event – Cyber Monday. It occurs the Monday after Thanksgiving and encourages shoppers to purchase more gifts and things on Monday. Originally, it was launched in 2005.

The Cost of Black Friday

While it may be tempting to join in on Black Friday specials and sales, you have to consider the cost. Remember, a sale isn’t necessarily a good sale. It has to be a profitable sale.

Some of the costs associated with Black Friday include.

How to Win on Black Friday

In order to win on Black Friday, you have to price your products for profit. Especially since you project to sell large quantities of product, you need to make sure you don’t start with a pricing problem. If you cut prices off a product that is already not profitable, then you will loose more potential profit. Before you start planning for Black Friday, make sure your pricing is in check. Click here to download our Pricing for Profit Inspection Guide.

Price for Profit During These Sales

Each sale you make has to return a profit. Therefore, you need to allocate as many costs to each good to make it easier. How much inventory do you need to push in order to turn a profit? But also, what prices are customers willing to spend? The trick with Black Friday is that since everyone is competing for the best deal, you must know what others are pricing the same product at.

Reduce DSO by Turning Over Inventory

The risk for big sales like Black Friday is that there will be some that cancel their credit card transaction for $1,800 worth of product. Because you are putting a lot of cash up front to increase inventory, you need to collect cash as quickly as possible. For example, you can offer discounts for cash only. For other pricing tips, download the free Pricing for Profit Inspection Guide to learn how to price profitably.

Black Friday Definition, History Of Black Friday

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Black Friday Definition, History Of Black Friday

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Traditions Turned Financial Fluctuations

Traditions turned financial fluctuations

Traditions turned financial fluctuations are to be expected in the American economy. Commercialism takes over this time of year with the holiday rush. With an overload of red sales tags on toys, electronics, clothes, and more, consumers are quickly adjusting to this being a norm.  Now with Thanksgiving is right around the corner, we are taking a look at how it has changed drastically from a traditional national holiday to a massive sale.

Financial fluctuations can severely damage your profits. Learn how to price for profit as we go into the most popular sales season! Download the Pricing for Profit Inspection Guide here

Traditions Turned Financial Fluctuations

Financial fluctuations generally shape patterns throughout industry seasons, with one of the largest humps being in the last quarter of the year (especially for retailers). As a financial leader, it is your responsibility to allocate resources to cope with the massive influx of sales, manage profitability, and mitigate any potential liabilities with hosting a sale.

Traditions turned financial fluctuationsHistory of Thanksgiving

Thanksgiving originated in 1621 when the Wampanoag Indian tribe and the colonists shared a meal together after the first successful corn harvest. In 1863, President Abraham Lincoln declared it a national holiday. The tradition is to express one’s thankfulness while sharing a hearty meal of turkey, stuffing, veggies, and a variety of pies.

While the holiday still remains a tradition to this day, the past few years have seen Thanksgiving invaded by the financial juggernaut of Black Friday.

Black Friday

Black Friday is one of the most sought after sales days (for consumers at least) in the United States. Traditionally, Black Friday takes place the day after Thanksgiving in the wee hours of the morning. People camp out to get the best deals on clothes, appliances, technology, etc.  Over the past few years, however, retailers have begun opening their doors to Black Friday shoppers earlier and earlier.  This year, many stores will be open on Thanksgiving day for holiday shopping.

As it’s evolved into an expectation for businesses to have great deals, we’re now starting to question the profitability of this type of event. With Black Friday being a commercial norm, Brown Thursday (Thanksgiving day) and Cyber Monday (Monday after Thanksgiving) are rapidly being seen as just another leg to this madness.

Traditions turned financial fluctuationsWalmart

This massive company is an infamous example of Black Friday hysteria. Having had deaths during their sales in the past due to stampedes of people, Walmart has continued to expand what was originally a Friday sale to a continuous sale starting Thursday at 6pm (in most stores).

Let’s tally up all the costs associated with putting Black Friday (Brown Thursday and Cyber Monday) into action:

  • Employee’s hourly pay (and potential overtime)
  • Manager compensation
  • Product stock and inventory
  • Crowd control training
  • Security to help manage crowds
  • Electricity of buildings, lights, and registers
  • Food for staff (Thanksgiving dinner for employees)
  • Time to price each SKU profitably
  • Liability insurance (in the case of casualties)

Traditions turned financial fluctuations

With all of these extreme sales, companies like Walmart have been able to stay profitable as this “holiday” has grown into a giant. One of the major factors that go into that is inventory. By acquiring a large amount of inventory, you minimize the cost per item and thus create a more profitable ticket item.

Putting Black Friday into production is not cheap. In addition to all of the above, the most important thing is to make sure your products are being priced for profit. Profitability is the number one thing that you need to keep in mind, as you have a responsibility to company stakeholders.

RTraditions turned financial fluctuationsEI

By contrast, REI, an outdoor recreational equipment retailer, has opted-out of participating in Black Friday festivities. Financially, they may have missed out on a slight increase in revenue.

But the real question is, what’s the best decision to make for your brand? Some decisions to gain more profit while going against values may actually compromise your company and result in a loss. No amount of pricing products for profit can counteract any decision that is against the brand.

Traditions turned financial fluctuations

#OptOutside has been a movement that aligns with REI’s mission and vision.  They are able to maintain their customer base and grow year over year without offering the Walmart-style sales. This tradition has smoothed over typical retail sales cycles.

One of the main differences between Walmart and REI comes down to the price difference on their products. REI sells higher quality, more expensive, and sustainable products. People who are seeking their equipment are not the type of customer that demands cheap products.

Deciding whether to host a sale throughout out the holidays? Make sure you have priced your products or services for profit. Download the Pricing for Profit Inspection Guide to help you price accordingly and point out areas where you are not currently producing profit. 

Seasonal Sales – Good, Bad, or Ugly?

With all things, there’s a good, bad, and ugly side to it; seasonal sales are not excluded from this.

The Good | How it Helps Businesses

Seasonal sales help businesses around the country and the world. Projections can be easier when a company knows when its sales will peak and decline.

Start by creating a yearly plan. If your company does not do anything besides one big day, analyze typical sales and cross-analyze them with your goals. How are you going to survive the gap?

Offer Other Products/Services

There are many options to subsidize a limited season. Offer those products or services that are popular in-season to another target market. Another option is to create other seasonal sales within the calendar year.

For example, a company that puts up Christmas lights in October-December will find that their off-season takes up the majority of the year. This provides an opportunity for you to adapt. This particular company uses their same inventory (Christmas lights) to do wedding decorations in the April-August months. While it does not completely match the winter sales, they are able to keep up the cash flow throughout the year.

The Bad | How it Hurts Businesses

With all things good come bad. Traditions turned financial fluctuations are not exempt from the bad.

External Dependencies

Depending on one single event, such as Black Friday, for the majority of your yearly sales, is a risky affair! If something externally occurs before or during said sales event, the entire event could be disastrous. But for some companies, that’s all they have.

If you find yourself in this position, it’s time to start finding other sales methods that do not heavily rely on one-time events surrounding holidays, etc.

Staffing: On-boarding & Overtime

It’s often said that a company spends most of its money on people. Seasonal sales only expands these issues. With these financial fluctuations, companies hire seasonal employees. Training, on-boarding, monitoring, salary (typically hourly for retailers), over-time compensation, and any other forms of employee care are just a few factors that hurt businesses if not managed carefully.

The Ugly | Seasonal Cash Flows

Seasonal cash flows are difficult to project and track. This is one of the really ugly parts of having high financial fluctuations.

Price for Profit

Even though Black Friday is in a few days, prepping for seasonal sales are still underway with the holiday season coming quickly. Easily discover if your company has a pricing problem, and learn how to fix it by downloading the Pricing for Profit Inspection Guide.

Traditions turned financial fluctuations

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Traditions turned financial fluctuations

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