Stacy Smallwood’s Charleston, S.C., fashion boutique, Hampden Clothing, has been on the growth fast-track almost since the day she opened its physical and web doors in 2007. Hampden has sprouted from a 100-square-foot space to 4,200 square feet today and the retailer also operates HampdenClothing.com, which accounts for 10% of its annual sales.
Smallwood deals with 40 ready-to-wear designers along with 20 designers of shoes and other items. Keeping abreast of what so many designers have to offer, not to mention tracking orders placed, can be a massively time-consuming process for a small retailer such as Smallwood. If any of that can be done more quickly, Smallwood is interested.
“When you don’t have the manpower of a big company, the more you can find to streamline the buying process and eliminate mistakes, the better,” says Smallwood, who should know the difference, having worked for Neiman Marcus for five years before opening her own store.
The desire to do more with less led Smallwood to use JoorAccess.com, one of the growing number of online wholesaling sites popping up to connect suppliers and e-retailers.
Anything that can decrease the amount of time she spends ordering is a “no-brainer,” Smallwood says. Ordering online has doubled what she can order in any given period, she explains. Before ordering online, Smallwood would return from a go-to-market trip meeting with designers and spend four days trying to organize notes and get orders done, routinely finishing only half of what she wanted to get ordered. Now she can return from meetings and have all her ordering done in that same four-day period, she says.
Joor Inc. and other wholesale online marketplaces such as Bamboo Rose Inc., SPC Commerce Inc.’s Retail Universe, Ordre.com and Nuorder Inc. say they are supplementing a wholesale-buying process that still largely involves face-to-face meetings, pen and paper, filling out long spreadsheets with order details and even faxing orders. In the process, the wholesale sites are trying to make it as easy for retailers to shop for merchandise online as it is for web shoppers to buy from e-retailers.
“Think about shopping for retailers, we’re changing that shopping experience,” says Sue Welch, CEO of TradeStone Software, which operates online wholesale site Bamboo Rose. A wholesale site like Bamboo Rose “brings that consumer shopping experience into business and they desperately need it,” she says.
In addition to saving retailers time, online marketplaces make it easier for them to place small, frequent orders, a higher priority since the Great Recession culled the herd of stores with excess inventory. They’re also making possible new ways for retailers to do business.
Lisa Cornstein can attest to that. She is founder and chief operating officer of fashion chain retailer Scout & Molly’s, and web marketplaces have allowed her to sell franchises for her retailing concept while still enforcing a consistent look across franchised stores and giving franchisees the flexibility to respond to local tastes.
She uses a special Joor platform that was created to allow her to preselect assortments, lines and designers she would like see available in franchised outlets. Franchisees then can pick from the preselected items, tailoring their selections to local tastes.
Without an online wholesaling option, “I honestly don’t know if it could be done. All franchisees would have to go to market and work with reps,” Cornstein says. Cornstein has sold rights to 27 locations in the past six months and expects to see 20 Scout & Molly’s shops open this year.
Carly Wikelius, an associate buyer for New York-based retailer Atrium uses both Nuorder and Joor, depending on which designer she wants to buy from. About 60-70% of the 250 designers she deals with are on one of the two marketplaces, she notes. She, like other buyers, uses the sites primarily to deal with suppliers they already have relationships with rather than to search out new suppliers. “It’s a lot more efficient,” she says.
While touting the ease they bring to the buying process, online wholesalers are reticent to say they want to replace the face-to-face buying process. Rather, they position themselves as supplements to it and as tools to speed the process after face-to-face contacts have taken place at trade shows, fashion weeks or sales meetings.
The actual mechanics of pricing and closing a deal vary by site. At Joor, for example, prices are preset by each brand. A retailer negotiates terms directly with suppliers through the Joor platform.
On Nuorder, suppliers have the ability to set standard, default pricing. They also can choose to set specific pricing and currency settings for individual customers. If there are previously negotiated pricing terms, a brand rep can use Nuorder to reflect those agreements. Any price negotiation is done outside of Nuorder.
On Ordre.com, prices displayed in the system are standard wholesale prices. Once a retailer expresses an interest in purchasing a brand’s products, terms and conditions are negotiated between the retailer and the designer. If terms and conditions have already been established, those prices are displayed in the system for a specific retailer. Ordre takes responsibility for the payment pathway, invoicing retailers, collecting funds and distributing them to designers.
That the marketplaces are largely used to maintain existing relationships and expedite the buying process likely are sound approaches, given many retailers’ reluctance to give up familiar ways. “There’s always been some attraction to the concept of the online marketplace of bringing the buyers and the sellers together,” says Jim Okamura, managing partner for Okamura Consulting, a Chicago-based retail consultant. “The practical reality of it hasn’t been quite as rosy.”
In part, Okamura says, that’s because retail buyers are reluctant to change their ways. But there’s also another factor, he says: Retailers may be concerned they cannot distinguish their offerings from those of competitors if they’re all buying in the same marketplace.
“In a world in which Amazon dominates, there is an even greater need to differentiate. That becomes the pressure that keeps buyers up at night asking, ‘Where can I find something that is unique to us,’” he says.
Rebecca Russell, buying manager at Boston-based In the Pink Store Inc., says she still visits with designers to touch and feel the merchandise. But she’s found using Nuorder, and, to a lesser extent, Joor, has drastically reduced her ordering time, allowing her to respond more quickly to customer requests and store inventory needs. Her company works with more than 70 brands for its 11 stores and web store. She became involved with Nuorder last summer when the Tori Richards brand, which she buys, encouraged her to use it.
Prior to trying online wholesale sites, Russell says she would go through a given designer’s catalog to see what she wanted to order, put all her order details into a spreadsheet and send it off to a brand representative.
If the representative was away or otherwise occupied, days could pass before she found out if items she wanted were in stock for purchase. Ordering via the sites cuts the process from days to minutes, and means In the Pink can get its stock sooner and begin merchandising it sooner as well. It also enables her to order from anywhere she has online access, not just from her office, an important consideration given the time she spends visiting stores.
One Nuorder option she particularly likes is the marketplace allows her to see how many of a certain item a designer has available in real time. That makes it easier for her to fill specific customer requests for out-of-stock items, she notes. If she sees a hot item is almost sold out, she can order remaining stock to be sure she has it as well.
The ease of online ordering has meant she’s doing more business with the brands she can now access online, Russell says. Her one complaint about online ordering is that not all her brands are on one wholesale site, which means she has to use several.
The changing retailing landscape in recent years has aided the growth of the online wholesale marketplaces. The Great Recession forced retailers to seek out ways to operate more leanly. Between 2008 and 2009, inbound container shipments of retail goods dropped approximately 16%, for example, as many retailers scaled back on inventory, says Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC. Cutting inventory and ordering closer to when retailers wanted products online or on shelves was one answer, says Heath Wells, Nuorder’s CEO. But that required tools to speed order turnaround. At the same time, suppliers were looking for ways to sell more cost-effectively themselves. “When the market fell in 2008, everyone had to rethink how they were doing business,” Wells says. “Brands had to be more efficient in selling. Retailers needed far more efficiency.”
The desire to carry wider assortments also has sent retail buyers online looking for broader selections. In a world where everyone competes with Amazon, access to more unique and less broadly distributed products is essential, Okamura says.
The fashion world, where most of the online marketplaces are at the moment, also is undergoing significant changes.
On the retail side, fashion is moving away from traditional seasonal offerings to consumers simply looking for something new each time they shop. The concept of seasonal wear is still important to generate media and consumer interest, says Simon Lock, Ordre’s founder and CEO. But in today’s market, “retailers are more interested in having new and exciting stock in stores 12 months a year,” he says.
That means buyers are ordering more frequently. The online marketplaces aim to ease and speed that more frequent buying.
The marketplaces each take slightly different approaches to attracting retailers and suppliers. Some started by going after select retailers, assuming suppliers would want to be where the hot retailers were. Others took the opposite approach, lining up suppliers, or designers in the fashion world, thinking they would bring retailers onboard. Some charge suppliers a percentage of sales transacted on the marketplace, much like traditional brokers or consumer marketplaces do, others charge suppliers annual membership fees.
At Nuorder, “the reality is you need the brands first. For us, it was ‘we need the brands right,’” Wells says. Nuorder has 600 brands selling through its platform. Brands buy licenses to sell through Nuorder, and licenses start at $6,000 a year for a small brand, Wells says. Nuorder, launched in 2011, expects to process more than $1 billion in business-to-business transactions this year.
Joor launched in 2010 and became profitable in 2014 when it processed close to $3 billion in transactions, founder Mona Bijoor says. She’s expecting 2015 transaction volume to reach $7 billion. The site features 1,000 brands, such as Vince and Michael Kors, and 110,000 retailer buyers worldwide from companies including Harrods and Bergdorf Goodman.
Bijoor says roughly 20% of its retailer base are online-only, and 40% sell both online and in stores with the remainder store-only retailers. Large brands pay Joor an annual fee, while smaller brands pay a combination of fees and a percentage of sales made. Retailers have free access but pay $200 a month for each merchandise buyer using the system. Joor asks brands to operate exclusively on its platform and not on other online wholesale platforms. The brands aren’t restricted in any other way when selling direct to customers.
Retailers create their own Joor pages so brands can search by type of retailer, price points and other distinguishing characteristics. Retailers also can search brands by price point, category, location, clothing gender and styles and send requests to connect to brands with which they wish to do business. A connection is made by hitting a Connect button on the profile page. That sends the other party a connection request in their work email similar to LinkedIn or Facebook requesting a connection. Once a connection is accepted, access is granted to the brand’s collection.
Unlike platforms that focus on the fashion industry, Retail Universe has created an array of 60,000 suppliers and 2,000 retailers across 32 product categories. Its major categories are outdoor goods, office supplies, toys, home goods and décor, sporting goods and personal exercise equipment, says Wael Mohammed, director of product management.
“We complement face-to-face,” explains Peter Zaballos, vice president of marketing and product. “There’s always going to be a role for trade shows and meetings.” But his platform serves a particular buyer who is under pressure to grow his category and doesn’t have the time to wait for the next show or in-person sales meeting. SPS, which operates Retail Universe, handles more than $1 trillion in orders annually. Other platforms have looked beyond fashion as well, offering an array of other categories.
TradeStone Software’s Bamboo Rose, for example, is an invitation-only platform used by Lowe’s Cos. Inc. and Family Dollar Stores Inc., among other retail chains. Footwear, hard goods and even food are available on the platform. Joor is looking to expand into the home and beauty products categories. And Nuorder has started to move into electronics, home, food and beverage, outdoors, and sporting equipment.
Ordre began in late 2014 after three years in development and two years of research to find key retailers in 543 markets in 93 countries, says Lock, who is also a fashion industry consultant through his Hong Kong-based Lock Group, which also stages fashion events. He has 1,950 retailers in his system and expects to generate $600 million in annual revenue within 24 to 36 months. Designers pay a 7.5% fee on sales on Ordre, Lock says, which is far less than the 15-20% ready-to-wear showrooms may charge.
“It’s the future of how the ready-to-wear fashion industry will do business,” Lock says of his site. Some apparel retailers are happy that online marketplaces are part of the here and now.
John N. Frank is a freelance reporter based in Evanston, Ill.
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