In 1999, I founded The Office Tex, a niche B2B company that sold computer media backup tapes to oil and gas organizations in the state of Texas. Over the years, our core customer base naturally progressed to include government agencies and education institutions of all sizes. To accommodate our changing target market, we expanded The Office Tex’s inventory to over 8,000 items, including everything from pens and paper to printer cartridges.
However, a wider target market and expanded inventory didn’t immediately translate into increased profits. In fact, maintaining financial growth is one of the most commonly cited struggles for small business owners, and after hitting several speed bumps over the past few decades, we can attest to this claim. We’re now turning a $1.7 million revenue each month, and we’d love to share some of the lessons and best practices we’ve learned along the way with other small business owners.
A Small Business Owner’s Dilemmas
The first issue that presented itself was growing our labor force in a cost-effective way. I was managing a lean team of just six employees and our business was growing rapidly; however, we learned that hiring more salespeople didn’t immediately yield a strong ROI. This was problematic for our budget-conscious small business. The cost of labor was outweighing our sales and cutting into our profit margins.
Another problem that plagued Office Tex (and likely many other SMBs) was the need for brand awareness to get the word out about our products and customer service, with a limited budget to allocate for of dedicated marketing and advertising. Sometimes I feel as though marketing is a necessary evil for a small business, kind of like insurance: it’s something you don’t always want to spend the money on, but you absolutely need it. We didn’t have an expert in-house, nor could we afford to outsource the job. We tried everything that our budget would allow for: email marketing, knocking on doors, and automated marketing software. It seemed like we were always being persuaded to try the latest and greatest marketing tactic, but we just weren’t seeing any return.
The greatest difficulty we’ve encountered has been how to continuously evolve our company to align with rapidly changing trends in the industry. The Office Tex was founded in the midst of the dot-com boom, and our company came of age as the entire industry shifted to digital. Changing consumer expectations suggested that most people were not just comfortable with shopping online, but preferred to shop online, and we needed to decide what our ecommerce strategy would be to ensure we were meeting our customers where they wanted to shop.
Finding the Solution
After much research and consideration, we decided to implement a multi-pronged ecommerce business model, whereby we leveraged both a company-owned site and sold our products on a marketplace. We chose to pursue multiple channels, allowing our customers to shop online in the way they found most convenient. The Office Tex has its own ecommerce store available on our website where our “legacy” customers can access our entire inventory of products — many of our customers prefer this more “traditional method” of purchasing.
Additionally, in 2018, we launched on Amazon Business, which allowed us to reach thousands of new customers that otherwise would have never found our office supplies store. It also allowed us to continue growing our catalog of products as we saw a market need for new supplies coming from these previously untapped shoppers. We found it was of the utmost importance to diversify our selling methods to accommodate our customers’ needs. Many of our newer customers prefer the convenience, consolidated shopping experience of Amazon Business. As an added bonus, Amazon Business offers a credentialed seller program that allows us to tout our SMB and woman-owned status, connecting us to new customers such as government agencies that seek out these types of businesses to stay in compliance with policies like the Small Business Act.
Launching our marketplace didn’t happen overnight. One of the top considerations for us was our ability to process orders efficiently, and integrate the model into our current system. Prior to formally rolling out our availability on an online marketplace, we asked ourselves, “How hands-on are we going to have to get when processing these orders?” Because we ship a diverse array of products, including oversized items, delivery and shipping logistics have historically been tricky.
To properly prepare for the new ordering system, we went live on Amazon Business with only a modest quantity of items, so we could figure out how to ship our items and scale effectively. Starting out on a smaller scale allowed us to quickly learn how to effectively go to market.
Addressing several business challenges
Implementing a marketplace-based ecommerce business model was the equivalent to hiring several full-time salespeople, but for far less money. We effortlessly bridged the gap between our inventory and our suppliers, reaching tons of new global customers without having to get out there and knock on doors or launch a nationwide marketing campaign to find them.
With our fully implemented ecommerce business model, we were reaching new customers just by having a presence online. We hadn’t increased our marketing budget at all, but being available on Amazon Business helped us to reach more customers and reach the right customers. Through our marketplace, we found success with government, education, and healthcare customers that we weren’t previously servicing.
Taking a fresh, digital approach to the next phase of our business model has allowed us to stay competitive in an era where online presence is critical for a business to survive in 2019. Previously, we were only grossing $4.5 million in sales for the entire year, and as previously mentioned, we now gross well over a million dollars per month. Ecommerce has grown our company, our brand, and our confidence that our small business can continue to serve our customers and unearth new sales opportunities.
Rita Bonarrigo is founder and CEO of Rita’s Tape Media, an online seller of office supplies doing business as CompuPro Global and The Office Tex.Favorite