SOURCINGTHE KEY TO INFINITE ISLE SUCCESS

David Verette

Vice President, Partner Sales

dverette@spscommerce.com

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SPS COMMERCE ANNUAL RETAIL BENCHMARK, RSR RESEARCHWhat are your top investment priorities in 2013?

1. Expand product assortment2. E-Commerce advancements

INCREASED COMPLEXITYOmni channel & e-commerce strategies requires more complex levels of technical integration from vendors.

– Live inventory feeds

– Rich product data

– Carrier integration

– Return processes

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INCREASED VELOCITYEndless-isle retail initiatives demand exponential growth in online assortments.

– Typical business goals: annual SKU growth of 50 - 100%

– Reliance on drop ship due to capex limitations

– Traditional retailer sourcing & merchandising organizations are difficult to scale

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SESSION SPEAKERS

Justin Stevens, Quirky

Jim Sustar, President, Trademark Global

QUIRKY

TRADEMARK GLOBALSupplier to the Internet Retailer

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ABOUT ME• President, Trademark

Global

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OUR MISSION• Brand Development• Manufacturing• Instant Drop Shipping

“Supplying Top Brand Name Products to Internet Retailers”

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TOPICS OF DISCUSSION• Product Development

• Sales Channels

• Opportunity for Independent Web Stores

• Pricing Strategies

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THE EARLY YEARS“Sell Everything to Everyone!”

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NOW WE’RE BRINGING PRODUCTS INTO FOCUS

Brand Development

• Create Defined Product Lines

• Create Brands

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TRADEMARK BRANDSTOYS GAMES SPORTING GOODS CONSUMER

ELECTRONICS

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TRADEMARK BRANDSKITCHEN HEALTH &

WELLNESSHARDWARE LAWN & GARDEN

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TRADEMARK BRANDSWALL ART PET SUPPLIES HOME

ACCESSORIESTEXTILES

The

Trademark Home™

Collection

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TRADEMARK BRANDSLICENSED GAME ROOM PRODUCTS

Bar Stools, Pub Tables, Neon Clocks, Dart Cabinets & Much More!

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We Create Exclusive Brands for Internet Retailers

Same Textile Products sold from Shared Inventory and re-branded for the retailer with their exclusive brand

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“SELL EVERYTHING TO EVERYONE?”Improved ProductsStill a wide assortment with a much more focused approach.

So we did find a way to still

SELL EVERYTHING!

but…

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Can we still….

SELL TO EVERYONE?

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NO!

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OVEREXPOSEDOur Products and Prices were all over the Internet

BUT….

NOT with the INTERNET RETAILERS that were experiencing the HIGHEST GROWTH RATE.

Our Products were over-exposed and our retail prices were compromised.

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E-COMMERCE SALES CHANNELS

• 3rd Party Marketplace Sellers

• Independent Web Stores

• Mass Market Dot Coms

• Flash Sale Sites

T-shirt Frenzy – OCProducts – Rikki Night LLC

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3RD PARTY MARKETPLACE SELLERS

• In the early years Trademark sold through 3rd party marketplace sellers– Fast To Market

– Massive Exposure on Amazon & eBay and other Marketplaces

– Use Product Data Feed

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MASS MARKET DOT COMS• Late to the Party• Rapid Growth with no end in sight

This became our Targeted Sales Channel

• Mass Market Dot Coms Would NOT take a Data Feed of all of our products

• If Products were overexposed and retail prices compromised, in most cases the Mass Market Dot Com buyers would either refuse to list it or would be undercut by Marketplace Sellers limiting revenue and/or profitability.

ISSUES TO OVERCOME:

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DECISION TIME!

Taking our talents to the mass market dot coms

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ACTION• Stop Selling to 3rd Party

Marketplace Sellers

• Start Selling to Mass Market Dot Coms

Example:

Our products sell to Amazon directly, so the Amazon Marketplace is covered and we no longer needed 3rd Party Sellers.

Amazon tries to undercut their own 3rd Party Sellers so the message was clear to us: Sell to Amazon directly!

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BUILT FOR GROWTHThe Mass Market Dot Coms…

– Reach more customers

– Preserve Retail Margins

– Expose our Brands in a high profile way which helps to build brand awareness.

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INDEPENDENT WEB STORES• Lost in the Shuffle

– Niche Websites, Specialty Shops where Service and Selection are king and not necessarily all about prices.

– Mimicking the Real World, Internet Specialty Shops have found a home with a very loyal customer following.

– These online retailers that are very important to Trademark.

– What are we looking for in an Independent Web Store?

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WHAT ARE WE LOOKING FOR IN AN INDEPENDENT WEB STORE?

NOT…. www.CHEAP-PRODUCTS.com (NOT Retailers with a LOW COST motif)

• Low cost retail compromises our pricing model

• So the “SELL EVERYTHING” discount store niche is DEFINITELY NOT what we are looking for in an INDEPENDENT WEB STORE.

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INDEPENDENT WEB STORES• LOOKING FOR SPECIALTY SHOPS:

– Specialize in One Product Category

– Service Over Discounted Price

– Loyal Customer Base

– Follow MAPP pricing

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PRICING STRATEGIES• M.A.P.P. Pricing (Minimum Advertised Pricing Policy)

– Trademark is Moving To MAPP PRICING

– Most Retailers Favor MAPP

– MAPP eliminates 4th Party Sellers

– MAPP Enforcement must be swift and severe

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PROMOTIONS• With MAPP in play the landscape is clear for promotional

pricing to be successful– Daily Deals

– Private Sale Events

– Full Product Line Promotions

– Front Page Banners

– Category Banners

– Email Blasts

– Top Search Engine Position on Retailer’s Site

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RULES FOR PROMOTIONS1. Limited Time – Limit the promotional period for the Retailer.

– Daily Deals, 3 Day Events, even 1-2 Week Sales are OK

– Do NOT Allow long events which will hurt MAPP unless Liquidating Inventory

2. Increased Visibility – Barter Promo Discount for Increased Visibility

– Supplier Discount is effectively “paying” for extra visibility so find out EXACTLY what and where the promo will take place. Banner, Email Blast, etc….

3. Lower Retail Price – Retailer Should Participate in Discount

– If Supplier gives a 15% Discount on Wholesale Price then ask the Retailer to participate by matching to make it a 30% Sale off the Retail Price.

4. Track Promo Sales – “Was it Successful?”

– Keep Track of sales performance and leverage that information to run similar promos with other Retailers and to repeat that promo at a later date.

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SUMMARY• Product Development

• Sales Channels

• Opportunity for Independent Web Stores

• Pricing Strategies

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SELL EVERYTHING TO EVERYONE?As suppliers & retailers we need to:

– Know who we are

– Know our role

Everything To Everyone? No.

Instead, we can be... everything to someone!

Q & A

Justin Stevens

Jim Sustar

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