US News: With business lagging, some wholesalers are becoming online retailers...

Caught between online retailers selling directly to consumers and huge retail chains demanding low prices, wholesalers are getting squeezed. Some of them are deciding to become online retailers themselves, including two New York-area companies that have been selling on the web for about a year.

For Eli Mechlovitz it was the downturn in the housing market that prompted him to seek new ways to sell his glass tiles and mosaic stones. He launched GlassTileStore.com, and now sells his product directly to consumers, at prices that he says are as much as 60% less than typical retail prices.

Sales are now about $100,000 per month, and growing by at least 20% each quarter, Mechlovitz says. He’s investing $15,000 per month in search engine advertising, hoping to increase traffic, which now averages about 20,000 unique visitors per month.

Mechlovitz does worry about alienating the retailers he sells to, by in effect competing against them with his online store. But he notes the wholesale operation does not sell to customers who walk in off the street, so consumers have to find GlassTileStore.com online. And if he loses a retail customer, so be it. “We’d rather give up one store than millions of customers around the U.S.,” he says.

Yomesh Shah does not have the same concern because his wholesale operations sells loose diamonds, while his e-commerce site, B2CJewels.com focuses on fine jewelry. He launched the web site in August 2007 because his wholesale business was not growing.

Like Mechlovitz, he tries to differentiate his site with low prices, but finds that’s not easy to do on the Internet. “When you’re online, it’s a price war,” Shah says. “An online buyer is more savvy and knowledgeable, they know what they’re looking for.”

Unique visitors average 15,000 per month, and Shah expects to increase that substantially through an online display and search results page marketing campaign he has begun.

Source: Internet Retailer

Wednesday, 5 November 2008

[Return to Latest News]