Go back into the mists of internet time (well 2001!) and my first online business was born, an ecommerce site selling horse related gifts. The initial business plan was never to get involved in supplying other businesses on a wholesale basis but more & more saddleries and country stores approached us so off we went! For over a decade, the business supplied stores across the world & exhibited at BETA, Spoga & AETA.
This year though will be our last in the wholesale space for the foreseeable future & I’m hoping to have it wrapped up by the end of this month. So why did I come to this decision to kill off part of my business?
There are 4 main reasons & 3 of them affect most businesses, so I thought it would be useful to share my experience with them. They are demand, profitability, logistics & opportunity cost.
It’s no secret that there have been huge changes in the retail sector of the equine industry over the last decade with a two pronged shift to online selling & large external groups investing into the industry. Gifts are a great add on product in store, often an impulse buy or a chance to get a last minute gift for a friend. It’s far harder to recreate that impulse purchase online – yes you can upsell in the checkout of an ecommerce store, but most stores aren’t or if they are, are focusing on related items. So if you are buying a pair of riding boots they will recommend some polish or boot trees, not a pair of earrings. Also if you’re looking to buy horse gifts online, then you’ll typically google horse gifts & land on a specialist site (like mine) rather than a horsey department store.
The other shift is the change in ownership of some of the largest retailers such as Robinsons & Rideaway, Robinsons used to be our largest wholesale account but now that it is 100% owned by Sports Direct PLC, they have eliminated the gift category from their buying.
It is much more profitable to sell products direct to the consumer rather than to other retailers. There has been a big shift in the industry with a number of manufacturers selling direct to consumers, with a lot of controversy in some cases. Remaining competitive as a retailer whilst maintaining an appropriate price structure to also be able to sell to wholesale accounts at a profit only gets more challenging. The slide in the value of the pound against the dollar has also made products more expensive to manufacture, especially the silver jewellery.
Wholesale is also harder on cashflow – you typically end up buying more product to get a discount to maintain margins, perhaps have it in the warehouse for 2-3 months before shipping on an order, then wait another 2 months for payment from your wholesale customer. Whereas a retail sale is in my bank account in a max of 7 days.
This is closely tied to profitability & demand. Many of our wholesale accounts would only buy from us in the Christmas period, just as the retail business was at its busiest too. This made the last 2 months of the year a mad rush with the warehouse jammed to the rafters, temp staff & very little sleep. I still have nightmares of the time 15 pallets of goods were stacked outside because a supplier refused to deliver to a 3rd party fulfilment warehouse. It was all hands on deck to try & find space inside before it started raining & the £1000s of fragile and not very waterproof stock was damaged…
Offering products on a wholesale basis alongside the retail adds extra elements to the back office of the biz. Those orders going out on credit terms, someone needs to be invoicing & then chasing for payment. You may need two different shipping rates & potentially extra suppliers. Wholesale customers tend to prefer to order by phone or fax rather than online. So the complexity of the business is increased.
4) Opportunity Cost
This is a bit more of a personal consideration. After my mother passed away last year I wanted to make some big changes to my personal life – to work less and spend a lot more time travelling. The business has been re-organised to allow this. We’ve gone from a team based in the office to everyone working virtually. The majority of stock is in 3rd party fulfilment warehousing. Everything myself & my team need to work can be accessed from the cloud, pretty much anywhere in the world. Apart from the wholesale stock that is…I’ve not found a way to cost-effectively out-source the fulfilment of this, mainly because we’ve never sold in case quantities etc.
I’m sure it would be possible to out-source with enough digging around to find the right partners. However, for me that time, money & energy comes at a cost of not pursuing other business opportunities. I have a busy digital agency, the Equine Business Association plus the retail side of the ecommerce business. All are more profitable than the wholesale side. Plus I’ve committed to spend more time riding my horses, focusing on health & enjoying life. So it was an easy business decision to make at the end of the day & feels like coming full circle back to the original roots of the business, which was always as a retailer.
If you are a wholesale customer of mine, past or present, I want to thank you for supporting the business for over a decade. There are some tremendous characters in the horsey retail world & I will miss our phone conversations! I hope you’ll come & be a part of the Equine Business Association, don’t be a stranger and I will of course see many of you on the show circuit.
As always, I’d love to know your thoughts on the points I’ve raised in my blog. Feel free to share your thoughts in the comments below.
Founder, Equine Business Association
Christina is the founder of the Equine Business Association. As MD of Blacktype Digital, a digital marketing agency, she's the geekiest horse person you're likely to come across. She's been in the horse business for over 17 years and also has an equine ecommerce store. A dressage addict, she spends her time outside of work slaving for her two british bred sport horses, at horse shows or drinking gin.