The e-commerce world has seen more innovation in the former year than in the previous ten years. Principal, daily-deal sections, and lightning-fast online stores entered the scene. For a market that hasn’t had anything new because Amazon and eBay, this has been a sigh of cool air. A brand-new age of professionals is emerging here today. Have you ever tried companies like:
- Nasty Gal,
- Warby Parker,
- Indochino,
- Stella Dot, C
- hloe & Isabel,
- Frank & Oak,
- Julep,
- Beachmint,
- Shoedazzle,
- ModCloth,
- Everlane,
- Bonobos,
- J. Hilburn?
Their combined profit in 2012 will exceed $ 1 billion.
All of these retail brands only exist on the web. Their peculiarity lies in the exclusion of everything superfluous from the path that the product makes from the manufacturer to the consumer. They are engaged in the vertical integration of the value chain, throwing out of it the traditional elements (dealers, intermediaries) that create added value.
The result is an almost direct delivery of quality goods from the factory to the consumer at significantly lower (in comparison with similar products) prices. The following are three benefits of vertical integration in retail thanks to magento support.
Individual goods = refusal to face major players
Any retailer will confirm that it is very hard to play with Amazon on demand. In ordinary stores, a consumer with a smartphone in hand can almost always discover a better price offer. In the e-commerce world, the situation is no better. It is almost impossible to beat the prices of the largest online stores.
Chris Dixon, an investor, once quoted an entrepreneur in his post: “If a product has a UPC (American Universal Barcode) on it, Amazon will issue it at a lower price than you.” Vertical integration retailers may not compete directly with Amazon: they produce unique products that cannot be found anywhere else, which allows them to thrive even when surrounded by bloated old-timers of the market. More information is on https://elogic.co/services/systems-integration/
Different Goods – Unique Name
Warby Parker is a separate brand, as are Dollar Shave Club and Bonobos. A principal advantage for an online retailer in a corner is the capability to quickly and easily create their brand, which supports levels can grow even in a highly competitive environment where other brands are only a click away or a search.
At one time, the atmosphere and special surroundings of purchases were the prerogative of physical stores, where personal presence and communication with the client made it possible to maximize all the techniques that are designed to please the buyer and bring money to the seller. Today, this real-world advantage is no longer so radical: iPads and the cultural buzz encompassing online shopping has given virtual shopping a different feeling that many modern consumers love.
Fewer links in the chain – better rates and higher margins
In the established power cable, there are links, the presence of which significantly increases the value of goods to consumers. We are talking about both local and commercial: warehouses, shops, showrooms, delivery – all this requires money. By shortening the chain and having control over it, vertically combined retailers save a lot of costs. This is beneficial for consumers: they get high-quality goods at a price that is several times lower than what is indicated on the price tags of similar things in regular shops and additional online retailers.
Hill Davis, co-founder, and CEO. J. Hilburn, in his interview with Businessweek magazine, notes that in most cases, garments reach the consumer at a price three times the cost of manufacturing. So, the production of a men’s shirt under the J. Hilburn brand costs $ 57. In the J. Hilburn online store, it is sold (directly from production, bypassing intermediaries) for $ 125. The shirts are sewn by an Italian factory, J. Hilburn is not its only customer, but goods that are practically similar in essence and quality are sold in other stores at $ 325–435.
