Looking Out for the Little Guys

By James Maguire | Posted October 14, 2003

Visit DollarDays.com and you'll see one of the Internet's most unlikely selections of merchandise. Leather jackets sit next to Christmas decorations. Toothbrushes and shampoo are juxtaposed to Angelina Jolie calendars, while furniture repair tools and electric guitar shaped telephones are side by side with women's hosiery.

"Because we have over 25,000 products, we have an assortment storeowners can't see anywhere else," says DollarDays president Marc Joseph. The storeowners Joseph refers to are the thousands of mom-and-pop retailers across the country, including convenience stores, drugstores, pet shops and e-tailers.

DollarDays is an Internet-based wholesaler that champions for these small retailers. Ordinarily, these small business storeowners would order from a print catalog, but catalogs often only have just 2,000-3,000 products. Or, small business retailers visit trade shows, which can be expensive, or buy from traveling sales reps, many whom no longer visit smaller towns.

DollarDays' goal is to use e-commerce to level the playing field and "make these small store competitive with the chains," Joseph says.

According to Aberdeen Group analyst Kent Allen, DollarDays "allows the dollar stores to take some of their highly manual, very fragmented sourcing practices and automate them."

Inspired by Dot-coms
Seeing an opportunity to cater to small retailers, Joseph started Scottsdale, Ariz.-based DollarDays in 1998. The company had a brief life as a brick-and-mortar wholesaler before becoming solely Internet-based. "We noticed how many Internet companies were contacting us for product, and we said, 'we can do this,'" Joseph says. Later that year, DollarDays.com was launched.

The site uses a custom-built e-commerce engine on top of a Windows foundation. One of the biggest challenges for the six members of the DollarDays IT staff was customizing the software's search capability. The staff had to tweak the platform's ability to present relevant results from among the site's 365 product categories, from clothing to toys to electronics. "Our search process is pretty complex," admits Joseph, who plans on upgrading to Windows Server 2003 in the near future.

Joseph credits DollarDays Internet presence with its ability to respond immediately to his clients. "A manufacturer wasn't moving his Halloween goods, and he called us and said, 'If I don't move these, I'll be looking at them next year,'" Joseph said. "Ten minutes after we got the call we put them on the site."

About one third of DollarDay's inventory are closeouts and another third are basic necessities such as toothbrushes and shampoo. The remaining third are, in fact, seasonal goods, which Joseph says gives retailers an additional reason to return. DollarDays also has eight merchandise reps that constantly hunt for attractive bulk purchases.

Retailers must purchase by the case — a minimum of 50-70 of each item. To encourage greater purchases, DollarDays offers rebates at various purchase levels. For example, at $10,000 it's a two percent rebate; at $20,000 it's three percent. The site also gives cash rebates at the end of the year based on purchase total.

Occasionally, though, even DollarDays is stuck with merchandise that won't move, which then goes into the site's own clearance section. "Everything has its price," Joseph says.

Almost 90 percent of DollarDays customers order through the site, with the remainder ordering by phone. Internet ordering is convenient for the busy schedule of small retailers, Joseph says. "We get as many orders in the middle of the night as during the day." According to Joseph, the site recently had 610,000 unique visitors in one month.

DollarDays' Customers
One of DollarDays' customers is Lisette Candelaria, owner of the Planet Dollar store in Avondale, Arizona. Her store sells a plethora of low-priced items, from Hallmark gift bags to household necessities. Candelaria used to acquire inventory by flying up to Las Vegas to attend trade shows focused on dollar stores. It was at one of these shows that she discovered DollarDays. "DollarDays pretty much carries everything all those distributors carry," Candelaria says. "Now I don't have to go to the trade shows anymore."

Buying online makes life convenient, she says. "I don't have a lot of time outside my store — I live here." It's that convenience that also makes Candelaria more appreciative of DollarDays' return policy. "If something gets to me that's not what I ordered, they take it back."

Rich Hardman is co-founder of Minneapolis-based CrazyApe.com, an e-commerce site launched in 2000. Hardman's site sells a mixed inventory that includes everything from software to binoculars to baseball cards. For Hardman, DollarDays provides an inexpensive source of promotional items. For example, he recently purchased about 20,000 CD carrying cases that he bundled with software. "The add-on item is what we look to them for," he said.

Hardman says he finds ordering from DollarDays to be easy and fast, with responsive customer service. And, most importantly, "the prices are good."

Getting The Word Out
"Our first challenge is getting people to be aware of who we are," Joseph says. Because DollarDays is a B2B site, it exists under the radar of the average Web surfer.

"Although we're strictly on the Internet, I've found that direct [e-mail] marketing is not effective, because the customer is not targeted," Joseph says, explaining that plenty of older storeowners are still not Internet users.

He contacted a large direct mail list vendor, attempting to buy an e-mail list of variety store owners, of which he estimates there are 5,000-6,000 in the U.S. "They had 144 e-mail addresses."

Instead, Joseph relies heavily on search engines. By virtue of being on the Net since '98 — and having a blizzard of keywords due to its large inventory — the site has a significant search engine presence. Joseph says he will not buy keywords, although some of the site's affiliates have.

Certainly DollarDays has reached its customers. To view the site's prices, a buyer must register with a federal tax ID number. (DollarDays does this to prevent these retailers' customers from seeing wholesale prices. The site only shows prices on its front page.) On a recent day, Joseph says that 514 new businesses signed up, which is typical. He claims that about 100,000 businesses have registered s far.

Bucking a Major Trend
DollarDays' strategy is based on using the advantages of e-commerce to buck a major trend in American retailing. As Wal-Mart and other super-size competitors have sprung up, many smaller stores are forced out of business. Joseph's goal is to be the wholesaler that enables these little shops to compete.

"If you go into a town that has a Wal-Mart that's been there a few years, there are still a lot of independents in town, because they have found a niche to be competitive," he says. "It may be customer service, unique products or some other niche."

Aberdeen's Allen explains that DollarDays allows small retailers to avoid what he calls "stale store syndrome." That is, a retailer with a limited inventory can use DollarDays' large selection to freshen up their selection.

With the right products at the right prices, these shops can be competitive, Joseph says. "There are so many entrepreneurial spirits out there."

Adapted from E-Commerce Guide.com.

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