Webstores for Staff & Franchise Systems: a primer

If you manage a company webstore, host them, develop them or are considering a webstore for your company, this article shares some quick tips. The following is a paraphrased transcript based after an on-stage conversation between myself and Bobby Lehew.  Bobby is one of my mentors in the webstore and e-commerce world. This convo was aimed at industry professionals at SkuCon 2018 in Las Vegas this January.

l. to r.: Bobby Lehew; Jason Mileskevich; Rich P.

1) First, tell us a little about the types of stores you do for customers. We run Magento webstores designed primarily for Franchise systems with more than 100 North American Franchise Partners. Those Franchise Partners buy in bulk with average order north of $450. Items include uniforms, apparel, gifts, premiums, hard goods, luggage, headware, etc. We have done two direct-to-consumer (retail or “staff”) style stores.  They should be avoided if possible due to low average value. Our stores are hybrid inventory models with low cost, high volume goods pick/packed from our own facility and high-cost low volume goods made-to-order. We have operated a total of 8 stores over the past seven years, with three currently operational.

2) Company Stores – Why do them? 1. Client stickiness, if you do a good job leads to loyalty; 2. Can be a good profit centre; 3. Can lead to profitable custom projects; 4. If you don’t, competitor may.

3) Margins: healthy? If so, what are they? We tend to price our webstore products like retail, so keystone or higher margins.

4) What’s the best experience you’ve had with a store? Our first store is our best. First contract in 2010 with Nurse Next Door in-home elder care franchise system. We just renewed taking us to October 2020 and ten full years of work.

5) What’s the worst experience you’ve had with a store and what did you learn from it? We haven’t had any true “worsts” but we have had disappointing.  One “staff store” was highly discouraged by us but client was determined that their brand was strong enough that staff would be buying. Turns out: nope. Sales poor but client paid upfront development fee; inventory fee and monthly maintenance so overall its been a wash. I guess one “worst” is when one of our favourite franchise founders died prematurely of Cancer in 2013. He left behind a beautiful family and his franchise system slowly contracted. We suggested closing the webstore and shipped them the 2 small boxes of t-shirts we had in warehouse. Sad.

6) What’s the most surprising thing you’ve learned about doing stores for customers? The “company webstore” style client ALWAYS think their brand is so hot that staffers will be crashing the website with orders. Staff swag has to be considerably subsidized or probably FREE before staff will be buying much. Other webstore clients over-estimate their annual volume. For us, any store that does less than $40k annually is not worth it, but each company has to set their own minimum threshold.

7) Have you created a pop-up shop style store yet? A store that was built for a short time, for a short purpose and was a profitable venture for you? Our best webstore client, Nurse Next Door, has an Annual Conference that we retail at every year. Its a love-fest with about 400 attendees where we average over five grand in sales over four hour period. Ironically, we cannot actually serve the volume of shoppers because they want to shop AND hug — after all these years they are friends and clients.

8) Contract or no? If so, what’s in a successful contract? Any secrets to a strong agreement? Contract Hell yes! Buyback clause. Development fees. Monthly Maintenance fees. To us, the jury is out on minimum spend clause… we haven’t done a pure one but did introduce a spending-milestones-equals-partial-fee-refund clause.

9) In-house or outsource services like fulfillment and kitting? In-house for us. We are small, flexible and want to keep the margin within. Our webstore clients are all over USA and Canada and we haven’t had an issue servicing them (and would be cautious to use a fulfill house for cross border).

10) Service fees: Do you charge for services like the technology? Setting up the store? Any monthly fees? Yes yes yes. See #8 above.

11) Are there any services you’ve been able to provide that have become a revenue stream for stores that surprised you? No newfound revenue streams BUT I have been surprised by the degree of customization, plugins, and more avail with the major platforms (WooComm; Magento, Shopify). If you have the will, you can basically get anything built. We’ve done some some simple integrations with Single Sign On; multiple warehouse ship point calculations; multiple carriers, etc.

12) Commissions: Are there conflicts with commissions? How do you structure a commission plan that inspires sales? Commissions are tough, we did have one store that was managed by a commissioned Account Manager but the profitability is tough to prolong when you have to pay commissions on top of all the administration. We prefer to have the projects as “house” accounts handled primarily by myself and a salaried administrator.

13) Swagbot: How has that helped create some buzz for your brand? It was really developed for one purpose only: legitimize our sponsorship and attendance at a BCTech Conference in 2017. Five thousand attendees at the conference and our booth had loads of traffic, since we had actual “stuff” for people to see. We used the Swagbot as a come-on to legitimize ourselves with the tech audience, but ironically they really wanted to talk hoodies, not A.I.

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