Spotlight-Pushing the Envelope-September 2011

Spotlight-Pushing the Envelope-September 2011 is taking the low-cost route to fast growth.

Open for business in late 2007, Plymouth-based iBuyOfficeSupply. com, an e-tailer of office products and furnishings, made $496,000 in sales in its first year. By 2010, that number swelled to $4.6 million, landing the company on Inc. magazine’s list of fastest-growing firms. The company is now on track to make $7.5 million in sales in 2011.
“A lot of people wonder how we compete with Staples or Office Depot or Office Max,” founder and owner Ron Weber says. “My answer to that is we wish that’s all we had to compete with.” Besides the hefty big-box retailers, there are thousands of smaller Internet vendors out there selling office supplies. So how does it compete?
Weber, who spent 25 years as a sales representative for office supply manufacturers and dealers, says he relies on a price-driven strategy to stay competitive. To keep its costs low, iBuy owns no warehouses and holds no inventory. Seventy percent of its orders are filled by two major wholesalers with about 90 warehouses scattered across the U.S. and Canada, an arrangement that allows for one-day delivery in most cases. The other 30 percent of sales are large orders filled directly by the manufacturer at discount prices.
iBuy has some 60,000 stock-keeping units (SKUs) of products. Clients range from individuals buying from their homes to small businesses, academic institutions, Fortune 500 companies, and the federal government.
Nicole Faraca of Savient Pharmaceuticals, a New Jersey–based manufacturer and a regular iBuy customer, says she found the Web site early this year while searching for low-price vendors. She adds that it’s the Minnesota company’s “exceptional service” that makes her keep coming back. A majority of iBuy’s eight employees, including Weber, are involved in helping customers find the right products.
A major challenge faced by Internet vendors, Weber says, is getting people to find them. As a result, a significant portion of iBuy’s profit margin goes into keyword advertising—ads targeted to the words typed into search engines like Google. iBuy advertises on specific SKU numbers or product names, instead of generic terms such as “office supplies.” This costs the company about a quarter per click, as opposed to roughly $6 that it would be spending per click for more popular terms. “And when people are searching for a specific product, we know they are looking to actually buy it,” Weber says.
iBuy also can be found on more than 1,000 affiliate Web sites, including Sears. com, and collects commissions on the sales they generate. With Google now placing higher relevance on pages with video, Weber is looking to add demo clips to some of iBuy’s product pages.

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