If you’re a manufacturer trying to reach b-to-b retail buyers, it’s often the smallest companies that are the toughest to bring on board as customers.
That’s why "sport-specific" sock manufacturer Thor-Lo Inc. hired an e-commerce software vendor not only to handle the technical aspects of its Web site but to aggressively market the cyberspace location as well.
The strategy is to prompt thousands of one-, two- and three-store companies in the United States to use the Internet to buy Thor-Lo’s custom-padded, super-wicking hosiery, said Richard Oliver, CEO-COO.
Those b-to-b buyers never hooked into Thor-Lo’s existing electronic data interchange system for processing orders, and an Internet connection was viewed as a solid strategic move to tighten relationships with a crucial market, Oliver said.
"What you don’t get with the big-box chain stores that you get with independent store operators is a lot more understanding of the product," Oliver said. "We feel that once we’ve reached a consumer, we’ve got a sock buyer for life. Mom-and-pop [stores] are good at conveying our message to the consumer."
An unusual approach
Thor-Lo has taken an unusual approach to reaching its retailers. It hired PlumRiver Technology Inc., Salisbury, Mass., to train its customer base on how to use its Web site to process orders. Thor-Lo pays PlumRiver a bounty—estimated in the $40 range—for every retailer it gets to activate an account.
"Manufacturers have to have an implementation adoption strategy for an electronic commerce site because ultimately that’s the only way to show return on investment," said Henry White, PlumRiver president-CEO.
"From training the manufacturer’s sales force to making sure retailers have incentives to use a system, we feel we’ve developed a methodology that does everything humanly possible to make sure dealers are going to use the system," White said.
In the case of Statesville, N.C.-based Thor-Lo, PlumRiver co-developed direct mailers that were sent out to Thor-Lo’s customer base (the company wouldn’t disclose the number of retailers it is targeting). Then, PlumRiver followed up on the mailer by offering retailers such services as order status, sales volume and free shipping for certain purchase levels.
The price you pay
In general, PlumRiver charges between $50,000 and $150,000 to set up and maintain a b-to-b Web site (neither Thor-Lo nor PlumRiver would confirm pricing on this specific implementation). Nonetheless, the pricing places it well below some of the estimated $3 million to $5 million software licenses some larger e-commerce vendors have charged for a b-to-b site.
Louis Columbus, analyst with AMR Research, Irvine, Calif., said Thor-Lo was cagey in requiring its e-commerce company to deliver visitors. With an estimated $50 million in annual revenues, Thor-Lo probably has neither the information technology nor the marketing resources in-house to stage a full-scale Web blitz, he said.
"The pay-as-you-play model moves companies away from objections to actions," Columbus said. "It is a good approach to pricing for the mid-tier of the market."
Thor-Lo’s products aren’t ordinary six-pair-in-a-poly-bag tube socks, which is why small retailers are so important, Oliver said. Thor-Lo sells a line of "Sports Specific Thorlos," which are priced between $10 and $20. Over 48 years of production, Thor-Lo has developed a cult following, but it needs small retailers to convince consumers the product is worth paying more for, Oliver said.
"By allowing 24-hour-a-day, seven-day-a-week ordering, we’re hoping to allow us to be in a better sock position at the retail level," Oliver said.
AMR’s Columbus cautioned that Thor-Lo might become too dependent on PlumRiver’s infrastructure. After all, it is outsourcing a lot of sales and marketing muscle to a relatively unproven company.
"Only time will tell if PlumRiver will be able to scale," AMR’s Columbus said.