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Does expanding your sales market reduce your cost of sales?

Expanding sales geography can move a company into a new level of revenue but along with it will come a new level of operational and infrastructure challenges. For many companies that sell heavy duty truck parts to a local market, they are seeing the growth of a new way of doing business: online parts sales. Most of us have purchased a consumer product online, however, online truck parts sales are just beginning to take advantage of this new channel. As a result many parts sellers are wrestling with developing a strategy that services their local customers and offers an online store to service both local and a larger geographical market. If done right, a seller can see a significant increase in sales; however, they experience growing pains to accommodate this new business.

What are some of the “Nuts and Bolts” things to consider when developing a “bricks and clicks” strategy? Here are a few that are critical for success.

  • Shipping – If much of your business is delivered by your company, you may need to beef up your shipping infrastructure and processes. These include physical space, packaging that will withstand shipping, and training employees. This may also be the time to invest in equipment such as bar code readers, electronic scales, and other efficiency equipment. Much of it will integrate seamlessly with your ERP system. For heavier shipments, there are some online freight sites that will provide shipping quotes and process a shipping order.
  • Shipping costs – You will need to calculate shipping costs at the time of order, not at time of shipping because many online customers will be paying for the product as they complete the online order. This will require building product weight into the catalog so your e-Commerce store can calculate the shipping cost.
  • Customer service for online customers – Having good, knowledgeable customer service people available to help online buyers is critical. Buying commercial truck parts is more complicated than buying consumer goods or automotive parts. Customer service people need to be knowledgeable about parts and how your online store works.
  • Online catalog management – An online catalog is a dynamic product and resources must be committed to keep it up-to-date. Parts will added, deleted, superseded, discontinued and so on and you will need a process to ensure that the catalog is continually updated. Buyers will keep coming back to online stores that have accurate information including pricing and availability.
  • Descriptions – Part descriptions must be accurate and thorough. So many descriptions, even from the manufacturer are terrible and don’t help identify a product.
  • Pricing – Create an ‘online’ price strategy that won’t undermine your existing customer base.

These are just a few of the things that need to be done. They will cost resources to complete and put in place, but once done, they can help you develop new markets. To do a cost – benefit analysis is fairly straight forward. Once you figure out the costs of putting these things in place, you can figure out how much gross margin you will need to pay for them. Some are onetime expenses and some are ongoing.

The exercise is worth the effort since online selling will experience very significant growth in commercial trucking over the next few years. Those companies that make the effort to do it right will be the winners.

This post first appeared on The Parts Bin - PartsRiver, please read the originial post: here

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Does expanding your sales market reduce your cost of sales?


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