Diversification Is Key To Success.
Once in a while, we like to take a look at large volume sellers and breakdown their businesses to see why they are so successful. By case performing studies and researching successful sellers , we hope we can pick up some of their attributes and apply it to our own businesses to further improve operations. There is always something that we can learn from these scaled eCommerce companies.
Today we picked a high-volume company named LightInTheBox. These guys are on virtually every single marketplace there is to be on and they also run a hugely successful e-commerce website. They are truly an all around e-commerce conglomerate and have their eggs spread out in many baskets. However the main reason we picked LightInTheBox is because they are a NYSE listed company. We know there are a lot of you high volume sellers out there, but how many of you can truly say you have scaled to an IPO.
Let’s See The Goods
See Their Investor’s Report and Crunch Some Numbers
This is a e-commerce company that everyone wants to be , they are based in China and are able to capitalize on the cheap skilled labor and cheap products all at the same time. They have their own fulfillment center, designers, photographers , web developers , marketing , accounting and more in China. Over 90% of their staff get paid half of US minimum wage. Warehouse space and logistics are also very cheap in China. With all those factors combined, LightInTheBox enjoys a significant advantage to other vendors in their space and their bottom line is substantially boosted.
Let’s take a look at a screenshot of their best-selling products on Amazon.com as of October 15, 2016
Screen shot courtesy of Jungle Scout.
They sell their own private label brand product + a large variety of other branded product, this is only a screenshot of the first few products they have for sale on Amazon.com, and there are over 4000 products listed alone on Amazon.com by LightInTheBox. Google their company name and search them out on eBay and other marketplaces, their reach is unbelievable and their multichannel reach is so diverse.
Let’s break down their business a bit.
1.) They are listed company on the NYSE. They took e-commerce to the next level and made into one big moneymaking machine.
Keep in mind they are not a marketplace , it is not a place where third-party sellers go to sell. It is one single company.
2.) For just the third quarter of 2015, GAAP net revenue was $70.2 million. O yes , over $70 million dollars worth of products sold in just one quarter
3.) Digging a little bit deeper, they actually lost money in this quarter , loss from operations was $8.4 million dollars
4.) Let’s not look at the loss the way it is, keep in mind this could be tactic for less the company to utilize , there could be a number reasons why….
– Tax liabilities.
– huge bonuses and salaries for directors that make up for the 8.4 million or much more.
– investments back into the company for additional infrastructures or other future capital investments.
– A huge company like that could be holding over 10 million in stock easy at any given time.
Now that we got that the financial out-of-the-way, let’s take a look at how this site can actually help us
1.) The site carries a very wide variety of goods from China , all made in China , all sourced in China. It is good place to find products in your niche or to get ideas.
2.) They claim to add 1000 new products every day to their catalog , just follow them and see if that’s true , that’s a thousand ideas for you every single day.
3.) For you savvy guys , we know you’re thinking about drop shipping their products to sell on your own website or marketplace account, there’s plenty of people already doing this. But hey , please try it out and let us know how it goes. Their pricing is very good and there should be room for bit of profit.
4.) Consider opening your own buying office in China with Chinese speaking staff. You would be surprised at how much you can save by spending an extra $1000 per month overhead. This is especially true for vendors who merchant fulfill internationally. Fulfillment to European customer is also much more cost effective from Asia than the U.S.
We love the business model of this site, maximizing low cost human resources with quality low priced products. They push their products all over different marketplaces, yet they do not ignore building their own site and customer base. Their eCommerce site has definitely already amassed a tremendous list of engaged buyers that love receiving offers for them.
And the best of all, even if any one of their marketplaces decides to revoke or suspend their selling privileges, they will go on business as usual. This is a cold hard fact that is hard to ponder by single channel sellers who have overhead cost. Once that marketplace decides to take you out, you will be left alone, perhaps in debt and sitting on a huge amount of inventory.