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Forced To Sell Direct
Blacklisting by shops is self defeating.
by Name Withheld, Publisher (May 15, 2006)
Yes, these are strange times in which we all live. The retail
cross stitch shops are dropping like flies. When we first entered
the business 15 years ago, there were about 15,000 shops by all
estimates. Today, there are less than 1,500 with fewer than 200
"real" ones. What was once an excellent business model
(e.g., selling through distribution on consignment), today no longer
makes good business sense at all.
What we are witnessing is a fundamental power shift in within our
industry – away from the shops.
Like hundreds of other designers, we added a shopping cart to our
web site to better serve our customers who are no longer able to
obtain our designs locally. As can be expected, the shop owners are
up in arms with all of us designers now and are circulating a
Unfortunately, this has its consequences:
1. The shops are now driving their own suppliers out of
2. Those designers who survive quickly realize that by
selling direct to the consumer, they only have to sell a mere
fraction as much at the retail price as they used to have to sell
through distribution on consignment, and that as turnover drops, net
profits rise, cash flow improves dramatically, and you don't have to
work as hard. It doesn't take a Harvard economist to figure this one
3. Consumers have less reason to shop at brick-and-mortar
shops and the shops continue to decrease in numbers.
4. Pretty soon you will see designers abandoning wholesale
channels entirely and adopting direct-to-consumer sales models.
5. It used to be that people cared abut what was good for
their industry. Now it's all about survival.
In my day job as a sales manager for an international company, I
see thousands of companies making their products available direct to
consumers at full retail price as a service. We sell to end users at
the retail price and certain products at wholesale, as do many other
companies, without problems. A classic example is the Sony Store on
the web. I don't see the likes of Best Buy and Circuit City
The thing that really annoys me most is that the while the shops
are all out blacklisting the individual designers, not a one will be
found boycotting the big manufactures who sell direct, to the
chains, etc. That is what I would call hypocrisy, at its finest. It
all has to do with power. When there were 15,000 shops, a boycott
would have spelled the death of a designer. Today, it just means
that you have to use alternate channels.
Speaking of chains, Hobby Lobby pulled nearly all independently
published cross stitch charts off the shelves recently and placed
them in sale bins right at the front of the stores – at 68% off! I
looked at our sales to Hobby Lobby once and it was all volume, with
very little profit. So, the loss of the Hobby Lobby account was, in
actuality, not that great of a loss after all.
As for us, we have seen overall sales drop by abut 40%, while
actual profits have declined far less. Cross stitch is in the
toilet; we are seeing quite a bit of activity with punch needle, and
machine embroidery is slowly growing as the word gets out. So, it
looks like we will continue to hang in there and evolve/adapt, which
is really what it is all about.
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