Published in print and on FinancialPost.com by Tony Wanless on January 13, 2014
See the original article here: http://business.financialpost.com/2013/12/18/online-shoe-store-boosts-sales-by-catering-to-rural-consumers/?__lsa=0f6d-f6a2
Sometimes, if entrepreneurs are lucky and well positioned, an under-served market finds them instead of their having to search for it.
So it was with Sean Clark who discovered that what he thought was his startup’s — an online shoe store called ShoeMe.ca, which opened in 2012 — main market wasn’t.
At least, it wasn’t completely. He expected the majority of sales to come from the bigger Canadian cities, but in his first year 40% (and climbing) of his sales came from customers in rural areas and small towns.
“Their local stores usually offer a very limited selection, and many people, especially women, want more than that,” Mr. Clark said. “They like fashionable shoes too, but can only get them if they visit a bigger city. We discovered early that we had a lot of traction outside the big cities that we weren’t expecting.
“Rural wasn’t part of our plan. I expected to get to urban customers who were online savvy. But now we’re finding that our service reps are increasingly walking older, rural and small town women through their first times online. Rural is now our driver. ”
Mr. Clark logged time as a manager with Clearly Contacts, the online glasses and contact lens supplier that has disrupted a traditional industry by allowing customers to buy their glasses online. He was also a director in charge of the company’s Australian operation.
So when he launched ShoeMe.ca more than 18 months ago, he expected to disrupt the staid shoe industry in Canada. He had plenty of market knowledge — such as that only 2% of footwear in Canada was sold online, while it was 10% to 15% everywhere else. And he had an advantage in that the big U.S. online shoe suppliers weren’t bothering with Canada because duties made their shoes too expensive.
Statistics from the online consultancy Forrester show 64% of Canadian online shopping happens in the United States, largely because of the wider selection offered. But if shoppers buy a physical product in the U.S. they must pay duties at the border and also pay for higher shipping across the border.
This increases the total price considerably and likely accounts for the fact that most online shoe retailers in the United States won’t sell across the border. Zappos, the large U.S. shoe retailer, did make a foray into Canada with its Canada.zappos.com site, but retreated because some of its brand distributors had other agreements in Canada. Also, it said, there was a problem with the “unpredictability of delivering orders to our Canadian customers given customs and other logistic restraints.”
ShoeMe charges a simple $4.95 shipping fee for Canadian orders and eliminates that on orders of more than $139. Also, Mr. Clark boasts that his selection is more varied than any shoe store, online or offline, in the country. For example, his site features 25,000 products and that will increase to 50,000 next spring.
It’s a classic “long-tail” play enabled by the Internet’s wide reach, the opposite of the 80-20 rule that most shoe distributors — and distributors in general — use. For example, a shoe-store buyer will likely buy only the best-sellers and most common sizes because anything out of that norm has less of a chance of selling and he or she would be stuck with the carrying costs.
But, Mr. Clark said, that often leaves rural residents unable to get the shoes they want.
“We sell extra wides, extra narrows, large and different — all the shoes that people can’t get at a typical shoe store, and certainly not in the small towns. Our value proposition is selection and service. We like to say we’re driven by rural mothers, who want to get the latest fashions for themselves and their kids. For women, shoes are a fashion statement as much as a necessity.”
The best thing about ShoeMe, he said, is it’s at the front end of a shopping revolution that is now spreading to Canada.
“Ecommerce is set to double in Canada in the next two years,” he predicts. “It was $18-billion in 2012, and is expected to be $40-billion by 2015. We’re projecting that we’ll double our sales to $15-million in 2014, and double that again in 2015."