Largest Sporting Goods Retailer May Succumb To Shifting E-Commerce Dominance

Sports Authority Inc. on Wednesday filed for chapter 11 bankruptcy protection and said it would close 140 stores, as the big-box chain struggles with a shift to online shopping.

The retailer, which has about 450 stores, could shut down in the coming weeks unless it finds a buyer for the rest of its business, according to people familiar with the matter.

Sports Authority became one of the largest sporting-good retailers following a merger in 2003, but it has been weighed down with debt from a leveraged buyout a decade ago.

It joins a growing list of superstore operators, including Circuit City Stores and Borders Group, that have filed for bankruptcy. Other chains, such as Macy’s Inc. and Wal-Mart Stores Inc., are adjusting to fewer shopper visits and competition from Amazon.com Inc. by closing dozens of stores this year.

 

The company has $1.1 billion in financial debt, including more than $717 million in bank loans, and about $211 million in trade debt, or debt owed to suppliers, court papers say.

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Sports Authority has “accumulated substantial losses” as sales shifted from traditional brick-and-mortar retailers to online resellers, Chief Financial Officer Jeremy Aguilar said in a court filing. In fiscal year 2015, which ended Jan. 30, 2016, Sports Authority posted before-tax losses of about $156 million on sales of $2.6 billion.

The retailer’s bankruptcy puts the jobs of 5,400 full-time employees and 9,100 part-time employees at risk, according to court papers.

Sports Authority said it has identified about 140 stores and two distribution centers, in Denver and Chicago, that it intends to close or sell in the coming months. The company said it expects most stores to continue in operation throughout the chapter 11 process.

Sports Authority has agreed to take up to $595 million in bankruptcy financing from senior lenders including Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and TPG, the people said.

As a condition of the loan, Sports Authority would close and clear out dozens of stores after filing for chapter 11, some of the people said. The company would need to close the rest of its store base by the end of April if it can’t find a buyer that would put more money into the business, they added.

Sports Authority has been struggling to compete in a crowded sector that includes big-box retailers like Wal-Mart Stores Inc. and Target Corp. Moody’s Investors Service has said bad weather, weak execution, poor margins and high shipping costs have also eaten into Sports Authority’s sales.

Papers filed in the U.S. Bankruptcy Court in Wilmington, Del., show Sports Authority’s big trade creditors include Nike Inc., which is owed $48 million, and Under Armour Inc., owed $23 million. Unsecured mezzanine debt topping $300 million is also reflected in bankruptcy court papers.

Leonard Green & Partners L.P. bought Sports Authority in a $1.3 billion leveraged buyout in 2006. At the time of the buyout, Sports Authority had a larger store footprint than rival Dick’s Sporting Goods Inc. Now Dick’s operates about twice as many stores and has more than double the sales.

Leonard Green is a big investor in the retail sector and also owns stakes in J. Crew Group Inc., David’s Bridal Inc. and BJ’s Wholesale Club Inc.

By

MATT JARZEMSKY and
SARA GERMANO

E-commerce Fulfillment up 50%

Amazon said its fulfillment service for merchants delivered more than 1 billion items to customers in 2015.

E-commerce giant Amazon handled the warehousing, packing, and shipping of 1 billion items last year for merchants that are part of its fulfillment program.

That detail, one of a number that Amazon revealed on Tuesday, shows the huge size of one of its lesser known services. Helping third party businesses sell in its online store generates extra fees and adds to the number of products available to shoppers beyond just what Amazon sells directly.

Over the past two years, the fulfillment program has seen a big growth spurt as more merchants join. The number of sellers using the service grew more than 50% in 2015 after a 65% rise a year earlier, according to Amazon AMZN 1.99% , which did not disclose the number of merchants involved.

In particular, Amazon said that international sales for third-party merchants in the fulfillment program has been gaining steam. Their cross border trade, which involved sellers in more than 100 countries sending orders to 185 countries, has more than doubled year-over-year.

The allure for merchants to sign up for the program, known as FBA, short for Fulfillment by Amazon, is to be able to sell to Amazon’s estimated 50 million Prime members. If not in the program, the merchants get no access to this group of heavy Amazon shoppers.

Prime members pay $99 annually to get anything from toilet paper to diapers to books delivered to them in two days or less. Increasingly, they are being delivered in a matter of hours through Amazon’s Prime Now service.

Amazon, of course, sells and stocks its own goods to sell online. But outside sellers now account for over 45% of total number of items sold on Amazon, a 5% increase since January, said the company.

It’s worth noting that the fulfillment business, which debuted in 2006, is costly for Amazon. In the third quarter, Amazon’s fulfillment expenses increased 22% to $3.2 billion. Sellers pay Amazon anywhere from $1.50 to $100 per order, depending on size and weight, for the service — plus a standard fee.

As more sellers flock to Amazon’s marketplace to reach its users, it can be difficult to distinguish their products. Amazon has been working on giving merchants in its marketplace more data to help lift their sales. Amazon added the ability for sellers to advertise their listings in 2012 in search and other places on Amazon’s website. But last year, it started letting merchants advertise in the first row or the first page of search results and within its mobile shopping app.

In 2015, the number of sellers using Amazon’s advertising service more than doubled, the company said. Those ads brought in $1.5 billion in direct sales.

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Amazon’s release of details about its fulfillment business comes a day after an analyst dropped his rating for the e-commerce giant over concerns about slower growth. Amazon’s shares fell nearly 6% on Monday after James Cakmak, with brokerage firm Monness Crespi Hardt, dropped Amazon’s rating from “buy” to “neutral,” citing concerns about the rising costs for its cloud computing business and for developing original shows to stream on its Prime subscription video service.

Amazon must prove to investors that it has multiple areas of high potential growth that will offset investments in cloud computing and premium content.

Soon, Amazon will put actual dollar numbers behind the performance of its business. Later this month, it will report fourth quarter earnings that include the all-important holiday season.

 

This Lesser-Known Amazon Business Is Growing Fast

Walmart and Retailers Struggle

 

Walmart, whose supercenters once transformed the way Americans shop, announced on Friday that it would close a record number of stores in the United States and overseas, as it fights to hold its ground in a retail landscape under siege by the behemoth Amazon.

The giant retailer, based in Bentonville, Ark., said in a statement that it would shutter 154 stores in the United States, or about 3 percent of its locations, as well as 115 stores overseas. It will also end its WalmartExpress small-store format, which failed to catch on in urban areas. As many as 10,000 employees could lose their jobs in the United States and 6,000 elsewhere, it added.

The closures underscore the turmoil faced by brick-and-mortar retail across a variety of fronts. Web merchants are gobbling up a growing share of shopping dollars, their vast online catalogs rendering Walmart’s sprawling superstores increasingly less relevant. And consumers are spending less on traditional retail items like apparel.

“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future,” Doug McMillon, Walmart’s president and chief executive, said in a statement.

“It’s important to remember that we’ll open well more than 300 stores around the world next year,” he said. “So we are committed to growing, but we are being disciplined about it.”

Mr. McMillon had warned investors late last year that the company was considering shifts in its retail strategy. At the higher end of its new plan to add 142 to 165 new stores, Walmart’s store base in the United States would still rise; at the lower end, Walmart would, for the first time, shrink its United States footprint.

The closings account for less than 1 percent of global square footage and revenue, which totaled $485 billion last year.

Walmart’s exit from its smaller-format stores also highlights the difficulties it has faced in reaching more urban consumers. Introduced in 2011, its Express stores are slightly larger than a typical dollar store and were an effort to establish the retailer in bigger cities. But they have failed to make significant inroads or generate enough returns in the face of cutthroat competition from dollar stores and other discounters.

Over all, Walmart has been slow to pull out of a flat sales period after the recession and was slow to react to the pace of growth in online shopping.

Although sales have improved, the retailer has warned of lower profits going forward because of its investments in its work force and e-commerce. Over the last year, Walmart’s stock has tumbled 30 percent to its lowest level in half a decade.

Despite heavy spending on e-commerce initiatives, Walmart’s online sales growth is slowing.

“Physical retail, and large box in particular, is at a tipping point,” Richard Church, a retail analyst at the data analytics firm Discern, wrote in an email.

“There are too many stores in the U.S. across all retail sectors, low end to high end and everything in between,” Mr. Church wrote. “This is never more evident than when consumer demand is sluggish and decelerating, as it is now.”

It is a difficult time for retailers over all. Though gas is cheap and the job market is strong, retail sales have struggled to gain any traction, falling 0.1 percent in December from the previous month, according to figuresreleased by the Commerce Department on Friday.

The National Retail Federation, an industry trade group, separately estimated that holiday sales rose just 3 percent from the previous year, below its projection of 3.7 percent growth.

The tepid showing by consumers adds to worries among investors, already troubled by the market turmoil in China and elsewhere around the globe, that the recovery in the American economy remains fragile.

There are bright spots in retail, like Lululemon Athletica, which raised its earnings outlook as it continued to ride a boom in athletics wear. L Brands, which owns Victoria’s Secret, reported its “best December ever” after the lingerie brand generated holiday buzz with a star-studded fashion show.

But heavyweights like Gap and Macy’s reported dismal holiday sales as warm weather in much of the country hurt sales of winter clothing. And on Thursday, Best Buy said its winter had been disappointing so far; sales have been hurt by a lull in demand for smartphones and other consumer electronics despite heavy discounting.

Noam Paransky, a director in the retail practice at the consulting firm AlixPartners, said that retailers were reaching the limits of competing on price, especially with online merchants eager to beat prices.

Brick-and-mortar retailers needed to come up with a better proposition, he said, to lure shoppers into their stores.

“ ‘Stack it high and let it fly’ doesn’t work anymore,” he said. “They have to figure out how to make shopping fun again.”

About 16,000 store employees will be affected worldwide by the closings, Walmart said. The stores are scheduled to shut down by the end of January.

Walmart said it intended to transfer as many workers as it could to nearby stores and offer severance pay to those who do not find new positions. The company is the nation’s largest private-sector employer.

Workers’ groups blasted Walmart’s move.

“For Walmart, its workers are disposable,” said Jess Levin, communications director at Making Change at Walmart, a group backed by the United Food and Commercial Workers International Union and a longtime critic of working conditions at the retailer.

“These latest store closings could very well be just the beginning,” she said. “This sends a chilling message to the company’s hard-working employees that they could be next.”

Of the 154 locations Walmart will close in the United States, 102 will be Walmart Express stores. The company said it would focus more on the slightly larger Neighborhood Market format, which has logged stronger sales (though it will also close 23 of those stores). Walmart is also closing 12 supercenters and four Sam’s Club membership stores.

The bulk of Walmart’s 115 closings overseas are in Brazil, where the economy is slowing. The retailer will also close 55 primarily small, loss-making stores in other Latin American markets, it said. The closures are expected by the end of the month.

Walmart said that costs associated with the closings would shave an estimated 20 to 22 cents from its earnings per share, and that the effect would be felt mostly in its fourth-quarter results, which it reports next month. That effect is not reflected in its quarter or full-year earnings guidance.

Print Outsourcing

Print outsourcing defined“Print outsourcing” has come to mean different things. In simplest terms, it involves aggregating and consolidating print management – including indirect print spend and related services – through a firm that specializes in this field.Few short years ago, there was talk of a wholesale shift to digital communications.However, far from going away, print continues to be a critical part of most companies’marketing mix. The evolution of customer communications presents a new challenge for Chief Marketing Officers (CMOs). They recognize that reaching their customers and prospects effectively requires multi-channel communications. While many consumers prefer printed materials, they can touch, others respond better to email or even text messages. Or, in some cases, both print and digital communications are required.Also, shrinking budgets and increasing pressure to grow top-line revenue are forcing CMOs to streamline processes and workflows and ring out waste to deliver better results.This creates a compelling need to manage better their overall print spend to drive more effective communications in both print and digital format. It also makes print management outsourcing a more important consideration for business efficiency and savings.This white paper explores the reasons that marketers are increasingly turning to outsourcing solutions for improved print management, the ways in which print managementoutsourcing can drive improvements in customer communications management overall, and the key factors for consideration in selecting a print outsourcing or, more accurately, a print management services provider.The Power of Print Outsourcing2HOW MUCH CAN ORGANIZATIONS SAVE? Savings can amount to as much as 30 percent on print across the enterprise. Whats more, experts in print management outsourcing are increasingly willing to consider pricing on a gain-share basis providing a savings guaran-tee. That 30 percent can have a huge impact, whether it is used to boost directly the bottom line or reinvested for greater marketing gains. A

Under this definition, print outsourcing includes vital consulting services that optimize print production and distribution, coordinate print with communications across all channels, and leverage print spending to create significant savings. In fact, to call it simply “print out-sourcing” is to sell it short. It is more accurate to refer to it as “print management outsourcing”, because it is the management and consulting component that can offer the greatest value. Print management outsourcing: A growing solutionAccording to the IDC*, print sourcing, and procurement services “is projected to grow from $2.8 billion in 2011 to $6.4 billion in 2016 in theUnited States at an 18.1% CAGR. Worldwide, the segment will grow from $6.6 billion in 2011 to $13.2 billion in 2016 at a 14.8% CAGR.”This projected double-digit growth rate is not due to an expected in-crease in print volume but rather to the significant value businesses are recognizing in outsourcing their print and print management. Outsourcing print management can help marketers gain a competitive advantage by transforming the way that they create, produce, store, distribute, and integrate their customer communications. There are dramatic savings and benefits to be had across the print workflow, including:4Maximized resources – from both a cost and labor perspective4Optimized customer communications – reaching customers and prospects more effectively to drive revenue and retention4Enhanced control of brand identity – ensuring proper branding and alignment by centralizing all printed marketing communications4Access to world-class print capabilities globally – leveraging the best quality print services based on each campaign4Faster time to market – greater speed and agility in production and distribution for revenue-generating campaigns and critical customer communications 4Improved compliance and reduced risk – leveraging only pre-vetted printersOutsourcing – not offshoring? So much of outsourcing today is designed to capture lower labor costs overseas. But with print, any production savings that could be derived from offshoring is more than offset by the costs of delivering the printed materials to their ultimate destination.The most valuable print outsource providers have vast networks of highly-vetted local printers, so jobs can be kept close to delivery locales, saving both time and money.

Delivering value and controlThere are three critical drivers that determine how great the benefits of print management outsourcing can be–outsourcing efficiencies, print capabilities, and management expertise.When organizations outsource, they gain the opportunity to direct more of their efforts toward their core businesses. They benefit from getting these non-core activities offsite to pre-vetted printer networks with excess capacity and from not having to carry the equipment and staff on their books. They reduce their overall risk and support their diversity, environmentally-sound practices and sustainability initiatives through a diverse vendor base.They also can pay just for what they use rather than having to staff for peak capacity. And they gain the leverage that comes from the massive combined volumes that are managed by outsource providers.More specifically, outsourcing your print management gives you ac-cess to the latest print capabilities around the world. This creates the ability to near-source your print campaigns, increasing both speed-to-market and reducing costs. Access to a wider selection of printers also helps in allocating each job to the best available print provider. Striking an effective balance of speed, capabilities and cost ensure rust jobs can be cost-efficiently expedited, specialized jobs receive the specialized attention they require, and routine jobs are completed economically as possible.Risk mitigation is another significant benefit. Using an un-vetted printer network can be filled with risk for an organization: for example, there is great risk associated with vendors outsourcing to other vendors – vendors who are not financially stable, not environmentally sound or not compliant (SEC, FDA, etc.) or who have little or no data security, secure digital asset management or storage. Leading print management outsourcing providers take the necessary steps to ensure their vendor panels include only qualified vendors with responsible and sustainable operations.IDC describes the latest approach to print management services as follows:“Depending on the nature of the contract, these services may also encompass consulting that is designed to optimise print manufacturing, reduce postal costs, or optimize print-relatedcommunications to drive faster customer/recipient response times and/or to reduce operational costs(e.g., demands on call centers) via more effective customercommunications. Service providers often leverage a qualified or certified network of suppliers for printing, fulfillment, and related services. These services may be based on proprietary technology and may include dedicated print management resources onsite.”

4Looking downstream–in addition to near-sourcing print jobs to minimize time and reduce the expense of delivery, organizations can gain significant savings through presorting during or after the print production process. Stricter postal automation and presort requirements make it increasingly difficult for individual organizations and smaller presort suppliers to capture these savings. Working with an outsourcing provider with expertise in both print and mail can deliver even greater benefits.Not only can you save on the print side, but you can also lock-in savings for your direct mail efforts, giving you more flexibility to test different marketing messages and offers in different areas without sacrificing postal discounts. Overall, organizations are finding that a wider, business-process focus enables improvements in everything from document creation through delivery and creates benefits that extend well beyond print savings.Who benefits most from print management outsourcingAll organizations can benefit from streamlining their print supply chain and workflow. However, we ‘ve found that mid- to large-sized companies with a minimum print spend of $1 million annually gain the most from print management outsourcing. On average, these companies save up to 30 percent of their overall print spend.There are several client-dependent factors that determine the upside potential for print managementoutsourcing, including: 4Disconnected print workflows and disparate print procurement processes4Limited print sourcing expertise4Regional network of print vendors with limited capabilities and lack of global reach4Procurement practices that allow each department or location to select their own print vendors4Insufficient visibility to the process and various spends across the enterpriseAll of these factors – unique to each organization – need to be considered when evaluating the value of outsourcing print management. The right print management partner will conduct a thorough audit of an organization’s internal processes and identify all the areas for improvement. Choosing a print management outsourcing providerEven organizations that outsource their print in some fashion today often find significant benefits in reassessing and realigning their approach. The criteria below can help your organization decide which vendors to consider who to choose.

1. Business-process expertiseAs discussed above, the business of customer communications is changing: There are more channels, and businesses are expected to be nimble in managing customer preferences across all channels. Social media is expected to play a growing role in customer communication – but its place in the mix is still being defined. New opportunities such as hyperlocal and real-time mobile marketing are new to the scene and require tremendous agility and speed.In this rapidly evolving environment, expertise in print doesn’t begin to encompass all that is important in the communications space. Organizations will gain the greatest benefits by teaming with a provider that is truly skilled in business-process optimization, has the required breadth of expertise and solutions across all aspects of document management and keeps abreast of communications trends and capabilities.A recent article quotes Ilan Oshri, a professor at Loughborough School of Business: “Buyers… expect the vendor to work closely with them on improvements.” Today’s business-process outsourcing is becoming more collaborative and consultative as today’s marketplace demands more efficiencies as well as savings.2. Performance and trust Customer communications are the lifeblood of businesses. It is crucial to choose a partner with a strong track record and a reputation for reliability and quality. It is also important to consider any potential challenges provider may have in recommending an approach that is not aligned with their own company offering, as a printer suggesting exclusively print campaigns to fill their factories.Reliability: The level of personalization, trans prom messaging and customer demand for accuracy and relevancy makes it more critical than ever that every element of every mailpiece and digital campaign is properly associated. There is also considerably increased scrutiny when it comes to compliance. In choosing an outsourcing provider, it pays to look for established expertise in managing the intricacies of data quality, multichannel communications and document integrity and security.Aligned interests: A vendor that has its own printing facilities and services has a vested interest in keeping its own print volume up. On the other hand, a “print-neutral” vendor is in a position to place communications jobs where their customers will get the greatest benefit. Particularly with the shift to multichannel communications options and the need for agility and speed, it pays to look for vendors who will not be inhibited by allegiances to any particular channel.Quality: Organizations need quality they can rely on – under all circumstances. When printing hits peak volumes, it can strain the process overall, and quality can suffer. It’s crucial to seek out a print management

An outsourcing provider who is fully prepared for peak volumes, not just the day-to-day. Look for a guarantee that every time, every job will be performed by a carefully-screened and approved resource, regardless of the job’s size and circumstances. This is particularly important when you consider a provider who does its own printing – be sure to ascertain what happens to jobs when the provider needs to outsource overflow.3. Overall value for investmentWhen you consider all of the factors that can help or harm communications effectiveness, it pays to look upstream and downstream, from data quality to print production to presort services for huge USPS savings and faster delivery.The trend in outsourcing today is to seek end-to-end providers who take a consultative approach to working with their clients and a holistic view of the communications process. These providers work with organizations, not just for them, and they structure services to meet their clients’ needs.Here are some additional questions that can help in ensuring a collaboration that meets your business requirements and generates savings and efficiencies that will improve customer loyalties and your organization’s bottom line:4Can the vendor provide support across all communications channels and throughout the communications process?4Do they have a single-platform solution? How easily can they change and add functionality as operational and market needs dictate?4How robust is their print network? Does it offer the global coverage the organization requires?4Will they place staff on-site as appropriate to coordinate jobs and interface with organization personnel – and at what cost?ConclusionGiven the growing challenges and mounting budgetary pressures faced by marketing leaders, print management outsourcing provides a very compelling proposition – the ability to aggregate and leverage their print spend to capture cost savings and efficiencies, while enhancing compliance and control of their brand and improving their ability to communicate with customers and prospects. And you can take those cost savings and reinvest them in additional marketing efforts to deliver even greater revenue growth. Finding the right print management outsourcing provider with the necessary blend of outsourcing expertise, print capabilities, and document process management experience will help ensure success.

Macy’s, Others Turn Stores Into Online Fulfillment Centers

A number of major retail chains are now expanding their capacity to fulfill online orders from stores, essentially turning their hundreds of retail locations into local distributions centers. The benefits include faster delivery of merchandise and the leveraging of existing store personnel.

In February, Macy’s announced it was expanding online fulfillment from 292 stores to 500 by the close of 2013 as part of its “omnichannel” push. It currently has a total of 840 Macy’s and Bloomingdale’s locations.

“We’re finding that customers don’t really care from where we pull the goods, as long as we fill the order accurately and the delivery is timely,” said Karen Hoguet, Macy’s CFO, in February on her firm’s fourth-quarter conference call. “We’ve built algorithms to help us determine from where to pull the inventory, and we are learning more each day about how we need to refine these formulas.”

She added, “We expect these fulfillment locations will be key to offering faster and even same-day delivery, and also will enable the customer to buy online and pick up in-store.”

The challenges come when an online order delivery leads to out of stocks at the store level. Readdressing commission structures is also an issue as many associates only see the website stealing sales from them.

“It’s totally an issue,” said Jason Merrick, director of e-commerce for Peter Glenn Ski and Sports, which operates 11 stores in Florida, Georgia and Virginia, in a statement. “We measure how much each store ships and communicate those metrics to the stores.”

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Algorithms help Peter Glenn’s web operation pull product from stores where the product is selling more slowly and avoid fulfilling from a store where the product is moving fast. Technology is also used to avoid the need for phone calls, faxes and having store associates constantly re-key web transfers into the point-of sale (POS) system.

Peter Glenn employs one staffer at each store to fulfill web orders, regularly keeps store managers up to date on the latest fulfillment techniques, and bases store managers’ bonuses in part on the accuracy of shipments from stores. Its headquarters’ web team monitors open orders.

Retailing experts discussing the trend on RetailWire.com generally saw a need for physical store retailers to take this route, if not to gain a competitive advantage, perhaps to avoid falling too far behind online giants, i.e., Amazon.com.

“It will change the mindset as retailers,” wrote professor and retail consultant Gene Detroyer. “Retailers must first evolve into primarily an online retailer with their brick and mortar locations becoming the showroom and pick-up locations.”

Other experts on the RetailWire BrainTrust panel addressed the fact that the cost per square foot at retail is much higher than warehouse space.

Kenneth Leung, a retail strategy manager at Cisco Systems, commented on the need for a proper balance between the two. “Pulling inventory from stores can be part of the overall customer strategy to decrease the lead time to delivery for online customers,” he said. “The challenge will be the data visibility needed and the decision support needed not to cause store out-of-stocks if there is a run on the item online.”

From another perspective, this may present a good excuse to reduce unnecessary retail floor space.

“In the omnichannel era, many big box stores are looking a little too roomy. Retailers are tightening assortments and reducing facings in an attempt to lower inventory carrying costs,” wrote retail consultant James Tenser on RetailWire. “This presents somewhat paradoxical consequences. First, it creates an opportunity to condense the selling area in some larger stores and allocate more space to the back room. Even if some of this space lies empty, it ties up much less capital compared with excess item facings on the shop floor.”

8 Common Mistakes U.S. Companies Make When Sourcing Goods And Suppliers In China

China’s impact on American business has always been the source of strong emotions among Americans. Bret Harte (1836-1902), a famous American author and poet who wrote about early pioneering days in California, once stated, “We are ruined by Chinese cheap labor.” Nevertheless, today’s successful American entrepreneurs have learned not to compete with China but rather to make money working with it. Consequently, a more modern take on China may be seen in a recently popular song by Kelly Clarkson, “What Doesn’t Kill You Makes You Stronger.”

China today is full of incredible business opportunities for American entrepreneurs and business owners, but like any country in the West, it is not a perfect paradise. You must accept the risks of sourcing goods in China while embracing the opportunities that come with it. The good news is that you can manage and reduce these risks with a methodical approach to sourcing in China.

This article is second in a series exploring how U.S. companies can source goods in China, and it discusses eight common mistakes U.S. businesses often make, with a focus on small businesses. (The first article discussed eight basics you should know when sourcing in China. The final article in this series will discuss how larger companies can establish a physical presence when sourcing in China.)

Here are the eight common mistakes U.S. companies should avoid when sourcing in China:

1. Lack of a Well-Defined Strategy

When sourcing goods in China, you must have a well-defined sourcing strategy or “road map,” including locating the best supplier for your particular needs. Too few small companies do the proper due diligence when shopping for goods in China. As a result, they may not get the best deal in terms of price, quality, functionality, or timely delivery.

To avoid this mistake, you must have a methodical sourcing strategy. Successful sourcing strategies typically include:

Identifying suppliers through the Internet, social media, and trade shows
Verifying and vetting suppliers
Insuring payment and managing quality control
Deciding which sourcing method (direct purchase, commission-based sourcing agent, using a sourcing provider or a trading company) best fits your needs
More AllBusiness:

 

2. No Well-Defined Standards for Suppliers

Before searching for suppliers, it is important to have defined standards. Well-defined standards can determine whether sourcing efforts are successful. For example, a company might initially purchase a small order of electronic parts from a Chinese supplier and be happy with the product quality only to learn that delivery on larger follow-up orders would be delayed due to the supplier’s limited production capacity. If the company needs the parts delivered on time to capitalize on the holiday season sales rush, it runs the risk of losing profits, all because it did not eliminate potential suppliers with limited production capacity.

Once supplier expectations are identified, only suppliers that can meet those standards need to be contacted, which can keep you focused, save a lot of headaches, and avoid disputes down the road.

The following is a checklist to consider when identifying supplier standards:

Geographic location. China is a big country. Does it matter where the supplier is located in China? Does it have to be in or near a big city? Would it matter if it is located in a smaller city or even in a rural area?
Production capacity. You need to figure out what your company’s needs are at present and in the near future. Then, you can choose the right size of a supplier. If the supplier is too small, it may not be able to ship your products on time. If the supplier is too big, there is a risk of not getting enough attention.
Quality standards. What is the quality standard you expect from a supplier? What is your expectation of the quality control and verification process from a supplier?
Price range. What is your price range for the products you are sourcing? Create a list of suppliers to compare, then cross out the ones whose prices are too high.
Technology and communication capabilities. What is your tolerance level for a supplier’s lack of technology and communication capabilities? The reality is that many good Chinese suppliers may not be equipped with the most advanced technology to assist with logistics and communication. You have to run a risk-benefit analysis, balancing a supplier’s track record and reputation against its technology and communication capabilities.
3. Inadequate Due Diligence Performed on Suppliers

Due diligence is perhaps the most important step when sourcing in China, yet many companies fail to perform adequate due diligence and end up being scammed. Some fail to perform due diligence at all!

The following is a list of resources to consider when performing due diligence on suppliers:

Check online reviews. If you located a supplier on an Internet sourcing platform, you may be able to read reviews from past customers to see if there are any complaints.
Review supplier websites and follow up by telephone. You should review the information on the supplier’s website, but do not forget to pick up the phone to call the number listed on the website and ask for additional information. Some suppliers do not have websites, but that is not necessarily a deal breaker. There can be many reasons that a supplier may not have what we think of as a necessary component of a business. So keep an open mind — but keep your eyes open, too.
Verify its registration and certification. If you obtained a list of potential suppliers that were verified by a big B2B platform (like a gold member at Alibaba), you may not need to verify the actual existence of the suppliers. Otherwise, you need to do further due diligence on the supplier in addition to your online background check.
Ask the supplier for a copy of its business license. A Chinese business license will show the company’s name, address, legal representative, registered capital, and other official company information. Suppliers that refuse or are unable to provide their business licenses are probably not worth your time. Dump them if they refuse. Note that a Chinese business license is only written in Chinese, so you may need a Chinese speaker to assist you.
Verify the supplier’s local registration. Local level Chinese governments have an agency called the Administration for Industry and Commerce (AIC). The local AIC has official registration records of all companies in their local jurisdiction that can be accessed online. The official registration records include the company’s registration number, registered name, registered address, registered capital, business status, business scope, and other basic information on the company. Note that, most local AIC websites are in Chinese only, so you will need a Chinese speaker to assist you with this step as well. (For example, Shanxi 山西红盾信息网: http://www.sxaic.gov.cn.) Be aware that the information on the local AICs may not be always up-to-date.
Visit a local AIC office. To get the most accurate and updated registered information on your suppliers, you could hire a Chinese lawyer to visit a local AIC office in person to review the hard copy of a company’s official registration records.
Visit suppliers yourself. You could go the extra mile to visit a few selected suppliers yourself. While it may seem like a lot of work at the beginning, it could pay off handsomely in the long run. When you talk to your potential suppliers face to face, you can often get a better sense of who they are as a person as well as assess whether they would be a good fit, even if you need a third party to facilitate the communications. During the meeting, you can inspect their facilities, ask questions about their production capacity, product quality-inspection process, R&D capacity, and other important business aspects.
Hire a sourcing service provider. Sourcing providers can assist in you in vetting suppliers, but you will need to perform some due diligence on this third party before you entrust them with the most important task of performing due diligence on potential suppliers. You need to know and verify key factors about the sourcing service provider, including its references, track record, reputation, expertise, and cost.
4. Lack of Protection for Payment and Quality Issues

Sourcing in China is, after all, an international transaction. Before you make a payment, you need to think about how you are going to get your money back if there is any dispute over product quality or delivery. Otherwise, you are at the risk of losing your money.

The following is a list of practical actions you may consider to protect yourself from payment and quality concerns:

Choose a safer payment method, like a bank line of credit and escrow service. Avoid risky payment methods like credit cards and wire transfers. When using an escrow service, be sure you understand how the escrow service you are considering works and what time limits and other conditions you must meet to get your money back in the event of a dispute.
Set a clear definition of “quality” in your contract with the supplier. What is the exact standard of product quality? What are the exact delivery terms? This will set expectations for both parties, and may determine whether you can get your money back if a dispute arises.
Consider placing a small initial order for samples, rather than making an initial large purchase. Once you are satisfied with the samples, you can then place a series of increasingly larger orders from the same supplier over a “probation period.” If the supplier develops a track of record of delivering quality goods on a timely basis, the trust between you and the supplier is established and you may proceed with larger purchase orders.
Identify and use multiple sources of goods so that you always have an alternative in the event that a supplier seeks unjustified price increases or the quality deteriorates. It is like dating — keep your options open.
5. No Written Contracts

To adequately protect your interest, you must have a detailed written contract. Any oral agreements or invoices may not adequately protect you, especially when different cultures and languages are involved. You should understand that the legal structure and enforcement options in China are different than in the U.S.

Well-written contracts typically include the following provisions:

Parties involved
Terms on samples, price, quality management, logistics
Definition of product quality, quality satisfaction, timely delivery
Payment terms
Liability for breaching contract
Choice of law
Dispute resolution
Arbitration clause
Attorneys’ fees
6. Written Contracts Not Reviewed by Attorneys

Some people download a copy of a form contract from the Internet or simply use a form they used in the past. Sure, most provisions are similar for a typical sales transaction, but the devil is in the details, so it is likely in your best interest to consult an attorney to help draft and perhaps negotiate the contract for you.

A good cross-border transaction attorney can draft a contract with more favorable provisions to buyers (namely, you) and better protect your interests. For example, your attorney may explain to you the pros and cons of contract provisions that dictate what law applies to contractual disputes between you and the supplier, or the method in which such disputes are to be resolved, like arbitration. Each of these decisions will have its own ramification if an actual dispute occurs, so there is real value in having the options explained to you clearly, not to mention the peace of mind that comes from having a well-written contract in place.

7. Ignorance of the U.S. Foreign Corrupt Practices Act (FCPA)

It is also useful to consult an attorney about what laws will impact your business in China. Both Chinese and American laws need to be considered and depending on your business dealings, many legal issues can be involved, including labor law, trademark law, IP law, anti-monopoly law, and commercial law.

One law that U.S. companies often to fail to pay attention to is the U.S. Foreign Corrupt Practices Act (FCPA), which broadly prohibits payments to foreign government officials to assist in obtaining or retaining business and has no exception for local customs. You may have been told or read that gift giving is viewed in Chinese business culture as polite and friendly, a way to build a business relationship. An attorney can help you understand when giving a box of Godiva chocolate to your potential suppliers in China can land you in hot water. When in doubt, consult an attorney.

8. No Mandarin Speaker on the Team

The importance of having a Mandarin Chinese speaker on your team is second only to due diligence on Chinese suppliers. In cross-border transactions, you cannot afford to settle for “maybe” or “probably” by saying that you and your supplier kind of understand each other’s expectations, which can lead to failure, to say the least. No guessing games, period!

If your supplier speaks fluent English and can understand your English well, you may get away without a Mandarin speaker’s help. Otherwise, you should consider engaging a Mandarin speaker, preferably a native speaker who also knows the business culture to help make sure your suppliers understand your expectations clearly and completely. At minimum, you need a fluent Mandarin speaker on your team, at least at the crucial stages of the transaction, like clearly setting product quality expectations. Finally, it is generally preferable to find your own Mandarin speaking team member, rather than relying on your supplier’s interpreters.

Of course, a native Mandarin speaker is indispensable for U.S. companies that wish to establish a physical presence in China when sourcing goods, which will be discussed in the next article.

5 Things You Need to Know About Social Media & SEO

Quicksprout recently published an awesome new infographic on the state of SEO that illustrates how the field has evolved over the past few years in response to Google’s game-changing algorithm updates and the steady rise of content as king.

While looking over the infographic one thing in particular caught my eye: the importance that companies and agencies alike place on social media when thinking about their SEO strategy.

The infographic illustrates findings from Econsultancy’s State of Search Marketing Report 2013, in which 74% of companies and 82% of agencies surveyed said that social media is either somewhat or highly integrated into their SEO strategy.

agency resources social seo In a cruel twist of fate, just two months after Econsultancy collected the data for its report, Google’s Matt Cutts released a video saying that social signals––metrics such as Facebook likes and Twitter followers, which indicate a profile’s authority and influence––do not affect search rankings.

This statement threw marketers for a loop; they had been operating under the assumption (understandably so––more on that below) that social signals were factored into Google’s search algorithm as an indication of trustworthiness and quality.

For this article I decided to dive deeper into what Cutts’ statement meant for the relationship between social and SEO and learn how SEO-focused marketers are thinking about social media now that social signals are out of the picture, at least for now. Let’s start with some more background information on the dialogue around social and SEO over the past few years.

A Bit of History

As I mentioned above, Cutts’ statement that Google does not look at social signals when determining the rank of a webpage came as a big surprise to the online marketing industry. After all, in a video published in December 2010, Cutts himself said that social signals were a factor in ranking.

In this video Cutts refers viewers to Danny Sullivan’s Search Engine Watch article for which Sullivan had spoken directly with Bing and Google in order to learn how the two search engines look at social signals as a ranking factor.

Both search engines told Sullivan that who you are as a person on Twitter can impact how well a page does in regular web search.

A variety of studies, including SearchMetrics’ Rank Correlation for 2013 and the case studies outlined in this infographic from Quicksprout, gave additional weight to the idea that search engines look to social signals when ranking a webpage. metrics rank factors study So you can understand why marketers were dismayed and a little annoyed when, three years later, Google told them nope, sorry guys, we actually don’t look at that stuff right now.

Despite all this back-and-forth, Neil Patel, SEO expert and founder of Quicksprout, recently urged marketers not to discount social’s impact on SEO too quickly; he thinks that social is the new SEO, and his argument is pretty convincing.

Why does Patel think that social is the new SEO, and how are other marketers integrating social into their SEO strategy? I dove into researching this subject and identified 5 key things every marketer should know about how social media impacts SEO in 2014 (going into 2015).

My research also left me with a few questions, which I mention throughout the post; I’d love to hear your thoughts in the comments below!

5 Things to Think About When Considering The Impact of Social on SEO

1. Social Links May or May Not Boost Your Search Rank

Okay, social signals pertaining to a profile’s authority are out, but does Google consider links published on social accounts to be credible backlinks? When a blog post goes viral on Twitter, do those new links boost the post’s search ranking?

Many marketers believe that links to your website via social media accounts do have a major impact on your rankings. Says Marketing Consultant Brian Honigman:

Today, links are mainly achieved through developing original content that is in turn, shared across social media. Links to your content on Facebook, Twitter, LinkedIn, Google+, YouTube and other social networks help the search engines understand what websites are credible and should be ranked for what keyword phrases.

In Danny Sullivan’s 2010 interview with Google and Bing for Search Engine Watch, Google first says that it doesn’t incorporate the number of times a link has been tweeted into their search rank algorithm, and then it goes on to say that it does (doh). Bing says that it definitely looks at this data:

We take into consideration how often a link has been tweeted or retweeted, as well as the authority of the Twitter users that shared the link.

While Cutts’ 2014 video is crystal-clear about the absence of social signals from the search algorithm, he does say that Google crawls social websites for data in the same way that it would any other site:

Facebook and Twitter pages are treated like any other pages in our web index, and so if something occurs on Twitter or occurs on Facebook and we’re able to crawl it then we can return that in our search results.

This leads me to think that while the authority of a social account doesn’t impact search rank, links published on social media could be marked as credible back-links and thus influence a page’s rank.

Takeaways: When Cutts made his statement about Google not factoring in social signals I understood him to mean clues about a particular company’s authority on social media, which, for me, is distinct from the number of times a page has been linked to on social media. Further research didn’t help me get much clarity on this point.

If there are any SEO experts reading this, I’d love for you to chime in below in the comments.

2. Social Media Profiles Rank in Search Engines

While social shares may or may not affect a webpage’s position in search listings, your social profiles definitely influence the content of your search results. In fact, social media profiles are often amongst the top results in search listings for brand names. When I searched “General Electric” in Google, the company’s Instagram and Pinterest profiles appeared as the 5th and 6th listings, respectively, and Twitter was the 8th result.

ge social search results Moreover, Google displayed the company’s Google+ profile information in the right-hand sidebar at the very top of the search results page.

ge social search sidebar

Social channels can feel more personal than webpages, and they’re a great way to get a sense of a company’s personality off the bat. When I’m researching a company I don’t know much about I typically go straight to their Twitter or Facebook page. So if a social account shows up at the top of the search results, I’m just as likely to click on it as I would be to click on their website.

Takeaway: There’s no doubt that your social profiles matter to Google and especially to people who are looking for you online. A few active social channels can make the experience of getting to know your brand online more fun, engaging and personal. Also, while some may consider Google+ a non-essential social channel, marketers shouldn’t discount the fact that a company’s Google+ profile is one of the first things a searcher will see (and potentially click on). As such, it pays to have a profile with up-to-date info and engaging content.

3. Social Media Channels Are Search Engines, Too

Nowadays, people don’t just go to Google and Bing to look stuff up; they also use social media channels to find what they’re looking for. Patel makes this point in his article on why social is the new SEO: “We need to understand that search engine optimization includes the search that happens on social media search engines.”

This works in a couple of ways: First, if you’re active on Twitter, it’s entirely possible that people will discover your company’s new content distribution app after searching for content marketing-related tweets with Twitter’s search engine. Likewise, brands that lend themselves to beautiful visual content can benefit from making their content visible in Pinterest and Instagram by using hashtags and properly categorizing their pins.

Moreover, as mentioned in point #1, if someone wants to check out your company, they’re likely to open Twitter and Facebook and do a quick search to see what kind of presence you have on each channel. YouTube, and, of course, Google+ are also search engines.

instagram search

The recently revamped Instagram search engine

Here are some impressive stats that illuminate just how much people are using social media to search:

  • As of 2010, Twitter handled 19 billion search queries a month (that’s more than 5x the queries handled by Bing!).
  • In 2012 Facebook said it got around one billion search queries per day.
  • As of March 2010, YouTube got roughly 3.7 billion search queries a month. Also, 100 hours of video are uploaded to YouTube every minute, making it one of the largest content repositories on the web.

Takeaways: Companies should expand their concept of SEO to include not just the traditional search engines––Google and Bing––but also social search engines.

When searching for a brand on Facebook or Twitter it’s not uncommon to see several different profiles pop up, and it’s not always clear which one is the real deal. Marketers need to ensure that it’s super easy for users to identify their official social profiles.

This may mean deleting duplicate accounts and/or clearly labeling each social account so that users understand what purpose they serve (for example, accounts for HR or press versus general brand pages).

4. Not Now Doesn’t Mean Not Ever

Just because Google says that social signals don’t currently impact search rank doesn’t mean they never will. Social media shows no sign of becoming a less important part of a brand or person’s online presence anytime soon; moreover, given that link-building strategies like guest blogging have become a less reliable way to indicate the quality of a webpage, it makes sense that search engines would begin to look for other signals of authority and value.

Takeaways: There’s no reason why social signals won’t begin to affect search rankings in the future, so smart brands will continue to build their authority in key social channels and think about social when designing their SEO strategy.

5. Don’t Forget Bing

Google may have back-tracked and changed their stance on social signals, but I haven’t found any evidence that what Bing told Sullivan for his Search Engine Watch interview doesn’t hold true today.

Remember, Bing said:

We do look at the social authority of a user. We look at how many people you follow, how many follow you, and this can add a little weight to a listing in regular search results.

Takeaways: Bing, which is the second most-used search engine, has been crystal clear about how their algorithm incorporates social signals into their search results, and, unlike Google, they haven’t flip-flopped on the issue. With its market share steadily growing, companies would be wise to include Bing in their SEO strategies.

Wrapping Up

Cutts’ claim that Google’s search algorithm ignores social signals should not be seen as an invitation for marketers to dismiss social’s impact on SEO. Instead, marketers should broaden their concept of search and SEO to take into account the myriad ways that people find content on the web. They also need to think about the positive effects that increased traffic from social can potentially have on their search rankings as well as the prominence of social profiles on first-page search results.

Ultimately, the web is all about building relationships, fostering audiences, expressing identity and sharing ideas––it’s inherently social, and there’s no reason that SEO best practices would go against the grain, especially since the rules that govern SEO are ultimately meant to make the web a more enjoyable and useful place.

Okay, your turn: How else do you think social affects SEO?

The Importance of Website Development in Internet Marketing

Today, pretty much everyone is online for various activities like shopping, job searching, etc. One of the best ways to reach your audience is through a website development. If you’re planning on taking your business online, hiring a professional website development company is probably your best option. These days, people start planning to make a purchase from your store even before you communicate with your potential clients. And it is all because of your website that introduces the audience to your business so effectively. Here are a few points that will clarify why website development is an integral part of your online marketing strategy.

Importance of Website Development in Online Marketing

A website is nothing but a collection of web pages that act as platforms where you’re able to talk about your business. However, it’s how you communicate and visually project your company that really makes a difference. Let people know what your company has to offer — let them know why they should buy your products/hire your services and how it is different from others. With a website you’re able to display your core products/services along with high quality images. You can categorize your products in various ways based on color, brand, size, prices, etc. to offer an excellent user-experience.

Round the Clock Shopping Facility

Unlike a physical store, a website gives your visitors the ability to shop at any moment according to their convenience. This is possible through eCommerce that allows customers to make purchases via credit card.

Prove Your Credibility

A website provides you with an easier way to prove your credibility and it’s important how you represent your business online as to ensure that it turns more visitors and customers. That said, the design of your website must be taken care of in the best possible way. A professional web design speaks volume about your business. You’re able to add your credentials, your skills, expertise and experience, etc. These things can help you gain the confidence and trust of your visitors and make it easier for you to generate leads.

Increase Your Connectivity

A website enables you to do what physically would not be possible — increase your reach, get more and more visitors to your website. Now, if you have a desktop-friendly web design, you cannot catch up to the mobile users due to loading issues. However, if you plan to create a responsive web design for your site, you’re able to make it accessible for a wide variety of users with various devices such as a smartphone or tablet. This not only increases visibility but also your website’s organic traffic.

Interact With Your Audience

Interaction with the audience is a must so that you’re able to generate more business. It’s possible to create a website that allows you to interact with your customers. You can create valuable content for your visitors related to your business or the industry you are in, post them to your blog, share them on social media networks, and be able to reply to their feedbacks and comments. This shows your customers how much you are connected and concerned about their needs and satisfaction.

 

Catch Up With The Competition

Websites have become an inevitable part of businesses. Imagine that your competitors have websites but you don’t. They are pulling in traffic and you can’t. Their business is rapidly growing and you are still waiting for that momentum. Can your business afford such a disaster? If you’re still waiting for that momentum, the future is now and it’s all about website development for a successful online business. Even if you already have a website but you aren’t able to drive enough traffic, no need to become discouraged. You are always able to improve your website’s performance through various SEO (Search Engine Optimization) techniques. It’s best to hire a professional website developers for your SEO needs to get favorable results.

 

These are just some of the benefits of website development when it comes to building and enhancing your Internet marketing strategies. At Five Technology, we’re here to enhance your company’s presence on the Internet with a team of developers and designers working together to create a stunning website that is simply worthwhile. Let’s chat to get started!

What is the difference between an advertising agency and a brand consultancy?

As the consumer landscape changes and consumer habits and the purchase decision-making process evolves, it is imperative that brand owners understand where, when and how to spend their valuable and increasingly limited resources.

Historically advertising agencies defined and controlled a brand’s message and through which channels it was broadcast. They would then blitz consumers with intrusive advertising and messages. The goal was to reach as large and as broad a target audience as possible on those platforms with the most extensive penetration.

But in the social economy, consumers have little faith in such corporate driven messages broadcast across mass media channels to which they are paying less and less attention.

Today consumers spend their time in a variety of social networks or in niche online communities with likeminded people. And it is to these people they look to when seeking information on products and services.

So does this mean the end of advertising agencies and advertising? Definitely not, there is still a need for good advertising agencies that create good work but the process has changed and the advertising agency can no longer be given responsibility for building brands.

In the past, branding and advertising used to be elements of marketing. Today, marketing and advertising are now part of branding and it is the brand consultant you should look to if you want to build a brand.

So here is an outline of the difference between an advertising agency and a brand consultancy. Hopefully this will give you enough knowledge to make an informed decision on who should build your brand.

1) Branding is strategic and advertising is tactical. The most strategic actions you will get from an advertising agency will be a brief. The brief will define the proposition that the advertising must communicate and to which segments. But then what? And what about internally? How will you get personnel on brand? Does the delivery driver or sales assistant know what their role is in the delivery of the promise/s made?

A brand consultant will develop a brand plan or brand blueprint that will drive the brand strategy, both internally and externally. This holistic approach will address all key elements of the brand from the copy used in recruitment advertising to customer facing departments and their ability to represent the brand to point of sale and retention strategies and more.

The brand consultant will then work with you to determine the best resources to use to get the whole organisation on brand.

It is not possible to define a brand through an advertising brief but it is possible to define a brand through a brand plan or blueprint.

2) Advertising agencies do advertising. That’s what they are good at. In fact some of them are very good at it. Advertising uses creativity and a slick message (normally defined by the organisation) to get your attention.

And this is done via campaigns pushed out across TV, radio, billboards, websites and so on. The idea is that enough people will see the campaign and the message will hopefully resonate with as many people as possible. And of course the agency gets a commission for placing these ads with the channels.

If it doesn’t work you either get the agency to come up with another creative idea and go through the whole process again, get rid of the agency, hire another one and hope they can come up with a creative campaign that does resonate or you can go out of business.

And as consumers have lost faith in traditional marketing and now distrust the messages contained in such campaigns or simply miss them because of the clutter, it is increasingly difficult to build a brand using such a model.

So unless you have very, very deep pockets and can advertise consistently for long periods of time, this approach is simply going to waste valuable resources.

A brand consultant will carry out an audit of your business, industry, processes, systems, stakeholders and more and then determine the best way forward for you.

Solutions may require advertising but will also look to improve R&D, sales, production, supply chains, operations, customer relationships and retention strategies.

3) If you are looking to go with an advertising agency, your strategy is likely to be in the hands of a creative director and his team. If the agency is going through a difficult period and doesn’t have many staff when they win your business, the agency will attempt to employ talent with experience in your industry.

Unfortunately, if the talent isn’t available, perhaps because they are working for competitor agencies, you will end up with sub standard people working on your brand and your chances of success are reduced further.

Because branding is a strategic institutional initiative, not a marketing initiative and therefore must have the buy in of executive management, a brand consultant will insist on having C level involvement in the development of the brand which places your brand strategy where it should be, in the hands of executive management.

4) Advertising agencies are often deemed successful if they have won lots of awards for creativity not whether a campaign increases sales or profitability.

There aren’t many awards for brand consultants which is a good thing because this allows them to focus on increasing profitability, often through developing and strengthening relationships with stakeholders and customers.

5) Most advertising focuses on a series of tactical initiatives to acquire customers. A brand consultant will develop a strategy to acquire and retain customers.

6) Traditional marketing activities are enormously wasteful as much of the advertising targets irrelevant demographics or customers that cannot afford or are not interested in the product. A recent report in the Harvard Business Review quoted a UK study that reported 72% of CEOs are tired of being asked for money from marketing departments without an explanation of how it will increase business.

Furthermore, in the same survey, 77% of CEOs have had enough of talk about ‘brand equity’ that can’t be linked to any real equity. A brand consultant will ensure budgets are spent on the right strategies for the right segments with metrics for measurement.

7) An advertising agency uses a one size fits all series of tactical advertising campaigns that use mass marketing across mass media with only a nod to digital and below the line activities.

A brand consultant will look to collect and leverage specific data to develop targetted communications across digital channels to engage prospects, whilst carrying on conversations with existing customers.

8) An advertising agency will often look at what the competition is doing and try to position an offering based on competitor actions. This approach is flawed because successful organisations are nimble and by the time you have developed your position the competition’s strategy will have evolved.

A brand consultant will be aware of competitor activities and will use that knowledge to strengthen the firm’s competitive advantage but will not allow competitors to define strategy going forward.

9) The impact of an advertising agency’s work is difficult to measure. A brand consultant will develop metrics to measure promotions, advertising and other activities.

Thanksgiving/Black Friday Online Sales Hit $4.5B, 34% Of Purchases Made On Mobile

The first two days of the holiday sales period have netted $4.45 billion in U.S. online purchases, with mobile devices — led by smartphones — accounting for a record $1.5 billion of that amount, with $2.72 billion spent on BlackFriday and $1.73 billion on Thanksgiving. The figures come from Adobe, which has been tracking some 4,500 sites, including 80% of the top 100 retailers.

IBM says Black Friday outpaced that with the average basket size of $134.45, and sales up 20.7% on a year ago with popular items including Apple Watch, Microsoft’s Surface Pro 4, and TVs from Samsung, Sony and LG.

The number of people buying goods online and by mobile during the holiday season continues to grow, but the average value of what they are buying may be falling. IBM says that Thanksgiving online sales — amassed by way of its Benchmark survey tracking thousands of sites — overall were up 26% compared to a year ago. But the average spend per order on Thursday as $123.45. That’s down from $125.25 a year ago, and nearly $10 less than 2013, when the average basket value was $132.

Adobe said that its $2.72 billion in estimated spend online on Black Friday showed growth of 14%. Adobe had expected growth of 19%.