Convictional Seller Network connects brands and manufacturers (“sellers”) to retailers, marketplaces, and distributors to engage in B2B trade. Brands can connect to Convictional and use the platform to invite their B2B partners to start selling their products.
One of our first sellers that joined the network was SUTRO Footwear. SUTRO is a darling of San Francisco that was originally and exclusively designed and developed for its retail stores in the Haight/Ashbury, Noe Valley, and Mission districts of San Francisco. SUTRO was known as Shoebiz Inc. from its founding in 1980 until 2015.
We sat down (virtually) with Mehran Esmaili and Sanaz Batmanghilich, two of the partners at SUTRO, to talk about their experience in using Convictional and how they have been helping retailers de-risk their businesses through drop ship automation.
Tell me about the founding story behind SUTRO.
The idea of SUTRO was a community developed brand by direct design input of fashion conscious, environmentally conscious, tech employees of Twitter, Salesforce and Facebook.
Our community was looking for: handcrafted, hand stitched, good-year-welted boots, utilizing all naturally tanned leather, hand polished with natural coloring and beeswax. We developed a collection of handmade boots with the lowest carbon footprint of any brand then and now. Focus of SUTRO has shifted from traditional Brick & Mortar retail to a Direct-to-Consumer (DTC) brand.
What will retail look like post-COVID-19?
Traditional retail was in a survival mode prior to the pandemic. The universal reasons for their survival mode are: high cost of commercial spaces, high cost of employee health care, payroll tax, minimum wage, and the strength of Amazon significantly. All of these factors reduced the net margin for retailers. The options for retailers are to move online, reduce inventory risk, and expand their assortment of products.
A factor that is taboo and not discussed publicly is the mismanagement and lack of vision of major brands. The brand partners of retailers, with massive marketing behind their online stores, with unlimited access to inventory, promotional and deep discounts had already weakened the foundation of Brick & Mortar retail.
COVID-19 accelerated the instability of independent and mall-based brands and retailers. It was not just the online shopping or the culture of the millennials that weakened Brick & Mortar retail, it was also the lack of fresh inventory; the lack of creativity; the lack of vision of major brands; the time a shopper had to invest to drive, park, and pay for parking (risking a parking ticket).
After all of the customer’s effort, they faced low or no inventory in the store that they wanted to buy from. These are the primary principles that will continue to result in a decline of Brick & Mortar in the days after COVID-19.
The thrill of shopping in stores is gone.
How have you used Convictional’s platform to sell more products to retailers?
The key to a successful drop ship platform is the formation of a community of retailers who come together with similar audiences and onboard their brand partners to this fulfillment model.
Retailers with a well-marketed ecommerce channel (hosted on Shopify, BigCommerce, WooCommerce or other modern ecommerce platforms) and an established audience are in the perfect position to leverage B2B drop ship fulfillment models. Partnerships of several stores with SUTRO Footwear, coupled with marketing budget and effort on the side of SUTRO will bring visibility to all partners, will significantly reduce Cost Per Purchase in all social media channels, and will yield higher SEO.
SUTRO has leveraged Convictional to:
- Tap into the future of retail.
- Onboard Azalea, one of the top retailers in San Francisco.
- Automate orders, reducing the time to process a B2B order by 90%.
- Eliminate the need for legacy EDI and clunky software.
- Give us the flexibility and freedom to onboard any retail partner for online reselling.
Let’s talk about drop ship for a moment. Before Convictional, what parts of drop ship were challenging for you as a brand selling to retailers?
Wholesale has the inherent risks of not getting paid, dealing with returns of unsold inventory, and loss of revenue due to non-payment or return of broken seasonal styles. In addition, net pay of 30 to 60 days requires the wholesaler to carry the cost of production up to 10 months (from start of production to collection) for a relatively low margin of profit. Before B2B drop ship automation technology like Convictional, there were no good options for doing B2B.
How did Convictional solve those challenges for SUTRO?
The benefits of Convictional’s platform has many dimensions:
- Convictional gives SUTRO access to more consumers through the retailers that we onboard for drop ship. These retailers already have established audiences which increases the visibility of our products online.
- Online drop ship reduces the cost of customer acquisition and improves lifetime value for the retailer since they can merchandise more products to keep their customers coming back for more.
- Convictional eliminates the pains of traditional wholesale. With Convictional, we get paid out upon shipment so we don’t have to wait 30 days to receive cash. Our available-to-sell inventory gets synced to the retailer automatically. And the retailer can test new products without committing to a large inventory purchase order.
Will drop ship be more relevant in a post-COVID-19 world? Why?
Drop ship platforms will be more relevant than ever post-COVID-19. Since fewer independent stores will reopen, many will not be financially capable of taking on new or deeper selection of products from their brand partners if they continue to purchase inventory through wholesale agreements.
What advice do you have for retailers and marketplaces who are thinking about their go-forward strategy?
Convert to Shopify, re-think and re-strategize your digital and social media marketing channels, and take on as many high quality brands as possible with drop ship options using Convictional’s B2B trade enablement platform.
Thank you, Mehran and Sanaz!