How to kill a Giant by riding on another Giant! A nice coffee story...
by chee Leng (on coffee makers)
I absolutely love it when I read success story on how other coffee companies sells coffee! In this case, it is about roaste.com.
They have managed to increase their sales by 205% by using the most popular channel currently -group buy site.
People that dabbles with online sales, especially selling coffee, know that it is not easy. There is practically no way to dominate the organic search (i.e. Google) because the big boys such as amazon would always be the top results.
But, roaste.com have found a very innovative way to sell, by partnering with another 'Giant', in this case, sites like Groupons, living social etc.
They offers great value deals through these sites and this manage to get them incremental sales.
By partnering with these group buy sites, roaste.com is able to sell to a huge database of customers. And that is how they "kill" the traditional online giants such as amazon by partnering with another giant, i.e. groupons etc.
But, selling via these channels is also not easy.
You need to sell at a great discount and once the sales is done, you need to give up to 50% of the sales value to the group buy sites.
While, I do not know much about how they sell and the way they structure the deals, I know that
it has to be carefully done, otherwise, there would be some repercussion, such as:
1. Eroding of brand value. roaste.com sells specialty coffee and if they do not manage it well, the brand equity of these brands might be eroded and perceived as cheap.
2. Vicious cycle? One thing with Group buy sites, is you must offer at very low cost, slashing off up to 50% off the selling price.
This might lead to customers waiting for great deals instead of buying them on normal retail price -might not be what you want.
My thoughts on how to maximize the value of this partnership:
1. Leads generation, they can collect all data by inserting another link, i.e. different discounts or promotions for buyers of the deals to opt in.
In this way, with every deal that they are selling, they are growing their database.
2. In addition, why not grow your database the same manner? Keep giving the same discounts to your database for every friends that they recommend.
While the price is the same to the customers, you save 50%, no need to give them to group buy sites and you get another new lead.
Of course, these are just thoughts, how the dynamics of the sales process worked might be totally different. Anyway, this is my $0.02.