Bootstrapping a Niche E-Commerce Venture: Elite Fixtures CEO Steven Annese (Part 4)

Sramana Mitra: There’s an electronic integration that you were able to put in place with these distributors?

Steve Annese: Yes, there was only one distributor at that time.

Sramana Mitra: They were electronically and sufficiently together to be able to establish that bridge with you.

Steve Annese: Yes.

Sramana Mitra: What year are we talking?

Steve Annese: It was towards the end of 2005.

Sramana Mitra: What happened in 2006?

Steve Annese: 2006 was a painstaking year for me. It just so happened that pay-per-click was a new concept and was growing at that time. Yahoo! still had their own independent search for pay-per-click before the Microsoft agreement. The distributor that was doing the drop shipping for me called me up and said that one of his other vendors is complaining because I was above him on the search engines on pay-per-click. I didn’t see the issue there. He was telling my distributor that if I continued to be above him on the pay-per-click listings, he would take his business elsewhere.

At that time, he happened to be doing more volume than I was. I did it as a favour to my distributor because I didn’t have anybody at that time. I made sure that I was bidding less in the pay-per-clicks. But I started looking for other distributors. In that transition, as my volume started to grow, I started to contact some of the manufacturers directly. I said, “I’m using this distributor. I want to open direct.”

Obviously, I would save a little bit of money and I would establish a direct relationship with that direct manufacturer. Some them were willing to open up. For some of them, e-commerce was just too new. They didn’t know anything about the e-commerce world. It was just working with lighting showrooms and distributors. Once I found another distributor that had the same brands, I cut over to that distributor and I also leveraged the direct accounts that I was able to open. Once I did that, I resumed my positioning in AdWords and Yahoo!.

Sramana Mitra: Wow! Give me the timeline of it. At what point were you able to get to a position of strength where your distributors were put back in their place and you were able to get back to bidding in the normal levels?

Steve Annese: That was about a year later. I was looking for distributors between 2006 and 2007 who were willing to do the same thing.

Sramana Mitra: Was it hard to find another distributor who would do that?

Steve Annese: It was. When I told you that I was contacting the manufacturers directly, they worked with independent representatives. Basically, the one that was willing to open me up pointed me to a representative. This one rep actually knew a lighting showroom very well and said, “They’re interested in doing distribution.” They basically opened the door for me to another distributor. It was the old story of one door closes and another one opens. That’s exactly what happened.

They then sent me to a representative and said, “You need to deal with the representative if you want to open direct.” He had relationships with a lot of the showrooms in the area and knew of one in particular that was willing to do this type of work. For them, it was pushing paper. I send them an order. They ship it. It was an instant sell. They didn’t have to work for that sell.

This segment is part 4 in the series : Bootstrapping a Niche E-Commerce Venture: Elite Fixtures CEO Steven Annese
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