Sergey Viktorovsky started his career in a furniture store, and in 2019 he himself created the Stabile company in an already familiar niche – furniture production. The business was kept on orders from large companies. With the onset of the crisis, in order not to lose production, Sergey entered the B2C market. And now he asks the question: what can the “chase for two hares” end up with and is it worth getting involved in?
Organizers of the project “Working Group” – “Pro business” and Pro Retail
Spring season partner of the “Working Group” – Alfa Bank
Project partner – Trafory company
The problem of two businesses of Sergei Viktorovsky, which are doing the same thing, but in different market segments, was discussed on the air of the Working Group project by the CFO of SoftLine Dmitry Levkovich and business consultant for Pro Retail Anna Zaboronok. Expert advice is relevant not only for the furniture industry, but also for all entrepreneurs who launch many products in different directions, and then think about what to do with all this.
Watch the full version of the live stream:
Stabile in figures (B2B):
- Start: 2019 year
- Customer acquisition channel: personal acquaintances
- Specificity: turnkey furniture (design, design and installation; production is outsourced)
- Average check: $ 10,000 per project
- The number of orders: 8 for the whole of 2020
- Profitability: 35%
For three months the company invested $ 1800 in advertising. It received 100 applications, with 100 applications – one order for $ 10,000. When the crisis hit and key clients – large companies – closed for a while so as not to lose their business completely, Sergey reoriented to the B2C market and registered a new company.
Furniture Guru in numbers (B2C):
- Start: 2021 year
- Customer acquisition channel: personal acquaintances
- Main stream: development of cabinet furniture for individuals
- Average check: $ 3000
- The number of orders: from 1 to 4 per month
- Profitability: about 20%
The epidemiological situation has become calmer: large companies are returning to the market. And now Sergey’s furniture business is actively developing in two directions at once.
Sales of the B2B segment bring in $ 3,500 per transaction (with an average check of $ 10,000 and a margin of 35%). An order in a B2C direction – $ 600. It turns out that sales to a business bring 6 times more money than to individuals.
Is it worth developing B2B and B2C directions in parallel or focusing on one thing? This is what the Working Group experts advise.
Solution 1. Communicate the value of your business to your customers.
There is a big difference in how people perceive Belarusian and imported furniture. Italian brands are already a quality mark. And nobody is interested in the fact that many Belarusian manufactures use the same technologies. The key factor in choosing furniture (especially in the B2C segment) is price.
Experts recommend explaining to customers how the price of furniture is formed, talking more about values that may not be obvious to the buyer:
- The quality of raw materials (the service life of the furniture depends on it)
- Additional additives (so that the client does not have to modify something during assembly)
- Ergonomics (alternative ways of using interior items)
- Build quality.
When a company talks about how it can make the lives of its customers easier, it enhances its image and allows its expertise to be sold. The “Working Group” proposed to introduce a separate service – consultation on the choice of furniture.
Solution 2. Find an up-to-date “dream base” (dream clients).
You should start with the question: “Who is my key client TODAY?” Dmitry Levkovich believes that Sergey should sell his furniture to those for whom its quality and price category will add weight when presenting his goods. For example, representatives of the fashion industry.
If yesterday boutiques could afford large budgets for interior decoration, today they are on the verge of closing. Evgeny Vyatkin recommends not to wait until the state of affairs in this area improves, but to change the “dream base”.
Here are the main criteria for selecting key clients:
- Number of retail facilities
- Growth dynamics
- Potential “food menu” (what Sergey can offer).
And then – to determine the price model. If Sergey’s furniture is too expensive for key customers, you can sacrifice super quality in favor of the customer’s capabilities.
Solution 3. Pay attention to vacant niches in retail real estate.
Experts advise not to waste a lot of time on non-target customers when there are those on the market who are looking for furniture manufacturers themselves. For example, tenants of retail outlets. The average opening time of the facility is 60 days. This period can be reduced to a week, but everything depends on the equipment and interior details, which “float” and “fly” for a long time to the customer. When time is money, a local furniture manufacturer can be a good alternative.
One shopping center can provide a company with hundreds of potential customers.
Here are two free “tasty” niches that you can fill:
one. Food courts… They are in every shopping center. More often than not, tenants go through several circles of hell to cover the need for furniture. Nobody comes to them with ready-made proposals – they are looking for contractors themselves. And this is a big headache.
2. Island trade… In a shopping center at 10,000 m2 there are about 25 “islets”. The main trend in recent years is the unification of island points under a single shopping center style. Not every contractor can do this.
According to experts, those who have a recognizable brand, personal image and authority make money in the furniture business in Belarus. Neither Instagram nor the B2B site works – only personal sales. “And in the near future nothing will change, there will be no miracle,” Anna Zaboronok is sure.
A simple algorithm from Anna for finding clients:
1. Follow the news about projects under construction on the site Realt.by…
2. Seek outlets for outlets’ owners and offer their services through personal acquaintances.
Solution 4. Maintain the B2C direction.
Dmitry Levkovich recommends that Sergey not give up the business for the B2C segment, even though it has a lower marginality.
If the sale gives at least $ 1 profit, it must be made. Because that dollar will pay off some of the fixed costs of the business.
The expert argues this by the fact that the main task of a business is to survive, and only then to develop. And in this position, any money is important.
Solution 5. Dissolve B2C and B2B directions – hire different sales managers for each of the segments.
Now Sergey does almost everything himself. Experts recommend hiring two sales specialists to actively increase the number of customers and “take” share from competitors. Then the search for partners in the B2B segment and the organization of meetings will fall on the shoulders of one manager, the second sales specialist will take over the work in the B2C direction, and Sergey will be present only at the final stage of negotiations.
To prevent new hires from “eating” too much of the budget, experts recommend replacing the salary with a percentage of sales.
Do you disagree with the experts’ decision? Do you have any ideas on how to help Sergey’s business? See the full version of the second issue of the Working Group.
You can get recommendations on the development of YOUR business in the new issue of the “Working Group”. Describe the question you would like to sort out and send it to [email protected] marked “Working group”. We will invite the authors of the most interesting questions to the studio!
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