Dominik Benner is the founder and CEO of Schuhe24, a platform for local retailers in Germany. Based in Wiesbaden, near Frankfurt, Schuhe24 takes care of around 2.000 local retailers, selling shoe and fashion items every day, which are connected to the platform. It launched in 2013 as a platform for shoe-selling retailers. Not much later, they expanded their services to the sports, fashion and leather and bag industry, with each branch having a separate platform. Within these platforms, the clients can choose a specific currency and language based on their country.
Text: Sanne Leenders // Photo: Schuhe24
We care about local retailers
Schuhe24 is very different from other e-commerce players. Our main focus is on local retailers. We think about retailers and why they are different from certain other retailers. This means that we do not think about the differences between customers. When we create an internationalisation strategy, we have to focus on how we can connect with retailers in the local country. In addition, we also have to think about the local possibilities offered. This strategy is distinct from, for example, Zalando, which is more customer-oriented. We give these retailers an advantage because we can offer them the opportunity to generate more revenue with our online sales. This is a crucial opportunity because, in the last few years, the number of sales for local retailers has been declining.
Lack of online knowledge
The idea to create a platform for other sellers was not initially the plan. This idea came to be after a sad event. My father passed away, and at the time, he owned a local retail store. After he passed, I decided to take over and run the family business. I tried to find a specific way within this e-commerce-oriented world. From the very beginning, our idea was that we would work together with other retailers. I always wanted to improve sales together and take advantage of more online advantages that local retailers could not realise. A local retailer is limited because they do not have enough online knowledge, they have limited capacity and subpar online content. I made it clear that we have to do something together, and this will make us all stronger. However, most retailers said that this was a fantasy. They believed that companies, such as Zalando, would go bankrupt. Others said they did not like the online world, but they did want to earn more revenue. In the end, most of them were opportunistic, as I am a local retailer as well. We started with ten local retailers, all friends of mine. The sales within the online platforms were very promising, and this opened their eyes. In 2013, our platform became a success, and we have attracted many more retailers since.
Good content is the challenge
We do have some e-commerce challenges within the fashion and shoe industry. Manufacturers often do not have good quality content, and they do not provide it for us. Around 80% of manufacturers do not have high-quality pictures, descriptions or data. This means that we have to create all of the content ourselves for our retailers and products, and this often takes a lot of time and money. Another big challenge is competition with manufacturers. Manufacturers used to sell their products to the retailers, and the retailers would sell it to the customers. Nowadays, manufacturers have contact with companies, such as Amazon and Zalando, and they get used to selling to customers. They opened their own online and mono-brand stores and started selling the products themselves. As a consequence, this has made it a bit difficult for retailers, as well as us, because the margin is higher on the manufacturers’ side. We try to tackle this problem by selling 50% of our products that are older than six months because the manufacturers do not have older products. We currently have the largest storage of old products in Germany. The customer usually does not care about the age of the products. In addition, we are not a high-fashion business. This ultimately means that we can sell a lot of products which are a bit older for relatively reasonable prices and manufacturers cannot.
These challenges affect our business in many different ways. We have to run a big team that works all day to provide the pictures, descriptions and attributes for all of the new products. Also, our stock is relatively low compared to the big players, such as Amazon or Zalando, because the retailers themselves have a very limited stock available. This means that the content we create is for the minimal stock, but it requires a lot of effort. People outside of our industry assume that most stores have the same products available. However, this is definitely not the case. The variety is wide, and this is the reason why the products have many different dimensions and SKUs.
Offering different payment methods
Customer service is a crucial aspect. For example, the payment process is very different in each country. Kauf auf Rechnung – which means payment by invoice – and payment by rate is the preferred payment method in Germany. In the Netherlands, iDeal and PayPal are necessary. However, some payments are well accepted all over Europe, such as credit cards and PayPal – which work well for both the younger and older demographic. Usually, the younger demographic tends to return products more and pay later. The older demographic does the opposite, and this ultimately means that the older demographic has more value. Within our strategy, we mainly target women between 40-70. We are not particularly fancy, and we do not claim to be “cool”. Our influencers are mainly between the ages of 40-50, and that is exactly our target group. When we focus on our target group, we focus on age, payment preferences and behaviour. These aspects are very different in each country.
The importance of localised customer service
It is imperative to be able to contact a local customer service agent. Every day, we receive hundreds of calls about clients who do not have an email address or the availability to pay online because our target customers are a bit older. They do not have the tools to order something online. Because of this, we take orders by phone. For example, on an Amazon page, it is tough to find a phone number to contact customer service. Our phone number can be found everywhere on our platform. We currently offer customer service in German, Dutch and English. These are our core markets. We are currently also focusing on France to start up our local customer service and retailers. We work with Salesupply for that local touch.
A look into the future
I think there will be a lot of changes in the future. Small unprepared online stores will disappear more and more. Online stores will probably become less important for consumers because most of them are not professional. Social media will become more critical as some social media platforms are already using direct buy buttons. This will eventually change the market significantly. At the moment, social media has very high traffic, but sales are low. However, I do think that this will grow a lot in the future.
Currently, we have a team of seven people. They look for specific influencers, and they create our posts. A few years ago, we decided to post all of our available products on our social media platforms to create an online catalogue for our customers. The only aspect which is not relevant to our company is voice ordering because the numbers doing this are very low. Also, customers want to see the products and their quality before they purchase them.
Expanding to more industries
At the moment, we are active in four different industries. However, we want to expand to four more relevant sectors, including home and living, beauty, jewellery and watches. We also want to reach new regional markets and countries. We would like to start with France and Austria and eventually expand to Benelux and Italy.
This article was previously published in Cross-Border Magazine 14.