The zero-margin business model is not sustainable, and vendors are nervous about it.
This was the message from E-Store managing director Steven Spilly when asked about the concept as touted by fellow online resellers like Wholesale Direct.
"Zero margins will inevi-tably cause channel conflict, and I would think that vendors and other suppliers are concerned about the impact it could have on both resellers and end users," Spilly said.
"How long can you operate on zero margin? While price is an important part of the buying equation, its not the be-all and end-all."
Spilly said that E-Store made a conscious decision not to be a zero-margin reseller and has thus avoided causing channel conflict. He claimed that it has done the legwork, spoken to suppliers and found that there were ways of partnering to increase sales by adding value for the end user without the need to operate at zero margins.
As far as Spilly is concerned, one of the key prerequisites is building customer and supplier relationships. "And sales volume is a key way to build supplier relationships."
He claimed to have done more business online in five months than Wholesale Direct has done since it started up, revealing sales of $400,000 in August and projecting E-Store's first million-dollar month before the year is out.