When wholesale becomes marketplaces and B2B eCommerce with Ken Kline of VHC Brands (episode 208)
Ken Kline is CEO and co-founder at VHC Brands, wholesaling premium home décor – think bedding, curtains, rugs and more. The business was founded in the 1980s and since 2015 has pivoted from using traditional sales channels into a B2B eCommerce operation with teams in the USA, India and China. In 2018 they achieved over $11m in revenue.
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About the Business
- Based in the USA
- On marketplaces and wholesale
- Platform: Netsuite
How VHC Went From Traditional to Online
VHC got its start selling to traditional retailers and later scaled up to selling on mass retail sites and custom private programs. When the landscape started shifting dramatically towards large online marketplaces, VHC got on board. Ken says they wanted to leverage the major marketplace platforms to become a leader in the field.
To sell direct to consumers, VHC uses eBay to sell a full spectrum of their product line, which is made up of around 2,500 to 3,000 skus. VHC largely sells through marketplaces including Wayfair, Overstock and Amazon.
They also use a mixed approach with Amazon selling on the platform as well as directly to the company, a hybrid model that Ken says works well for their business.
Listen to learn how VHC uses a mix of mass retail sites to sell the full spectrum of their brand.
The Power of Marketplaces
VHC’s decision to sell products on large retail platforms was one that Ken says was intentional. Selling on marketplaces like Walmart, Houszz, Wayfair, JC Penny and more meant that the company didn’t need to run any kind of B2C platform.
They do however, run a very robust B2B website. Because they needed a strong backbone for EDI management, the company chose to go with NetSuite.
Ken says that VHC is trying to focus on optimizing their listings on sites like Wayfair and Houzz instead of trying to create their own retail site. This attitude means that they can essentially run their own store without having to build all of the curated, B2C infrastructure.
Besides the giant ad revenues of retail sites like Wayfair and Houzz, Ken says they have great search optimization within the sites and are even beginning to offer paid promotions and ad spots.
For VHC, the ability to scale by using a mix of large retail sites has been a great way to grow their own company. The best thing about using retail sites is that it allows them to focus their bandwidth.
Shifting From Traditional B2B Channels to eCommerce
The issue that VHC has struggled with consistently is that of curation at all levels. The element of traditional retail curation — that is, retailers picking and choosing the pieces they wanted to offer–was limiting the bandwidth of VHC’s product offering.
Ken says that this “limitation by curation” made it difficult to work with traditional retailers, but big retailers like Wayfair, Overstock and Houzz were different. These massive retailers are largely “product agnostic” and they typically don’t care about style or volume.
For Ken, these online channels have made it possible to get in front of customers without having to go through the curated retail process. VHC continues to try and find the sweet spot of how many products they offer. Ken says they are topping out around 2,500 skus, especially as they continue to add rich content like video to their products.
Listen to learn the value of using mass retail marketplaces instead of traditional, curated retailers.
Building Core Data
In order to overcome the variety of operational and logistical variances from retailer to retailer–which Ken describes as having to fill out unique and tedious spreadsheets for each company–VHC decided early on to codify and standardize their retail data.
Today, they create all necessary retail data as part of their product development process, making the whole process far easier in the long run. While they started this process in house, the company now uses Salisify, a SaaS platform that collects templates from mass retailers and makes the process easier for wholesalers.
Salsify also does the job of flagging any content that isn’t optimized for search within unique marketplaces and alerts wholesalers when templates are updated.
Operational Excellence as a Business Differentiator
VHC has always shipped quickly–within 24 hours–and Ken says he didn’t realize that was a differentiator for them. He jokes that the company is based in the Midwest, with the kind of work ethic that allows them to “show up” operationally.
Literally–he says, operational excellence isn’t about the right software platform, it’s about low hanging fruit like timely shipping, good packaging and accuracy. He believes that it all starts with people and processes rather than software. The passion of your team is what is going to drive your business.
eCommerce Book Top Tip
- The Blue Ocean Strategy by W. Chan Kim & Renée Mauborgne
eCommerce Traffic Top Tip
- Email marketing
Tool Top Tip
- SmartSheet – A cloud app that organizes big projects and forces people to do their part
Growth Top Tip
- Take operational excellence very seriously
Interview Links
Related episodes
- Find episodes with more multi-million-pound retailers here
- And those with other B2B retailers here