The path of innovation inevitably seems to end up in the commoditized business graveyard. Time and again smart, nimble companies invent new technologies or manufacturing processes, just to standardize them, inspire knock-offs and direct competitors and ultimately find that their unique differentiator in the marketplace has evolved into a commodity and that customers make their selection based on price or availability, not manufacturer, brand or logo.
Indeed, I believe that the challenge of commoditization is so great that I just finished co-authoring an important new business book on just this topic, coming soon to a bookstore near you. It’s an important topic, and many of the people reading this very blog are doubtless threatened by outsourcing, the globalization of the modern workforce and similar changes to the business ecosystem.
That’s why I was quite intrigued when I had a chance to sit down with John Fischer, head of StickerGiant, and talk about how he’s identified a pure commodity business and turned the commodity nature of the sticker space into an advantage, creating the largest sticker reseller in the world.
Q: Roughly how many stickers do you sell every year, John, and how big is your company?
A: We ship 40,000 orders or so a year, and sell just under a million dollars worth of stickers a year, and, yes, that’s a lot of stickers!
Q: The average sticker on your site is about $2.00. Surely there’s not much profit to be had in individual stickers? Given that, how are you profitable?
A: We make money on every order, count our pennies and bootstrap everything, this is not a business that will make me rich, but it is better than working for “the man”.
Q: My understanding of the sticker marketplace is that it’s characterized by lots and lots of small manufacturers or printers, each of which have insufficient breadth of offerings to appeal to a mass market. Is that how you see it, and if so, how many producers do you represent?
A: We have hundreds of suppliers from all over the world, many of our suppliers send us our weekly orders and they stink like that hippy juice, I think its called patchouli, some vendors have one sticker, some are working out of their basements and some have thousands of SKUs.
Q: Seems like there are lots of legal issues with stickers, mostly around whether the manufacturer really has the rights to the images used. For example, I’ve seen lots of Betty Page stickers that are far beyond what I imagine Ms. Page would approve. Do you have any issues or problems in this regard?
A: I try to respect intellectual property and take every claim of copyright infringement seriously. I have partnered with a international intellectual property firm to serve as a “early warning” system for possible infringers. As far as Betty Page, I have worked directly with her agents to identify and catch infringers. Often perceived infringement is not infringement at all,
parody for example is protected speech.
Q: Do you have any advice to entrepreneurs who want to compete in a commoditized marketplace like your own?
A: Sell something with a higher price point, like Faberge Eggs, Stradivarius Violins, or Porn; that would be easier and a more profitable space to go into.
Q: Let’s wrap this up, John. Who are your customers and what final thoughts do you want to leave us with?
A: People assume that sticker buyers are skate punks, or college kids, when in reality our customers consist of anybody on the Internet with a credit card or paypal account. I capture very few “seekers” and feel that the majority of my customers fall into the “Internet time wasters” category, people aimlessly wandering the hills and valleys of the Internet.
Stickers are funny, provocative, obscene, truthful, controversial, confusing, beautiful, erotic, appealing, and on and on, I am selling language, StickerGiant is a clearing house for the First Amendment, and the human experience at large.
Very interesting, John. Thanks for sharing this insight with us, and, dear reader, I encourage you to pop over to John’s StickerGiant site and check out some of the very amusing stickers — and bumper stickers he’s selling.
With such a broad customer base as “anybody on the Internet with a credit card or paypal account,” can you truly sustain revenues beyond the survivalist margins associated with most commodities? Companies that stave off commoditization usually do so by finding new revenue streams from new consumers (ref. Clayton Christensen’s The Innovator’s Dilemma/Solution books).
When anybody is already your client, how do you find the non-consumers to convert?
The moral of the story: never underestimate the “Internet time wasters” market segment. 🙂
And with that, back to work for me…
This topic of figuring out how to successfully sell a commodity has always intriqued me. As a marekting guy, businesses are constantly asking me to work miracles for them when they have no way of differentiating their product or service from their competition other than the old no imagination default… “low price”.
If low price is the only way you can find to compete it usually means you’re destined for the business graveyard because there will always be someone who comes along and will sell it for less.
Your interview with John from Sticker Giant inpired me to comment on another commoditized industry where one business has recently impressed me. (No, I have nothing to gain by telling you about them.)
I recently married off my youngest daughter, Ashley. We forced her to wait until she was 18. This girl has wanted to get married since kindergarten, but that’s a different story. Anyway, the wedding reception was on a Saturday night and on the following Wednesday I received a “greeting card” in the mail.
The card was from my second oldest daughter, Leslie. What was shocking about the card was the picture on the front of it was of me and Leslie… taken at the wedding!
Having once been in the printing business I was stunned that I could have received a customized printed card so quickly after the wedding. Plus, having the old printer paradigm of, “its as cheap to print five hundred cards as it is to print one”, I figured my daughter must have invested her entire life savings to pull this off.
Then to top things off, the message on the inside of the card was a customized message from her. She was being sweet and thanked me for the great job I had done at the wedding.
I called her and thanked her for the card and asked her about the details surrounding this card.
As it turns out her fiance, who is currently dodging suicide bombers in Iraq, has an uncle that started CardCafe.com — http://www.cardcafe.com/ — a business that has taken the commoditization out of the greeting card industry.
And what further enhances the appeal to me is that not only can you customize your card with a personal photo and message that they will print for you; but they will stuff the card in an envelope for you… lick the flap and seal it for you… address it for you… put the sticky stamp on it for you… and then they drop it in the mail for you!!!!
I was flabbergasted!
The coup de grace of the whole process is that they do this for the same price as many greeting cards in the rack at the grocery store… less than three bucks!
Ok, maybe everyone doesn’t hate those digital goofy e-cards as much as me and no one probably hates sending Christmas Cards as much as I do. So maybe you won’t be as impressed with this business idea as I was.
But they’ve taken everything I hate about sending greeting cards out of the process for me, namely the stuffing, addressing, licking, stamping and running to the post office.
This year I’ll be sending a few Christmas Cards. My friends and family will be surprised to find out I’m still alive!
GO JOHN FISCHER!!!! I’m one of the people who sells the brother stickers and I have to say that there are few cooler people in the industry. It is very inspiring what he and his staff have been able to do with StickerGiant.
StickerGiant is often in my mind when I’m creating new stuff, because he was the one who dared to approach stickercraft with a Jeff Bezos outlook: we will offer EVERYTHING and therefore attract EVERYONE. The best of luck to StickerGiant and I congratulate the interviewer for his insight in choosing to highlight this dynamic approach to “commoditization”.
The reason I put commoditization in quotes: actually, every single person who creates a sticker and defends its copyright is a MONOPOLIST. Think about it. While nobody could have foreseen the rise of the MP3 format in the late sixties, Black Sabbath was indeed not just a rock band but a SOFTWARE COMPANY. StickerGiant is really a clearinghouse that makes these micromonopolies actually worth something.
So if you want to experiment with this technology, I’d like to point you to our site: http://www.StickerNation.com – where you can print small batches of vinyl stickers yourself (125 copies just $25). OK, enough self-promo, but right on John!!!