Balsam Brands is a multi-brand E-Commerce retailer selling holiday and home décor. The company holds an extraordinary experience in building e-commerce globally. In our recent interview, Donal Ryan, International Growth Manager and Molly McLaughlin, International Growth Strategist, shared lots of useful insights on the company’s business strategy. In particular, we discussed the biggest industry challenges and the ways business can successfully scale up to international markets.
Let’s get down to the nitty gritty!
A lot is happening in retail these days: geopolitical events, inflation rise, supply chain disruptions, and so on. How does your business withstand all the challenges? What do you generally anticipate for the company in 2022?
Donal: The biggest issue for Balsam Brands was and remains problems within the global supply chain. This is a challenge our company faced in 2021, when we saw massively increased costs for getting our products from our suppliers to our warehouses and ultimately to our customers. In 2022, the company is working hard to receive our inventory on time at a reduced costs both for inbound and outbound shipping.
Last year, the Suez Canal incident amplified this issue and caused a huge backlog and container shortage. So the cost for space on containers rapidly grew, and when products arrived we had to manage the delivery network – which was also strained with so many people shopping online. So the delivery cost also grew. On top of this, there weren’t enough drivers available to deliver orders in our ideal timeframe.
In 2022, Balsam plans to reduce both inbound and outbound costs so we can sell our target volumes during our peak periods – especially since the selling window for Christmas products is so tight. One strategy will be maximizing container space when shipping our products to reduce costs and save time. The second is building and improving relationships with our carriers and network partners. This is a core value at Balsam Brands, and we’ve found that when you have good relationships, you are in a better position to secure and negotiate strong contracts.
Now, when people return to traveling and have more options to spend their budgets on, do you see the role of eCommerce revenues change any time soon? How may this influence your brand’s growth strategy?
Molly: During the 2020 holiday season, there was a significant global shift moving toward eCommerce. So we saw a high uplift in revenue, far exceeding our expectations. Last year demand shifted as physical stores reopened and people had more choices for where to spend their money. Now the general expectation is that the micro-shift to e-commerce will continue because of the convenience and the ability to get more products to wider regions.
However, we need to figure out how to capitalize on this demand when people can again buy products at brick-and-mortar stores. This was also a challenge for Balsam pre-pandemic, so we've been working on this strategy all along. For example, because most of our products are sold exclusively online in Europe, we build comprehensive marketing campaigns focused on educating customers, connecting with them emotionally, and working to become a part of their holiday traditions and celebrations.
Molly, from your profile on LinkedIn, I learned that in 2021 you grew revenue by over 50% through strategic cross-functional collaboration and KPI goal setting. That sounds like a huge win. What other things could you and Donal add to the list? How does this influence your KPIs for 2022?
Molly: One of our long-term goals, particularly in Europe, is to expand our presence in other markets. We've prioritized cross-border e-commerce in countries like Ireland, Austria, Belgium, and Switzerland – so customers in these markets can order from our existing webstores. We tailor our strategy in those geographies just as we would in a primary market, giving them specialized attention, localized marketing campaigns, and relevant onsite content. We also work to reach these shoppers in new and exciting ways by utilizing existing resources like our strong supply-chain network and local PR partners.
Taking your experience in pricing, which advice or recommendations would you give other pricing professionals to deal with current challenges?
Donal: Our key learning from 2021 is better understanding our customer demographics. Success doesn't come from a product or the price you put on it. It happens when you learn who your customer is, when they shop, and why. And keep in mind that there may be a few key demographic groups in your target market – and they may behave differently!
By knowing your customer well, you can design your pricing calendar accordingly - planning top discounts and great coupons at the optimal time. For example, in our industry, customers who shop in September have different priorities than those who shop on Black Friday. So we have a completely different strategy for the two periods. Doing this will allow you to achieve revenue and margin targets in the most efficient way.
When planning for margin, cost plays a key role. And with costs always changing, past best sellers and margin-drivers may no longer make you the most profit. That’s why it’s important to think of your product assortment as a collective group and look at the long tail as well to find products where you can offer value. Having a high-level view of your margin target, ways to achieve it, and your customers’ priorities will all contribute to a strong pricing strategy.
In this term, will the current approach to pricing change? Will the industry see any substantial transformations? Do you envision any approaching transformation that pricing professionals should prepare themselves for?
Donal: We're planning our approach a bit differently this year. For this conversation, let’s focus on our top 10 products. Given that costs have increased so much, we may take a margin hit on these by pricing them at a really attractive price for customers in order to sell more units. In turn, we’d recover some margin with the rest of our products. Put simply, some of our best sellers might be slightly cheaper than before while others may be more expensive. This is because people buying products outside our best sellers have more unique wants and needs, and may be willing to spend a bit more, and this would allow us to continue prioritizing value for our core customers.So this year I don't think we will apply one margin target across all products and expect to sell everything the same way.
Molly: Another strategy we have, especially within new or high-growth markets, is promoting less expensive products to new customers as an entry point. This will help people connect to our brand and eventually.feel comfortable investing in our higher-priced items. If more people can experience the quality of the products and associate us with their holiday celebrations, then hopefully in 2-3 years they will be ready to buy a tree. So not every strategy has a goal of margin generation: some are for the expansion and building bonds with buyers.
What are your tools for productive work? Anything from the ones that help you achieve targets to those helpful in organizing the daily routine?
Donal: Our company doesn't spend lots of money on lots of different tools. For reporting and analysis, Microsoft PowerBI is one of our most important resources. It helps us manage our product, sales, and customer data – and provides strong visuals for understanding performance.
I also use Jira, a project management tool, to organize my tasks or set priorities and deadlines. It's great for collaborating with other teams as well. I also use Excel spreadsheets for daily tasks. We used to rely on Excel for pricing, and still do a little bit, but we're hoping that with Competera’s help we can move as far from spreadsheets as possible. We’re still getting all the information we need in some bespoke elements of the tool, and when that’s finished I hope I won't be talking about spreadsheets for pricing ever again very soon.