Sales for out children wear store Liten Butik during the christmas campaign this year was a bit slower compared to last year. We followed the visitor-stats for the site and they were even higher than last years, but the conversion rate were lower. What was the reason?

We had disturbances in aug/sept due to the move to Linköping but that did not affect the activity on the site once it was back up. We had stronger offers this year, the implementation and execution of the campaign was better than last years. Still the sales was lower.

Since we started we have been monitoring the blog/forum activities concerning kids-wear and the “temperature” of the discussions has turned a lot colder the last year or two. Earlier people did tip eachother about who had what products and how they fitted, quality and design. The typical post would be “Ohh, check it out. They have 10% off on the Molo pants. I have had them for a while now and they are worth the money”. The typical post today is “It´s just 40% off, postage is nor free. It’s a crap offer. Don’t even bother.” In many cases post has been false and hateful. Why this change of attitude?

We have spoken to ather e-stores and they experience the same, lower sales on campaigns and more negative feedback on offers.

I think the reason for the above is two:

1. The establishment of the danish brands “Molo” and “Katvig”. The way it was handled was, I think in retrospect, a total disaster for the online-kids business in Sweden. The brands was sold to any store anywhere without restriction. In one year the brand was in every store in the country. That alone is not bad, but in combination with point two it has turned out a disaster.

2. Most of the stores are run on a hobby-basis by one or two persons. People are really uneducated and uncritical on how they run their business. Starting an online kids-wear store has been more an activity of wellbeeing than an serious business. People think “Oh, having a online-store sounds cosy and it can’t go wrong”. A store has been started without any calculations or analysis what so ever. Most common result, overconfidence of sales and overstocking.

2-3 years ago every store that started triumphantly shouted “The most unique store in Sweden” … and what was their main brands; Katvig and Molo. After a while stores could not sell the overstocked brands and to avoid losses price reductions were unavoidable. Sales and offers was not used to build client relations or loyalty, it was a way of not losing money. The result today is that fewer and fewer is buying at original prices when you know that the product will be on sale a bit later. It has gone so far that a lot of stores starts a season off with price reductions up to 25 percent.

Have that in mind and make a quick estimation for a kids-wear startup:
About 110.000 babies are born in Sweden every year. The by far biggest consumer is the first-time parent. 25 percent of the swedish people are regulary shopping online, but the major consumer is male and the kids-wear consumer is female. Ruffly estimated that would give the online kids-wear stores 10.000 new clients every year. There are about 50 online kids-wear stores in Sweden, so each store would have about 200 clients each. Positive calculated every person places two orders a year and the avrage order is about 500 sek (from our own stats). The resulting sales would be 200.000.

If you prior to that have stocked products to a value of 300.000 the longterm result will be that you will panic, cut prices dramastically, the clients refuse to pay full price and in the end the whole business will die.

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