Through creative thinking and inventive partnerships companies are learning to build profits using "pass-through" sales. In an exclusive interview with Blake Zalcberg, Chief Operations Officer of OFM in Holly Springs, North Carolina, explained how his company is helping web-based retailers increase revenues without capital expense.
In order to compete in a era of Big Box retailers. Zalcberg was looking for a way to differentiate OFM from larger rivals Herman Miller and Steelcase.
With a tight operation, he landed on a business plan that called for quick turnaround of small orders. This allows OFM to sell their furniture through websites operated by Internet retailers.
A marketing genius, Zalcberg sells products through the on-line sites of such major companies as Staples and Office Depot.
The beauty is that OFM receives shipment orders each day from the on-line retailers. They then ship the merchandise directly to the customer. The retailer never takes ownership of the merchandise so it is a complete pass-through.
OFM invoices the retailer, who is paid by the consumer making it positive cash-flow for the retailer.
At Staples in Rochester Hills, a spokesperson speaking on anonymity said the store is not involved in these types of Internet sales unless the customer returns it for a refund, which is very rare. Most customers buying on-line keep their purchases, according to the store.
Office Depot in nearby Royal Oak reported the same experience with pass-through sales.
Impact on your business
Zalcberg says that any Michigan business desiring to branch into office furnishings could easily follow the path of the Big Boxes.
OFM provides all product information for the retailer, who only has set-up and maintenance expenses. Beyond that it is just a matter of handling the transactions.
With over 3,000 SKUs, OFM can easily expand the offerings of retailer looking to expand their offerings. A retailer could quickly add an entire office product department to their offerings with OFM's products. Similar arrangements could be made with other inventive, forward-thinking manufacturers.
Transferable business model
OFM's model is one that Michigan manufacturers could replicate in other consumer product lines. Michigan has excellent logistics to allow a manufacturer to get into the pass-through business. This includes major facilities for FedEx and FedEx Ground.
Michigan retailers can also benefit by seeking out pass-through arrangements. Volume considerations become the important indicator as the cost of web development needs to be offset.
"Picking the right product lines as part of an overall growth strategy will allow a retailer to succeed with little cost of entry," says William Williams of Max Impact, a Rochester Hills strategy and leadership development company.
At the present time none of Michigan's retail furniture and general merchandise chains, such as Meijer, Art Van, Gardner White, or ABC Warehouse, use the pass-through available at OFM -- but given the ease and positive impact on the top- and bottom-lines it is only a matter of time before the state benefits from programs like this.
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