Monthly Archives: October 2017

79. How to Join the Gazelle Club

The Gazelle Club

The year 1994 was a vintage year for high-growth company analysis. David Birch concluded that 3% of the fastest growing companies, known as gazelles, created most of the new jobs in the U.S. Also, Bruce Kirchhoff concluded that 4% of firms formed in 1977-78 started growing and hiring rapidly six years after being founded. And, David Storey concluded that 4% of startups that survived 10 years were responsible for 50% of new jobs in the overall economy.

Researchers have gone on to try to correlate the gazelles with high innovation rates, and no one disputes the idea that firms with superior growth and profitability—compared to their peers–do so by differentiating themselves through innovation. Continue reading 79. How to Join the Gazelle Club

78. A Dual Strategy Against Amazon’s Digital Channel Disruption

Amazon’s digital channel has eclipsed much of the information value and cost efficiencies once enjoyed by traditional distributors. When a disruptor eats into your space, you need a dual response strategy:

  1. Downsize to your core profit customers (niches) and renew the relationships
  2. Use your incumbent capabilities to create a new business model to join the disruption growth party

Don’t Be Kodak   

Back in the day, Kodak had a massive camera film franchise. They also invented the first digital camera. But, they let the technology languish. As others began to chomp into their film sales, Kodak put film veterans in charge of a catch-up digital-camera strategy. The strategy was to get digital photographers to print out their best photos in order to stimulate film sales. Mighty Kodak collapsed. Continue reading 78. A Dual Strategy Against Amazon’s Digital Channel Disruption

77. How Amazon Will Skim Your Cream SKUs

At the upcoming Advanced Profit Innovation Conference, I will delve into what Amazon (AMZ) is doing and why you should be paying attention. I’ll present a case, based on real data, showing detailed facts about six of the most profitable, and the most unprofitable, items from a contractor-supply distributor’s total of 5000 active warehouse items.

The Profitable SKU Facts

The case distributor uses line item profit analytics to calculate a profit or loss on every SKU. For 2016, the average stats for the six most profitable SKUs were:

  • On average, 150 customers bought these items 750 times per year or five picks per customer
  • The average sales per pick for all six was over $1100
  • The average margin rate (22%) generated an average margin dollar per pick of $250
  • The average cost-to-serve dollars per pick ranged between $82-88
  • The profit equation:  $250 – 85 = $165 (less another $62 for rep pay)

Continue reading 77. How Amazon Will Skim Your Cream SKUs