Sunday, August 27, 2006

Gudorf & Sons’ V-Store Closes

Yes, it’s true.

While the Gudorf & Sons’ online V-Store (virtual store) has been open for five years now as an extension of the Gudorf.Net web effort, the company behind the e-commerce store engine it uses has decided to call it quits and so the links to the Gudorf & Sons store will close accordingly.

While it’s a little sad to see it go, the need for such a decision is very clear. The market realities of today’s web world are such that if you don’t offer a unique business proposition in the way you drive traffic, offer pricing, or service the consumer, the myriad of other choices available to the consumer will mean you simply fade away into the crowd. The Gudorf & Sons web store’s primary uniqueness was the family name; nostalgic for some but of no real value versus a purchase from Amazon or others of the larger web world.

Five years ago, the idea of being able to easily create a customized e-commerce storefront was pretty exciting and I couldn’t resist the temptation to give it a try. With minimal fanfare and only a few hours of effort, the Gudorf & Sons V-Store launched from the Gudorf.Net web site offering books, movies, music, electronics and much more to anyone who happened upon the link. The experience was akin to any web purchase from a smaller site and I had hopes that the commissions (profits) would help to offset the costs of operating the Gudorf.Net web site. Of course, I should have listened to my mother who told me many times in my youth that “if it’s overly easy, it might not be worth doing”.

The business model from the V-Store system perspective was that if enough small fry such as me built their own stores, then V-Store could aggregate that traffic and the purchases that went with it into a powerful overall business. While V-Store’s approach was unique as to enabling others to easily start a retail store that uniqueness broke down when it came to the consumer for if the small fry store operators could not develop an adequately unique proposition for their consumers then the V-Store system operator would never flourish.

There are two overarching flaws in the V-Store approach at the heart of their closure. The first is that many of the small fry, who created stores like the Gudorf & Sons web store, did so out of curiosity and lacked the ability to drive reasonable traffic to the site. The second flaw was that with a business model that needed to pay the small fry a slice of the profit (a commission really) plus pay the V-Store operations, the ability to be competitive in product pricing with the likes of an Amazon couldn’t materialize. If a unique enough consumer position could have been created at the individual small fry level, then perhaps the price competitiveness could have been overcome but with that part of the equation totally in the hands of the small fry (see the first flaw), the V-Store operators themselves were hard pressed to create a truly unique consumer proposition.

During this same time, Amazon and others grew at much faster rate than the average V-Store small fry player and so the gap widened between the Amazon level consumer proposition and what the V-Store operators could offer. As such, the apparent need for small “mom & pop” web stores became less and less sustainable as these small web stores could not economically generate adequate traffic to enable the volume of sales that would yield a competitive price while also delivering a differentiated and positive customer service experience. Thus the downward spiral took root for lack of a unique consumer selling proposition.

In summary, I’ll chalk it all up to a fun learning experiment for myself and further proof positive that if you don’t have a unique selling proposition at the consumer level that you can afford to nurture and cultivate, then you’re business is on weak footing at best.

Here’s the official notice in case you’ve got any orders pending. FYI.

August 23, 2006

Dear Vtailer:

Please be advised that effective Monday, August 28, 2006, Vstore will cease accepting new orders.We will continue to service those orders accepted prior to August 28, 2006 for a period of thirty (30) days, or until midnight September 27, 2006 in accordance to the Terms and Conditions you agreed to when building your Storefront. You will be able to access reports during this period and should you require this information after September 20, 2006 a copy should be printed. Any orders not completed by midnight September 27, 2006 will be cancelled.All outstanding commissions payable under the Terms of the Agreement will be paid on or before October 26, 2006.

We at Vstore wish you every success in your future ecommerce entrepreneurial endeavors.

Sincerely,Vstore

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