When it comes to sporting goods, we are all convinced that cutting edge gear will increase performance. Whether it’s true or not, that’s what we all believe but are not so willing to admit. We like others to think that it’s “All us” out there. The United States is the hub for the sporting goods industry; we manufacture more specialty products, create the hype through marketing them, are the testing grounds for them, we sell more within our market and export more abroad than we take in. I guess you can say that if the GDP was determined by athletic equipment then we’d be the US. Hmmm, ok… how about, the US a few years ago.
While local sporting goods stores, outlets and specialized boutique shops that cater to one or two sports can meet most everyday needs of today’s athlete; when it comes to big ticket purchases, everyone has to shop, and the easiest way to do all your pricing and product review research is on the internet. Walk-in stores will neverdie, some may go out of business, but there necessary. Personally, I like them for my peripheral purchases, footwear, workout clothing, bats and balls and small stuff. What’s happening today is that there are so many products coming out that stores cannot stock all of them. To add to the excitement, product designers and manufacturers are their own retailers, and they’re the only place you can buy that item.
More and more people are looking to the internet to buy these higher priced and hard to find items. While they’re paying for shipping, they also are buying all of those peripheral items which pulls dollars away from the local retailers. If you’re an online sporting goods retailer or even wholesaler, you know what I’m talking about.
The Good, The Bad and The Ugly
Well, the good thing is that these E-commerce sites are killing it right now. They’re exporting to other countries, vendor distribution centers are accommodating to this industry and the profit margins can be good due to no floor planning and low overhead costs.
The downside of this is that there’s a lot of competition and pricing is slowly going down. While international exporting and high volume is good, profit margins have to be watched more closely and online vendors have to be ahead of their competition by optimizing websites, negotiating better deals with vendors and actually advertising.
Now the ugly; increasing cost of these businesses are their merchant account fees. It wasn’t so much of an issue when volume was lower and profit was high, but when you need to watch every penny, every one really counts, and you know it!
Due to these high volumes and increasing sales outside their domestic areas, banks are hiking up rates, adding to the woes of the merchant. This is just a product of getting big, fast. Merchant accounts come with rules and applications require business plans, and you all know that. Unfortunately, we had to leave out our real goal which was to make a lot of money in the shortest time possible. Your bank and/or processor may be charging you a higher discount rate and associating other fees to your account because you may be in a high risk category now. So many other merchants are in the same category and it’s not even similar to having a bad credit rating or being involved with gray market products or services, but banks assess risk and “Too big too fast” and doing volume sales outside your domestic area is high risk.
The solution may be to shop around for a new processor or bank. Give your current bank a shot, but if they’re not playing ball, don’t be afraid to stop processing through them. Personally, I wouldn’t close that merchant account, but just stop processing and leave it dormant once I got a new one. This whole process doesn’t take too long; search the internet for merchant service providers and find one that meets your needs. they’re not all the same. Some offer different services and some even specialize in specific types of industries. Ask about their portfolio and if they have experience in your type of business or industry; this means that they’ll be more in tune with your sales cycles and peak processing times. They’ll also be able to deal more effectively with your chargebacks. This can be worth its weight in gold down the line. What a lot of online merchants don’t know is that merchant service providers can provide services that you didn’t think you could get, at least without paying a lot for them; services like third-party fraud scrubbing, virtual terminals, 3 D secure processing and fraud protection. Just like your customers found value in a commitment to you, if you’re not totally satisfied with your current credit card processing solution, find value in your business and shop on the internet.
About the author:
Jennifer Loganathan is the President and CEO of Stradafee Limited. Stradafee is a leading international payments company based in New York. Stradafee is a retail and ecommerce payment processing provider specializing in international and Internet merchant account solutions. Stradafee also offers check processing, high risk merchant accounts and offshore merchant account options. Stradafee can help businesses of all industries and sizes. For more information on credit card processing and check processing please visit www.stradafee.com.
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