As consumers comb through online sites such as Amazon, Newegg and eBay for the lowest prices and e-tailers battle for sales, the race to the bargain basement can quickly eat away at manufacturers’ profits.
Folsom’s Quipt gives manufacturers a cloud-based system that helps them ward off such price erosion.
Currently, Quipt is focused solely on computer and consumer electronic companies, said Jason Willitts, the company’s founder and CEO. These manufacturers generally sell their products to e-tailers such as Newegg, Groupon, TigerDirect and Best Buy, who then sell the goods directly to consumers.
“Once a manufacturer sells a product to them and transfers title, they own it and market it at whatever price they want,” Willitts said. “You think, ‘Well, they’re going to try to make as much money as they can.’ (Online e-tailers) do start that way until they see somebody out there undercutting them. And then the race to the bottom begins, and nobody wins ...not the (e-tail) channels, not the manufacturer.”
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Margins become razor-thin as the manufacturer responds to pressure to lower prices, said Willitts. His solution was to build a cloud-based environment that lets manufacturers put their inventory on the e-tailer’s systems without giving up control of it. They maintain ownership, set pricing and ship directly to consumers, or if they have a third-party logistics company do the shipping, they can also monitor their work. Quipt does it all.
Willitts, a finance graduate from Chico State, worked in the online sales, fulfillment and logistics sector before he came up with the idea for Quipt. A partner in Nashville Computer Liquidators in Tennessee, he cashed in his shares and founded Chanx in Arizona in 2000. By working with manufacturers there, Willitts learned exactly what they needed from a software tool. He moved the company to Sacramento in 2012 and began perfecting Quipt’s software.
Although Chanx remains the corporate parent, the Quipt name has superseded it in the marketplace. Willitts and his wife, company controller Shelby Willitts, employ 12 people at their headquarters near the American River bike trail. All the growth has been funded through Quipt’s operations, Willitts said.
“We have built a client list as large as we thought we could support as we were developing the software and rolling out different models,” Willitts said. “Now we have a half-dozen inventory partners on it. We have, I think, over 20 dot-com channels integrated, and we’re going to start scaling pretty rapidly.”
Quipt has been acting as intermediary so far, buying product or striking revenue-sharing deals and then selling the merchandise at the e-tail websites, Willitts said. But in the fourth quarter, four new manufacturing clients will handle sales directly through the e-tail websites.
While Quipt shares some traits in common with e-commerce giants such as ChannelAdvisors and CommerceHub, Willitts said his software goes further when it comes to managing price.
Call The Bee’s Cathie Anderson, (916) 321-1193. Follow her on Twitter @CathieA_SacBee.