Ecommerce Gurus

Companies that may once have been strange bedfellows are finding common ground in this recession.

From the fatal felling of fallen financial firms to collapsing home builders and the auto-giant Chrystler, bankruptcy is becoming a crowded bed. Well make some room because retail stalwart Eddie Bauer is snuggling up.

We in the retail community hate to see this happen to one of our own, and to varying degrees, direct retailers of nearly every stripe are taking a hit. The difference is in the balance sheet. Simply put, Eddie Bauer wasn't in a position to absorb this economic trough.

In the words of Eddie Bauer CEO, Neil Fiske "Eddie Bauer is a good company with a great brand and a bad balance sheet." He goes on to explain that "a crushing debt burden placed on the company from the Spiegel reorganization in 2005,

combined with the severe recession, left us with no choice but to use this process to reduce the debt load on the business."

So, for Eddie Bauer, what was once a savvy financial maneuver became the boat anchor that needs to be cut. Recently the federal government performed "stress tests" on America's largest remaining financial institutions, attempting to determine just how much damage they could survive without collapsing.

I think smart direct retailers are performing stress tests of their own. Based on potential future conditions, what could your business endure in its current state? What can you do now to insulate yourself from that possibility?

Here are a few notes for thought:

Outsourced operations of any kind can represent drastically reduced cost to you -- especially those tied to performance, making formerly fixed operating expenses variable.
In-house operations need efficiency like never before. The time you spend to ferret out those gaps in your processes will pay for itself in spades.
Bend the ear of an expert. Tap the strength of your community and industry.

What other things have you already done to weather the storm?

Posted by: Jesse Kurth