What Do You Know?

In a fiction writing workshop I used to attend, a middle-class, middle-age suburban woman once read aloud from a story she’d written about a college student succumbing to the temptations of sin. In the story, the protagonist walks through a rough urban neighborhood and stumbles into…an opium den. When the woman finished reading, I suggested that since opium dens were no longer part of the inner-city landscape, perhaps she should have the protagonist enter a crack house. To which the author replied, “What’s that?’

Therein lies the danger of breaking the first tenet of fiction writing: Write what you know.

Substitute the word “write” with “manage” or “operate,” and you have a major tenet of business.

You could argue that flouting the rule contributed mightily to the current woes of multititle mailers Hanover Direct and Fingerhut. Both decided several years ago to take advantage of the e-commerce revolution not only by selling online but by providing back-end services to nascent pure-plays. Now, as our cover story notes, Hanover is consolidating its third-party provider operations, as well as closing several catalogs, as it strives to turn a profit. Fingerhut, too, is scaling back its third-party operations, as Mark Del Franco finds in his article on back-end services providers (p.16).

In fact, you might say that Federated Department Stores, the parent company of such midscale and upscale retail chains as Macy’s and Bloomingdale’s, violated the rule too when it bought Fingerhut, whose catalogs target lower-income buyers. Under Federated’s parentage, Fingerhut overextended credit, to the point where it began auctioning off some of the IOUs it felt it would never collect.

Of course, rules were made to be broken or, at least, to not be taken literally. If companies stuck only to the tried-and-true, growth would be limited. But I prefer the Black Box model of expansion: During the past few years the networking products cataloger has expanded into providing network and cabling installation and maintainance services largely by buying small, local service providers. In other words, the company is building upon what it knows – networking solutions – and buying the expertise (relatively inexpensively, I might add) of small specialists in the services aspect of that market.

Maybe other catalogers will be able to successfully work around the “manage what you know” rule. Spiegel, for one, has set itself up as an ISP and a portal site, and J.C. Penney is making a push as a back-end services provider. I certainly hope they’ll succeed, but whether they will, I don’t know. And in keeping with this column’s theme of writing what you know, I’ll stop right there.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.