by THERESA AVAGLIANO

Take me to bed, or something like that,” quips Candice Ferreira, the marketing director for B.E.D., one of the hottest restaurant/clubs in Miami's South Beach. In 1999, the upscale B.E.D. opened to rave reviews of its French/Asian influenced menu and its not-so-sleepy decor: beds. Patrons are served in bed, on rattan trays. No tables, no chairs. Just beds.

Ferreira is testing out taglines for new promotional merchandise. She wants to imprint her sassy slogans across tee shirts, tank tops, baby doll briefs, thongs — well maybe just a logo for the thongs.

Her aim is to think locally, and act globally. Ferreira wants to export the local flavor of B.E.D’s brand by using the Web to gradually expand the company's provincial merchandising program. At the same time, she wants to mitigate inventory and receivables risk for the $6-million company, and avoid the development expense associated with building an e-commerce site. “We want to play it safe, keep it low risk at this point,” reflects Ferreira, who adds that merchandising revenue at B.E.D. is a small, supplementary source of income right now.

So Ferreira’s next innovation — no, not branded sheets — was to outsource the mechanics of B.E.D.’s merchandising expansion, something small businesses never had the economies of scale to tackle.

B.E.D. signed on with outsourcer CityMerch Corp., of Miami Beach. Essentially, CityMerch aggregates small business merchandising to create economies of scale, thus attracting established vendors. Concepts & Associates Inc.’s e-Company Store does the same thing for large clients. But traditionally, tiny local merchants have been ignored by vendors seeking scale.

CityMerch developed, and now hosts, a B.E.D. e-commerce site — which is also featured on the CityMerch main mall site. B.E.D. also provides CityMerch with inventory on a consignment basis, while the outsourcer provides inventory management, warehousing, fulfillment, and collection services. Meanwhile, B.E.D. sidesteps financial and inventory risk.

Outsourcing small business merchandising runs the gamut from the exotic to the sublime. To be sure, E.L. (Pete) Upham, the director of marketing and community affairs for The Miami City Ballet (MCB) also is using CityMerch to jump-start a new Webbased merchandising effort.

“Revenue from MCB merchandise is miniscule,” admits Upham. But he emphasizes that revenue growth is just one factor feeding the outsourcing initiative. “The branded merchandise provides walking billboards within the community,” an important outreach objective for the $10-million arts organization. In addition, says Upham, the world-class dance company would like to expand its merchandising reach to, well, the world.

Both ideas show promise. Although hard numbers from B.E.D. and MCB won’t be available until later this year, projections confirm that the branded merchandise market is flourishing. Wholesale revenues are expected to reach $15.63 billion in 2003. That total does not include sportsrelated merchandise or manufacturers' goods, like Nike and Tommy Hilfiger. The retail business will generate $50 billion, which is an 11 percent increase from the 1999 tally.

Margins on branded merchandise run high, usually between 50 percent and 60 percent, says CityMerch Chairman Bob Williamson. But the revenue generated by small companies is negligible, often two percent to four percent of total sales. At big chains — like the Hard Rock Cafe or Planet Hollywood — branded merchandise accounts for 15 percent of total sales. The spread between big and small companies, and the attendant potential for growth, is what makes small business merchandising compelling.

Outsourcing also solves logistic problems that are unique to small businesses. For example, MCB sets up shop at home — in the Ophelia & Juan Js. Roca Center — and while on tour. Whether in Miami, Lincoln Center, or Royal Albert Hall, the storefront is usually squirreled away in a lobby corner. Access is compromised by the pre- and post-performance throng, and traffic is often limited to guests that pass the counter on the way to and from their seats.

In contrast, the Web site takes this small, profitable adjunct business, and swells its potential by giving MCB patrons — and ballet fans in general — a 24-hour storefront. It also frees up MCB's ticket-sales staff, which sometimes doubles as merchandise peddlers.

B.E.D. has similar onsite constraints. Merchandise advertising is relegated to apparel pinned to a back wall. What's more, the exclusive club is small, comprising 16 beds that accommodate a maximum of 150 diners at two scheduled seatings. Even after midnight, when B.E.D. is in the club mode, the nightspot only holds 253 guests. So traffic is always minimal.

What’s more, on-site fulfillment is burdensome. Waitresses “pick-andpack” items from a store room shelf, sneaking away between taking orders for tuna tartare tzatziki salad and serving mascarpone and pecan crusted veal chops.

Among other Web efficiencies, the outsourcing arrangement also allows Ferreira to balance inventory; only pulling stock from the warehouse when a big event night prompts a packed house.

Apparently, selling the virtues of outsourcing leads to buying outsourcing services too. Witness CityMerch, which contracts out several of the services it sells to B.E.D. and MCB. Included are Hostasaurus Inc.'s hosting; Inkel Direct Corp.’s warehousing management and fulfillment services; and Willow CSN’s call center.

“We’ve offered customers the phone numbers of our vendors, in case they weren’t interested in our outsourcing model,” declares Williamson. “None took the numbers.”