Do you want a piece of the $51 Billion Ecommerce Business?

Written on November 4, 2010 by Shirley Tan in ECommerce, SEM

I bet you do! Heck, I just want 2 pieces, hmmm 2% of  $51 billion  (my Casio calculator doesn’t have that many zeros so even if my math is bad, it works out to be roughly $1 billion). Okay, perhaps that’s a little too ambitious a goal for this year, since it’s already November, but it’s completely doable to get a tiny sliver of this pie – if you act now.

You can  read the full article

Here is a snippet from the BizReport article:

Experts predict that online shopping will increase by 13% for Q4 to reach about $51 billion. If that happens, consumers would spend over $10 billion more in the online space than in 2009. It could also push yearly ecommerce totals to more than $162 billion, a 12% increase over 2009. Holiday sales figures are expected to account for about 23% of the total yearly online spending, according to eMarketer’s report.

Why the strong increases for Q4? Jeffrey Grau, Principal Analyst with eMarketer notes that shoppers are spending more online in an effort to avoid crowds in physical stores. Also, finding bargains is simpler online and making purchases of unique or popular items online can be simplified in an online environment.

Conclusion:

It’s all about the “OFFER”. Consumers are looking for bargains and the ease of shopping online.  Online shopping would not be this popular if these two things were not true. So, make sure your company is doing everything you can NOW to deliver the desires that consumers want — deals and ease of use.

Ensure that your OFFER is relevant and that the email campaign you send out is strategic (you’re not sending email campaigns just to check it off your to do list). Remember, consumers want “easy” so ensure that your website is user friendly. Once you get your visitor to click onto your site, don’t disappoint them. You customer is getting offers from every direction this holiday season. Assume that people are short on time and attention so be “explicit” and clear about your offer and what you want them to to do on your ecommerce site.

Don’t assume they will scroll down your long product description to eventually find your add to cart button.  Clear your cookies and shop your own site, better yet, ask a novice to shop your site while you sit there (restrain yourself from “pointing out the obvious”) quietly observing how he/she interacts with your site. You may learn a thing or two.

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So You want to be a Groupon?

Written on November 1, 2010 by Shirley Tan in ECommerce

I’d just read this interesting article about Walmart and ConAgra Brands working on Groupon style apps. I have personally purchased 4 things/offers on Groupon and initially when I first signed up I would check my email everyday just to see what the interesting offer would be. (market research – yeah right – Go broke saving money)

IMHO, it’s both good and bad. If your business service oriented and you have suite of offerings like a spa or restaurant it’s great, you can discount one of your higher margin service and still at least come close to breaking even and hopefully your new client will come back and try other services and be willing to pay the full price.   However, if you sell physical products, that might not work so well for you if you take a loss on a single item or break even in hopes of capturing a customer and getting the customer on your mailing list. It all depends.

I think its may work as a temporary lead capture if you have high margin items and there is high potential to extend the life time value of your customer.  (I’m all about extending the life time value – always)

If you  try Groupon or something like it, be sure that you’re not inadvertently training your customers and your new customers to only purchase from you because you have a coupon or its on sale. Its like Macy’s achilles heel, most shoppers will not buy from Macy’s at full retail and worst, most will only buy when they send out the extra 15 – 25% discount on top of the sale priced merchandise.

Have you tried Groupon as a consumer or as a merchant? What was your experience as a consumer?  As a merchant, what worked what didn’t work and would you try it again?

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Should Shipping be a profit center or a Marketing Tool?

Written on October 21, 2010 by Shirley in ECommerce

The holiday season starts early for us marketers. We should be busy finalizing our holiday season email promotions, sprucing up landing page creative, coordinating upcoming promotions with affiliates and customer service department, such as Black Friday and Cyber Monday specials.

One of the nagging question ecommerce businesses struggle with is whether shipping should be considered a profit center or a marketing tool. With the highly competitive retail holidays fast approaching, I thought I jump in and add my two cents to this conversation.

Retailers that give free shipping away use it as a conversion tool and competitive advantage over the competition. Retailers who haven’t given free shipping often wonder if they should. Some give free shipping over a certain dollar purchase threshold and others charge a low flat fee, as low as $2.95, from what I’ve seen.

Two years ago, I viewed shipping charges as a profit center. It definitely added to our bottom line and helped us recover the ever-increasing costs of shipping we pay to UPS, FedEx and U.S. Post Office. But the competitive nature of my industry changed my view about this. We tried different formulas like a flat rate charge of $9.95 when the order under $100.00 and free shipping on purchases over $100.00.

Eventually, we figured out that we broke even around $150.00 because some of our products are pretty heavy when purchased in bulk.  I was fine with breaking even on shipping and even subsidizing it a little bit so we could grow our sales. The tricky part can be figuring out your top line sales growth if you’re giving away free shipping.

As I said above, this is a good time to test this theory. It’s different for every retailers and it’s based largely on profit margin, conversion rate, AOV (average dollar purchased), amongst other metrics. With the holidays fast approaching, your site will experience increased traffic, and this is the best time to check (test) where your break even point is or if your profit level will increase if you give away or subsidize free shipping.

Below is a link to a free shipping calculator, compliments of Mike Ober, Senior Manager, Merchant Developer.  Check it out and give us some feedback on what your findings are. Would you share your opinion or experience with regards to Free Shipping.

Mike Ober’s free shipping calculator http://bit.ly/b2QupJ it opens as an Excel spreadsheet. You can also follow him on Twitter by clicking this link:   http://twitter.com/MikeOber

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