Retailers struggle with multi-channel

The development of multi-channel marketing is one of the most impactful things happening in internet retail these days. As I have written about before, the idea that customers want to order online but pick up their merchandise in a physical store seems counter intuitive. However, there is growing evidence that they want to do exactly that. This gives a tremendous advantage to multi-channel merchants because not only do they see an increase of online sales but they also see significant upsell revenue once they get their online customers into their stores.

While you might think that multi-channel retailers are moving to capitalize on this trend, the third annual Buy Online/Pick-up In-Store Study indicates that progress is not happening too fast. For example, the process of picking up items ordered online is often more tedious than it should be. Also, fewer retailers are taking advantage of the upsell opportunities that in-store circulars offer and fewer retailers are using web-enabled kiosks.

Lemonade Stand: The death of MLM and affiliate marketing as we know it?

Lemonade Inc. is getting some attention today with its launch of an ecommerce platform that practically anyone can sell from. The idea is that people can set up “lemonade stands” on social sites like Facebook that sell products from various well-known companies including Apple and Wal-mart.

My first thought is that this is a very dumb, annoying idea. We already have to put up with our offline friends trying to sell us overpriced MLM products and trying to get us to come to “parties” where we are expected to buy something. Now, we are about to face the same thing online.

My question is this–if I want to buy an iPod, am I really going to find a friend and buy it from their “lemonade stand”? If I want to get it at the best price, wouldn’t I set up my own lemonade stand and buy it from myself?

No Love Lost between Wikipedia and Overstock

More bizarre news from Overstock. Now, Wikipedia has apparently banned them from editing on their site. This comes after a long history of alleged blantant advertising and other nefarious actions by Overstock on Wikipedia.

For an internet retailer that has such a large profile, it seems inexcusable for Overstock to continue to engages in PR suicide. What in the world is going on over there?

For what it is worth, the Overstock model makes great business sense to me. We have talked to them before, and if they did more business in our sector, we would consider partnering with them. It blows my mind that they cannot seem to get profitable.

The Benefits of Your Competitors Going Public

Recently, Vitacost, the biggest online player in my company’s industry, announced their decision to go public. We have been watching Vitacost for years. The problem is that information about them was hard to obtain—private companies tend to be secretive. So, it is actually kind of liberating to watch them start to go public because all of a sudden, we are swimming in great information.

For example, we now know that Vitacost operates on about a 33% gross margin and is now profitable with a 5% net margin. They spend 11% of revenue on administrative expenses, 11% on marketing, and 5% on fulfillment. They grew 55% in the last quarter over the same quarter last year to $22.8 million. We also found it interesting that 35% of their revenue comes from sales of their own brand while the rest came from selling other brands and their own brand sales are growing faster than other brand sales.

A Six Step Plan to be Profitable in Internet Retail

Just after I wrote my rather negative post entitled Six reasons NOT to try to be an online retailer, I read Aaron Wall’s post about how hard it is to sell yourself if you are too negative. Ouch! Good thing I am not trying to be a consultant or I would be starving.

Several people wrote interesting comments after the last post. Some of pointed out that the term “profitable” is relative and I agree. For example, if you are investing a ton of your time to make an extra thousand dollars a month, I do not consider that profitable. It is more like working for minimum wage. Also, I do not believe that those kind of sites have a future. I firmly believe that if you want an online business that is going to stand the test of time, you have to really go for it rather than just dabbling.

Six reasons NOT to try to be an online retailer

The internet retailing landscape has changed dramatically over the past eight years. In a summary, it used to be very easy but now it is hard and getting harder every year. The gold rush is over, and if you are someone without much money or business experience that thinks you can build a reasonably profitable ecommerce site, you are fooling yourself.

I am about to become very unpopular with the consultant types out there but here is a simple truth as I see it… This is no time to be starting an ecommerce business unless you have a way to address the six issues below.

E-tail search functionality continues to evolve

If you are an internet retailer, you need to read this report from the Aberdeen Group. It discusses search capability, one of the most important and most overlooked aspects of your site.

One shocking statistic from the report is that only 59% of surveyed ecommerce sites have search; however, 96% will have that capability within 24 months. It is clear that search is no longer a bonus feature on your site but is instead a competitive requirement.

So how can search help you? To start, statistics show that 60% of your visitors would use it. Also, your conversion rate would likely increase for those visitors by up to 5% with a larger average order size.