Financial Meltdowns and Internet Retail

These are interesting times to be sure. While some are claiming that there is little relation between what is happening on Wall Street to what is happening on Main Street, there is little doubt that retailers have a lot to worry about.

Want an example of how things trickle down through the economy? Consider my children’s lemonade stand they used to set up in our business park. Last year, they minted money. This year, they never opened. Why? On most days, our building’s parking lot is the only one that has cars in it; the other businesses are down to only a few days a week or out of business completely. Granted, we are in a small business park and most businesses here are related to the construction industry. But it is still a bit sobering.

The Impact of Video on E-tail

There were a few presentations from Internet Retailer about video that piqued my interest. Dave Witzig from ShopNBC discussed the impact of video on their highly successful ecommerce site and made some very strong statements that should be of interest to everyone.

1) Product videos should be your focus. ShopNBC has 6,000 1-3 minute product videos (representing half of their total SKUs). Focus on these videos primarily before going into other areas.

2) Customers that watch videos convert at twice the rate of customers who do not. Yes, you heard that right. That being said, he did not say what percentage of customers watch videos.

Because of the growing broadband penetration, video is becoming more and more mainstream. In fact, Witzig said that watching video online is now the fastest-growing form of consumer entertainment.

Internet Retailer Top 500 Guide

Today, Internet Retailer released their annual Top 500 Guide that chronicles the online retail industry in general and the top 500 online retailers in particular. As I am listening to their presentation of the report, I am typing these highlights.

Total E-Retail revenue hit $166 billion in the US in 2007, representing 6.3% of total revenue. The top 500 online retailers accounted for 61% of the total E-Retail revenue. Total retail growth was at 3.8% last year while E-Retail grew at a much healthier 21.8%.

The fastest growing categories in 2007 online were jewelry (36%), books/other media (32%), mass merchants/dept. stores (31%) and apparel (24%). The slowest growing categories were health and beauty (11%), flowers/gifts (11%), food/drugs (12%), and hardware/home improvement (13%).

Report from Internet Retailer 2008

I am at the Internet Retailer conference in Chicago this week. You do not hear much about this conference in the blog world for some reason. That is strange considering that there are 5,000 attendees and practically every major company in internet retail is represented here.

There is always a lot to learn from this conference, though you have to look for the nuggets. The keynote and major presentations are from leaders of major retailers. In my opinion, the chance of a retailer standing up in front of 5,000 competitors and giving away too much information is pretty slim. But at least, you can get a feel for where the industry is heading.

How Branding Will Replace SEO

After yesterday’s firestorm, I feel the need to clarify a few things and then explain what I mean by branding.

1) Was I linkbaiting? No. Telling the truth as I see it even when it is unpopular is not necessarily linkbaiting. I do have a small gift for provocative titles though.

2) Do I really believe what I said? Yes, every word. Some people seem to find it stunning that I would actually believe what I wrote. Trust me when I say I do believe it.

3) Do I know what I am talking about? You can be the judge of that. I have been pretty successful selling online for ten years though.

4) Can a small company actually brand themselves? Yes, and if you keep reading, I will tell you how.

Is SEO a Dying Industry?

According to Shoemoney, SEO has no future. I do not always agree with him, but in this case, he is dead right. Let me pull on my flame retardant suit before I explain why.

First, understand that the only reason SEO has ever worked is because search engines were not advanced enough to always show relevant information. I remember when I started selling online. At the time, I had only a few competitors in my industry and it was easy to beat them in the SEO game. It took only a few metatags and such, and within weeks, I was dominant.

The Main Factor Necessary to Convert Visitors to Customers

InternetRetailer.com reports that the highest conversion rates among major online retailers during March were the following:

Office Depot – 20.9%
QVC – 19%
VistaPrint – 18.3%
Roamans – 18.1%
Lands’ End – 16.2%
eBay – 15.7%
1-800-Flowers.com – 15.5%
eBags.com – 15.3%
L.L. Bean – 14.6%
Pottery Barn Kids – 14.2%

These conversion rates are through the roof when compared with industry averages. In fact, they are not even believable unless you understand what the most important driver of conversion is.

Several years ago, a company I owned brokered online advertising. When working through the numbers with clients, it became obvious that some of them were completely in the dark about conversion. One client that comes to mind stockpiled an inventory equal to the number of impressions she was buying from us. In other words, she assumed a 100% clickthrough rate and 100% conversion! I don’t know how many times I have heard clients tell me that everyone buys that comes to their site. (After all, why wouldn’t they?)