Name: Vince
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How to Beat Daily Deals
November 9th, 2011
Friday's Debut Stock Price
Just this past Friday, Groupon released their IPO. In the first few hours of trading, the stock jumped from $20.00 a share at the opening to $26.11 dollars at the close, a 30% increase. But it’s not just startups that are part of the craze. Google has recently started Google Offers, with several preliminary markets in Los Angeles, Atlanta, New York, Houston, and Chicago. With all the hype on daily deals and cut rate discounts, how are eCommerce merchants supposed to compete? In order to keep up with daily deal and deep discount sites, eCommerce merchants need to evaluate what their strengths are and how to leverage their competitive advantage to move ahead of the competition. Here are three ways in which your site can beat the price war:
1.) Stock/Inventory: Daily deal and discount sites often have a limited supply of goods in their
inventory, precisely because they purchase excess inventory for firesale rates and resell them to the general public. Brand names, like the one on the right, often go for 80-90% less than their MSRP. They sell these goods until they are sold out or the deal expires. Have a well stocked inventory or a reliable supplier, and customers will be pleased that their products are available.
2.) Aesthetics and Variety: One way eCommerce merchants can rise above the competition is to have an intuitive and easy to use site. Sites like 1saleaday.com have little else besides the four items of the day for sale on their site. There is no welcome page or the ability to browse different categories. Your advantage is to provide choices for the consumer, even if your site sells a niche product. The ability to customize and provide a satisfying customer experience is underestimated, and can be used to great effect on your site.
3.) Incentives and Recommendations: You can’t compete with these sites on price, but that doesn’t mean you can rule out incentives. Well placed incentives, whether it be free shipping, discounts, or rewards for customers who purchase from your site, increase your conversion rate. But don’t stop there. Target customers by analyzing their purchase intent and show incentives to customers who are on the fence about purchasing your products. Not only does this increase revenue, but profits increase because customers who would have bought anyways are not shown your deals. Here at Runa, we call these Smart Deals.
Smart Deals are the future of eCommerce. Forrester recently conducted a study of the trends in eCommerce, and came to a conclusion that methods of using algorithms to predict consumer behavior was the next big trend in the online retail industry. Here is a small excerpt from that study:
For retailers looking to grow their conversion rates — which typically hover around 3% —
conversion marketing provides opportunities to address the other 97% of visitors. Some
examples include startups like Runa, which enable retailers to trigger offers to customers that
are only valid for a current session
More from that study is here.
You can’t win a price war with these sites, but here are just three ways that eCommerce sites can rise above the competition to grow their profits and revenue. Focus on what your site does best; like the aesthetics of your site, the variety and the availability of products for sale, and most importantly a way to target and incentivize those customers who are on the fence about purchasing your products.
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Trends in eCommerce: The Problem with SEO/SEM
October 26th, 2011SEO/SEM firms have it tough. Many of the challenges that they go through include the accessibility of the keywords chosen, changing algorithms, duplicate content, and many more.
The point is that the amount you spend in time and money on SEO/SEM is directly related to the complexity of this marketing tactic. With so much at stake, you can be sabotaged by other sites that participate in Black Hat SEO, or those that create their own autonomous bots that can click on your Pay Per Click (PPC) advertising. It’s a dog eat dog world in search engine marketing, but your site is your guaranteed sanctuary. Coddle your potential clients with a beautiful site, easy interfaces, and targeted deals, and they won’t let you down.
Speaking of problems in SEO/SEM, some studies have entered the field to describe what goes on in this chaotic world. One study by Hal R Varian, an economist at UC Berkeley, discusses what economists call Marginal Returns in detail:
In choosing its bid, the advertiser should consider the incremental cost per click: how much more money it will have to spend to get additional clicks. If the incremental cost per click is less than the value per click, the advertiser should increase its bid; if the incremental cost per click is less than the value per click, it should decrease its bid. In equilibrium the incremental cost of moving up one position should exceed the bidder’s value per click, but the incremental savings from moving down one position should be less than the bidder’s value per click.
More here, if you’re up for it.
All this econ technobabble is confusing, but the main point Varian tries to make is that for every additional dollar you spend on SEO/SEM, the less profit you will receive in the long run, per dollar. For merchants, please be careful in how much you spend in SEO/SEM! It definitely works, but be aware that the law of marginal returns is not on your side.
I should mention that I am all for SEO/SEM, I believe that traffic is extremely important to any online merchant, but it’s not the end all and be all of their marketing efforts. Any merchant should be aware of the problems they have, and the solution is to maximize their revenue in other arenas, specifically your site. In the next coming days, I will discuss other problems for traditional eCommerce marketing techniques, starting with affiliate marketing.
Vincent
A Preview About What to Expect from the Runa Blog
October 21st, 2011Hi readers!
I am glad to announce that I will be a co-writer for the Runa blog. Although this blog will primarily be about eCommerce, I am not limited to this industry. Please send me any comments or topics you would like to discuss, and I’ll be more than happy to write about it!
Here’s a small preview about what you can expect on this blog:
Markets in everything:
These posts will be devoted to interesting Magento and Miva merchants that sell unique and interesting items. If you know of any merchants that you would like to showcase I would love to show off all the different products that eCommerce merchants have to offer!
Trends in eCommerce:
This is pretty self-explanatory. There are many different areas where entrepreneurs can provide a service for merchants. I will do my best to describe where eCommerce is going and how merchants and developers can take advantage of the potential niches.
Controversial News:
For these posts, I will try to keep as impartial as possible. I will personally try to reveal both sides of the issue. If you happen to sense my political beliefs, please call me out on it! I want an honest discussion on news that divides eCommerce merchants.
That’s about all for now! Be sure to check in everyday for updates.
Vincent