Using non-core products as a loss leader!

June 11, 2008 | 1 Comment

One of the best ways (If done properly) to add additional revenue to your ecommerce sales is to sell non-core products (at cost or even at a loss) to gain additional core sales and new customers.

A great example that I found this weekend, is B&H Photo. They sell a variety of non-photography related computer and technical products. What quickly caught my attention is that many these products are being sold well below any other online retailer's price, even cheaper than anyone on eBay. I don't have access to wholesale computer accessory costs, but I imagine that they aren't making much money, if any, on their computer product sales.

So how is this smart marketing?

When an established website like B&H draws sales from non-core products, they gain additional customers and brand exposure. What they gain by selling at cost, is the opportunity to sell other products for profit, and they gain repeat customers. In the end, if the amount of money spent marketing and supporting non-core products is minimal, there is absolutely no downside to this practice. If they aren't making money from those computer related sales, they're making money from those additional customers that are also interested in cameras, memory cards, photography accessories, and more computer accessories.

A good idea for some but not for everyone:

This practice can be a strong marketing technique, however, it will not create a sustainable business model for everyone. A businesses that can most effectively harness this technique must have a strong search engine presence, or the ability to draw sales and traffic at little to no additional cost. This technique is probably not a good idea for a startup business unless you really know what you are doing. A business must also have access to related but non-core products at a very competitive price.

Obvious potential pitfalls:

Some strong reserve must be used to not cannibalize existing profit margins, as it extremely easy to sell short on everything. Don't make everything a loss leader, only those non-core products that you are adding.
Another danger is accidentally migrating from one core product type to another. It needs to be clear to yourself and to your customers what your business is there to do. If you are a photo shop, that sells some computer accessories, it should be clear that you are not a computer accessory seller that has some photography equipment. This is absolutely key in protecting your brand, and sustaining your business model.
The other products that you decide to sell must be related to what your business does. If would make no sense for an online flower shop to start selling car parts. You need to be careful not to dilute your brand, message, and what it is you currently do with completely unrelated products.
You do not ever want to enter an arena that will create a lot of additional customer support requests. This is a quick way to nullify any gain you get from additional customers and sales.

The big picture:

It's sometimes difficult to grasp the concept of loosing money on one place to gain money in another. If you have the ability to step back and look at the big picture, you will find that there are numerous areas where a loss here can create a huge gain somewhere else. Small steps should always be taken when testing out a system that has both the potential for a loss and a gain, but I think that many will find that this is a useful, appropriate, and completely possible marketing technique.

Posted by jestep | Filed Under General, Marketing

Oh my stock, photos that suck

January 30, 2008 | 12 Comments

Almost every website with any resemblance of professionalism uses stock photography. Although it is usually very high resolution, it is so often very low in realism.

Do people actually respond to fake, photographs? Only your own testing can tell for sure, but one thing's for certain, if the images on your site are actually unique and speak to your customers, you have an advantage over everyone else.

Here's my favorite examples of the too-stock photography that we see everywhere!

Posted by jestep | Filed Under Development, Marketing

What domains to block in your Yahoo search marketing account

October 17, 2007 | Leave a Comment

Yahoo recently added the ability for advertisers to block domains in their search marketing accounts. At first I wasn't sure how to use this feature, but after some investigation and a cross reference with my analytics, I think that it will be a very effective tool to help eliminate bad traffic, if it's related to a specific domain.

First thing you need to do to make sure you are using yahoo's built-in analytics or configure your own analytics to report on all traffic from your yahoo campaigns and run a report by the domain that the traffic is coming from. You want to sort that report by the overall clicks from a particular domain.

Here's an example of the report that you need (signifigantly reduced for readability).

Now if you look under the conversion column in this report, you will see that a few of these sites have provided no conversions.

These are the sites that you want to block from your PPC campaign. In this case the wealthygeek.com (3/1039 = .29%) is a conversion rate that I am not willing to pay for, so I'll block it and others with poor converting traffic.

I would make sure that you have at least one month of traffic and PPC statistics, three months or more if you don't get a lot of PPC traffic. Remove domains that tend to provide a lot of traffic but no conversions. If a site can't provide a 1% conversion rate, it's probably not worth keeping. Depending on your past history you may want to set your threshold above 1%.

Just remember that even if your PPC traffic goes down a bit, your overall cost is going to go down with it, and your overall conversion rate is going to go up.

Warning: If your ads attract poor visitors, it wont matter what website they're on, so don't use this method to optimize your account if you aren't getting sales. This tool is useful only to remove sites that just send bad traffic. You should always be testing new key phrases, and new ads, and eliminating the ones that can't provide cost effective traffic.

Yahoo also has a Q&A post as there have been a ton of question since this feature was launched.

Posted by jestep | Filed Under General, Marketing

Some tips on running an affiliate program (The sniper vs. the shot gun).

September 14, 2007 | 1 Comment

When you run an affiliate program whether through a 3rd party affiliate marketplace, or with a self branded program, you will undoubtedly run into the problem of trying to figure out which sites to allow into your program. Putting active affiliate recruiting aside, there are two common approach methods to accepting affiliates. First, the shot gun approach (Let every or almost every applicant into your program) and second, the Sniper approach (Let only high quality, select affiliates into your program).

Posted by jestep | Filed Under Marketing

How to track craigslist ads

July 26, 2007 | 6 Comments

Tracking craigslist ads can be a little tricky because javascript, flash and other useful scripting languagaes are not allowed. It is possible however to track ads using a simple image tracking program. This is limited compared to full-featured javascript tracking script, but it will at least give some idea of the amount of views that your ad is getting.

This should also work on myspace, and other networks that allow html, but do not allow javascript or flash.

Posted by jestep | Filed Under General, Marketing

Ecommerce How-to List for Do-it-yourself'ers

May 16, 2007 | 2 Comments

Following a post from Matt Cutts, I have been collecting how to's every time I come across one that I use. I have about 900 saved up now, in just about every area imaginable.

There are so many how to guides that people need for running their ecommerce website's. With that in mind, this is a list of very useful how to's related to ecommerce. Hopefully this post will be a good resource for site owners, and those looking to get into ecommerce. Topics include everything from setting up a web server, marketing, to integrating a website with a payment gateway.

Posted by jestep | Filed Under Development, General, Marketing, PPC, SEO, Security, Usability

Why both natural and PPC traffic are important.

November 10, 2006 | 3 Comments

Pay per click advertising has become a completely integrated part of search engines, and many website owners fail to see the value in either natural traffic or PPC traffic.

A while back I found a table that compared the click through rates of Natural and PPC search traffic. I cant seem to find the original source any more, so my apologies for not citing the source of this information, although it was a reputable source.

I have placed the data from that table into an easy to follow graphic model of a common search engine result page.

Comparing PPC and Natural Search Click Through Rates

Posted by jestep | Filed Under General, Marketing, PPC, SEO

Buying text links for relevant traffic!

September 13, 2006 | 1 Comment

If you are moderately up to date in the world of SEO, you would know that there exists a lot of debate about the effectiveness of purchasing text links for a website. While buying links used to be a great way to get a website up in the rankings, it isn't nearly as effective any more and can have negative effects on a website if the linking is considered spam.

So taking the 'bold' assumption for this post that there can be no positive SEO benefit from paid links, can it still be worth it to purchase text link advertisements?

My answer is absolutely…

Posted by jestep | Filed Under Marketing