Flashback to July 2002

July 17, 2009 · by Dale Traxler

Back in 2002, my wife Cynthia wanted to run her own "part time" ecommerce business. We were in the post 9/11 recession, she'd been laid off from her job in high tech, we decided the time was right to jump into ecommerce.

We bought a small existing business that was selling beads. The website, abeadstore.com, was a static HTML website attached to a Miva Merchant shopping cart on the back-end. It had a small, but loyal group of customers, but very low traffic or web visibility through Google or Yahoo.

Cynthia thought she could run the business as a part time endeavor. At the time, I was the VP of business development for a start-up content management company, but couldn't resist experimenting with Google's new service called AdWords. Within a month or so, we discovered that by spending about $8 a day on PPC advertising, we were able to double our sales. I ended up quitting my job so we could run the business together.

The main challenges for us in 2002 were:

• Getting better search rankings with Google so we could keep PPC costs down
• Keeping up with inventory changes and order fulfillment challenges
• Putting new/restocked items up and taking them down from the website when we ran out of inventory
• Managing PPC costs in Google to be less than $8 day
• Not getting more orders than the 2 of us could ship
• Trying not to work more than 80 hours a week!

Thinking back to 2002 - wouldn't it be great to double your business on $8 a day of PPC advertising in our current market? Google even used to send us nice gifts because we were "big" advertisers. Hah!

2002 to 2005 - Big Changes in the Marketplace

In 2002, there were several large, successful wholesale and retail catalog resellers for jewelry supplies. They had websites that displayed PDFs and an 800 number to call in your order. They had not discovered SEO, PPC advertising or newsletters. The notion of ecommerce and driving most of their sales online were a vague thought.

But, there were many dozens of mom and pop beading supply stores emerging, plus a few sophisticated ones entering the marketplace. There were plenty of technology changes as well.

We were able to grow our business by investing in AdWords campaigns that had more than a few keywords and actually writing ads that included those keywords. (a novel idea at that time). We started a newsletter using Constant Contact very early on that allowed us to look much larger than we really were and reach more people for less cost. We also invested in SEO by carefully targeting keywords and developing supporting page titles, metadata, and most importantly, good relevant content.

Our business grew more quickly than we wanted at the time, so we decided to focus on profits rather than growth. Big mistake! We missed an early opportunity to become one of the online "Gorillas" in the jewelry supply business, but more about that another time.

By 2005, our marketplace had changed dramatically. The big catalog distributors had begun investing heavily in ecommerce and were suddenly impacting our sales. PPC click campaigns yielded less than 1% conversions rather than the 8-10% conversion rates back in 2002. Everyone was blasting out emails. Free shipping was creeping into the market, and several vendors were low-balling their pricing to grow their top line and market share.

In our own business, we decided to buy one of our suppliers to increase our gross margin. and added a new online store selling wholesale gemstone components at JewelryPlus.net. We had many growth pains internally and externally:

• In addition to Google PPC, we now had Overture (later yahoo) PPC campaigns with more than 500 keywords
• We needed to develop ad campaigns for print
• SEO was challenging as everyone was now doing it and algorithms were constantly changing - incoming links were all the rage
• Our HTML sites were stale compared to newer ecommerce sites
• We had begun to outgrow our shopping cart, our order management and our accounting systems
• Our competitors were much more aggressive, driving up the cost of our PPC campaigns
• We needed to find the low cost suppliers to keep our COGS down
• Shopping sites were on the horizon, but we had no way to do product data feeds
• Trying to work less than 60 hours a week
• Google no longer sent us gifts as a large advertiser!

2009 - Recession, New Technologies, & New Market Pressures

Skipping ahead to 2009 after several very strong and profitable years and one lousy year in 2008. We are once again in a recession, but we see the light at the end of the tunnel from the business perspective. The challenges of running an ecommerce business are getting even more profound however. Rather than go blow by blow, let's just summarize our current challenges compared to previous milestones:

• Managing PPC campaigns of more than 2000 keywords in Google, Yahoo, Microsoft, Amazon, Facebook & more
• Managing other banner & print ad campaigns in many venues
• Always investing in SEO for all major search engines for 6 different websites
• Managing data feeds to shopping sites like Amazon, become.com and others
• Posting and managing social networks including Twitter, MySpace, Facebook, our own blog at DailyBeadBuzz.com
• Doing twice the number of newsletters just to keep up with competitive pressures
• Running constant promotions to keep in front of our customers and prospects
• Margin pressures from Free Shipping and recessionary pricing tactics by competitors.
• Keeping up with competitors using the latest ecommerce platforms for personalization and merchandising tactics
• Managing content on 4 different online stores, plus 2 other websites
• Evaluating new trends like product reviews, mobile ecommerce and such
• Adding more products to our inventory to meet more of our customer's requirements
• Improving site usability, lowering cart abandonment, increasing site conversion rates
• Trying to work less than 40 hours a week ;-)

You'll notice, one big thing is on the list anymore. We addressed our ecommerce and financial infrastructure by investing in Netsuite about 2 years ago. We highly recommend SAAS solutions to everyone whenever the platform permits! (more on that later).

In summary, we've learned that our business is constantly evolving. It's the nature of all businesses, but it is particularly evolutionary in ecommerce today because of rapid technological changes and rapid consumer behavioral changes.

If you run an ecommerce business, be ready for a fast ride. Be willing to experiment, but always go back and revisit strategies and tactics that have worked well in the past. I suspect the changes in the next 5 years will make everything in the past 9 years look like slow motion.

Back to "Real Work"

Back to reality- my current project is evaluating where to spend money on advertising over the next 12 months. I pulled out of print advertising about this time last year, but am looking at jumping back in. But, a limited budget, no way to track print conversions, etc. Those evaluations and decisions just never end!

Category: Evolving eBiz | Tags: Marketing, Pay-per-click Advertising, Search Engine Optimization, Shopping Carts and Platforms, Technology