Posts Tagged ‘E-Commerce’
It’s starting already. Apple and Amazon are kicking off the shopping season with the rumored announcement of the iPhone 5 expected this week and last week’s Kindles announcement. Even though I won’t be pregnant this time around, we still plan on focusing our shopping efforts online. I really don’t relish the idea of taking a sub five month old out during some of the busy shopping days of the year, in the middle of flu season! As such, it’s time to update our Back Friday strategy with the times.
We’re developing our strategy primarily to catch surprise deals – those we won’t know about in advance. Since we expect the deals to start prior to Black Friday, and continue well into Cyber Monday (which is more like Cyber Week…) we also want to make sure we don’t buy too early if someone else is going to have a better deal.
Dynamic Pricing is becoming increasingly common. It’s been speculated that retailers like Walmart and Amazon will rely on dynamic pricing this holiday season to undercut the competition. In order to capitalize on these price fluctuations, we plan to set up price watches.
We intend to utilize Camelcamelcamel (Amazon price watches), and it’s companion websites CamelBuy (BestBuy price watches) and CamelEgg (NewEgg price watches). Last year, many of the big chains had great deals in the days and weeks leading up to Black Friday for items like video games, books, music, toys, and electronics. They even had price drops for big ticket items as well like TVs and gaming consoles. Sometimes these price drops were advertised in advance, but not always. Price watching alerts you to sales as they happen, giving you the best chance possible to grab items as they go on sale before they’re sold out.
I have adjusted all my price watches on down significantly (I never buy during the black Friday season unless it’s an amazing deal!). Currently on my price watch? Memory Cards for the camera, and baby toys & books.
Price watching, however, can only get you so far. Bundles were common last year, and I suspect they will be again. Rather than drop the price of, say, an Xbox 360, retailers will bundle it with several games or with gift cards. Bundles are popular when manufactures control the price of products so retailers can’t discount them. Apple is a prime example. Many of these bundles will be announced for Black Friday, but some are surprises and will happen in the weeks and days leading up to it. Since bundles appear as new product listings, automated price watching won’t work.
When we were gearing up for our baby, I set up Google alerts in the hopes of catching sales from online stores too small to have dedicated price alert websites. I’d set an alert with the name of the product I was interested in, and the phrase ‘(Discount OR Sale)’. The strategy didn’t work for me. Turns out Google alerts were not real time enough. For this shopping season, I’m turning to twitter and social media. Nothing is more real time than twitter.
I’ve already friended companies in Facebook and follow them on Twitter already to watch for coupons. For the holiday season I plan to use saved searches, and set up an account with tweetalarm.com. Once those deals are live, you can bet some happy consumer will take to twitter to share the joy of their new purchase. Since I’m new to twitter, I’m testing both services out now. What am I searching for now? #Blackfriday! I want to catch any other good strategy ideas in time to use them.
While rocking Nicki to sleep this afternoon and reading the news on my mobile phone, I came across an article on Walmart. They are rolling out a new search engine, called Polaris. Polaris is so effective, according to Walmart, that they’ve seen a 10%-15% increase in the likelihood of the customer completing a transaction after conducting a search.
As I played around with Polaris, I couldn’t help but contrast the experience to one I had a few weeks ago. Nicki had been fussy all afternoon and I found myself at the end of the day without any clean bottles. Life would be so much easier with one more bottle. So while rocking Nicki off to dreamland, I wipped out my mobile phone to find out if my local target sold Dr Brown’s 4oz bottles. Typing with my free hand I entered the shortened query “dr brown” into the target search bar.
Screen Grab from my phone on 9/1
What the what??
The first item is at least a Dr Brown’s product. The second result at least has “dr” in the title, but “eye of the beholder”?! How is that relevant to my query? I scrolled five pages before giving up on that search.
Okay, I’ll change my query to be more specific. I typed “dr brown 4oz bottle”
Screen Grab from my phone on 9/1
Target, you are killing me!
Target’s search on the mobile phone is pretty much worthless, but it doesn’t have to be! Here are three easy ways to fix it:
1) Set a better threshold for deciding which items are included in the results. It’s clear from my two query examples that Target’s search returns any product that contains some words in the query. That’s why adding words to the query increases the number of results returned. While this is generally a good approach, it can run afoul when some of those words make up very important phrases (ie ‘dr brown’) but are also fairly generic (ie ‘dr’ and ‘brown’). As I scroll through my search results, I found furniture in a brown finish before I come across the bottle I want.
Unless target is using a very antiquated search algorithm, it should be scoring search results according to relevance, which is a prediction of how well the item matches the query. There are three ways to filter out bad search results.
* Set an absolute threshold. This is the easiest and most straight forward approach where any item with a score below the given threshold is considered not relevant.
* Set a relative threshold based off of the most relevant item. In this approach only the top n results are relevant, or only results within n points of the highest scoring item are relevant.
* Look for a gap in relevance scores. The best approach would be to look for a gap in relevance scores. Most modern search algorithms weight co-located terms higher than terms that occur in the description but not together. Thus while a Dr. Seuss book may have the word ‘brown’ somewhere in the description, it still is considered less relevant than a product that has the phrase ‘dr brown’. All ‘dr brown’ products likely rate much higher than all non ‘dr brown’ products. By looking for this gap, you can filter out results the customer is likely not interested in.
2) Allow customers to search by relevance like they can on the desktop version of Target.com. Or, if that’s what Sort by ‘Featured’ means, set it as the default and make it clearer. Searching by popularity only makes sense if all items are relevant to the query and the customer is otherwise unsure of which item they might want to buy. If I was interested in baby bottles in general, I could use ‘popularity’ as a proxy for value, trusting my fellow consumers’ buying choices. In order to find a specific product, however, I’d have to either guess how popular it is relative to other items target sells and jump to that results page, or scroll through every result on every results page until I find it. Price is only marginally better, as I can venture a guess as to how much a single bottle will cost.
3) Expand search results smartly. It might be tempting to return everything that evenly marginally matches the query to increase collateral sales. Instead, it just frustrates the customer who has to scroll passed more results to find the ones he or she is interested in. If you look at the most relevant results by the approaches described in step (1), a pattern typically emerges. For my query, the top results would all be in the baby category, manufactured by Dr. Brown, and be feeding related. Rather than return all results that marginally match the query, return those that that are also similar to the top results in these regards: other baby items, other items manufactured by Dr. Brown, or other items related to feeding. This approach is referred to as pseudo relevance feedback in the Information Retrieval community.
I want to continue shopping at target. With the new baby my days of browsing the isles on a whim are over. I rely on my mobile device not just to make purchases online, but to decide which stores to visit in person. The mobile site just has to work.
As for the bottle, well… it turns out Amazon sells them.
(Note: I’ve since installed the Target App on my phone, and search is much better – but that’s still no excuse for a broken mobile website in 2012! )
My attempt to pay the lowest, rock bottom prices, have been foiled again.
Yesterday afternoon I ordered a clock for Nicki’s Nursery. Domingo and I had discovered that we need to rock Nicki for at least twenty minutes after she falls asleep before she enters her deep sleep. Try and stop rocking before then, and the eyes spring open. Normally I have my phone with me and can time how long we rock, but every once in a while I forget it. So a few days ago I picked out a butterfly wall clock from Cafepress, and yesterday I ordered it with a 30% off labor day weekend coupon. This morning I wake up and find a 35% off coupon for today only. Have I mentioned how much that annoys me to miss out on a the best sale, even if it’s only 75 cents?!
But that wasn’t the only savings I missed out on.
I also noticed yesterday that Shutterfly was doing a 34% sale on canvas prints. Since I wanted one for Nicki’s nursery, I decided to go ahead and order it. Much to my delight, they were also running a free shipping on orders of at least $30. Since I couldn’t do both the free shipping and my $20 gift card, I decided to hold off on the gift card. (Shipping would have been $19.99, and I can use my gift card for Christmas cards.) I finalized my purchase this morning at around 1:41 am. Just 7 hours and 5 minutes later I get this offer in my inbox: $39 Canvas Print from CafePress, including shipping.
Now that one stung.
As an aside, $39 for a 16 x 20 canvas print is a great deal, and (given that you have until December to use it), would make an excellent Christmas gift for a spouse or parent. A quick Google search shows me they run this deal about once a month. Clearly I need to do more research before making a purchase next time.
I predict Amazon Prime is going to save us money in the long run even though I don’t expect I would have paid for expedited shipping frequently. Prior to baby, I never previously paid for expedited shipping. I was the gal who would hunt for additional items so my shopping cart would hit that magical $25 to avoid shipping costs. I was buying extra stuff I wouldn’t ordinarily buy. (Ask me how useful that spaghetti measurer is sometime.) With prime, everything ships free with no minimum order. That means I can use camelcamelcamel.com to wait for price drops, and I don’t have to worry about filling my shopping cart when they occur. I’m really looking forward to testing this combination out for Black Friday! Price alerts & free shipping? Sign me up! The combination of camelcamelcamel and AmazonMom has already saved me $14 in under two months. I’m well on my way to recouping the cost of membership.
A report last year linking prime membership to greater spending, causing some to speculate that prime entices customers to spend more. Sure, that’s possible. I know in my case, however, I signed up for prime because I anticipated increase in shopping with the arrival of our daughter. I guess it’s just one more case where correlation does not imply causation, or at least the causal relationship in this case is the reverse of what was predicted.
Another good source of discounts I’ve been taking advantage of lately came with my maternity clothes purchase. I purchased about half of my clothes online from Motherhood Maternity during one of their spring sales. Turns out they send you a set of coupons with each purchase that includes $20 off from Shutterfly, and 25% off a $40 purchase from Carters among others. Well, apparently my order got split into two shipments so I received two sets of coupons! I used one set of $20 off Shutter fly for birth announcements. Each one ended up costing me 46 cents including tax & shipping! Yes, that’s only 1 cent more than the cost of the postage. I plan on using my second $20 off coupon for the canvas print I’ve been wanting.
As for carters, I ordered the next size up in baby clothes a few weeks ago – 9 onesies and a sleep and play averaging $4.50 each! The sleep & play was the most expensive, but totally worth it. It’s a glow in the dark skeleton. Nicki will 3 and a half months by Halloween, but I think there’s a good chance she’ll still be in the 0-3 month size given that it’s a little just two months away. I also figure we’ll get more use out of it earlier in October than November.
I wouldn’t go out and purchase maternity clothes just for these coupons. Shutterfly routinly does a $10 off $20 purchase, and carters does a 20% off $40 purchase. But they were a nice add on, that amounted to an additional $24 in savings on things I was going to buy anyway.
No, I’m not talking about our blunder (although I’m not loving the sheet set as much as I thought I would. I think there’s a chemical on them that I’m extra sensitive to due to pregnancy.) I’m talking about the retailer’s blunder.
It seems we weren’t the only ones who stayed mostly in this black Friday. Online sales were on the raise, especially on Thanksgiving itself. Cyber Monday sales are up too. This is a trend I like to see, as next year I doubt we’ll be spending much time our shopping with such a small infant.
The increase to online sales came with a few glitches. BestBuy, in particular, couldn’t handle the increase demand and accepted more transactions than they couldn’t deliver on. They had to cancel some orders at the last minute. Maybe that’s why the camcorder wasn’t selling out. Maybe in my web browser it appeared available when it really wasn’t.
But BestBuy isn’t the only one. The record traffic was difficult for Walmart and Target to handle. In fairness, Target’s troubles started before black friday.
It’s good news if you’re a web developer. Particularly if you’re expertise is in cloud computing or scaling. Since online sales are up so much, you can bet major retailers will be pulling out all the stops to make sure their ready for next year! I also read (although I can’t find the source) that there will be a push to support more mobile devices, including the iPad. I am looking forward to Black Friday from the comfort of my couch!
I had some free time today (first time in weeks, wahoo!) so I got out my beading supplies and decided to take a crack at the seed bead nets I wanted to try. After about six hours, and one false start, I finished with this:
I’m very happy with how it turned out, especially for a first attempt. Well, technically second. If you want to try this, I recommend using a beading string rather than any kind of wire or cord, and size 10 needles. For my first pass I used a translucent beading wire, but the wire held its shape if bent, which ended up emphasizing all my mistakes. I’ll post a tutorial later, I plan to make a few more first so I’m sure I’m not leading anyone astray with bad ideas.
About two months ago I talked about the profitability of Etsy stores, and the difficulty of turning a real profit. This project serves a perfect example. Let’s ignore material costs, which were pretty negligible. This net took me 6 hours. Using the 30K a year target, I’d have to charge approximately $90 in labor costs. If I omit the the time spent down a bad path, and the assumption I get faster with practice, I might able to get away with charging $45 in labor. Yet, a search shows they sell for between $5-$35. If I set my price to $35 to match the high end, then my hourly rate gives me $23K a year. And that is, of course, assuming I sell well – 857 to be exact.
Even though I know exactly where the $35 price tag comes from, I still can’t help but think the price is too high. I couldn’t see myself shelling out more than a few dollars a piece for a bead net, and I’m sure many of you feel the same way. At the current rate it would make it one of the most expensive ornaments on our tree. As cool as I think the net is, it isn’t the coolest ornament we have. As with all things combining internet and profit, you have to be in it for the fun, not the money.
In theory, ordering online is faster than going to the store. For me at least, this is far from true true. I tend to be deliberate and slow, waiting for deals. One trick I employ while shopping online is to log in to the store, add an item in my cart and then close the browser. In the past, I’ve found if I wait just a little while, I’ll get a coupon from the store in hopes that I will complete the purchase. It reminds me of car dealer negations. You’re hiding the fact that you really want the product in hopes the seller will discount the price more. I’ll track products on multiple sites to see if catch any price drops and sales. This kind of price hunting may start to become more delicate.
Many companies are shifting towards more consumer profiling. Capital one made the news back in August when it was discovered they used a third party to estimate a potential customer’s worth. The third party collected data based on where you lived (from your IP address), what type of browser you used, what time of day it is**, etc, to make guesses on how much income you have, and how good a credit risk you are. Capital one would then choose which credit card offers to display on their website based on that estimation. Capital one claimed not to use the data in making lending decisions, however they made the news again six months ago when they offered different users different loan rates presumably based on the browser used. This action is legal because they aren’t discriminating based on any of the protected classes. This kind of profiling, however, is one trend that may make online discount hunting harder.
A product otherwise on sale may be offered to me at full price if the profiler estimates (rightly or wrongly) that I want the product and can afford it. This isn’t exactly new, but it may be becoming more common. Amazon tried something similar, but reversed their policy admit a backlash from the internet community. Although, there are mixed reports that they may be at it again, mostly by redirecting prime customers to different products and not price fixing per se.
This dynamic pricing (Also called flexible pricing, customized pricing, and personalized pricing) has become an increasing concern of mine with the abundance of personalized ads. A few weeks ago I was jewelry shopping on QVC.com. I ended up leaving a tab open because a ring I liked was out of stock in my size and I wanted to see when it would be back in. I’ve now noticed as I’ve surfed the web that the same ring has been featured on ads for QVC. I tried it out by leaving a tab open with a different product. This means several things: 1) QVC knows what my shopping behavior is and have tied it to me, likely by the cookie they left on my computer; 2) They are sharing that data with a third party advertiser responsible for display ads on many different websites; 3) The advertiser is likely keeping tabs on where I am going and may be sharing that information back to QVC. What if I purchase something expensive elsewhere, will the advertiser tell QVC that I can afford to pay more? If I look for a QVC discount code, would it signal that I really want the ring so QVC should raise the price? To be fair, I don’t think this is unique to QVC. Nor do I think QVC is doing anything deceptive in terms of price altering. The price never changed for me, and I had my husband check from a different state using a different browser and operating system. My concern is that dynamic pricing will be the next step.
The concern I have is I am no longer in charge of the single I send. I do not know how online companies are evaluating me, and what that could mean to my bottom line. While dynamic pricing has been around for ages in the form of senior citizen discounts, or student discounts, in those cases the change is price is transparent. I know what the discount is, whether or not I qualify and what I have to do to get it. When dynamic pricing happens because of my internet habits, I have no awareness. I don’t know that if I had opened Chrome instead of Firefox that morning, I could have saved. Would a company assume I have more disposable income if I view their website from a smart phone?
There’s no clear cut way to thwart this kind of tracking. Removing cookies would be one step, since it reduces the amount of ongoing tracking most companies can do. Even that’s not full proof, as my IP address is unlikely to change in any one sitting. If the combination of ip geolocation, exact operating system (vista home vs Windows 7 professional, etc), and browser version is not enough to identify my computer, it certainty narrows down the field of possibilities.
For now, I will have to be careful about how I shop online if I want to ensure I am paying the best prices.
** Whether you’re on during the day or night could indicate what type of job you have: day shift vs night shift, white color vs blue color. The type of browser and operating system can also be used for profiling, as computer geeks often use linux, while trendy hipster types might prefer apple.
There was a really good article about the profitability of Etsy. Simply put, Etsy‘s profitability is dependent on the individual stores profitability. Creating a profitable Etsy store, however, is no easy feat. The biggest hurdle is determining how much to charge for a given item: too much and the shop keeper loses customers, yet too little and the shop keepers profits may not out way costs.
So how much should one charge? It’s easier to think in terms of profits and work backwards. A simplified formula for profits is
YearlyIncome = NumberOfSales * Price – Expenses
Solving for price, you get
Price = (YearlyIncome + Expenses)/NumberOfSales
You can substitute DesiredYearlyIncome to get a price target. To give a concrete example. Let’s assume that I’m striving to be one of those $30,000 a year etsy merchants as a jewelry maker, and I think I can reasonably sell 1,000 pieces a year. Then I will need to charge $30 above the materials cost for each piece I sell. This $30 is basically the cost of labor. But as Max Chafkin points out, “The vast majority of Etsy sellers are hobbyists who aren’t in it for the money and, consequently, end up charging rates for their labor that would make even a Walmart buyer blush.”.
With similar products being offered at barely above the materials costs, it’s difficult to raise the price too much without impacting sales. Why buy a necklace from me if someone is selling a comparable one for $30 less? As a result, the price I can charge is basically fixed. This means the only two variables in the equation left that can change are expenses, and number of sales.
Expenses can be difficult to change. If you’re already buying whole sale, or in bulk, you’re not going to find much wiggle room. You can also substitute cheaper supplies, but you run the risk of losing customers who want jewelry made of higher quality materials.
Increasing the number of sales is also not easy. In my example, I assumed 1,000 sales and needed to charge $30 per piece in labor costs. If I only want to charge $5 in labor costs, I would need to sell 6000 pieces. That’s roughly 16.4 sales a day. Some visitors to my store front will not purchase anything. Some visitors may be other shop owners or crafters looking for inspiration. In order to get enough potential customers to my store I will have devote time to advertising, time that won’t be spent crafting.
The way I see it, the best bet to be profitable is to reduce competition, primarily by changing the product you offer. One way to do this is by offering a product that few others can. Fill a niche. There may be many wire jewelery makers on etsy, but there are far fewer casters. There will always be crafters who will mimic cool designs they see, so you can’t just differentiate yourself by style alone. Another approach I’ve seen recently, is to take advantage of the fact that many of your shop visitors will themselves be crafters. A few etsy shops owners offer instructions for how to create their crafts for very small sums of money. There’s no materials cost, once the instructions have been created, so the $1-$2 is pure profit. It’s also a small enough sum of money that you’re unlikely to be greatly undercut.
Despite the difficulties, there are those who do manage a thriving business out of etsy. You can either look at the numbers Max Chafkin points out and either lament that only 1,000 etsy shops make 30k a year, or rejoice because 1,000 shops make 30k a year. If you’re of the latter camp, and are eager to give your business a try, there’s lots of advice about selling on etsy, including custom work to help maximize your chances of being successful.
If you’re curious, there’s also a consulting rule of thumb for determining your hourly wage that also applies to crafters doing custom work. The formula is:
(DesiredYearlyIncome + YearlyExpenses)/2000.
The 2000 comes from 40 hour work week, 50 weeks a year. Why not 52? Well you’ll need some (paid) time off, for sick days or even just to recharge. We all need a break some times.