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Net Gains

Recent figures indicate that Internet sales now account for 10% of retail sales [Retail Week, 2006]. Many retailers are looking to get a piece of the action and are spending money on websites. I have seen retailers who are making a significant proportion of their income from websites and others who have spent a lot on the design and hardly make a bean.
Have you taken any steps into the World Wide Web? Whether you have already created an online version of your shop, or if are you considering it, what is your next step? I have spoken with gift retailers across the UK and work closely with many. I have seen a variety of approaches, some that work very well and others that, well, just don’t. So here are a few thoughts and ideas about making money on the Internet…

Make it convenient
One of the most important ingredients for retail success is convenience. It works time and time again. Make it easy to buy and people buy. The same is true of the Internet. Make it convenient for customers to buy and they will.

Add value
Research is one of the most popular uses for the Internet, particularly gathering information prior to making a purchase. It is clear that purchasing habits are changing. Even if consumers are not buying on the Internet many use it to find out what they want to buy and where they intend to buy it. Web pages are skimmed rather than read so information must be concise and salient.

Make it specialist
But how do you make it convenient? How do you provide information when there is just no time to write it all up? Well the answer is to keep it specialist, keep it niche. Here are a couple of examples:
If you are a gift shop in Exeter and you are using the website to promote local produce and tourist gifts, then how about selecting your best ranges and creating a story with a little intrigue, a sense of history and atmosphere? Explain why these gifts are the most relevant. You may be the only gift shop in Exeter doing this on the web.
You can also be a specialist in a product area. If you have tried reflecting your whole shop on the Internet, try something a little different. Pick a small category that you know and love (one that works for your shop) and create a website around it. Let’s take an exaggerated example, how about PinkFluffyHandbags.com? Consumers looking for pink fluffy handbags are better off going to a website that specialises and only sells pink fluffy handbags rather than, say, John Lewis (who only appear to sell one pink handbag and it’s not even fluffy). The specialist can offer a superb choice of relevant items along with good concise information such as suitable age ranges and it’s just so convenient!

Make it seen
According to Google, its network reaches more than 80% of Internet users. To get your page seen on Google you can either try and get it listed free by working through the black art of Google Optimisation. Or you can pay for advertising on a pay per click basis. Google call their pay per click advertising Google Adwords.
If you understand and use Google Adwords correctly, it can drive a lot of profitable business to your website. If you do it wrong, you may as well tear up some £20’s now and save some time!
To understand how to use Google Adwords, it is helpful to know a bit about the history of Google. When Google started in 1998, Yahoo! and AltaVista dominated. Google was the new kid on the block. Most Internet experts at the time didn’t think Google had a chance. Remarkably, Google surpassed both of them. How did they do it?
The Google guys decided to give their users exactly what they wanted. So if you typed in “pink fluffy handbag” they would give you the most popular pink fluffy handbag websites at the top of the first page. They did this by developing mathematical formulas to determine the most relevant website pages people would want for any particular search term.
Google Adwords is actually based on this same principal. Google wants ads that are relevant to people’s searches; this is the key to being successful with Google Adwords. If you can create ads that are relevant to your search terms (called keywords) then Google will reward you with a high placement at costs lower than ads that are not relevant. In other words, if people see your ads and click on them, you will pay Google less for your ads. If people see your ads and don’t click on them, Google will charge you more for the ads. If you get a really poor click rate, Google will screw up your ads and disdainfully toss them into the waste bin.
How do you get people to click on your ads and get a lower cost with a higher placement? The key is relevance to the search words used. This means you must try to get into the head of your potential customers and create an ad or ads that mimic the thoughts of people looking for something like “pink fluffy handbags”.
Here is how the PinkFluffyHandbag.com website fared in Google advertising. My advert says:

Pink fluffy handbags
Great choice of handbags that
are pink and fluffy.
www.pinkfluffyhandbag.com

I added 10 search terms (keywords) including ‘pink fluffy handbag’ and ‘pink handbag’, with an average price of 50 pence for each click to my website. Google told me I would get five clicks per day. It also told me my advert would almost always be at the top of the list.
This means that the advert is highly visible. It is crystal clear what is being sold so people clicking on it will know exactly what they will get. The range of pink fluffy handbags is fantastic; in fact probably the best range in the UK. This means it is more likely that a customer will find what they are looking for and buy. So I get good value from my advertising spend.
And there’s another positive side to this approach. Because all of the advertising is very focussed, I should get a superb click through rate, as the advert is highly relevant to the search terms typed by the consumer. This means Google will improve my advert ranking and I end up paying less and getting a better listing position than other more general sites.
From the customer’s point of view they have total convenience. A website that provides a range of just what they are looking for. Probably the best range in the UK. They feel they have come to the right place and there is little reason to look elsewhere.
I know retailers who have made a lot of money using a very similar approach to this. And, as far as advertising goes the same approach applies to using your location to be different. Just three pence will buy you top spot on the following search terms; ‘Gift Shop in Exeter’, ‘Exeter gifts’ or ‘Gift shop Edinburgh’. ‘Edinburgh gifts’ is more expensive at 56 pence for number one spot, but save money and go for 2nd or 3rd spot; they are just as likely to be read. When I looked there were no Edinburgh gift shops advertising on the first Google page. So if a shop does advertise it would get a high click through rate because the advert closely matches the search words. This also means in the future Google will give them a higher placing than others because the click through rate is high. Have you tried typing in searches like this for your shop in your town or city?
Do you remember not long ago everything to do with the Internet had the word ‘virtual’ tagged on to it? With 10% of retail sales the Internet is not so ‘virtual’ any more, it clearly means real business. If you are embarking on an Internet venture of your own I would advise doing your research beforehand. Google will tell you for free how many times the search words you are thinking of are typed which neatly tells you how big the market is. I would very much like to hear how you get on.

Further Information
David Mackley MBA BSc is part of the Giftware Connect team, offering fresh perspectives on running your business with the help of simple technology. He can be contacted on 01635 262718. Giftware Connect: Beyond EPoS. www.intelligentretail.co.uk.

September/October 2010
issue 61
available now