Opportunities Online Persist despite Tougher Economic Climate

Posted on | January 1, 2009  
Writen by | Ian Griffith

Story by Ian Griffith on 1/1/2009
Last year we conducted some comparative benchmarking of retailer websites on our ecommerce system for the month of November. We compared traffic and sales, pageviews and conversion rates to give stores feedback on how their websites were performing. When presenting an analysis of the strengths and weaknesses of their online business we suggested ways they could improve over the next year.

After reviewing this year’s results it became clear that in addition to the value of benchmarking the stores with each other, the comparison with last year’s benchmarks is providing insights into the impact of the recession on online sales. While some stores continue to see gains, there are others that had fared well in the past that have seen sales slip. This comparison suggests what stores should be doing to distinguish themselves in this challenging climate.

In comparing 50 stores that were also live last year, we see that our mature websites have seen an average a decline in sales between November 2007 and 2008, compared to increases in at least the last three years prior.

It is interesting to note that the Conversion Rate has remained much the same at 1.8% for the mature stores; however the average order dropped from about $267 to $239. The average order is even lower for the new stores that have launched websites this year, although some do manage to sell over $500 per order. In addition to a decline in order size we also saw the total visitors to the mature sites drop by almost 7%.

Getting Back on Track
While this is a limited sample, it does appear that some of our mature sites have been coasting on the strength of their inventory. Offering good wines at competitive prices used to be enough to sustain double digit growth, but this new economic environment suggests that continued growth requires a store to do more. The stores that continue to find growth even in a tough climate are more creative in finding ways to meet the needs of their customers. These stores are constantly tweaking the merchandizing of their homepage much as they would displays in a store. They write compelling emails that do more than just announce another sale. In some cases they are looking beyond the internet to promote themselves then using the website to convert interested prospects.

It also looks like some marketing channels are becoming a bit saturated. While listing your inventory on a shopping feed is still a good investment, there is growing competition from other East Coast stores with similar inventory. Also, the newest stores tend to start with low margins in an effort to kick-start their sales and grow their customer base. Promoting your inventory around the internet on shopping feeds can still be profitable for mature stores, but this needs to be part of a broader marketing mix. An experienced store should be drawing on what it has learned about selling online to come up with a distinctive argument why they are the best choice for prospective customers.

Selling wine online is still an important sales channel for an ambitious wine store. However, it is becoming harder for new websites to find growth at the high rates that were possible only a few years ago. Maybe after the economy recovers from its current malaise some of this pressure will lift, but don’t overlook the opportunity in the current climate for the store that pays attention to new opportunities to connect with customers.

To learn more about how the Beverage Media can help you Sell Wine Online with a website for your store, contact Ian Griffith at 212 571-3232 x318….

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