Different Paths to the Top of Wine Ecommerce
Posted on | December 14, 2010
Written by | Ian Griffith
At this time of year we typically run benchmark comparisons for our retailer websites to give stores feedback on how their site is performing. We take statistics for November and compare metrics including total visitors, pageviews, sales, transactions, conversions, and order size. Comparing results across all our stores we see the following categories of websites:
- Newcomers: stores that launched this year for the first time and are in the process of figuring out how this new business channel will fit into their operation.
- Mature websites: stores that have been online for at least a year and have settled into a familiar pattern of running their online store.
- Top Performers: stores who have figured out how to operate at a higher level than the other mature stores.
Everyone wants to be in the Top Performers category, but there are only a few stores that manage to sustain their business at this level. These stores distinguished themselves by processing more than 500 orders in November, with billing over $100k. The lower end will write over a million dollars of business online this year, while the upper end will do a lot more.
As you might imagine we’ve been asked a number of times how these stores are able to do it. Are they discounters? Are they established stores? Do they use virtual inventory? Who designed their site? As we survey the benchmarks it’s clear these stores are all quite different. The good news is that success in this industry doesn’t depend on a formula; there are a number of different paths to the top.
Established Stores: Half of the Top Performers are established stores with a marketing momentum that lifts the website. Yet others have used the internet to grow a brand online that is more prominent than their store.
Product Selection: Established stores with deep vintages of classic wines certainly convert this into sales online. However, smaller stores have grown their online business using virtual inventory to attract customers and sales, which doesn’t require the accumulation of inventory over time.
Advertising: While all the Top Performers advertise either online or offline, one of the established stores hardly advertises online and still relies on print ads. The others are involved with Search Engine Marketing/Optimization and Shopping Feeds. Online advertising is understood as a cost of business that needs to be optimized and maintained.
Key personnel: This is a big factor at the smaller stores and usually involves the store owner. Also, established stores may be better able to afford the salary of an ecommerce manager capable of growing their online business. Crafting emails and promotions make a big difference in the profitability of the site; don’t rely on advertising for all your sales.
Discounts: Certainly these stores have attractive prices, but they sustain their position at the top by figuring out how to remain profitable. Offering rock bottom prices and spending heavily on advertising will push orders through your website but the money will eventually run out.
We have written in the past about the Stages of Growth for an Online Wine Store which is our model for helping a store find its path to the Top Performers. However it has been interesting to watch how extraneous factors play a large part in the ability of a store to grow their website. The Top Performers may be as remarkable for their ability to stay focused on this important area of their business.
Comments
2 Responses to “Different Paths to the Top of Wine Ecommerce”
December 17th, 2010 @ 6:54 pm
Great round-up, Ian. I particularly like that you talk a lot about what’s going on in the store itself (reputation of the brick-and-mortar, inventory selection, staff, print advertising, etc). It seems that as the population of online wine retailers increases, what’s actually happening in the store is becoming more important towards success online.
In the example above, under “advertising”, you mention that there is a store that barely puts any resources in online advertising. Yet, they’re still among the top performers–partly because they’re dedicating many resources to brick-and-mortar business (which the website identity is closely tied to). I think it’s almost as important to note that below the top performers there are many sites that are steadily growing despite not spending money in online advertising or even sending e-mails blasts to their customers. These stores are very similar to the top performer in question though; they are dedicating many resources to their very active brick-and-mortar stores.
There are exceptions, which don’t fit this pattern. And there are certainly stores whose internet business continues to grow not because of the efforts in store, but because of the efforts online. That said, the one important thing that I personally have taken away from this year’s benchmark comparisons is that it’s far easier to find long-term success online if you have a lot going on at your brick-and-mortar store.
December 20th, 2010 @ 5:20 pm
Nice follow up post James. There are some stores where promoting the store is less a distinction between online and offline, and more where the most effective marketing message can be placed. Including the website as another channel of the store in these promotions yields benefits for the whole business.