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Tel : 617-864-1677

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An Interview with Tom Wark of the National Association of Wine Retailers (NAWR)

May 18, 2017

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Dissecting an eCommerce Site’s Initial Growth

May 7, 2016

Before any business decides to build an eCommerce website, one of the most important questions they consider is if the project will be worth the costs.  When compared to building a simple content site on a platform like Wix or Squarespace, eCommerce solutions cost more as they require more features pertaining to managing inventory, orders, shipping and delivery policies, and more.  At the same time though, having the ability to show your inventory and let consumers place orders makes an eCommerce site more valuable.  How valuable though?  Enough to make it worth any store’s while?

 

As a vendor that sells and supports eCommerce websites, we know that the sales figures per store on our network vary vastly, which makes it hard to describe what’s “typical”.  That said, we conducted some research, examining traffic and sales figures for 15 websites launching between 2013-14, to try and parse out how websites grow during the first two years after they launch and what factors affect this growth.  While many of the stores wildly differed, two very obvious factors emerged:  marketing ad-spend and the store’s online presence prior to the launch.

 

The first factor, marketing ad-spend, shouldn’t surprise anyone.  Stores that invest money into advertising that generates traffic (and inevitably sales) grow more quickly and those that don’t.  The second factor though--a store’s online presence before the eCommerce site launch--tells us a more interesting story.  For stores that had a content site prior to launching their eCommerce, on average, they end up with more total sales after two years.  They don’t grow faster than stores that didn’t have a previous site, but they start with more initial traffic making it easier for them to hit a higher volume of sales.  

 

That said, not everyone has a previous website and not everyone is ready to commit additional funds for digital marketing.   To that end, we wanted to dig further and assess the growth patterns of a store that has just set up a search engine friendly eCommerce site and submitted free product listings to Wine-Searcher and other free wine directories.  The subset of stores in this situation from our study, on average, received 10-20 website visitors per day and about 1 order per week during the first 3 months they are live.  Those numbers naturally increased though over time, and during the collective first year of business, the average store processed 94 orders for about $14,773 in sales.  During the second year of business, the average store almost doubled in growth--about 184 processed orders for $28,918 in sales.  

 

Having a relative sense of an eCommerce site’s growth rate and potential net sales over the first two years--without taking in account marketing and a previous online presence, helps answer the question if it will be worth the costs.  If those sale figures are not worth the costs of a potential project a store should first ask if they’re able to commit a digital marketing budget to grow the business.  And if not, consider first building a content-based site that showcases your business, announces your events, and highlights your sales and specials.  By amassing an audience on a less expensive content solution you are are building an active audience on a website domain, which, if you migrate to an eCommerce solution, will generate more revenue more quickly.

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