A Coming of Age for Online Wine Sales
The online selling of products appears to be entering a new period of maturity where it can no longer fly under the radar. Two recent events have highlighted that eCommerce has become a significant part of consumer activity in the US. The first is that Amazon has agreed to collect sales tax for a number of the largest states. The other is that Google is converting their comparison shopping engine from a free to a paid model.
From the beginning Amazon argued that without a physical presence in a state they were not required to collect sales tax, per a 1992 Supreme Court decision. As the NY Times reports, this exemption was seen as a way to give the Internet growing space, but with Amazon now collecting sales tax the feeling is that the Internet is able to play by the same rules as traditional retail.
Google Products has for years been a great source of free traffic for retailers who put the effort into preparing a data feed to Google’s specifications. Now that traffic is no longer available for products containing alcohol, and if it ever comes back it won’t be free. Google has explained that the change is intended to improve the user experience by eliminating duplication and poorly maintained feeds. I’m sure the new revenue stream doesn’t hurt, but there was a judgment made by Google that retailers were ready to stand on their own feet.
This puts additional pressure on wine stores this holiday season as a great source of free traffic has dried up. Online retailers need to realize that the supply of new customers now comes with a price tag attached, and that they need to direct more effort into retaining existing customers and encouraging repeat business. Gone are the days when it was enough to post your inventory online and just wait for the orders to come in. There are very few stores where the selection will drive a baseline level of business that is enough to cover the operating costs of a website. Even if your selection can do this, what a wasted opportunity that you aren’t leveraging new customers for repeat business.
In the past this column has posted the Five Stages of Growth for a Wine Website, but it boils down to growing your customer list, and having a dialog with your customers that encourages them to stick around. Over time you figure out the best way to describe your business to customers, and how to focus your advertising expense on the best potential prospects.
The simplest approach to growing your customer base is with shopping comparison engines where your inventory does the work of finding new prospects. If you can figure out how to make money or at least break even with these feeds you will have a steady stream of customers to convert into a second sale. Email campaigns, blog posts, social media connections, homepage promotions all contribute to growing repeat business and customer loyalty. This is where the profit from your website grows.
The experience of communicating with customers should help clarify what sets you apart and how to describe that to prospects that want to shop with you. When you can articulate that value proposition you are ready to advertise on search engines in a way that targets your best prospects and keeps your costs in check. Do this well and your store will prosper in this new age, both online and offline.