February 03, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

Consumers don’t know about it, and if they did, chances are they wouldn’t like it, but more and more e-tailers are turning to customer-specific “dynamic pricing.” The practice analyzes information tied to a consumer’s computer cookies—including ZIP code, browsing, and shopping history. The e-tailer’s software automatically varies the price for any given item, charging different customers different prices for the same product. “Most consumers are totally unaware of the practice,” Shop Smart magazine deputy editor Sue Perry told Newsfactor.com. “The changes can be as little as $2, $3 and $4, but it all adds up.”

“Dynamic pricing has always been with us,” Wharton University marketing professor Pete Fader wrote in a study by the Annenberg Public Policy Center. “Think of the classic hagglers in the market of a Middle East bazaar. People will pay very different prices for the same bolt of fabric… Fixed pricing is a much later phenomenon and it’s an artificial one. Companies must engage in flexible pricing practices in order to honor their responsibilities to their shareholders. If retailers charge a flat, low price to make everyone happy, they’re leaving a lot of money on the table.”

Dynamic pricing—also known as targeted pricing, flexible pricing, or tailored pricing—is strictly kosher. Attorney Marcelo Halpern of Chicago’s Latham & Watkins told ZippyCart price customization’s legality was last established in 1996, when Denise Katzman filed a class action lawsuit against Victoria’s Secret. Katzman sought legal redress after discovering that a male colleague’s catalog featured a lower price on an identical item. Judge Robert W. Sweet dismissed the case, calling the complaint “objectively unreasonable.” “Fair market value is defined as what a willing buyer is willing to pay to a willing seller,” Halpern said. “Aside from certain federally regulated product categories like pharmaceuticals… under U.S. law an online business can charge whatever the market will bear to whomever will pay it.”

Even when dynamic pricing isn’t customer-specific, it offers e-tailers significant profit potential. A pilot program by Digonex Technologies for Warner Brothers boosted the bottom line for selected music titles by over 15 percent. Digonex also claims they raised relevant revenues by over 20 percent, and elevated sales volumes by over 35 percent. Digonex recently announced a deal with the Cleveland Cavaliers basketball team for their Sports & Entertainment Analytical Ticketing System (SEATS) software. The program sets seat prices according to a proprietary list of variables. “Although the Cavs play indoors, our customizable system could even take into account weather forecasts,” asserts Digonex PR Director Chris Pohl.

As far as price-conscious consumers are concerned, Editor Perry reckons its computerized caveat emptor. “Experiment by clearing cookies or using different computers. Compare prices at rival sites or shopping comparison sites. Don’t leave items in the online cart. Track past purchases to compare prices.” Either that or . . . haggle?

February 02, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

In an editorial in today’s Wall Street Journal, Amazon’s retail vice president for Europe launched a blistering attack on the European Commission. Greg Greely excoriates the European Union (EU) for contemplating new rules which would allow manufacturers to restrict sales to distributors with bricks and mortar stores; retailers who sell a minimum value and/or volume of goods. The proposed laws are designed to protect Europe’s “high street” retailers, who see “pure play” e-tailers like Amazon as a growing threat to their dominance. They also have the backing of several prominent, though unnamed, manufacturers who see e-commerce as a threat to margins.

E-commerce consultant Jeff Puthuff says the timing of Greely’s editorial is more important than its substance. “It’s highly unlikely the EU will discriminate against online shopping, especially as established retailers are looking to get into the game. It’s far more likely that Amazon is trying to distract Wall Street from this weekend’s debacle with Macmillan Publishing, which adversely affected their book business.”

“The implications of the proposed rules are clear,” Greely opines. “Less consumer choice and higher prices driven by reduced competition, and less transparency in pricing and information (limiting consumers’ ability to make informed purchasing decisions). Those consumers not near locations serviced by brick and mortar stores—such as people in rural areas—will be especially disadvantaged.”

Greely’s polemic rejects the idea that Amazon and its ilk are hitching a “free ride” on the investment made by Europe’s bricks and mortar stores. The Amazon exec attempts to turn the argument on its head, using John F. Kennedy’s “rising tide lifts all boats” theory. “Increasingly, consumers extensively use the Internet to access online product descriptions, detailed images, technical specifications, and reviews before purchasing offline. In fact, because so many consumers do product research online before buying in physical stores, it can be argued that physical stores are the ones free-riding on online retailers.”

The editorial runs contrary to persistent rumors that Amazon is contemplating establishing an off-line presence. In December, The UK’s Sunday Times reported that Amazon had a “secret plan to open high street shops” in Britain, after learning of talks between Amazon and property landlords.

February 02, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

In an editorial in today’s Wall Street Journal, Amazon’s retail vice president for Europe launched a blistering attack on the European Commission. Greg Greely excoriates the European Union (EU) for contemplating new rules which would allow manufacturers to restrict sales to distributors with bricks and mortar stores; retailers who sell a minimum value and/or volume of goods. The proposed laws are designed to protect Europe’s “high street” retailers, who see “pure play” e-tailers like Amazon as a growing threat to their dominance. They also have the backing of several prominent, though unnamed, manufacturers who see e-commerce as a threat to margins.

E-commerce consultant Jeff Puthuff says the timing of Greely’s editorial is more important than its substance. “It’s highly unlikely the EU will discriminate against online shopping, especially as established retailers are looking to get into the game. It’s far more likely that Amazon is trying to distract Wall Street from this weekend’s debacle with Macmillan Publishing, which adversely affected their book business.”

“The implications of the proposed rules are clear,” Greely opines. “Less consumer choice and higher prices driven by reduced competition, and less transparency in pricing and information (limiting consumers’ ability to make informed purchasing decisions). Those consumers not near locations serviced by brick and mortar stores—such as people in rural areas—will be especially disadvantaged.”

Greely’s polemic rejects the idea that Amazon and its ilk are hitching a “free ride” on the investment made by Europe’s bricks and mortar stores. The Amazon exec attempts to turn the argument on its head, using John F. Kennedy’s “rising tide lifts all boats” theory. “Increasingly, consumers extensively use the Internet to access online product descriptions, detailed images, technical specifications, and reviews before purchasing offline. In fact, because so many consumers do product research online before buying in physical stores, it can be argued that physical stores are the ones free-riding on online retailers.”

The editorial runs contrary to persistent rumors that Amazon is contemplating establishing an off-line presence. In December, The UK’s Sunday Times reported that Amazon had a “secret plan to open high street shops” in Britain, after learning of talks between Amazon and property landlords.

February 01, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

With all the talk of Apple iPads, advanced smart phones and 3G networks, e-tailers would do well to remember that plain old SMS text messaging is an extremely powerful medium. A report out today from the U.K.-based Mobile Data Association reveals that British cell users send 11 million texts per hour. According to the CTIA (formerly the Cellular Telecommunication Industry Association), Americans send some 4.1 billion SMS text messages per day.

Convergent Mobile hopes to push consumer’s buttons with their new US411 text messaging service. Consumers looking for logistical information or special offers from a participating company text a business-specific keyword to US411. They then receive customized SMS messages—with or without a link to the business’s web page.

Convergent customers pay $20 for the keyword and $10 a month for unlimited texts, such as “Il Fornaio would like you as a customer. Just show this text msg next time for a free item on the Antipasti menu. Buon appetito!” Convergent’s back-end software includes response stats and a bespoke, mobile-enabled web page.

“We beta tested the system with a special promotion offered by the Jackson Rancheria Casino Hotel,” Convergent President Mickey Breen told ZippyCart. “They saw a customer response rate between 17 to 18 percent over the first seven to ten days.”

Convergent’s US411 will compete directly with AT&T’s recently launched ATT411 TXT. Crucially, the ATT411 TXT business-specific “keyword” is a five or six digit number. AT&T’s SMS service is also significantly more expensive: $828 per year for each ten-digit telephone number keyword, or $2,268 per year for a “toll-free” ten-digit telephone number.

“Our US411 service will be much easier for customers to remember, and easier for a business to use,” Breen asserted. “We feel that our logo, incorporating each customer’s keyword, will become a recognized symbol for SMS-based marketing.”

Despite any inherent advantages Convergent’s service may enjoy, AT&T is a communication colossus with huge reach to both customers and businesses. One thing’s for sure: text messaging as a marketing medium is set to become the mouse that roared.

January 29, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

Google’s attempt to localize its search engine took a knock last month when a $550 million deal to buy Yelp.com fell apart. A source close to the negotiations told ZippyCart that Yelp wanted more cash. Google was constrained by its wariness of Yelp’s business model—where anonymous reviewers heavily influence click through rates for businesses that may (or may not) advertise on the site. Post-break up, both companies have moved ahead with plans to expand their share of the local search market.

Yelp has secured new funding from Elevation Partners. The deep-pocketed private equity firm is scarfing up $25 million worth of Yelp’s Series E preferred stock. According to the press release, the cash infusion is set to soar by some $100 million “through a planned purchase of shares from vested employees and other eligible shareholders. The details of the offer to purchase are expected to be announced to qualified participants in the near future.” (You can almost hear the employees yelping from here.)

Meanwhile, Google has ditched user-generated local info in favor of core functionality. Earlier this month, Google introduced “Near Me Now” searching for iPhone and Android users. Smart phone users activate a “Local” button by entering an address or clicking on “Use current location.” The search engine then lists results by proximity. It’s an extremely useful, virtually unknown service. And the fact that a lackluster paid app called “Near Me Now” lives in the Apple iTunes store bodes badly for Google’s marketing efforts for a product by the same name. Similar to this is the “Around Me” app which came into the spotlight when the iPhone initially launched. This app provides direct competition to Google’s “Near me Now.”

Saying that, Google knows its searching business’ bread is buttered on both sides. To make advertisers more attractive to local surfers, they’ve added “click to call” to Google AdWords. “Your location-specific business phone number will display alongside your destination url in ads that appear on high-end mobile devices,” the company notified its customers. “Users will be able to click-to-call your business just as easily as they click to visit your website. You’ll be charged for clicks to call, same as you are for clicks to visit your website.”

AT&T has also joined the battle for local buyers’ loyalty. In addition to local searches and reviews on YP.com (purchased and refreshed last year), the telecoms giant’s alpha-testing Buzz.com. According to VentureBeat.com, the Yelp – Twitter – Yellow Pages hybrid focuses exclusively on “local business love.” Users can ‘”favorite” a business and leave short comments, “but there’s no place for negative reviews.”

While the jury is out on the value of independent local reviews, the competition for local search is becoming increasingly crowded. Google, Yahoo, Yelp, ATT&T and a host of smaller startups (e.g., foursquare.com and webnabit.com) are duking it out for the eyeballs of local customers seeking local businesses, and vice versa. It remains to be seen if a single player can achieve and maintain market dominance, or if the local search segment will grow even more fragmented. Either way, Internet entrepreneurs are clearly convinced that shoppers will think local, and search local too.

January 28, 2010
OpEd Guest Post By Keara Schwartz, Founder of Share Some Sugar

So you’re a business owner and DIYer and you’re planning on painting your office this weekend. What do you need to complete the job? A paint roller and extender, a drop cloth, a ladder, paint brushes and of course paint. Head to a local or online hardware store and your tab can easily run you upwards of $150. That’s a lot of money to spend when you end up using these items so infrequently.

But what’s the alternative? You already saved yourself lots of money by signing up to paint your living room yourself rather than hiring a professional painter. Think about all of the people that live in your neighborhood who probably already own these painting tools. How do you know who has what? If you could type in ‘ladder’ on Google Shopping and you get approximately 128,000 search results on ecommerce sites, you should be able to do the same thing in your own community and find neighbors and friends who are willing to lend you what you need.

Welcome to the world of eBorrowing. An online world full of items that people own and are willing to share with people who need to use them. Lots of people own items that collect a lot of dust because the items don’t get used very often. These people are usually happy to share things, like a ladder, with someone who needs it for a weekend project to paint their living room.

A new era has emerged. An era of C2C or consumer to consumer sharing sites like ShareSomeSugar.com which finds someone in your neighborhood who is willing to lend you something that you need. Sharing or eBorrowing sites leverage consumers’ existing inventory, or items that people already own.

The concept of eBorrowing is not new. B2C services like Zipcar.com, the car sharing service or BagBorrowOrSteal.com, a site that lends out designer purses and accessories, have recently been gaining critical mass. Why? Because it doesn’t make much sense to purchase and own something that you don’t use all that often. But why are these sites gaining popularity now? Well this reasoning is rooted in the current economic climate where consumers are consuming more consciously. These sharing services have a high capital investment in inventory and the consumer pays directly to a business.

These days, consumers are asking themselves if they really need to buy that ‘ladder’ that they will use once or twice a year. Or if it makes more sense to borrow or rent it from a friend, neighbor or another small business, use it and give it back when they are done. Borrowing and sharing isn’t for everyone. It is however one economic and environmental solution that fulfills your need to temporarily use an item. Next time you consider buying a durable item that you may use infrequently, ask yourself if you really need to own the item or if you could just borrow it instead.

January 27, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

When in Michigan, do as the French do. Actually, Ann Arbor’s Busch’s Fresh Food Market has been running a curbside pick-up service—similar to the French operation recently chronicled by The Wall Street Journal—for the last three years. The 15-strong American supermarket chain’s Director of Marketing says curbside pick-up only accounts for “a small percentage” of her employer’s business. But Kim Brown also says the idea is gaining popularity, thanks to Busch’s recently launched MyWay e-commerce program.

MyWay customers place their shopping order online and receive an earliest pickup time. The member drives-up to one of Busch’s 15 stores, parks in a designated pick-up spot, and calls the phone number on the sign. A Busch’s associate loads the order into the customer’s car. Members pay a flat fee of $6.95 per order. So far, so French. Busch’s Fresh Food Market takes it to the next level with personalized emails.

“Each week, we send registered MyWay members an email with ten deals based on frequently purchased items in their shopping history,” Brown told ZippyCart. “The deals are good for two weeks and the email highlights the exact percentage saved on any given item… As part of the program’s success, more and more of our customers are becoming aware of our curbside pick-up option when they log-in to place their orders. We’re seeing a small but noticeable increase in take-up.”

While the trend of blending online ordering with curbside pickup is getting all the press, Brown says the savings piece sells the service. “MyWay‘s embodies Busch’s core mission: to make grocery shopping an easy and friendly experience. But it also reflects our customers’ response to tough economic times. They don’t want to miss out on savings at their favorite local supermarket.”

Brown asserts that MyWay‘s personalized emails offer a big advantage over the Michigan chain’s print ads and circulars. “The average supermarket customer buys a thousand items per year. The average supermarket stocks 30 to 40 thousand items. Our print ads have limited real estate, and not everyone is prepared to hunt through them for discounts and coupons. With MyWay, our customers can make sure they’re not missing out on savings that apply specifically to them.”

Groceries entering the ecommerce space shows yet another brick and mortar niche that can benefit from online sales. Amazon.com has been testing a similar ecommerce model in Seattle, called Amazon Fresh, for quite some time. This online grocery service allows customers to purchase their food online and it will be delivered to their door by a selected delivery date and time. Customers who spend over $125 on their groceries qualify for free delivery. Big-name grocery stores, like Safeway, are also entering the mix in the hopes of keeping customers in a down economy.

January 26, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

Circuit City is dead. Long live Circuit City! A year ago this month, the consumer electronics giant filed for bankruptcy. The retailer shuttered its remaining 567 U.S. stores and laid off 34,000 workers. Last May, Systemax Inc. bought the failed brick and mortar retailer from its creditors and relaunched Circuit City as a pure play e-tailer. CircuitCity.com joined Linen’N Things and Eddie Bauer as part of a growing pack of post-C11 “zombie e-tailers.”

Bankruptcy lawyer Steve Jacubowski told Zippy Cart the e-commerce strategy makes perfect sense. “The new companies lose the old company’s enormous overheads. With a large customer database, a fulfillment infrastructure and a nationally-known brand, it’s like starting from the fifty yard line.” E-commerce entrepreneurs are now stalking bankruptcy proceedings, hoping to pick-up a well-established brand for proverbial peanuts.

Meanwhile, bankrupt retailers trying to maintain a vestige of their brick and mortar operations are not-so-gradually shifting their focus online. Earlier this month, a federal judge approved Crabtree & Evelyn’s reorganization plan. The soap seller has already reduced its retail footprint from 126 to 91 stores. As a central part of its recovery efforts, the Connecticut-based, Kuala Lumpur-owned company launched a new online store.

MediaWeek reports that the beleaguered upmarket magazine publisher Conde Nast is looking for online and/or retail partners for branded products and services, including business deals for recently terminated titles Gourmet, Domino and Cookie. Paidcontent.org says Conde Nast is including the defunct brands in its “plans to roll out a digital tablet format across all 18 titles this year, as well as expanded e-commerce and licensing.”

Why would anyone want to sell a branded product from a company and/or magazine that went bust? Al Ries reckons simple human nature works in the new owner’s favor. “It’s like Tiger Woods’ recent troubles,” the branding guru told ZippyCart. “Bankruptcy is a short-term knock against a brand. People tend to forget about it over time. If management can refocus the brand and make it stand for something online, they can recapture a large amount of its value.”

Apparently, Conde Nast agrees. “These brands still have life,” an “insider” told MediaWeek. “It’s easier to do licensing or branding development deals because the editorial doesn’t get in the way.” Now there’s a new if-not-entirely-palatable idea.

January 25, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

“Social shopping” is the great white whale of e-commerce. With Facebook’s membership exceeding the U.S. population and tweets coming from outer space, web developers are busy searching for a killer app that integrates social networking and e-commerce. Last week, former dot bomb chronicler Philip Kaplan launched blippy.com. The site automatically “tweets” members’ credit card purchases. Once a particular credit card is registered on Blippy, the site posts every transaction made using that card, within seconds.

“We call it passive sharing,” Kaplan told CNN. “And we think it’s going to be a trend. You don’t have to go to Twitter or Facebook and type to tell everybody what you’re doing. You just sort of do your normal stuff and you’re automatically publishing. That said, you can always pause the sharing if you’re buying birthday gifts or something like that.”

Even as the national press picked-up the story, controversy over the site’s dangers began. Or vice versa. By the time Giga.om.com‘s Liz Gannes asked Kaplan about blippy.com’s default “privacy” option, Kaplan had modified his story. “Some people are using Blippy and they’re not making their purchases public at all. They’re just using it as a simple consolidation of their purchases, like Mint.com but one step further. Our goal would be — you know that receipt you get from the grocery store and you throw away, that’s amazing data. We want to show not just where you’re spending but where you’re buying.”

Today, Help Net Security sounded the alarm. “The things you (and prospective fraudsters) now know about this guy [who uses Blippy] is the following: his name, what he bought, where and when he bought it, and how much he paid for it,” blogger Zeljka Zorz wrote. “What’s to stop phishers to use this information to mount a spear phishing campaign, sending an email peppered with this information and purporting to be from the seller in question? The information will definitely add to the credibility of the message and increase the chances of the person falling for the scam.”

At the moment, there are some distinctly odd posts at Blippy. Dozens of “blips” tell of customers who spent $0 at Blockbuster, Netflix and iTunes. Other posts reveal strangely repetitive amounts from Best Buy. Regardless of glitches, the possibility of dummy posts and security concerns, Time magazine reports that Blippy has some serious backing: Sequoia Capital and Twitter CEO Evan Williams.

It remains to be seen if the desire for community can overcome common sense. If Kaplan’s experience is anything to go by (go buy?), the answer is a resounding yes. “On a recent trip to Bali, he battled with a friend over who would get to pay for dinner,” Time’s Barbara Kiviat writes. “He wasn’t being gracious. He simply wanted the Blippy community to see that he was in a cool place.”

January 20, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

Web loyalty programs have been getting mixed reviews over the past few years, and is something that ecommerce companies should be cautious about using. Robert Farargo, one of our guest bloggers here at Zippy Cart, reports:

Since late last year, Senator Jay Rockefeller has been leading an investigation into internet giants Affinion, Vertrue, and Webloyalty. Rockefeller’s called the companies on the Capitol carpet for luring unsuspecting online shoppers into post-purchase “discount clubs.” Once enrolled, the programs automatically deduct a monthly fee from consumers’ accounts. Schemes with names like Reservation Rewards, Shopper Discount & Rewards, Travel Values Plus, Passport to Fun, Great Fun, Privacy Guard and Privacy Matters have snared over four million “members.”

The so-called discount clubs have generated over $1.4 billion for the trio, kicking-back tens of millions to hundreds of e-commerce “affinity partners” such as Movietickets.com, Barnes & Noble, Pizza Hut, Victoria’s Secret, US Airways, Classmates Online, Continental Airlines, FTD, Fandango Inc., Hotwire, Orbitz and priceline.com.

On the 11th of January, Affinion told Rockefeller’s U.S. Senate Committee on Commerce, Science, and Transportation that it would kill its datapass marketing membership programs. According to a letter sent to Rockefeller, Affinion will now require consumers to provide all 16 digits of their credit or debit card number when enrolling in its programs in the “online post-transaction environment.” There’s no talk of refunds or even a heads-up to consumers who’ve previously and unwittingly surrendered their credit card details to one or more of the three companies targeted by Rockefeller’s committee.

Meanwhile, The Fort Meyers News Press reports that Affinion (a.k.a. Trilegiant) is mailing out small value checks to customers who’ve shopped with one of their affiliates—with small print and a not-so-small catch. “Depositing that check, according to the terms written over the endorsement line on the back, meant that [Cape Coral resident William] Young was agreeing to membership in a shopping club called Buyers Advantage. . . Young’s credit card, the one he had used when he shopped with [mail order Affinion partner] Haband, was charged $159.99.”

William Young has been dubbed a “serial rebater” by The Fort Meyers News Press because he earns a decent second income by utilizing online rebate companies to save some extra cash. When he got a check for $8.25 from Haband, his wife assumed it was another rebate check, as they had just made a purchase with Haband. Because of this, she deposited the check without reading the fine print already mentioned. Unfortunately, this scheme impacts more than serial rebaters, as many consumers have not seen the disclaimer on the check which Affinion PR Rep, Mike Bush, states “is larger than the print in the newspaper.”

What’s more, the charge to Young’s credit card made no mention of Affinion/Trilegiant; the money was debited by “TLG Everyday Val.” It’s all perfectly legal, but according to New York lawyer Justin Berkowitz, “Affinion shows why doing the legal minimum is still abusive. What they’re doing is telling people they can have a free tank of gas, and whispering that they have to buy a car too. The Attorneys General of California, Maine, and Connecticut all went after Affinion for the misleading checks in 2005. It’s clear Affinion did only what they were forced to so that the lawsuits would be dropped.”

Berkowitz says that any e-commerce website partnering with Affinion risks ruining its reputation. “Haband claims that its ‘a conscientious family business.’ This kind of under-handed marketing practice threatens to obliterate the goodwill they’ve built-up over 85 years.”

When an indignant Fort Meyers News Press reporter Melanie Payne confronted Affinion’s PR rep, Mike Bush was decidedly unrepentant. “If a member doesn’t want to be in the club they signed up for, they can call an 800 number listed on the credit card, cancel the membership within the trial period and get a 100 percent refund.” There’s no word whether Rockefeller’s scathing report on Affinion, Vertrue and Webloyalty will lead to any regulatory action or legislative change.

January 18, 2010
Guest Post By Robert Farago, E-Commerce Consultant

The Daily Grommet is Woot meets The Sharper Image at Etsy’s house. Every day, The Daily Grommet’s “Discovery Team” presents a single cutting-edge product in a video demo that’s not a million miles away from a late-night infomercial. Visitors behold the way-cool-ness of the invisibelt, TrekDesk, Handpresso Wild Domepod and other “how did I ever live without it” items from 26 main categories. The Daily Grommet’s Chief Marketing Officer says her employer differentiates itself from its mainstream competitors by limiting itself to a single item per day, focusing on the story behind the product’s origination, and tapping into its highly-engaged fan base. “The big box stores choose products by a top down process,” Jeanne Connon told ZippyCart. “Our team gets suggestions from real people who find neat products that they want to share . . . We’re circumventing the funnel for what products get seen and heard.” As part of its commitment to “citizen commerce,” The Daily Grommet connects customers and manufacturer’s reps in its “Talk About This Grommet” forum. And they don’t edit out negative comments.

The Daily Grommet launched in October 2008. Connon says the Massachusetts e-tailer is currently pulling-in around 40k unique visitors per month, with 3000 Twitter followers and 1500 Facebook fans. Although the site’s conversion rate is “somewhere around the industry average,” Connon claims that over 50 percent of visitors that click through to Amazon end-up purchasing an item. The drop-shipper has 10 full-time employees, sustained by the luxury of high margins. “People don’t come to us for bargains. They come for the latest thing, or the next big thing.”

The Daily Grommet’s folksy product videos make their way around the web. That’s just as well; the e-tailer depends on viral marketing and viral marketing alone. “We’re boot-strapping at the moment,” Connon admits. “We’re doing the venture capital dance right now.” She dismisses the worry that The Daily Grommet will eventually run out of products. “There are tens of thousands of new products every year. You’d be amazed at what people come up with.” Which is, of course, the whole point.

January 18, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

The Wall Street Journal reports that Time Warner has purchased online shopping service StyleFeeder.com for “well over eight figures.” The acquisition reflects an ongoing, cataclysmic drop in Time’s dead tree and electronic ad revenues. “Advertising will always be our core, and our primary revenue stream online,” asserts Time digital strategy supremo Fran Hauser. “But that growth is slowing. Our editors are generating significant consumer demand for products in the retail market. And what StyleFeeder allows us to do is share in that value creation.” This begs the question: will affiliate marketing determine editorial coverage?

Actually, that already happening. Even a quick peek at InStyle.com reveals a website that’s more magalogue than magazine. According to the Journal, Time plans to do unto its other titles what it’s done unto InStyle. “Time Inc. expects StyleFeeder to be laced throughout the Web site of its fashion magazine InStyle, a key brand inside a group of magazines, including People, that are highly regarded by Time Warner executives. Time Inc. said StyleFeeder also could be woven into Web sites of other brands, including Essence and People en Espanol.”

Driving the deal: margins and scalability. Last year, InStyle.com shoppers bought some $10 million worth of chotchkies. But the flagging media colossus kept “only a fraction of [the money from] those sales.” Yes, but, InStyle.com’s shopping service is considered an industry standard. It won MinOnline’s 2009 “Best of Web” award. “Much more than another online shopping add-on, InStyle Shopping demonstrates how an integrated e-commerce experience aligns perfectly with the way that celebrity and fashion-conscious readers use a magazine,” the judges wrote. “It turns a content experience into a service.” One way or another, that’s a scary thought.

January 18, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant

The Wall Street Journal reports that Time Warner has purchased online shopping service StyleFeeder.com for “well over eight figures.” The acquisition reflects an ongoing, cataclysmic drop in Time’s dead tree and electronic ad revenues. “Advertising will always be our core, and our primary revenue stream online,” asserts Time digital strategy supremo Fran Hauser. “But that growth is slowing. Our editors are generating significant consumer demand for products in the retail market. And what StyleFeeder allows us to do is share in that value creation.” This begs the question: will affiliate marketing determine editorial coverage?

Actually, that already happening. Even a quick peek at InStyle.com reveals a website that’s more magalogue than magazine. According to the Journal, Time plans to do unto its other titles what it’s done unto InStyle. “Time Inc. expects StyleFeeder to be laced throughout the Web site of its fashion magazine InStyle, a key brand inside a group of magazines, including People, that are highly regarded by Time Warner executives. Time Inc. said StyleFeeder also could be woven into Web sites of other brands, including Essence and People en Espanol.”

Driving the deal: margins and scalability. Last year, InStyle.com shoppers bought some $10 million worth of chotchkies. But the flagging media colossus kept “only a fraction of [the money from] those sales.” Yes, but, InStyle.com’s shopping service is considered an industry standard. It won MinOnline’s 2009 “Best of Web” award. “Much more than another online shopping add-on, InStyle Shopping demonstrates how an integrated e-commerce experience aligns perfectly with the way that celebrity and fashion-conscious readers use a magazine,” the judges wrote. “It turns a content experience into a service.” One way or another, that’s a scary thought.

January 18, 2010
OpEd Guest Post By Mike Darnell, Social Media Manager for Treepodia

Recently I read an interesting post by Jennifer Meacham on PracticalEcommerce.com entitled “Innovative Video Use Increases Conversions for Merchants.” The post’s main theme is that using spokespeople videos on your site can be very effective.

Don’t mind me,

I’m just walking back and forth on your screen…

Although many of us find these types of solutions highly annoying (especially when they’re set as autoplay), online spokespeople are actually an interesting solution to the whole ecommerce-video paradigm. Their effectiveness builds on our brain’s predilection to trust human figures, and especially faces that talk to us.

Problems of Scale

There is a catch however: to maximize effectiveness you need to invest in creating a unique video of your model walking and talking while demoing EVERY item in your catalog. This is fine if you have a store that only sells a few items, but becomes highly impractical for any store that sells tens, hundreds, or thousands of items. The solution isn’t “scalable”.

Another scale related issue is the ratio between your model’s size and your product’s size. If your selling handheld items which are significantly smaller than a human being, your product would show up near invisible in comparison to your model’s body. Definitely a case in favor of having a talking head instead of a full body.

What to do? What to do?

I recently heard a podcast by Jennifer’s PracticalEcommerce.com associate Kerry Murdock, who conducted with Faculte.com’s CEO Maher Hakim. Maher advocates approaches that I tend to believe are more effective than the spokesperson model:

“Don’t spend a lot of money on producing the video… you can create really nice video by stitching together some photos & then putting in some music and audio and narration on top of that. It looks and feels like a video to the end user”

What Maher is saying, and I’m very much in support, is that you’re online videos needn’t be Oscar grade material. Your’e not going for the Oscar anyway – it’s a sale that you’re after, and then another one, and another one, and another one…

Why video gives you an edge anyway

Using video enhances your shoppers’ experiences because, regardless of how it’s done, it adds new engagement dimensions that help them get a tangible feeling for the products their looking for, increasing their sense of security and comfort about the item and convincing them to make purchases more often.

A 60 second product slideshow, by virtue of being mixed media, simultaneously addresses the needs of different types of consumers and can have a very positive effect on your conversions:

• Voice-over narration attracts auditory learners, who absorb information best when hearing it.
• Visual cues, such as bullet point slides, work well with visual learners, who absorb information best when seeing and reading it.
• The dynamic aspect of the video draws attention to the content – our eyes are designed to follow movement.

The important thing to take away from all this is that choosing to create you first video, uploading it to your site and getting the feedback required to learn what works and what doesn’t, gives a huge advantage over choosing not to do anything. So GET BUSY!

About the author:

Mike Darnell is the social media manager for the Treepodia smart video platform that provides vendors with automated and optimized ecommerce video solutions