The Marketplace Fairness Act of 2013, which would require eCommerce retailers to collect sales taxes for online purchases in states where they do not operate, has been getting a lot of press, since its recent passing in the Senate. The debate continues as it moves to Congress with a major disconnect between those that support it, such as Amazon and major brick and mortar retailers and those that would like to amend it such as Ebay.
According to research from the University of Tennessee, states have missed out on more than $11 billion in uncollected taxes in 2012 from online purchases. Currently, the burden is on the online consumer to pay sales tax to their home state, but most never follow through when they file their annual taxes causing states to lose out on that income.
According to eCommerce growth estimates from companies such as Forrester Research, this is a number that could grow as much as 13% in 2013 alone. Large brick and mortar retailers feel that online only retailers are gaining an advantage by not having to charge taxes and would like to “level the playing field” so that all retailers are on equal footing when it comes to taxation.
But what does it mean for all the growing eCommerce retailers that could potentially be affected by having to collect sales tax from their consumers?
The impact to web only retailers – that sell more that $1M a year in online revenue – will be the greatest which is why companies like eBay are trying to have the threshold raised to $10M a year in online revenue or more than 50 employees so they are "protected from new burdens that harm their ability to compete and grow," said Brian Bieron, Ebay's senior director of global public policy.
Ecommerce retailers that are selling $1M are typically in growth mode and feel that it will be burdensome to collect taxes for multiple states, even with state-provided software called for in the bill. The administrative and regulatory burden to pay taxes in all sales tax states will be high and may require them to hire additional employees to deal with these changes and to ensure compliance. This will require changes to their business strategy and can potentially stifle creativity and entrepreneurial spirit.
Webgistix CEO, Joe DiSorbo, who works with hundreds of eCommerce retailers who would be impacted by this bill, believes that this will hurt small businesses and that the winners and losers are clear.
“Amazon, along with local retailers, have a vested interest in forcing every online retailers to pay the sales tax because they have an economies of scale advantage over the small retailer and they know over time this will ultimately force the small online retailer out of business."
"The small tax advantage that eCommerce only retailers have over local and large online retailers does not make up for their lack of economies of scale. Not having to collect and pay the sales tax gives small companies the ability to be creative and entrepreneurial. It allows them to test new business models and new ideas. This ability to experiment cannot be understated.”
What do you think? Please feel free to share your thoughts with us.
Webgistix will be closely watching this issue as well as standing up for the eCommerce retailers.
We also suggest using resources from companies like Avalara (sales tax & compliance technology) who are closely following the debate and will continue to update information on the Marketplace Fairness Act and what it may mean for you. http://salestaxchanges.com/
We all know that being closer to the customer is the place to be, especially according to ebay, Amazon, Google, Walmart and other retailers that are touting same day delivery as the next best thing since sliced bread.
A recent interview with a nutraceutical company reveals that leveraging strategic fulfillment locations led to dramatic savings, increased speed of delivery, and better customer service.
In industry speak, this can be referred to as logistics network optimization. It means getting as close to the customer as possible in order to leverage faster and cheaper shipping and optimized order sourcing.
It also means ensuring that customers are getting their product as fast as possible, but that you as a retailer are leveraging the delivery network and optimizing profitability.
However, this can be difficult to do for many retailers who have a lack of infrastructure to support it. A survey by Multichannel Merchant of 654 retailers in April 2012 found that 75% of online/multichannel retailers operate only one warehouse which makes it very difficult to optimize their network or increase speed of delivery.
One nutraceutical company decided to use the Webgistix SmartShip service – which runs network analysis using things like order history and product weight to determine optimal distribution networks leveraging Webgistix warehouses – and was able to determine that by placing inventory in three strategically placed warehouses instead of one, it would be extremely advantageous for his company.
How advantageous?
-This company was able reduce costs by approximately $2.72 per order or shipping costs
-This saved over $31,500 in a 3 month period
-In addition, customers received their products an average of one day faster, which increases customer satisfaction and loyalty
Pretty incredible stuff.
How can you too leverage logistics network optimization to improve customer service?
-Understand where your current customers are.
-Understand your product profile: depending on volume/ SKU counts etc., it may be prohibitive to split inventory across multiple locations.
- For example, in apparel this can be difficult if you have multiple styles, colors, sizes and unpredictable demand.
-Understand the demand of your customers: in many cases you are using order history to see where your volume is coming from, but future demand can change dramatically. There are sophisticated demand forecasting and sensing tools that can help.
- For example: New product introductions, increasing your geographical reach, etc. will influence future demand
-Know that this is not a one-time exercise – understand when to re-evaluate: Edward Frazelle, founding director of Georgia Institute of Technology’s The Logistics Institute has stated that companies used to evaluate their networks once every 5 or 10 years, but “that’s no longer the case as the issues affecting the network configuration are changing so fast that they have to be monitored much more frequently.”
- For example: A retailer that is adding a product line that is heavier (hard copy vs. soft copy books) and will affect shipping costs
-Work with people that know how to do this analysis. In house resources, outsourced resources, consultative services and network design technology offerings are all options.
The payoff: Optimal network design can minimize inventory carrying, warehousing, and transportation costs while satisfying customer response-time requirements and lead to increase customer loyalty.
And an extra $31K isn’t bad either.
We’ve almost halfway into October, and you know what that means.
That’s right, it’s the beginning of the Holiday season.
And as an online retailer, you probably know it starts a month earlier for you than everyone else.
While there are huge opportunities in the form of holiday sales, there are also the added complications of dealing with them.
Here are a few things to keep in mind before the season starts.
Are Your Holiday Marketing Materials Ready?
The first thing to do in regards to a holiday rush of orders is to ensure you actually have a rush of orders.
The fundamental question you need to ask yourself is this: Why would people go to your store over someone else’s during the holidays?
Holiday discounts are a great way to ensure more people come to your store. You can be sure your competitors will be offering them.
Another good way to distinguish yourself from the crowd is by offering discounted or free shipping. Studies have shown that offering discounted shipping can increase sales by more than 40%.
Of course, make sure you’re making a profit on such an arrangement.
Emphasize how fast your shipping is! Think about all the nervous, last-minute Christmas shoppers who are waiting at the door for their packages! By emphasizing the speed of your delivery, they will be more likely to buy from you.
And speaking of speed of delivery…
Is Your Fulfillment Up To the Holiday Challenge?
Do you have the ability to deliver quickly?
Online buyers these days are used to quick delivery speeds, as most large online retailers offer 2-day delivery by ground.
Any longer and you might not be gaining customer loyalty, but losing it instead.
Make sure your operations are streamlined so that your target market gets their orders as quickly as possible. There’s nothing worse than a late Christmas present, so don’t spoil your customers’ holiday.
You also need to consider whether you can handle the additional influx of orders during the holidays. It’s not unusual to double, triple, or even quadruple order volume during this time of year.
If you’re shipping orders yourself, determine whether you need to hire temporary workers to help you through the busy months. If you simply don’t have the room or the expertise required, consider outsourcing your fulfillment to a specialized service.
Some of you will already be outsourcing your fulfillment. In that case, make sure that your fulfillment provider is able to meet the high standards you would want if you were doing it yourself. Even during the busy holiday season, these standards, such as 1-day order processing, should still be carried out for 100% of orders.
If you’re not confident with your service, now is the time to shop around before the orders start flooding in.
Do Something Special To Get Old Customers Coming Back.
You should also engage customers who have shopped at your site before. After all, they are the ones most likely to buy from you.
Perhaps you can introduce a new product during the holidays, or have a holiday contest.
At the very least, you will need to communicate with all your loyal buyers.
Utilize social media, and also send them eCards or discounts through e-mail.
A small gift or holiday card in the mail can produce surprising results, test it in a limited market to find out if it’ll work for you.
There are so many more things you need to do to get ready for the holidays.
But the above suggestions are good places to start.
One thing, however, is clear. You cannot wait until the season actually starts to get prepared, you need to start now.
Otherwise you risk more than a few sales… you’ll risk your reputation.
We’ll continue next week with more things you can do to prepare for the holidays.
How have you been preparing for the Holiday rush?
So you want to start to expand into eCommerce.
A 600 billion dollar industry with no shelves to keep stocked, no cashiers to hire, no store to keep clean. It’s just your product and your customers, without the thousands of dollars in on-the-ground investment a brick and mortar store needs – I can see why you’re interested.
But there are some things that are just as important as a physical storefront that you probably haven’t dealt with before.
Here are the essentials:
How To Make People Stop By Your Online Store
You probably have many ways of attracting people to your stores. Flashy displays, coupons, and sales events can all make people more likely to drop by.
It’s not really so different with an online store. Discounts and sales still make people more likely to buy. Having a well-designed website makes people more likely to shop on your site. And coupons still work – they just need to be e-mailed instead.
But there is one major point of difference, and that’s getting people to see your store in the first place. The internet is a big mall in the world, and even with a great site, it’s very possible you’ll be overlooked.
So how can you make sure you are getting the amount of traffic you want?
It’s simple: get people talking about your store.
Word of mouth, as well as social media, is a great way to boost the search rankings of your store. Get exciting about what you sell, and encourage them to share it with their friends and family. The more link and discussions there are about your site, the more likely that search engines like Google and Bing will rank your site higher, causing more people to click on it. This method is known as Search Engine Optimization, or SEO, and it’s the best way to get a steady stream of traffic every month.
Another way of getting traffic is by advertising, something you might have experience with. There are many ways to do this, but perhaps the most widely used is a method called pay-per-click advertising. To break it down, you create a small advertisement that shows on either a website or search engine. Every time someone clicks on the ad, you pay a small fee, the cost of which depends on how many people are competing for the same space. Once the prospect clicks the ad, you can direct them either to your website, or another page which is designed to sell them a certain product.
If you do direct people to your website, you need to make sure it’s as well put together as it possibly can be. An eCommerce website is designed to sell products, while a traditional retail website is designed to drive people to the stores, so make sure you’re setting up an entirely different site for your eCommerce division. Your website is just like your traditional storefront… set up promotions so that they’re highly visible, and design it strategically so visitors see what you want them to see. Set up a review system, and reward buyers for participating. Set up a loyalty program, so that they keep coming back.
I cannot possibly go through all the different ways to create a good eCommerce website and marketing strategy, but these are the major ones that differ considerably from offline retail.
Next week, I’ll be talking about the most important parts of any eCommerce business – how to get your product to the customer in one piece, and quickly, as well as why that’s important.
The single most important selling weapon in the arsenal of an eCommerce retailer is their website.
For most online stores, almost all sales go through their webpage.
In other words, it’s the prime real estate of your business, the location where you put the most compelling deals, the most attractive products, the stuff you want every single person who visits your site to see. An accurate analogy would be the storefronts of physical retail stores.
And yet, online businesses have a huge advantage over traditional brick and mortar, but one that most, strangely enough, do not take advantage of.
That’s the ability to track how people view and go through your store.
Can you imagine an offline retailer being able to see which displays customers are viewing most, what paths they are taking through the store, which departments they spend the most time at, and also basic demographic data for those customers?
You can imagine that major department stores would pay millions of dollars for such data.
Yet even more incredible is the fact that all online retailers have access to this information for FREE, and a huge percentage decide to ignore it!
Don’t throw that data away: it’s a goldmine.
The easiest, and cheapest, method to track your website data is Google Analytics. It’s a free tool that’s incredibly easy to install, and it provides you with a wealth of information that tracks everything from visitor data to which webpages get the most hits. It even allows you to split test pages against one another.
Here are just a few ways to use this data to optimize your page:
Use Traffic Data To Accurately Target Your Market
One of the most important things to know about customer behavior is not just what they’re doing once they’re at your website… it’s also how they got there.
Luckily, Google gives you accurate information on how people get to your site, whether it’s through pay per click, referrals, organic search, or direct traffic. By finding out where the majority of your traffic is coming from, you can focus your advertising dollars in those areas, enabling greater efficiency and return per dollar.
You can also find out what search queries they used to find your page.
Check The Traffic Numbers Of Webpages To Know Where Your Customers Are Looking
Using Google analytics, you can keep track of how many times your pages were viewed, and where the viewers came from. Did they start at the home page, work their way to the “About” page, then end up on the “Contact” page? Or did a majority just click on a front page promotion?
Once you can identify how visitors move throughout your site, you can put advertisements and other attractive offers in their path. You’ll also know which pages you should have your best content on, and which pages need work.
That data also lets you know if you are directing your traffic in the right ways, and to the right places. If one section isn’t getting enough traffic, for example, you can increase the visibility of the navigation button.
Alternatives To Google Analytics
In fact, you could do so many things with the data from Analytics that there are too many to list here. You can test site loading speed, where in the world your customers are coming from, and how many are returning customers.
If you want even more detailed data, it exists, for a price. New software allows you to track how people are moving their mouse when they are on your page, or where they are looking. It then creates a heat map so you can see which areas get the most attention.
You have so much information at your fingertips these days that you have an incredible advantage over both offline retailers… make sure you take advantage of it!
Have you ever used analytics on your website?
If you’ve been paying attention to our blog the last few weeks, you’ve probably read a few of our articles on how to increase sales for your online store.
In fact, if you focus on improving your product pages, utilizing coupons correctly, and actively communicate with your customers, you would almost certainly see a dramatic increase in results.
But many savvy eCommerce merchants already knew of these tactics. They knew that they need to actually sell their products, not just display them. They knew that testimonials are immeasurably important when convincing someone to buy. They knew that coupons can bring in customers that would otherwise not be buying.
Here are a few they might not have thought of:
Enable “Guest” Checkout If You Currently Require Registration… and Offer Registration If You Currently Only Have Guest Checkout.
There are a lot of benefits to having people register in your online store.
Not only are you able to get their contact information for e-mail communications, but you are able to tailor product recommendations to their profile.
It allows you to see who is buying what, and when. That gives you incredible visibility into your customer demographics, and allows you to market to certain segments far more effectively.
If you don’t have registrations of any kind on your website, those are good reasons to consider them.
In fact, with these advantages, it’s not surprising that some online retailers require shoppers to register when they buy!
However, this can be a big mistake, as requiring registration has been proven to decrease sales.
A recent study by eConsultancy found that 25.65% of customers would abandon a purchase if they were forced to register.
So make sure that, if you don’t have it already, you give shoppers the option to buy as a guest, without registering.
Encourage Reviews By Rewarding Reviewers
Amazon, the 600 pound gorilla in eCommerce, began a new program a few months ago that has proven extremely successful. They have created a system where they reward reviewers who consistently provide quality reviews with early access to books and merchandise.
Whether or not that can work for you depends on the size and type of business you’re running. However, there is one lesson in there that works for almost every eCommerce store.
Reward your reviewers.
Whether you can give them early access, samples, discounts, or even just a nice e-mail, make sure you are encouraging them to review again! Even the strongest sales page can fail to convince a potential customer compared to a few authentic, honest reviews.
Optimize Your Website For Mobile Devices And Tablets
More and more customers are viewing your site on tablets and mobile devices.
According to TechBargains.com, 58% of shoppers use their phones to make purchases, while 75% use tablets to buy online.
Around 9% of all purchases during the 2011 holiday season were done through mobile devices, and that number has been growing every year.
If you don’t have a mobile version of your site, you are practically driving those customers to another store.
There are dozens of ways you can increase the number of people that buy from your store. But these 3 methods are often overlooked, and not particularly difficult to implement.
Have you ever decided not to buy because you were forced to register?
So your online store isn’t doing as well as you’d like, and you’re trying to figure out why.
You’ve done all the essentials.
Your website looks great, and it is both easy to navigate and easy to use.
Your products are clearly labeled, and there are various incentives to buy, including a strong returns policy, discounted shipping, and promotions.
You are driving qualified traffic to the site with a variety of initiatives including SEO, social media, and Pay-per-click campaigns.
There’s just one small problem.
People still aren’t buying your products.
The thing is, it doesn’t matter how great your site is, how easy you make it to buy, how many people come to your site if they aren’t interested in what you’re selling.
But wait, you’ve done your research. You are certain people want what you offer.
Then most likely the problem is not what you’re selling, but how you’re selling it.
Why Are Product Pages Important?
A product page is more than just a place for customers to buy your product… it’s also a place you can convince them to buy it.
The more relevant information about the product on the page, and the more reasons to buy, the higher the likelihood of someone buying it.
In fact, you should treat every product page as a salesman for the product. Some product pages have a mere paragraph describing the product.
Would you expect a door-to-door salesman to limit his sales presentations to a few words?
Explain every virtue and overcome every possible objection to buying the product, and don’t worry if it runs a bit long. Generally, the more expensive/obscure the product, the longer the page needs to be.
You don’t need to take my word for it, take a look at the Kindle’s product page.
It’s not random chance that the page runs extremely long and features multiple sections. Printed out, it would exceed 5 pages.
It’s designed that way, because Amazon has found that a long product page works best for the Kindle.
And it might work best for your product too. So the next time you’re designing a product page, make sure it actually sells the product.
But what if you’re selling hundreds or thousands of different items?
The above applies to items that are particularly difficult to sell. However, you cannot take that approach to all your product pages if you have hundreds of them.
So what common elements can be included in all your product pages that helps sell all your products?
First, make sure to include some kind of review system. Not only does that provide you with credibility, but in many cases reviews can do the selling for you!
Of course, make sure reviews are easy to create and easy to view.
Secondly, make sure the product page layout is suitable for the type of product you are selling.
Are you selling computer hardware? Then you will want to include the technical specifications of each part in every product page.
If you’re selling food products, you might want to include how long the food can be stored.
In short, it depends entirely on what you’re selling. But whatever it is, make sure you are providing all the necessary information for a potential buyer to make a decision.
Product pages are an incredibly powerful way to increase sales for your online store, if utilized properly.
But they often aren’t.
Have you tweaked your product pages lately?
There are a million and one ways you can boost your sales.
Lower prices, offering free shipping, promotions, etc.
Chances are you’ve already been using some of these tricks to keep the customer hitting “checkout.”
But there is one aspect of online business that is constantly overlooked.
The return policy.
How can your return policy boost your sales?
It comes down to minimizing risk for your customer.
How Risk Affects Sales
Put yourself in the shoes of a buyer for a moment.
Every time you buy something online, you are putting your trust in the retailer.
You trust that the seller is trustworthy.
You trust that the product will arrive quickly and undamaged.
You trust that the product will be worth what you paid for it.
In other words, there is a sense of risk involved for any transaction.
Buyers weigh this against their desire for the product, as well as other considerations such as website design and reputation.
Every buyer goes through this process, whether consciously or unconsciously.
Your job as a seller is to minimize that risk for the buyer, so they are more willing to buy the product.
The action you take is different if you sell your own product, versus if you are selling someone else’s’.
Check Your Return Policy If Selling Other People’s Products
Returns are the bane of almost every online store.
In 2008, they cost online retailers more than $20 billion.
There is however, one thing more expensive than having a return policy.
And that is not having one.
Not having a return policy does not cost you in expenses, but in sales.
Not to mention complications in the form of customer service issues.
If you don’t have one already, simply adding one and visibly telling people that it exists can bring your sales up.
This is because it puts your customer at ease when buying, even if they never intend to use the policy, especially new buyers who don’t know what to expect.
Be generous with your return policy, but be sure to make sure it’s comprehensive and allows for manufacturer returns.
Also, if you outsource your order fulfillment, top providers will handle the returns process for you.
So what about if you’re selling your own product?
Guarantees. Guarantees. Guarantees.
If you’ve ever seen a late night infomercial, you know they almost always give guarantees.
Generally, they are full, money-back guarantees.
Why?
Because they have been proven to increase sales again and again.
Once again, when you ask a customer to buy a product, you are asking them to put their trust in you.
Instead, put your trust in the customer, and take away any inhibition they might have to buying your product.
Send it to them if they ask for it, and ask them to pay nothing until a trial period ends.
Tests have found that the vast majority of people will not try to take your product without paying: they are inherently honest.
A good product is its own best salesman.
Exceptions
Of course, the tips mentioned above are not always applicable. If you are selling cars for example, you most likely don’t want to give them out to people who might not be able to pay for them.
A return policy that is too broad, especially if you’ve had issues with returns in the past, can be detrimental to a bottom line.
Use your judgment to decide whether or not you can apply one of the above tips, or should.
Done properly, it can increase your sales more than you’d think.
What does you return policy look like?
See these two people?
They are taking a vacation, as you can tell by the sparkling beach and crystal clear water.
What might be less obvious is that one of them is the CEO of an eCommerce business…
…and not at all not worried about something going wrong while they're sipping Piña coladas.
Does that sound like something from Mars to you?
If it does, you might want to consider outsourcing.
I’m going to assume you’ve heard all the old arguments.
You know outsourcing can save your company money and time if you choose the right partner.
But you might not know what it can do for you.
Less Micromanagement
One of the common traits the people that have this problem share is that they are micromanagers. Is that a bad thing?
Absolutely not. In fact, it’s a rather prevalent trait among top businessmen and women. It shows attention to detail and an emphasis on doing things right.
At a certain point though, everyone must delegate. No one can do everyone’s job.
Outsourcing is simply delegating on a larger scale, and it works the same way…
…as long as you hire the right people!
I cannot stress that enough.
You must be able to trust your outsourced partner to do quality work, or this simply won’t work.
When you do find the right partner however, you’ll find you don’t need to check over every aspect of that part of the business anymore.
They will be doing that for you.
You don’t have to give up all control, and you certainly don’t want to give up visibility into what they are doing.
Many outsourced companies have the ability to provide you real-time information about your business.
More Free Time
You can outsource entire sections of your business. For example, customer service, order fulfillment, or even marketing. It depends on what you need.
That means the hours you spent supervising that segment of the business you now have free. You’ll still spend part of it making sure everything is running smoothly, but a majority of that time is open.
What can you do with that time?
You can spend it focusing on other aspects of your business which need it.
Or anything you want, really.
Peace of Mind
Finally, and probably the most important of all, outsourcing can deliver you peace of mind.
If peace of mind were a product, how much would you be willing to pay for it?
If you outsource to the proper people, professionals in their field, and you do everyone on your end correctly, there is no reason you should be constantly worrying about that segment of the business.
Preferably, make sure there is some kind of guarantee that your outsourced partner cannot mess up without compensating you for it.
If you’ve done all this, you’ll quickly find that not only will you be able to take a break without worrying every hour, but that you’ll be able to focus more on other aspects of your business that might need it.
You have to be careful about what you outsource, because it’s not for every part of your business. Likewise, you need to be careful about who you outsource to.
Do your research.
But if you can find a partner you can trust, that might be you on that beach one day.
When was the last time you took a vacation?
If you ask 10 conversion experts the quickest and easiest way to improve conversions, you’ll likely get 10 different answers.
Any number of things can be responsible for poor conversion.
Bad website design. Incorrectly targeted ads. No unique selling proposition.
The simple truth is that every conversion issue is different.
There is only one foolproof method for increasing conversions that works no matter what kind of issues you have.
Testing.
Major companies like Google, Amazon, and Walmart, as well as almost every effective eCommerce operation out there, vigorously and constantly test features of their websites to ensure maximum effectiveness.
Simple right? But you’d be surprised how many online retailers don’t test their websites, ads, or e-mail marketing. Here are a few common conversion problems that testing makes short work of.
Targeting the Wrong People.
Most diligent online retailers will know their target market. Correctly appealing to that target market, however, is a different story. For example, does your market prefer to hear about price, quality, or features? It’s not uncommon that people create ads or email campaigns that bring in a lot of traffic, but not many conversions. Though this can be due to any number of reasons, it is most likely due to hitting a note your target market isn’t interested in. You won’t get conversions if you bring in people interested in price, but most of your converting customers are actually interested in number of features. The simplest solution is to test different ads and emails with different appeals to find out which ones stick.
Un-Optimized Websites.
Studies have shown that the look of a website is incredibly important in encouraging people to stay on the page. But how does someone tell if a website is attractive to their customers? Most judge their websites based on their own preferences and taste. As it turns out, what looks good to you might not to your customers. It comes down to a simple question; what’s more important to you, a page that looks great to you, or a page that converts? Assume nothing and test everything. The change of a single graphic can affect the conversion rate of a website by 50% or more. This doesn’t just apply to the aesthetics of the site, but also to the usability.
Improperly Marketed Products.
There are dozens of other factors you need to be aware of, even when you’re hitting your target market and have an effective website. Perhaps the most important is how you are marketing your product. Good ads and attractive websites can’t help you if you’re selling a bad product, or you are not offering anything unique over the competition. That includes pricing, visibility, and variety. But there’s a clear solution to fix that problem too. It’s…
Well, you already know what I’m going to say, don’t you?
Make sure you test every major piece of your website and marketing against one another, and then implement those with the best results.
Done properly, your conversions can only go one way: Up.
Do you test your website?