MyLocalWineStore» Wine eCommerce

What wine eCommerce site is right for a medium size retailer?

Bruce — Mon, 17 May 2010 04:40:09 +0000

In a previous post Wine eCommerce website: Custom Built or Off-the-Shelf? I said the question is really, “what are your requirements?” Then based off the most important requirements (“Must Haves”) you can choose what eCommerce package is best for you.

In my last post Two Very Different Wine Retailer eCommerce Websites I listed those requirements. I then showed how two different size wine retailers, very small and very large, will have a different set of requirements based off different objectives. The very small company is an owner operated local wine retailer, the very large company is a corporate with a dedicated team of internet marketing experts.

In this post I look at two more types: small-medium, and medium-large wine retailers.

The small-medium wine retailer

Is owned by a number of people only one of whom actually works in the retail store full time. This person, the GM, works hard, perhaps 50 hour s per week, much of that time in his office as he has retail assistants to man the store and even a storeman to manage stock and delivery.

He has a significant promotional budget that is mainly spent in newspapers. He has a website and is very aware of the importance of the internet but has yet to get his head around what he should be doing (his website developer seems to speak a different language). He also runs public tastings when he can and sends out a newsletter email to a list of customers. His ideal advertising results in measurable sales, however he reluctantly accepts the famous saying, “I know that half of my advertising dollars are wasted … I just don’t know which half” (John Wanamaker).

Most of his customers are local and repeat. He has a significant trade and corporate clientele. His best customers are wealthy doctors or lawyers who like to try high margin wines and/or have a favorite they always buy.

He is happy with using the internet but it is not his expertise. His expertise is wine and retailing.

The medium-large wine retailer company

Is a multi-store company. It may be a state chain store or perhaps it just has a few stores spread strategically over the county. Let’s say the company is 100 staff large with a dedicated marketing team led by a hardened marketing pro (and mother of two – which has refined her management style more than anything else!).

The marketing team of three has a large promotional budget much of which is spent on price promotions. Before the noughties recession this was mainly newspapers with a little local TV. Now it is rapidly becoming internet focused and the team is now almost completely focused on professional internet marketing (SEO, PPC, email marketing, social media). Everything is measured – each advertising campaign has to show better results than other campaigns or it’s dropped. This team is driven by sales results, specifically if $1 is spend on ads then at least $1.01 is made in profit. She despises as old school the saying, “I know that half of my advertising dollars are wasted … I just don’t know which half”.

The customers are state wide, the shipping is by Fedex from large retail stores, and a number of payment systems can be used from PayPal to authorize.net.

The wine eCommerce requirements

The eCommerce requirements document below has Must Have, Should Have, Nice to Have columns. The ones on the left are for a small-medium wine retailer. The columns on the right are for a medium-large wine retailer.

The difference

Unlike my last post, the retailers’ requirements are similar.

The difference is in live integration, custom coding, price, and options for shipping and payment. As well as the promotional tools of social media, email marketing, and testing.

This reflects the bigger budget as well as the desire for more marketing tools.

There is of course many different combinations for each individual retailer but these requirements are a good indication dependent on store size.

What do you think? Please comment below.

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Download the 3 page pdf here: Wine Ecommerce Requirements – Medium Sized Companies.

PDF screenshots:

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Two Very Different Wine Retailer eCommerce Websites

Bruce — Mon, 10 May 2010 03:19:05 +0000

In my last post Wine eCommerce website: Custom Built or Off-the-Shelf? I talked about whether you should have a custom built wine eCommerce website or one “Off-the-Shelf”. In short I said pretty much everyone actually uses off-the-shelf software and the question really is what are your requirements before deciding which software or service provider to go with.

In this post I set out what those requirements are. To see the wine retailer eCommerce Requirements document scroll down to the middle of this post. If you want just download the pdf, customize it and send it out to eCommerce providers.

The eCommerce requirements document has Must Have, Should Have, Nice to Have columns on the left are for a very small wine retailer. The columns on the right are for a very large wine retailer or winery company. You can see just how different each retailer’s requirements are despite both being in the same business. The two wine retailer decision makers are very different…

The very small wine retailer

Is owner operated. He gets time off by having two or three retail assistants run the store one or two days a week, or just closes the store on a Monday. He has no specific promotional budget as any expenses directly reduces his income, so he’s a reluctant spender. Any expenses such as advertising and website development must lead to more dollars in than out.

He is really busy just keeping the business running. If he has a way to keep costs down he’ll take it, despite being really busy already. Most of his customers are local and repeat regardless of whether he has website or not. He is happy with using the internet but it is not his expertise. His expertise is wine and retailing.

The large wine retailer company

Has a 1000 staff with a sales and marketing team of 100 people including an internet marketing team of 5.

The team is led by a young smart marketing expert. She lobbies for part of a large marketing budget versus other sales and marketing managers. She is willing to try all sorts of marketing campaigns to boost sales, many of which will be handled by ad agencies.

Her team is driven by two things,

if they screw up, their career could be over in that company
if they do really well their career could skyrocket.

So they minimize risks and maximise chances to achieve marketing success.

Their customers are national, their shipping is from numerous (distributor) warehouses around the country. They have to communicate and cooperate with other teams throughout the company (including a very risk adverse IT team). They need to integrate with all sorts of systems from the sales and custom services team’s “CRM” through to the accounting department’s software and operation’s “ERP” shipping and supply software. Any eCommerce project is likely to be decided by recommendation from a committee made up of all the departments. A VP will sign off on the committee recommendation.

So here’s the difference

The small retailer’s key requirement is to have more cash come in versus out. The large company’s key requirement is to not screw up!

The small retailer’s Must Haves are based on a simple calculation of net margin i.e. sales margin less expenses. If a requirement’s expense does not outweigh its cost then it’s not needed.

The large companies Must Haves are all of these plus more to do with the technical specification of integrating systems. Although I may seem overly cynical about large companies the fact is they can afford to be much more careful.

Some web developers may think the very small retailer needs a few more Must Haves and the large company needs a few less but I think that’s probably splitting hairs.

The bigger question is for those retailers in between the very small and the very large. What do they really need? What are the Must Haves vs Should Haves vs Nice to Haves? Have I missed some key requirements? Feel free to comment below.

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Download 3 page pdf here: Wine eCommerce Requirements Document

PDF screenshots:

Wine eCommerce website: Custom Built or Off-the-Shelf?

Bruce — Thu, 06 May 2010 02:08:04 +0000

Will an “off-the-shelf” eCommerce website be right for me? Or should I get a custom built eCommerce website?

Pretty much the only people nowadays commissioning true custom eCommerce websites are very large corporates. Every other company uses pre existing “modules” or packages of code to make at least 80% of their website and customizes the rest.

“Off the shelf” eCommerce websites can sometimes provide 100% of what is needed requiring no code customisation at all.

I believe the amount of customization is dependent on the expected extra sales or cost savings for a business. The larger the business, the bigger the benefits, and therefore the larger the development budget.

For a small company any customization may prove uneconomic and a website that is 99-100% off the shelf is an option

In a continuum based on purchase price eCommerce options may look like this:

> Really honestly free (e.g. x.wordpress.com)
>> Simple software with simple built-in customization (e.g. Yahoo, Volusion, Joomla VirtueMart)
>>> Software that requires not so simple customization (e.g. Magento, specialist wine eCommerce software)
>>>> Software that requires a programmer to build your website out of various pre existing modules (e.g. .NET, web developers)
>>>>> Custom Built software.

What particular software you choose will depend on your “requirements”

If your requirements are, post wine reviews and new releases for customers to see online, and buy in-store, then the x.wordpress.com may be sufficient.

If you require,

live integration with your stock, point of sale, accounting systems, suppliers for drop shipping and customers for CRM
complex price promotions, loyalty schemes, truly heavy website traffic, trade and retail pricing
plus all the normal eCommerce features such as shopping cart and catalog,

then you’re likely to have some significant customization.

The trick is to decide what requirements are “Must Have” vs “Should Have” vs “Nice to Have”

Then look at the software websites to see how many offer all your “Must Haves” and what’s the price. Chances are you’ll have to contact them with your list of requirements so you can get an accurate quote.

Once you’ve collected the quotes you’ll have a minor heart attack as to how expensive your requirements are. Then you’ll have a glass of wine and reconsider just how Must your “Must Haves” really are. Here’s a good way to do this.

Refine your requirements into three or more stages

Stage I

Must Have’s are probably basic eCommerce catalog, content pages, shopping cart, shipping, email and payment processes.

A key decision you’ll need to make in Stage I is whether you can accept just your logo and brand colours on the website or whether you want a custom design. Sometimes there is a happy medium of being able to choose from a number of different designs (called “templates”) for no or little cost. In a corporate role I’ve insisted on full custom design, in a small business I’ve been happy with just the logo as long as website looks professional.

Note, for a small business, integration with other systems will be “Nice to Have”. Instead of integration you will probably upload inventory using a spreadsheet file, use PayPal not your own merchant account, and use simplified shipping quotes e.g. flat rate or by the case. For a medium business you’ll probably save money by having this integration so it’s a worthwhile “Must Have” assuming you have the budget.

Stage II

After a couple of months (or years) of use, experience confirms that you really do need some features you discarded in Stage I as too expensive. Perhaps the software restricts your online promotions and marketing, or you’ve had negative customer feedback about something. So add some of the “Should Have” and may be even “Nice to Have” features to your website.

Stage III

Your online business has really taken off and can now increasingly justify “Should Have” and “Nice to Haves”.

Controversial Alternative to Stage III

Frankly when your online business has grown to Stage III, I think you should comprehensively redo your requirements list as you’ll have a lot more experience with what you need.

And the eCommerce market is moving very swiftly so new solutions may now be available at more affordable prices than when you last checked.

You’ve done the hard yards of creating content for product listings, legal statements, shipping and return policies, so you can just upload this into the new system. There maybe some Google issues but these can be resolved (with something called a “301 redirect”) without losing Google Ranking. You can now afford to have a web developer add in lots of payment and shipping options.

I use to think you should start with a clear roadmap

You would know what and how you were going to increase the functionality of your website. Perhaps you start with eCommerce ‘bronze’ edition knowing that you can upgrade to ‘silver’ then ‘gold’ in the future.

But as the speed of eCommerce development picks up with new or updated eCommerce software coming out every month, I reckon you should choose what software suits you now and then look to move to new software every 6-12 months.

This will be sacrilege to some – and would have been to me a couple of years ago!

But two years ago there was no Magento, WordPress was just a blog, Google shopping products were only just being launched, customer reviews were unlikely and social media was for geeks and hippies. Outsourcing to India was for corporates, selling to China was for optimists or fools, and expecting a guy from Croatia to provide sensible comments on a technical forum in good English: oh come on!

Since then the whole landscape, or “webscape”, has changed. All those things have happened plus much more. Why wait for the current provider to upgrade their software when you may be able to get a better eCommerce website at half the price with new functions that hadn’t occurred to you 12 months ago.

So the key task is deciding what requirements are Must Haves, Should Haves and Nice to Haves. And then reconsidering, reprioritizing and requoting these every 6-12 months based on cumulative experience.

What do you think a small wine retailer’s “Must Have” requirements are? (see my next post on wine ecommerce requirements)

Conversion analysis of the shopping cart leads to 34% increase in sales

Bruce — Mon, 15 Feb 2010 18:00:59 +0000

E-commerce site Breadtopia engaged Fairfield Professionals an eCommerce company.

Fairfield undertook some conversion analysis of the shopping cart page (not the following checkout process).

This indicated a number of obstacles to checkout

Confusing, hidden business rules
Long form, with most content below the fold
Unnecessary information requested
Absence of persuasion motivators
Low apparent trust value

Once they fixed this they got a 34% increase in revenue.

Nice job Fairfield. They show conversion is a multifaceted issue not just the checkout process but also the simplicity of pricing, perceived company trust worthiness, and lack of good copy writing (‘persuasion motivators’).

Do you have any case studies you’d like to share?

The Profit of an Online Wine Store: some Financials

Bruce — Sun, 14 Feb 2010 18:00:57 +0000

What’s your priority? To convert traffic into sales.

This is the hardest task and requires the most work (especially creating good content).

But here’s the problem, many websites look fantastic (“flash” slides, great vineyard images, trendy artwork) and fail to make a return on investment. Indeed many are commissioned for, say $10,000, and never recover that investment.

The frustrated wine retailer then writes off the internet as useless

And yet research* shows that 4-6% of a retailer’s business is now over the internet. The same research showed that 8% of sales will go online by 2013 (some small wine stores already have 15-25% of their sales online).

What’s more the phenomenon of people browsing online and buying in-store is now accepted by big retailers all round the world. Macy’s CEO says** that for every $1 of online spend that same customer will then spend $5.70 on in-store purchases!

So let’s do the numbers (note this is an illustration of what you could be making with a lot of hard work – not a guarantee):

$1,000,000	Store Revenue (nice round figure for calculation purposes)
$40,000	4% via the internet as per the research
$12,000	= Gross Margin (30%)
PLUS
$228,000	Internet sales $40,000 * later in-store spend $5.70
$68,400	= Gross Margin (30%)
LESS
$6,000	Less advertising, web hosting and service fees.
= between $6000 and $62,400	= Total Gross Margin and a good profit no matter how you look at it (i.e. with the ‘Macy’s sales’ or not).

So done well an eCommerce website makes a good ROI

Done poorly you’re just supporting a designer’s artistic ambitions.

What figures would you use?

Notes:
*”Retail v e-tail in America. Bleak Friday, Bricks-and-mortar shops struggle to win customers back from virtual ones.” Nov 26th 2009 The Economist (may need a subscription to read).
** “Macy’s chief addresses power of e-commerce.” Las Vegas Review-Journal.