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For the last couple of weeks, though, sales are really off. I've been doing AdWords all year for some of the more profitable items, but setting a daily budget that almost always was consumed by about 10 pm. Now I find that there are so few clicks on the ads that I'm only consuming half of my budget. That's ok, though, since none of the clicks are converting.
I don't have any idea what to do, so I guess the solution is just to cut prices to the extent possible and wait things out. Given that I'm already one of the lowest-priced retailers for the limited number of products I sell, there's not much left to cut in price.
I know I'm not alone in this. What steps, if any, are you taking to address the problem?
I continue to spend on inventory. I guess I'm hoping things will come back at least somewhat after the markets stabilize. I sell hobby/craft items...2 things going for me in a recession: I sell 1. stress relief and 2. a way to fill your jobless time.
I know this is not to do with ecommerce, but I've also taken personal time in the past few weeks to make a lot of preserves and pickles, and to cook and freeze a bunch of stuff. It makes me feel better to be prepared in that way. A prepared guy is a happy guy; a happy guy is a better merchant.:)
If people were not freaked out last month, why are they now? Looks like I am not the only one. Only thing that changed from last month was Mccain's poll number.
Oil, food price all went down, that didn't have much affect. Are people cutting down for anticipation of Christmas? At this rate, Ad will fall real soon, sell your GOOG stocks now.
If people were not freaked out last month, why are they now?
Bottom line, it's bad for sales. :(
Yes, I believe that's true. The number of people who are in trouble with their mortgages is very tiny. Yet the mortgage story has bled over to the stock market because of the "bailout." People are selling perfectly good stocks at fire sale prices.
This type of fear is self-fulfilling, as the markets go down as people sell out of fear.
The markets would go up if people continued to buy things. It's hard to convey that concept on a page selling widgets, though.
My opinion is that this is definitely not the time to ratchet up your advertising spending. The costs of advertising will surely go down and it may be better to wait until Christmas shopping truely starts.
I changed up my ad wording a to stress the economy of my widgets - 'give a widget for a beautiful handmade gift at a tiny price!' and I removed words like 'buy' and anything else that might inspire spending guilt or fear.
I sent out an extra email newsletter with subscriber specials, acknowledging the economic circumstances and touting widgets as a back-to-basics inexpensive way to get through Christmas and relieve stress...
To save some cash, I dropped my ad spending to nearly zero on keywords that I get good organic search placement on and will take some time to update my meta descriptions on landing pages to reflect the types of changes I made to my ads.
It seems to have helped, as my orders over the past 2 days have really picked up - almost back to normal. Small sample size, I know, but it still makes me feel a bit more hopeful. If there is any way to market your products as something to help people get through tough times and save money, you may be able to create an advantage in this climate. You could probably sell HRoth some preserve-making widgets right now. :)
The shopping cart system, I think, is pretty straightforward, and easier to use than most. Click the "Buy" button, there's a brief message saying "thanks, please wait while we add the item to your cart." Then there's the cart page. Hit checkout and fill out shipping information. Hit Submit and fill out the credit card info. That's it.
I'd like to combine the shipping info page and the credit card info page, but the shopping cart I have doesn't allow for that.
I'm certain that the trust issue comes into play. I don't feature a lot of products on my site, and for a couple of reasons. One is that there are many products in my niche that have so little profit that I can't justify the time required to create the pages and get them ranked. The other reason is that I want the products I sell to be good quality. There's plenty of junk out there, but I don't want to be known for that.
Also, my site is not strictly ecommerce. It's a mix of information, advertising for retail stores, and then my online store. That may confuse vistiors.
On a typical day, about 600 people will look at my online store page and, of those, roughly 800 will look at the product detail pages. And I'll sell one to six items, although there are a few days where I'll sell none.
The information / advertising for retail may be confusing people but not by much I wouldn't think. I have found that on your shopping cart / check out areas take out everything that will distract people some things include: products on offer and links to non important parts of the website.
You are right about the trust thing - Do you have a B&M address listed for your shop? People like to see that if there is a problem they could come see you and many people simply get scared away if I don't see an address listed any where.
That's a great idea, rachel123. I make a number of my widgets, and the rest the customer uses to make something.
I too comb through my AdWords on a regular basis to check that I am not paying for ads for keywords I already rank well for.
The NRF predicts a less then 2% sales growth this holiday season, the worst growth in many years, perhaps since 1991. E commerce looks less gloomy, whereas a 8-9% sales growth is predicted (down from 19% last year when consumer fears of the economy and "soft sales" truly started). It is growth, however, it depends on new competition in your niche. Luckily I assume there have been less new "competition" created this year as the economy has been unmotivated, as well as inventory cut-backs from big-box like competitors. This could lead to relative growth for us anyway.
What dies this mean? Well, i truly don't know anymore. For us, there will be less market-share. As such, Ive taken more of a proactive measure on positioning, marketing and value. That way I can secure the "minimal" growth in my vertical.
One hard decision is merchandising. In previous years we overspent and overstocked in the run up to holiday, however, this time we simply cant take that risk. A lot of items are on preorder, and grouped now. Slow selling items are even on sale for 50% off in attempts to keep cashflow. I feel though if every e-tailer cuts back on inventory however, they will automatically make less, and allow for the smaller customer base to search else-wear for their "perfect gift" This change may really depend.
My store is still new, it's not well-known, and there's a lot of competition in a niche with very low profit margins. I'm finding that word of mouth is working well for me, and that many customers tell me I offer the best service they've ever experienced. I hope that will help me to expand.
hellraiser1, I don't carry inventory; my distributor does. There's a very popular widget that's in demand this time of year. Unfortunately someone at the manufacturer screwed up, and the model X widget won't be available until after the seasonal demand is over. When I get customers ordering the X widget (even though I have "OUT OF STOCK" shown on the page), I offer to give them a slightly more expensive model for the same price. I make $15 less, but I still make a profit. And the customers seem to appreciate the effort.
People may be earning the same, prices of products may be the same, but it is just that people do not feel as wealthy and confident. I don't think any economist seriously believes that the world can escape a major recession now.
These are subjects this Nerd pays a substantial amount of attention to...what can I say? I love stats and numbers.
Economists, unfortunately, rarely identify anything as a "recession" or "depression" until they write their books during the ensuing upswing. That part of cyclical analysis is one of those "hindsight is always 20/20" phenomenons. I think part of it is that the National Bureau of Economic Research (NBER)(the Business Cycle Dating Committee to be exact), the group which has the official say of whether or not the US is in a recession, is a government entity. Not only must the numbers be checked, double checked, recalculated, revised, signed off 10x by all necessary beaurocrats, etc. but they also want to avoid "externalities" of saying we are in a recession. I guess its the only time our government wants to avoid fear-mongering.
This has always bothered me: Strange that we live in a world where "money" is a theoretical entity which we place so much "faith" in. I mean, think about this... The concept of money is entirely manufactured. So is credit, debt, wages, etc. Our whole economic system relies on faith to the point that religion's requisite "leap of faith" pails in comparison. Since modern economic history began (post-barter economics) man has gotten into situations like this where "confidence" is dragging down the "real economy". People "lose faith" in the system and mechanisms to correct such failures. It seems to me, though I know its completely naive, that we should all just wipe the past few weeks from our collective memory and carry on as usual. Literally, we need to just be more confident...
What I foresee being a problem for us e-commerce types, is credit card debt. With the traditional credit markets locked up to the point that the LIBOR Index (London Interbank Offered Rate -- an index which tracks the rate banks are charging one another for unsecured debt loans; high #'s = bad) is hitting new highs daily, people are going to be using their credit cards -- and not to pay people like us. We have become a credit hungry society who is used to living beyond our means with money borrowed from projected future income (see Milton Friedman's theory on Interest Rates and Income Streams). That river has run dry...so now people will borrow from their credit cards as their banks won't even open the door. That leaves e-commerce, which is driven by Visa, MasterCard, American Express and Discover out in the cold (I'd say up the creek without a paddle, but I've already used an analogy where we have no river...). I am tightening my belt, the same as everyone else, and waiting for John Q Public's discretionary spending fund have a (perceived) positive balance.
What I foresee being a problem for us e-commerce types, is credit card debt.
I was thinking/worrying about this the other day. What if some of these banks start cancelling credit cards for people who are in too deep because the bank can no longer afford to carry people. It could cripple ecommerce.
Sales have been lower this week than in the previous 2 or 3 weeks. What's really starting to bother me: my AdWords spending is decreasing...and not because I have lowered my bids!
That is probably because people who are having poor sales like me and you are trying to compete for what few customers there are. This boosts the price of the Google PPC ads, and the only one who wins in the end is the Big G.
AdWords bidds got real expensive real quick
Yes, I have noticed this as well.
In fact, yesterday I hit a new record for Adwords single day cost. So I adjusted some bids downwards this morning because I am busting my budget. Oddly, I have not been cranking up my bids, so it must be the people under me are raising their bids and driving up the CPC for me.
people who are having poor sales like me and you are trying to compete for what few customers there are. This boosts the price of the Google PPC ads, and the only one who wins in the end is the Big G.
Unfortunately, my overall spending on AdWords has been decreasing...even if my CPC is increasing, there are simply fewer clicks...I hope this is because of fewer searches/clicks overall and not because my prices are out of line, etc.