No sooner are we out of the back-to-school season than the fourth quarter holiday retail frenzy beckons. The drumbeat has already started as retailers try to read the tea leaves from back-to-school shopping and recent earnings reports as a sort of rough holiday guide. Retailers of all types are casting a sharp eye on inventory management, product mix and timing of promotions as they prepare for holiday sales.
Rob Heller, founder and CEO of DealYard, an online retailer of discounted brand name home goods, spoke with me recently about his company’s preparation for holiday sales, SEO, use of affiliate programs and social media strategies. DealYard buys excess and closeout inventory directly from manufacturers of housewares, tools, personal care items, kitchen appliances, bath fittings and small electronics.
Heller manages DealYard’s strategic direction, along with its operational, technical and financial activities. Previously, he was a founder of MaterialNet.com, a strategic sourcing software provider for Fortune 1000 companies and worked on Wall Street.
eMarketer: What is your outlook for the upcoming holiday shopping season?
It’s difficult to gauge. So far, for the first half of this year, we’re up over 10% vs. last year. We’re anticipating solid growth during the holiday season with at least a 20% increase over last year.
eMarketer: What is DealYard doing to prepare for the holiday shopping season?
Heller: We’ve already begun preparing our direct marketing plan which entails direct mail to our existing customer base with special deals and promotions. Since we recently joined the Commission Junction affiliate program, we’re going to be aggressively trying to bring more affiliates into our program. We’ll be offering them exclusive coupon codes for use on some of the coupon sites.
We’re also becoming more active with social media programs, posting more to the blog which we created a couple of months ago. The blog posts automatically post to our Facebook and Twitter accounts. We anticipate using Facebook and Twitter to offer limited-time exclusive coupons and promotions. For example, for the next three hours customers can use a specific coupon code and save 15% on any order. We also plan to place product reviews and video product reviews on Facebook.
We’ll do deals of the day, directly from our homepage. We’ll promote those through our email program, as well as social media.
eMarketer: What are some of the challenges you face in planning for the holiday season?
Heller: There are a few challenges because sales are about five to six times greater than they are during the regular season. We have to make sure we are getting all our orders out within a day. With customer feedback being as important as it is, we need to make sure that we get positive feedback from across all of our different channels. That’s always a challenge.
Another challenge is making sure that our customer service department answers customer questions and concerns within a timely manner. We are planning a phone system that will integrate directly with our CRM application so when a customer calls, their information will automatically come up on the computer. We’ll know who they are and that’s going to help us be much more effective.
One of the other real challenges is remaining price competitive on the items that we sell because every few days, our competitors will undercut us and become the low seller. We see a drastic reduction in sales when we get undercut on pricing.
We’re constantly monitoring our competition and seeing where we stand and analyzing our sales per item. If we see a slowdown in our turnover for individual items we try to understand what’s happening. Is it something about the product description? Is the image not clear?
eMarketer: Which product categories will have video reviews?
All of our categories. For instance, if we sell a coffee maker or a quesadilla maker, consumers can shoot video of themselves in the kitchen using those items. They would post them to our site.
eMarketer: Do those kinds of product videos or tutorials really help drive sales?
Video and written product reviews are very strong. When customers see other customer reviews on the products, it definitely helps drive sales. If there’s a video on the product, and it shows how easy it is to use, combined with well-written customer reviews, that will help drive sales.
eMarketer: Do you think consumer shopping behavior and attitudes will be different this year?
They’re going to be very similar to last year. The economic recovery has been very slow and unemployment is still very high. Consumers are still going to be very prudent and price-sensitive. They’ll be looking for the best value and deals they can find.
eMarketer: Have you noticed any patterns in how customers use DealYard? You mentioned customers love the product reviews.
Yes, we place reviews on our site powered by PowerReviews and they definitely influence customers’ buying patterns and behavior. Positive reviews combined with good value help drive sales. We’re also finding that for more of our sales, customers are using coupons they access from coupon sites.
For a while, we were telling our customers to either register on our site, or just go through the one-page checkout process. We’re finding that about 85% of them are choosing not to register, and create a username and password. So we recently implemented a one-page checkout to make it easier for our customers.
eMarketer: What are the pitfalls to avoid in preparing for the holiday season?
Some of the pitfalls are marketing expenses because during the holiday season, a lot of the comparison shopping engines increase their PPC (pay-per-click) rates by as much as 50%. And if you’re not constantly monitoring and analyzing your ROI, you can waste a lot of marketing dollars. When they raise their CPC (cost-per-click) rates, we put on additional filters and don’t submit as many products to them.
eMarketer: What is DealYard’s approach to holiday advertising and promotions?
We dramatically increase the amount of direct email pieces that we send out. We are generating a lot of incentives and coupon codes to our affiliates and to our existing customers. We’re constantly tweaking our organic SEO and trying to increase the amount of PPC campaigns through Google AdWords.
We use a lot of email with our existing customer base. It’s opt-in and we don’t go out and buy lists. We generate new customers through affiliate programs like Commission Junction and ShareASale.com and ongoing organic SEO efforts.
We’re constantly increasing our product base by differentiating our product offerings. We’re on a dozen different marketplaces and comparison shopping engines. We’re looking to add about four or five more marketplaces. It’s really just a matter of submitting a product feed to them and then marketing your products to their customers. They also do organic search to help things along.
eMarketer: Do you have a mobile e-commerce program? If so do you expect mobile shopping to have a significant impact on business this holiday season?
About three months ago we implemented a mobile e-commerce platform with our AspDotNetStoreFront application, which makes it so much easier for our customers to transact business via their smartphones. It’s very user-friendly. We didn’t have this mobile platform enabled last year.
Last year, if customers had an iPhone, they could go to DealYard.com and transact but it would be difficult. And for any other smartphones, such as the BlackBerry, it would be nearly impossible. Images appear and instead of rendering horizontally like they’re supposed to, they were vertical on the application. Now that we have a mobile e-commerce platform enabled, it’s easier to transact business. There’s also a live chat mechanism and email capability. You just go to a browser and type in Dealyard.com and the software automatically recognizes that you’re on a smartphone browser.
eMarketer: What have you noticed since the implementation?
More people are using it to browse and search for products and they’re also transacting business. You can’t really compare it to last year, because it wasn’t a very significant form of revenue for us. The more people use their smartphones to go to all the different comparison shopping engines they’ll see DealYard’s low prices and be able to do business with us straight from their phones.