Moving to technology and the nut and bolts of operating a site. Yahoo! Stores is well known as an excellent place to get started in online retailing and you’ve been on it for years now. Now that you’ve become a successful retailer, what are the pros and cons for remaining with Yahoo!?
Yahoo! offers retailers a very affordable platform that saves you lots of headaches. I think it would be difficult to find a PCI compliant, fully hosted ecommerce platform for the same budget. Particularly if you went the do-it-yourself route, say, by getting a server from Rackspace. While I think the price provides excellent value, your flexibility is limited. The back-end prevents you from doing some things simply. You’re forced to customize and create workarounds. There are extreme differences between an established platform like Yahoo! and Magento, which was designed from scratch for web 2.0/3.0 (or whatever they’re calling it these days).

As a company, we’re pretty loyal to Yahoo! and the Yahoo! platform. Still, if a company knows that it will grow beyond $5-15M in annual sales, I think they are going to ultimately regret choosing Yahoo! When we launched our newest store, I wanted to see what I was missing, which is why I researched alternatives and ultimately chose Magento. Revamping that site has been a good learning experience and an opportunity to really see the pros and cons of Yahoo!

Is Yahoo! a flexible platform for integrating the latest operational, web design, merchandizing and payment technologies and services?
Yahoo! isn’t a platform that offers the latest and greatest. It is always a couple of steps behind and there are number of integration and technology challenges that are really frustrating. One of the most obvious examples is integrating an alternative payment option like Google Checkout. While the Google Checkout icon can help your PPC clickthrough rates, if you actually want to integrate it, you’ll violate the terms of your Yahoo! agreement.

Talk about the Yahoo! Stores retailer and developer communities…what are their value?
These communities are really important. When we started out, we didn’t outsource anything because we couldn’t afford it. We learned Yahoo’s proprietary programming language, RTML, and grew the site to a level where we could afford to outsource. Once we had a development budget, we tapped the developer community. The sites wouldn’t be where they are today without the contributions of the professional store developer community.

Talking specifically about the Yahoo! platform, what are three things that you did that you would have done differently had you known better?
A. I’d like our site to be faster. We need to make some optimization changes but I’m going to have to do some research because I’m not sure right now if it is the underlying code or a graphics issue.

B. We need a lot more sophistication in our supplier chain. I would have really loved to have spent a lot more time developing real-time integration of our inventory data. We’ve since created workarounds but they are not as ideal as doing the most effective way right from the beginning.

C. The third change would have been to spend a lot more time and care building our product database. It is really valuable to have complete product information or attributes (notably dimensions and weights). This is especially true for retailers who drop ship. Complete product data helps minimize shipping costs. It helps you provide real-time shipping calculation to customers when they are in your shopping cart. It helps you calculate by dimensional weight. I can’t overemphasize the importance of having an accurate and up-to-date database.

How does Nextopia’s site search technology and modules that you use fit into the Yahoo! Stores world?
Nextopia integrates very easily into the Yahoo! Stores platform and we’ve been a happy customer for over three years. In a perfect world, your product database includes all of the relevant product attributes, which enables you to filter search results. In general, site search benefits a retailer in proportion to the completeness of the underlying product database. By working with Nextopia, we’ve been able to implement some solutions but as I said just now, I really wish we had built our database with complete product attributes from the beginning.

Enough about Yahoo!, let’s talk about Magento and your newly revamped site, IslandBeachGear.com.
Even though Magento’s basic version is open source and the vendor doesn’t charge for it, it isn’t your least cost option by any means. Magento is neither simple, nor is it free. It took many, many hours to develop our IslandBeachGear.com site to the point where it is now. It required a lot of tweaking to get it right and you’ll probably require some knowledgeable developers. We used a combination of in-house resources and some third-party development. Additionally, the hosting level you need to have a fast website is expensive.

Nextopia Site Search integrated on a Magento site-IslandBeachGear.com

In contrast, you can get a Yahoo! Store up and running in no time. In about twenty minutes, I could create a functioning one or two SKU Yahoo! Store that could actually take orders and process payments. It wouldn’t look pretty but it would work. In contrast, Magento isn’t nearly as easy to use. The tradeoff is much greater flexibility. I’ve been very impressed by the design and usability and the out-of-box functionality. I love the flexibility. There is no limit to what I can do. I haven’t run into one adjustment or request that we couldn’t implement. With Yahoo, I run into roadblocks all the time. Magento is designed using the latest software technologies and online retailing, marketing and merchandising processes. The SEO capabilities, integrated reviews and real-time inventory access are great. That said, I would love it if Magento provided an on-demand platform like Yahoo!

Thanks very much to Patrick. Great information and guidance from someone who’s been in the ecommerce trenches for a decade. As you can see, the road to success requires a lot of hard work and iterative trial. If you fish or know someone who fishes and might appreciate an angling-themed Christmas gift, you know where to start your shopping.

Can you give us a quick summary of your company, operations and markets.
We’re an ecommerce retailing company, currently operating four sites in the fishing and outdoor leisure markets. Our corporate headquarters are in Somers Point, NJ and we run our Island Beach Gear retail store in Ocean City, NJ. In total, we have 25 full-time employees. We’ll add seasonal staff during the peak fishing and beach-related retailing months (spring and summer). Our fishing sales are split 80% in the United States, with the balance from overseas markets. The big overseas markets are South America and the United Kingdom with some sales in parts of Asia. Our beach gear sales are almost exclusively North American sales.

Who are your competitors?
We’re a specialty fishing retailer. We don’t generally–or even try to–compete against mass merchandizers like Wal-mart or the national chains like Cabela’s or Bass Pro Shops. We win customers on service and know-how, not private branding or discounting. There are probably 6,000 independent fishing retailing stores in the United States, the vast majority of which are small Mom and Pop stores. To give you an idea of the market fragmentation, a really successful independent fishing retailer will do one million dollars annually in sales. But while they’re small, these local stores are really important because they know their regions. They know specifically what works in the local rivers and lakes and costal waterways. In contrast, our specialized knowledge is product-centric. Our company and our sales reps have lots of product knowledge, but the local fishing market knowledge is found in local stores. A final word on this retailing category is the fact that people who like to fish have been much slower to adopt to Internet product sourcing than in other categories.

Let’s talk about mixing fishing and business, or in your case, making fishing your business. How often do you actually get out and test the products you sell?
While I do get out on the water, I’m the head guy so I’m not out as much as our customer service and sales staff. Our product buyers and customer service team all fish a lot because they have to test lots of gear to figure out what we should buy. I tend to test the beach gear products more often than the fishing catalog.

Let’s start by talking big picture. Your retailing properties target outdoor pursuits that are restricted by climate seasonality across much of the North American continent? How does the seasonality of your customer base affect your operations?
We sell a good amount of gear twelve months per year. We sell all types of fishing gear, primarily saltwater, although we also sell freshwater and fly fishing. But saltwater is definitely our focus. While fishing sales increase considerably in the summer, the winter months are not exactly dead. The seasonality issue is certainly real but we balance that against a very wide product selection.
How has your customer base been affected by the economic downturn since 2007?
Although our number of orders for the 2009 fiscal year were up over 2008, average order value was down. We’ve done much better than the industry average, I think, in 2010.

Has their behavioral change affected your growth plans?
When economic times are tight, focus on the things that are working. At times, your focus could be to gain market share, not lose it. We’re trying to do a better job at everything we do. We’ve reduced our PPC spend as well as adjusted some of our other marketing activities. Inventory projection is always a gamble but we have reduced large inventory purchases to extend our cash resources.

Has it changed your plans for upgrades in technology, marketing activities or third party services that you use?
I’m constantly evaluating third party add-ons like Nextopia site search, and I probably get several phone calls per week from vendors pitching me on some third party tool or conversion booster. I like to listen to learn if we’re not doing something that we should. You really have to distinguish between what can help you and what will waste your time. If something comes out that is better than what we’re using, we’ll make the change.

Nextopia site search helps fishing enthusiasts find exactly what they need among the thousands of product SKUs on TackleDirect.com

Two things I noticed that you are not using are reviews or videos on TackleDirect. Why not? Reviews are available on some of your sites but not all of them. Are you planning on integrating them any time? What are you thoughts about user generated content (UGC) and online retailing?
It is time to get serious about both reviews and video across all of our sites. Incorporating reviews into Yahoo! Stores isn’t easy. We evaluated review technology for our Yahoo! sites a while back and it was premature. We’ve also found limitations with PowerReviews on the Yahoo! platform. To really do the job well, we’ll probably have to redesign our product layout because our current site design doesn’t work easily. It will take some effort. In contrast, the Magento site (IslandBeachGear.com) included review software from the beginning. Integrating reviews into that site was far easier.

Any comments on UGC?
One thing I’d really like to create is some kind of customer showcase. We receive hundreds of pictures every year. We’ve received everything from pictures of landing a 1,000 lb. blue marlin, to a variety of world record catches to little kids who caught something really special. My favorite, though, has to be a picture several years ago from three guys who went to Thailand. One of them landed a huge tuna using a very special and very expensive fishing reel that cost over $1,300. What I loved about the picture was that the boat they were sitting in, a very beaten up 14′ aluminum, was probably worth $50.

Come back in a couple of days for the second part of our interview with Patrick.

1. What are the three most important ecommerce metrics that you track?
First, I really dislike ecommerce metrics such as time on site or bounce rates. I don’t give them any value. The data can be meaningless. If you’re going to use bounce rates you need control rates. If you use really advanced analytics, bounce rates can be meaningful. But in general, though, I don’t think it means much unless you have really sophisticated analytics tools and know how to use them. Similarly, I don’t concentrate on macro stats like revenue or transactions.

It is really simple: consistent flow of quality traffic and maintaining conversion are the keys to making money on the Web.

2. For a new retailer just starting out, what are three things you would recommend they do?
You can’t start top down. You need to drive the revenue first and then convert it. The first two employees I would hire are an SEO specialist and a conversion specialist.

The money that these two people bring in will pay for themselves 20:1. The money they make supports everyone else.

The third thing I’d do is invest money in your website. For example, Nextopia’s technology has such long-term positive revenue and ROI ramifications that it is just stupid not to implement it on your site.

3. Benefiting from hindsight, what are some things that you did that you wished you hadn’t?
It depends on the size of your company. In my personal experience, my mistake was failing to hire enough people who can drive revenue. To avoid this I would have hired more ROI optimizers and conversion optimizers.

Those are the people I want our company to hire. I’d also look at people who understand multivariate testing and really good persuasive copywriting.

When you look at filling these kind of testing and optimizing positions, I really can’t see any diminishing returns from hiring lots of people to fill them. There is a lot of room to grow before you dominate a niche so hire as many of them as you can afford.

4. What single thing that you’ve done has had the greatest impact on your business?
Without a doubt, it has been hiring analytics and SEO people. Since I joined BrickHouse Security, we’ve tripled our sales. Analytics really plays a crucial role in our success.

5. The proverbial magic wand…If you could wave one and invent some technology that would make your days easier, what would it do?
It would have to be cloning. I’d love to be able to clone my team. What you can never have enough of is people who can drive traffic and then convert it into paying customers. Sure, it is a human resources obstacle but we’re lucky because our CEO comes from an SEO background. He understands the importance of people who bring people to our website.

There is also a ton of technology that I’d love to have. I’d like really good call tracking. Attribution is an area where a lot of vendors are promoting solutions but, frankly, it is really difficult.

Thanks again to Ryan for taking the time to expound on his equation for success in the ecommerce world.

Let’s move to technology and the nut and bolts of operating BrickhouseSecurity.com?
We host with Yahoo! Stores. We moved to that platform in late 2005 and the reliability has helped us become an Internet Retailer Top 500 site.

What are some of the vendors you use?
Yahoo! for hosting. Google, Omniture, and Yahoo! for analytics. We use Nextopia for site search.

How important is site search to your company?
Fifteen percent of our revenue comes from the search box on our site. A lot of our site visitors do not land on our home page. Site search really helps our visitors who arrive looking for specific things. They want to navigate directly to the product rather then click on links. A lot of people want to click on the product images that we display as part of our Nextopia AutoComplete module.

How do you integrate site search into your website?
We’ve been using Nextopia’s EcommISearch module for the past year. It integrates very well into the Yahoo! Stores environment. Nextopia has also spent a lot of time ensuring that it integrates well with Google Analytics.

I can see every search term typed in, which search terms converted and exactly where they converted. I see the traffic sources that are directing people to our site, and our revenue per customer. I can easily see whether we need to do a better job of optimizing our landing pages.

I’m sure you spend hours looking at logs, Do any particularly weird search terms jump out at you?
Strangely enough, the most common search term is nothing. Lots of people don’t enter a search term, yet still click submit. We just direct those searchers to the new products page.

Long tail searches on our site can reveal some really “interesting” interests that people have. Queries relating to monitoring or recording cell phones are pretty common. Unfortunately, that’s illegal so we can’t help them. Lots of people are interested in detecting bugs or are suspicious about the possibly of hidden cameras lurking in their homes of offices. They think their smoke detectors might contain hidden cameras, and many times they are right (see Erin Andrews).

Two other interesting product categories are covert surveillance and GPS Tracking. We have taken products normally sold to the government, and made them consumer friendly in terms of use and price.

Let’s talk specifically about Nextopia’s AutoComplete with Images technology.
AutoComplete with Images has really helped us. Let me explain – we first started off using Nextopia’s AutoComplete module which just displayed keyword suggestions to our customers. We later upgraded to their affordably priced AutoComplete with Images module which extends keyword suggestions to includes top converting keyword and product names and thumbnails that link directly to product detail pages. Think of it as a guided search box experience.

How does it work?
As soon as a customer begins typing into our search box, they are automatically presented with both keywords and products relevant to their search. The display instantly changes as a searcher inputs more characters. It starts predicting as each character is entered and dynamically changes the display of suggestions. Visitors end up seeing related queries and products right away, bringing them close to the point of conversion. So, customers can either click on a suggested keyword and proceed to do a search on our site OR they can click directly on a thumbnail of relevant products and be directed right to a product detail page.

Nextopia's AutoComplete site search technology on BrickHouseSecurity.com

Ex. A customer searching for the term ‘usb’ is “autosuggested” 5 top keyword suggestions for search and 6 top converting products with ‘usb’ in the product name. With each keystroke, suggestions dynamically change to display the most relevant set of suggestions.

What issues were you trying to address by integrating it?
First of all, we wanted to direct people to what they want and need. We found people often don’t use the best search terms so a system that suggestively prompts them is much better. A lot of people search for uses of products; not necessarily the products themselves. We wanted to enhance this process. We’ve found that product images are the best way to direct people. We now put them immediately in contact with the product.

We wanted to present historically strong sellers and direct people to those pages. The Nextopia technology pulls data from our sales history and changes as sales rise and fall over time and incorporates this data into their algorithm. We also spend a lot of time optimizing these pages. We ensure that our product pages include cross-selling information, recommending other products and coordinating products.

Another issue for to think about is this…if your product pages aren’t very good, then you might be better off putting them in contact with a product list than giving them a choice of which ones to select.

What was the AutoComplete implementation process?
It is real easy since we were already an existing eComm|Search customer and were already submitting tracking codes for each product SKU. That was it. Nextopia’s developers did the rest.

What kind of metrics are you seeing with the AutoComplete with Images module?
Upgrading to Autocomplete with Images was a great move as it converts twice as well as the base AutoComplete module. We started showing four images and then expanded to six images per query. Half of our searchers click on the product images in the search now. Overall, revenue is 8% higher. We’ve seen close to a 2% rise in overall site conversion, which I think will jump to 3-3.5%. That is very big for a site like ours.

Any other comments?
Nextopia’s AutoComplete with Images module is worth thousands and thousands of dollars to a larger website. In addition to the revenue it creates for us, it makes it really easy for our staff to find products. In fact, pretty much everyone in sales and support uses it to quickly find products in our catalog, even if it wasn’t designed for them.

I’m also experimenting with the number of pictures to display. I have six images showing now. If I want, I could have 8-10 pictures. I’m going to keep testing. I know that if I put it 10 images at a time, I think I could lift sales another 15%. It’s pretty tempting to fill up the screen and quickly give direct people to the highest selling products.

Finally, we’ve found that more people who use site search arrive organically than through PPC ads.

That’s great info Ryan. Thanks for your time.

What’s your background?
I’ve been in and around ecommerce for a long time. I started in 1996 when I was in high school and got serious about selling Beanie Babies in volume. I ended up a Top 100 seller on eBay in 2002-2007. I went from eBay to consulting on other people’s sites, as well as jumping on the Amazon.com platform when it opened up. When I joined BrickHouse in September 2008, it was the first time that I had worked for someone other than myself.

Tell us about BrickHouse.
BrickHouse has been online on since 2005 and is an Internet Retailer Top 500 retailer for 2010. We have fulfillment warehouses in California, Indiana, and Tennessee. We’re headquartered in New York City. We offer 18,000 products, focusing on opportunities in micro security niches, such as GPS tracking, consumer sector surveillance, biometric locks, home security and child safety. We were born on SEO & Analytics, that is what makes us great. Interestingly, we have a lot of international customers who are looking for technology that isn’t readily available in their home countries.

How did you get started in analytics?
Someone has to figure out how to make the money. I’ve been in analytics for years.

Who is the typical BrickHouse customer?
There really isn’t a typical customer. I guess you could say that the typical BrickHouse Security customer wants to find out something or confirm a suspicion. The GPS tracking customer, for example, is looking to confirm the location of their children, their husband, or their vehicles. The customer interested in surveillance usually wants to confirm that things are OK. How is the nanny treating the children? They come to us for general security and surveillance technology.

What do you do to stand out to in the marketplace?
We try everything here. We have an actual phone number on our site. We have a huge tech support team with free lifetime support. Our product videos are stellar. We are everywhere in the online universe, including eBay & SkyMall.

Has the economy in the past couple of years changed the types of product that people buy?
It hasn’t. People still want to do what they want to, and have needs to fill. Finding a cheating spouse, for example, is a need for some people; as is making sure their children are safe. We’ve maintained strong conversion rates. In fact, conversion is higher now than it was in 2007. As far as pricing….we continually reevaluate it. We’re certainly not the lost cost leader because we sell the best products with professional service.

What do you think is the most interesting product you sell?
I think it is the Stealth iBot. It installs in seconds through a USB port, and records everything a person does on a computer. It is undetectable by most anti-spyware software, and stores up to 10,000 screenshots and virtually unlimited text. Think of it as a really sophisticated keylogger that is capable of revealing multiple email and Facebook accounts. It only costs $129.
Thanks Ryan. If Sandra Bullock had slipped an iBot into Jesse James’ laptop she would probably have saved herself a lot of heartbreak and been able to take someone more deserving to the 2010 Academy Awards. Look for Part Two of our interview with Ryan in a couple of days.

Let’s talk technology and the nut and bolts of operating your website. You’re on the Miva platform? What do you see as the pros and cons of it?
We were already established on the Miva platform (hosted with Cyberhost) before I arrived. It is secure and works 24/7. Even though we’re on an older version, it works well and I’ve had a good experience. Although some things are not as customizable, we’re not looking to upgrade MIVA. We’re developing a custom shopping cart, though, because we want some additional flexibility and customizable functionality.
What about processing and payments?
We don’t do any card processing online. It is all offline and non-real-time. Part of the reason is security. Part of the reason is that we’re not a widget company that ships boxed inventoried products the same day. Rather than dealing with backorders, we find it better to process the order as it it is filled. The benefits of doing offline processing definitely outweigh the benefits of doing it online. We deal with fewer refunds and backorders.

How do you handle international customers? Any special fraud programs in place?
We do address verification, and direct contact and confirmation with international customers. Because each order is hand processed we can spot inaccuracies and potential fraud threats. Any orders over $300 require a special form we send after the order has been placed.

You have a corporate policy against shipping to Mexico, Russia and all of Africa. Why?
There is just too much fraud that takes places as a result of doing business with these countries to make it worthwhile.

Let’s talk customer acquisition. It looks like word of mouth is important? Event marketing, I assume is big, too.
Both are really important. We do word of mouth and event marketing across the country. We don’t host events ourselves. Instead, we get involved with green living events around the country, such as The Green Festival in San Francisco, Green America and numerous other conferences. I love trade shows and I’m trying to find an herbal IT conference that I can attend. Haven’t found one yet, unfortunately.

Let’s talk SEO.
We do all of our SEO in house. We use Google Analytics and Google Base for our shopping feeds. Also, we cover our keywords, meta-data, headers, alt tags etc… everything indexable to keep us in the search light.

We use Nextopia’s technology in a several different ways. We use the EcommISearch module for our site search and the new Out of Stock Alerts module which enables customers to add their email on a per-SKU basis. When we receive new product and update our inventory and shopping cart, the system automatically sends out an email. It is a great way to drive sales.

Selecting Nextopia for our site search has been one of the best decisions we made. I love Nextopia. I really do. I’ve really enjoyed working with the engineers tremendously. When I’ve needed applications developed, they’ve gone above and beyond the call of duty several times. Probably the main reason our relationship works is that they’re the right size of company for us. I know I can talk to Chris Bannister (my Nextopia account rep) and get stuff done. I work with other vendors and don’t get anywhere near the same level of personalized attention. With other vendors, I’m not just not as important. With Nextopia, I am really, really important.

The Right Amount of Cardamon at Just the Right Time

Let’s talk Social Marketing. You’re tied into Twitter, Facebook, MySpace and You Tube. What does social marketing do for you?
Keeping in touch with the herbal community is critical for us. Social marketing gives us a face, so we’re not an anonymous wall. It allows customers to talk to us as well as interact. As we both participate in this discussion and observe it, we find out what our customers want.

Mountain Rose Herbs launched a user generated video contest in October 2009. Customers were asked to showcase their love of herbs, teas, spices, oils, and all things botanical.
The creator of the winning video received $1,000 and featured placement through the company’s social media accounts.
The idea came from internal discussions. The promotional video introducing the contest really captures who we are as a company. We wanted the video to encourage customer participation, we hired a local guy named Norm Scott, who did a terrific job. The entries were great. It is really fun to see how we touch people’s lives and play a part in their practice of an organic herbal lifestyle. (The delightful winning entry came from Catherine Wing and Bill Buckendorf who created a rapping rodent, Chives the Mouse).

Looked at your Twitter feed. Seems to be a combination of news tweets and coupon offers?
The key is having someone on your staff who has the time to keep on top of it. I’m definitely not that guy. Our marketing department handles it. Overall, Twitter helps keep our name present in any discussions relating to the herbal industry. From my perspective as a Mountain Rose employee and as a musician, I think it is a really good tool.

Where do you go to learn more about ecommerce innovations? What are some of the resources?
We work with a database programmer, Will Emmerson. He does a lot of our custom backend development for our ERP system. For example, he wrote the back end between Miva and our system. I work with him collaboratively. I’ll take an idea for a program or problem we need to solve. We’ll talk about options and possible solutions and then develop whatever we think is the best fix. Between Shawn, Will and I, we follow advances in technology and reason about how it could fit into our shop.

For a new retailer just starting out, what are a couple of things you would recommend they do?
First, I’d invest in IT and use it. Don’t go cheap and scrimp unnecessarily. Allocate whatever is necessary (time and/or money) to do a good job. It really can help you grow efficiently.

Finally, what is one thing that people probably don’t know about Mountain Rose Herbs?
Our corporate IT policy dictates that everything we buy is EPEAT Certified Gold. Everything we buy for our staff of 80 plus people, from desktops and monitors, to networking equipment, needs to meet this standard.

(Ed Note: EPEAT is a system that helps purchasers evaluate, compare and select electronic products based on their environmental attributes.)

Thanks Nate for your time. If you want to hear Nate’s other love, visit his band’s website. He manages it, of course.

Can you give us quick summary of your company, operations and markets.
Mountain Rose Herbs was founded in 1987. We’re located in Eugene, OR, and sell a wide range of natural botanical products, including organic herbs, spices, teas, and oils. We carry approximately 2,000 product SKUs. We have a head office in Eugene and operate several warehouses around the city. We do some manufacturing to produce our own finished products. Our business, however, is primary selling bulk ingredients to people who want to make their own herbal or aromatherapy products. You can order 4 oz or 200 lbs of nettles from us.

MountainRoseHerbs.com-Nettles

Our customer base is people into organic agriculture, herbs, aromatherapy, herbal and alternative healing, sustainable business practices, and botany. They take what they source from us and make their own products for retail and personal use.

Which products are your favorites?
I use a lot of the products we sell, especially the herbal teas. Once you start working around herbalists, you quickly learn that there are lots and lots of cool products and uses for them. For example, I’ve got a friend who burned himself while camping. He didn’t have health insurance so I spoke with some of the herbalists at work about a solution. They gave me a recipe for a salve which helped him completely recover without any scarring.

If you weren’t running the back end of an ecommerce outfit, what would you be doing?
Playing music or working in IT. I love music and I love IT!

Does your business have seasonality?
Getting involved with herbs and the products we sell is a lifestyle. We’re pretty steady all year long, although we do see some fourth quarter spikes from people who do bulk orders to make products for one-of-a-kind holiday sales and fairs, or who are planning to give them as Christmas gifts.

How has your customer base been affected by the economic downturn?
As I said, we sell to people who are enthusiastic about the herbal lifestyle. Buying from us forms part of their healthcare. When the economy is tough and health care increasingly expensive, people take more responsibility for their own health.

What do you do to stand out to in the marketplace?
We have an awesome marketing department that is very in tune with the movement. They focus on the fact that we are a company worth supporting, we value our employees, our loose culture and, of course, our high quality.

Thanks for your time, Nate. We’ll be back in a couple of days with part two.

With the most recent Christmas rush receding well into history, we caught up with retailer Stefan von Imhof of VP Games to learn about the really important stuff you need to become successful.

(Be sure to read the in-depth interview “Niche Retailing Online in a World of Wal-Marts: VPGames.com Case Study” we did with Stefan earlier this year. Part 1 and Part 2)  

What are the three most important metrics that you track?

1. Sales are the most important metric we monitor.

2. Non-paid or organic search traffic is next and something I check daily. There is no acquisition cost and I’ve found that organic traffic has a 1% higher conversion rate than standard paid search. You can’t ask for a better combination.

3.The other metric I closely track is conversion rate. Big box retailers talk of 5-7% conversion. I would guess that our conversion is .5-1% point higher than the average ecommerce site our size thanks to our merchandising efforts. (I think the best way for a site like ours to raise the conversion rate is to increase our product selection and organize it better. That’s where Nextopia’s site search helps us).

For a new retailer just starting out, what are three things you would recommend they do?

a. Avoid inventory risk

Watch your inventory because you can really get burned. It is really easy to stock up on goods and not realize the increasing risk you’re running. In future, you may not be able to sell them to cover your cost. Worse, you may not be able to sell them at all.

b. Watch your variable costs

You should know your fixed costs, those are simple. It is your variable costs that can kill you. For example, you might be spending $15,000 per month on advertising and be able to make money with a 1.8% conversion rate. But what happens if your conversion drops to 1.2%? You might start losing money. So you have to decide whether you can afford the same advertising budget. (This actually happened to us several years ago. We used to spend lots on eBay because the conversion was great. But the recession arrived and our conversion plunged. Because we were rigorously tracking our advertising spending, we knew very quickly we couldn’t sustain it due to the decrease in sales).

c. Partner with a good web guy

You want to have control over how your website looks, feels and operates. Assuming that you don’t know HTML yourself (and don’t plan to learn it), I think it is really critical to get someone on your team who can handle in-house development. In my experience, the last thing you want to do is rely on a third party. Instead, find someone who knows everything about the web or just learn it yourself. Even a basic understanding of Photoshop, HTML, Javascript, XML, or Python will go a long way in doing what you want to accomplish.

Benefitting from hindsight, what are some things that you did that you wished you hadn’t?

The number one thing I would have done is avoid eBay. And by avoid I mean use it sparingly. eBay used to be a big part of our operations, but we realized that we really didn’t have any control over the eBay selling environment. We started out very reliant on eBay. It was very easy to do and addictive. A friend of mine once said that selling on eBay is like a crack addiction – it’s easy to get hooked, to spend all your time addicted to the simplicity and easy cash flow that the platform can provide. But all of the things eBay can do (and does all too frequently like raise fees, and impose strict selling rules, etc.) are completely outside of your control. If you don’t have control, you can’t fix things when they go wrong. You don’t want your company’s futures dependent on the success of other companies. Use eBay and Amazon, but diversify. Instead of putting money into other companies’ pockets, focus on growing your own garden and control your own destiny.

What single thing that you’ve done has had the greatest impact on your business?

The greatest impact was investing in technology. Doing this represents a bigger up-front cost but it is well worth it. It has paid off big time as we’ve grown. By investing in internal web design and Python programming resources, we’re retained control and flexibility to do what we want. For example, we produce pretty complex shopping comparison shopping feeds. Without the internal resources to create them, I’m not sure we would have been able to afford to outsource its development.

The proverbial magic wand…If you could wave one and invent some technology that would make your days easier, what would it do?

There are so many things to be done. What I’d like is have is a robot that could analyze our site, aggregate terabytes of customer behavior data and figure out the best ways to increase conversion and turn as many shoppers into customers as possible. Also, if the robot could make a killer breakfast each morning, that would be pretty cool, as well.

My Favorite Thing: what I most enjoy about working in my business

Having your own business, owning full control of your working life is the truest sense of freedom in the world. There aren’t many things that you can do where you have a more acute sense of freedom than you do as an entrepreneur…starting something from nothing. I love being able to travel on my own accord and I love the feeling of being in control of my present and future. Even on the bad days, when things aren’t going well, I enjoy working for myself because in the end, I love solving problems and finding solutions.

1. What are the three most important metrics that you track?

2. For a new retailer just starting out, what are three things you would recommend they do?

3. Benefitting from hindsight, what are some things that you did that you wished you hadn’t?

4. What single thing that you’ve done has had the greatest impact on your business?

5. The proverbial magic wand…If you could wave one and invent some technology that would make your days easier, what would it do?

Thanks Maria for your time. Good luck finding an integration wand.

While we’re proud to be a Toronto-based company, this week we’re a little prouder than usual due to that recent nail biter in Vancouver. More than a few Nextopians arrived at our office the next day with voices raspy from having exhorted our national heroes 2,500 miles away as they battled for the men’s Olympic ice hockey gold medal. The result also generated more than a few congratulatory emails from Nextopia customers, some of whom were fans of Team USA. Regardless of which team you were pulling for, even those who don’t like hockey (I think Canada has fewer than 100 people who’d fit this description) would have to admit that it was an incredible game. Let’s hope that the National Hockey League agrees to contribute its players to the 2014 Games in Russia.

(Thumbs-up, too, for the hockey-playing Canadian women who went undefeated and earned their own medals in that same gilded shade).

What does this have to do with our usual posts about ecommerce excellence? Gold medals beget merchandizing opportunities. And ice hockey gold medal victories by Team Canada mean lots of merchandizing opportunities for Nextopia customer IceJerseys.com, which is headquartered in Montreal.

We fired off a few questions to Anthony Wolfe, the company’s VP of of Ecommerce. Anthony didn’t have much time, given that Olympic gold medals in Canada’s favorite sport aren’t as common as we’d like.

First, general comments on the Olympic Hockey tournament?

I think the tournament was great all around. Fans were treated to seeing the best players in the world competing for their country with everything on the line – it really doesn’t get much better than that!

Did you see a jump in sales (and search queries) coincide with the Olympics? If so, when did sales start to go up?

We started to sell Olympic merchandise at the beginning of Q4 2009, and sales gained momentum throughout the holiday shopping season. In fact, we’ve carried jerseys and apparel for most participating countries from the beginning and sold out of a lot by Christmas. Sales never really dropped off much after Christmas, picking up significantly as the Olympics approached. As a result, a huge chunk of our search queries have been focussed on Olympic teams and merchandise.

How much of an effect will Canada’s gold medal have on your sales this year?

The gold medal has resulted in a major sales boost over the past week, and we anticipate it will linger for a few more weeks.

What is the top selling “let’s celebrate the gold medal” item?

Right now we have two champs items that have been very hot:

• Team Canada IIHF 2010 Olympic Champions Swooshflex Locker Room Cap
• Team Canada Men’s IIHF 2010 Olympic Champions T-Shirt

In addition, the two official Team Canada jerseys continue to sell at an incredible clip:

• Team Canada 2010 Olympic Swift Replica White Hockey Jersey
• Team Canada 2010 Olympic Swift Replica Red Hockey Jersey

Canadian pride aside, what was your favorite jersey (mens or womens) among teams in the Olympics?

Honestly, I think there were a number of really nice jerseys in addition to Canada’s. The USA alternate jersey, Germany, Norway, Finland and Russia were among my favourites. I especially liked how many of this year’s Olympic jerseys worked a sublimated ‘patriotic’ pattern into the jersey fabric – or in Canada’s case, the crest. Very subtle, but nice attention to detail.

Lastly, what are some of the countries from which people have bought Canada jerseys?

In addition to Canada and the USA, we have shipped Canadian jerseys to pretty much everywhere around the world, including: Australia, Bermuda, France, Ireland, Japan, New Zealand, Netherlands, Norway, Switzerland, Thailand and the United Kingdom.

A hockey jersey and Bermuda shorts must certainly be a strange sight on the island. Anyway, with the Closing Ceremonies fading into history, we’d like to thank Anthony for taking the time to talk to us. We’d love to talk to him more later in the year about his site operations, as well as the mystery why Slapshot remains so popular.

In the meantime, enjoy fulfilling those orders.

- Team Nextopia (who are big fans of Team Canada)