Posts Tagged ‘Christmas retail’

Niche Retailing Online in a World of Wal-Marts: VPGames.com Case Study (pt.2)

Monday, January 11th, 2010


VP Games Logo

Here is the second half of our two-part interview with Stefan Von Imhof, a business graduate of the University of Massachusetts (and proud Minuteman) who turned his love of gaming into a thriving online retailing operation. He discusses his most important vendors, why Black Hat SEO isn’t worth it, and the real value of Twitter (hint: it’s not notifying the world that you had toast for breakfast).

Let’s talk about technology and the nut and bolts of operating a site? Who are you hosting with and what are some of the vendors you use?

We host with a company called Channel Advisor. We started working with Channel Advisor in the early days back when we used to sell a lot more on eBay and Amazon. If you are a multichannel retailer (selling on eBay and Amazon as well as online from your own site) you need something to tie everything together. The Channel Advisor platform allows us to sell through multiple channels under one “dashboard.”

The second big vendor we use is Shipworks, which provides our shipping software and is closely integrated with Channel Advisor. When you really look at our business, we’re not a video game company, we’re a shipping company. Shipping packages is what we do. It’s certainly the most important thing we do. We ship hundreds of packages every day and getting stuff out the door correctly is everything. Shipworks is both inexpensive and very customizable. It handles emailing customers, email notification (such as “Your Order as Shipped” emails), out of stock notifications, and a bunch of other stuff.

A third company we rely on is Nextopia. With 9,000 SKUs, it can be very difficult to organize all of the info. One of the things that bugs people with Google searches is that you can type in “Wii controller” and not easily find any Wii controllers. Instead, you might find Wii controller jackets, skins, holders, and everything else related to Wii controllers. That’s kind of what I wanted to avoid on our site. On a regular day, we’ll have 3500-8000 search queries on our site. Nextopia has been a great tool to deliver relevant answers to about 99.5% of our searchers. The other half percent who can’t find what they want – we find out why and tweak the engine. It’s a constant improvement process and Nextopia has been really important to what we do. They have been a great partner in our growth. They make a great product, provide great support. and they’re super friendly. What more can you ask for?

 

VP-Games-Site-Search-2

Have you been tempted by any SEO black hat opportunities?

Absolutely. SEO is such a tricky game. There is no question that blackhat SEO works; if it didn’t, nobody would do it. But the last thing you want to do is break the rules because 1. you can get caught, and 2. the benefit will only last a short time before Google finds out what you are doing, tweaks the algorithm, and it’s all over. My advice to retailers considering blackhat techniques is not to do it: you run the risk of getting blacklisted from search results, and that is death for a website.

With gaming inherently linked with people on the leading edge of Web technology and behavior, how are you finding the ROI of involving yourself in social media?

As far as Twitter, we used to use it far more when it first became popular, primarily with sales offers and coupons. My personal opinion (as someone who has done social media consulting for other companies) is that I honestly don’t think people are terribly involved with Twitter. Twitter boasts a really huge user base, but I’m just not sure how many of them are actively listening to each other, and how much is just “noise”. The one area where we’ve found that having a Twitter presence excels is in customer service. It is really the best way to reach a retailer like us because it cuts through the email and email filter walls. I tell people all the time – if you are having trouble reaching a company, try Twittering them or write on their Facebook wall – it’s probably the quickest way to get a response.

Do you see social media as an opportunity to blow out old stock or juice monthly sales?

Yeah, absolutely. While I think Twitter is maybe overrated, all social media is still important. I personally think a lot of small businesses sell Facebook short. Facebook is probably the most important social media presence a company can have, because it offers much more personal communication. With Twitter, anybody and their brother can show up in your Twitter stream. But when a company shows up in your Facebook news feed, it is a much more personal experience. We are active on Facebook because we want to show people that we’re both open and responsive to customer complaints. That’s really the key – connecting with customers on a personal level.

Final question, if you weren’t running an ecommerce store, what would you be doing?

I don’t know – to tell you the truth I haven’t really thought about that. Probably working in the renewable energy industry, maybe solar, which is of course going to be huge someday. There are a lot of companies doing a lot of amazing things with solar energy around here. My college background is business so I’d probably looking for opportunities in green tech/renewable energy. Either that or city planning. Santa Barbara is an amazing place, and it takes a lot of urban planning to keep it that way.

Thanks for taking the time to speak with us Stefan. Good luck finding the time to actually eat some breakfast; filling orders for Modern Warfare 2 and I’m sure DJ Hero is probably keeping you very busy.

Niche Retailing Online in a World of Wal-Marts: VPGames.com Case Study (pt. 1)

Friday, January 8th, 2010


VP Games, a happy Nextopia site search customer

Here is the first of a two-part interview with Stefan Von Imhof, a business graduate of the University of Massachusetts (and proud Minuteman) who turned his love of video gaming into a thriving online retailing operation. He found some time from the craziness of holiday retailing to talk to us about why physically stocking video games is financial suicide, how independent retailers can compete against chain stores, and why your grandma may actually love to receive The Beatles Rock Band on Christmas morning.

Give us an overview of VP Games, your operations, and markets.
We started Vista Gaming Products, Inc. in 2005. I was selling a lot on eBay at the time and was looking for a solid market to get into. The Xbox 360 had just been introduced and there was huge demand for consoles. We bought two premium bundled units for about $500, and sold them on eBay for around $2,000 each. The economy and eBay were both, well, in a bubble at the time, so it was a good time to come up. We saw an opportunity and jumped in headfirst. I knew the retro gaming world pretty well so we started our product line around those products.

Santa Barbara is about 100 miles from Los Angeles, which just happens to be the mecca of the entire video game industry. I got some contacts there and told them I wanted to start selling their products. We sell products for all major gaming platforms, including Nintendo Wii, DS, Xbox 360, Playstation 3, PSP, Retro gaming platforms, and plenty more. After several years of continual growth, we’ve ended up with the 7-8 suppliers that we currently use. We have seven full-time employees and hire additional seasonal staff each October. Next year we plan on expanding our selection of toys, cell phone accessories, and BlackBerry/iPhone accessories.

Are you a video gamer?
I was big into electronic gaming as a teenager. I call it retro gaming but really, the definition of retro depends on your age. For some people, retro means Intellivision from the early 1980s. For others it is good old Nintendo. My definition of retro gaming is about the era of Sega Genesis to Super Nintendo. I include first generation Gameboys in this group, too. I was in college when Playstation came out, towards the end of my time at UMass the PS2 was pretty big, but I didn’t play very much because I was too busy. The industry has always been one of growth, but the first big explosion in electronic gaming came with the introduction of the Xbox 360. It was a huge event and though it seems like ages ago, it really isn’t. The Xbox 360 graphics were so much better than anything else that had come before, it was just groundbreaking. PlayStation 3 continued the growth of electronic gaming. But what really blew gaming into the stratosphere, though, was the Nintendo Wii. It introduced gaming to millions of people who had never played, and it brought people back into gaming who had given it up. Since 2005-2006, the industry has been booming.

What is the gaming industry like?
The gaming industry is very, very competitive. You can divide it into a number of product categories: consoles and systems, games and software, accessories and parts. Many of our competitors focus on games where the demand is highest but the margins are very small. A $60 game at retail will cost about $50 at wholesale. There is so little markup in new video game software and so much competition that it is insane to even try to compete on price for us. Everyone in the industry buys the games for the same price so there is little difference between what Gamestop, the leader in brick and mortar retailing, can buy a game for and what smaller retailers like we can. Furthermore, consumers know what they are getting with a new video game, so there is very little opportunity for differentiating yourself.

While we offer games as upsell items, the two primary areas we focus on are video game accessories and repair parts. Accessories provides a less competitive market, much higher margins, and a good opportunity to compete against large retailers like Wal-mart. Modding or customizing your gaming console is really popular so that’s one area where we concentrate our efforts.

Repair parts are another great area. Gaming consoles are expensive computers and can break in lots of ways. At one point, the Xbox 360 had nearly a forty percent defect rate! Although they are essentially computers, you can’t really take those things to a regular PC repair shop. You either find a video game repair shop or do it yourself. There is a huge market for repair parts and margins are very good. Parts and repair kits are a specialty item, and not widely available in brick and mortar or big box stores. They’re also generally very small and cheap to ship so they are an ideal category to sell online.

VPGames-Screenshot-1

What makes the video gaming industry unique?
I can’t think of any other industry where inventory risk is as high. Video games are probably the fastest depreciating asset in the world. Most games lose their value immediately after sale. Three months after a game has been released, it can already have lost as much 30% of its value. Within a year, the value can drop by half. Can you think of anything else that loses half of its value in 12 months? As the last thing you want to do in this industry is risk money in inventory, you want to drop ship almost all gaming titles. Although we sell about 5,500 games, we actually only keep about 30 in stock at any given time. Accessories are a completely different animal in that they don’t have such a short lifespan, don’t depreciate as quickly (or in some cases at all), and have a much higher resale value when used.

How do you stand out in the marketplace as a small retailer in a very competitive category?
Firstly, if people think small retailers can’t compete against the big guys – that’s baloney. Today there are many ways to carve out a competitive advantage. Focusing on accessories and repair parts rather than gaming software is one way. We’ve definitely developed both product categories over the years. We didn’t plan on it but both have really contributed to our bottom line revenue. The accessories market is driven by online activity. Big box stores really only carry a small variety of parts and accessories. They typically carry basic bundles that are really expensive. In contrast, we have a really large selection of controllers, cables, adapters, cases, skins, memory units, cradles, docks, and other cool stuff. A lot of “long-tail” inventory that big box stores don’t carry because they take up so much room, don’t move quickly, and are expensive to house.

In general, we’re much cheaper. It might be tough to believe if you don’t shop online, but yeah, most online retailers are just plain cheaper than brick and mortar stores – much cheaper than Gamestop, for example. Not everyone lives near a shop that sells video games, and not everyone can afford to pay brick and mortar prices. So if you look online, you’ll find us. We use Adwords, Yahoo Search Marketing, Bing Cashback, eBay, and Amazon. We do a lot of comparison shopping engine feeds, coupon websites, affiliate marketing and loyalty marketing.

How has your customer base been affected by the economic downturn?
There is no question it has affected spending. Some people think that gaming is recession proof but a more accurate description would be that it is recession resistant. People are not buying games like they used to and new games are selling slower. The used game market is, unsurprisingly, doing phenomenally well.

Has consumers’ reduction in purchasing affected your growth plans?
We’ve cut back on a lot on expenses. We reduced labor and sent a lot of human interface tasks and database work to India and Chile, taking advantage of the global economic workforce. Next year we are looking to outsource more of our customer service overseas.

What did you do to prepare for this holiday season?
Video games are a huge part of Christmas gifting and the annual craziness gets going with Black Friday. From then on, it is absolutely crazy until the end of the year. 18 hour days and coffee bean breakfasts are the norm. It’s so important to us that we literally start preparing for the next shopping season the day after Christmas. We truly prepare all year long because holiday revenue is so incredibly important to our business.

One of the biggest things we’ve done this year is really refine the search functionality at vpgames.com. We have about 9,000 SKUs and we need to ensure that customers are finding what they are looking for quickly and easily. An intelligent site search solution (like the one we have from Nextopia) is absolutely critical.

Let’s talk product. The Beatles Rock Band. What do you think of it? Is it a popular item?
It is awesome. The reason I think it is selling so well is that it transcends age groups. It brings people together and is something that families can play. Everyone in the family can have a role and everyone knows Beatles songs. Games like Guitar Hero and Rock Band have been huge in bringing even more people into the gaming industry.

What else do you think will be hot this year?
The big games this season are Super Mario Brothers for Wii, Call of Duty Modern Warfare 2,  and DJ Hero. All completely different games, all extremely popular. Video games are like movies or music: there is something for everyone. I love electronic music so I really like DJ hero. I just wish I had more time to play it!

Thanks Stefan. Come back for the second half of our interview in which he discusses the real value of Twitter for a retailer and why Black Hat SEO just isn’t worth it.

How the World’s Largest Christmas Store Thrives Year Round-Pt. 2

Thursday, December 17th, 2009

 Bronners.com-Logo

We’re back with Bronner’s Vice President Maria Sutorik. In the second half of our conversation, Maria discusses all the technology powering the World Largest Christmas Store’s online presence.

Let’s move to technology and the nut and bolts of your site. Who are some of your vendors? I noticed McAfee, Nextopia, and both sites are Yahoo! Stores.
Both the McAfee Secure and Nextopia relationships came from the fact that we host with the Yahoo! Stores platform. We actually have three Yahoo Stores; Bronners.comBronnersCommercial.com and BronnersWholesale.com. We do our payment processing offline, and also use a local search agency that we’ve been very happy with.

 Bronners.com-Homepage

Seems a natural environment to allow customers to showcase their Christmas displays (either video or photos). Any plans to incorporate user generated content?
Improving our use of UGC is on my wish list for 2010. We’d like to do a lot more but it is a question of where do we apply our time. Our MyChristmasWonderland.com site has operated for several years and is integrated with GoogleMaps. It is a place where Christmas lovers can post pictures of their outdoor lighting displays. It is really quite amazing to see the results when our customers invest time and effort and creativity into their gardens.

How is social media such as FaceBook and Twitter working? I saw that you have Facebook pages for both the commercial and retail operations.
Our use of social media services is working well. Facebook and Twitter have proven great sharing channels for customers to share their experiences. Right now, we have 6000 Facebook fans and 1,500 Twitter followers. We’re careful to split up the Facebook audiences between our retail and commercial customers because their interests relative to Christmas are very different.

Bronners.com-on-Facebook

Do you handle web development in-house or it is outsourced?
We do both. The creative is done in-house, while we outsource a lot of the store coding to a specialist Yahoo-Store developer. Our Bronner’s commercial site is handled by a former employee who left to launch a web development firm. We produce all photography ourselves.

What about search engine marketing and search engine optimization. Do you handle those in-house?
The search agency handles both optimization and search engine marketing. I manage our comparison shopping program. Although we use a third-party feed software, we manage feeds ourselves. That’s a lot of work because the key to profitability is submitting the right products with the right pricing, product descriptions and titles.

How did you find Nextopia?
We had seen them at a show. We thought the time was right to upgrade our site with a really comprehensive site search and merchandising system. The price certainly was right, too. It made perfect sense. The implementation was painless and the performance has been terrific. We’re using the eComm|Search module to handle site search on Bronners.com.

Bronners.com-Site-Search-with-Nextopia

How does Nextopia’s site search technology and modules fit in with your ecommerce plans?
We use all the core functionality, including search filtering. It really helps customers find their way to the products they’re looking for, particularly when they aren’t sure of the spelling or, perhaps, there is a regional difference in what a specific product is called. Overall, we’ve been very happy customers since 2007.

We’re raising a glass of eggnog as a toast of thanks to Maria for sitting down and talking to us about what it is like to live Christmas 365 days a year. Merry Christmas to everyone at Bronners from the engineering elves at Nextopia Software.

How the World’s Largest Christmas Store Flourishes Year Round

Tuesday, December 15th, 2009

Bronners.com-Logo

With Christmas Day less than two weeks away, we were delighted (and lucky) to be able to get some time with Bronner’s Christmas Wonderland Vice President Maria Sutorik. If you’ve ever been anywhere close to Frankenmuth, MI, you’ve seen the ads, billboards and invitations to visit the World’s Largest Christmas Store. And if you’ve been online, you’ve likely been amazed at the selection of ornaments and decorations. In the first part of our two-part interview, Maria discusses how the company her Dad Wally started in the 1940s has grown into a full-time employer of more than 250.

Part One

Can you give us a quick company history.
My Dad started a sign painting business in the 1940s. He later branched out into creating window displays. In 1951, he met some merchants who were searching for Christmas decorations for their city lampposts. To meet their needs, he designed and produced Christmas panels. Over the next couple of years, he gradually built up a sideline producing and installing decorations and displays for communities, shopping centers and stores. The first retail store opened in 1954. By 1977, retail operations had grown to the point that my Dad purchased 45 acres on the edge of town. Our current store covers an area equal to five and a half football fields.

What is Bronner’s today?
Bronner’s is a multi-channel retailer with wholesale, retail, catalog and web distribution to individual and corporate customers. We have customers around the world. Our Christmas lights sell very well in Europe, while the Japanese market seems to like the retro look of lighted plastic. We create displays for cities, business and malls, as well as work with movie studios that are developing Christmas-themed movies such as The Santa Clause. We give them ideas on set design and dressing. As far as company management, I concentrate on event marketing and online operations while my brother is the president.

Is the international market important?
We’ll take whatever comes our way but we really don’t target international markets. It is a lot of work to sell overseas because international shipping requires a lot of custom quoting.

How many product SKUs do you carry?
We have about 50,000 in our retail store and carry roughly about 10% of that number online. The approximately 800 items in our print catalog are all sold online. We allot much of our online store to unique items, or items that have sold well in our retail store. We also review a mix of sales data and other intelligence (including our Nextopia data and reports) before deciding what to sell online.

Are they all carried in inventory or do you drop ship any items?
We only drop ship two product categories; large commercial items that we sell to malls and high volume custom ornaments.

Where do you source products and new items from?
We attend buying shows domestically, and in Asia and Europe. We also source new products from manufacturers who will make our own designs. In fact, half of the ornaments we sell are our own designs. I even have some of my own designs for sale in the store.

What are some of your favorite items that you sell?
I’ve always loved our personalized items because it is a category my Dad created. He used to letter ornaments for the children of employees who would receive them at the annual party. Their relatives and friends started asking for their own personalized ornaments and that is how our customization department started. The other items I really love are the life-size nativity scenes. My Dad worked hard to design scenes that were both lifelike and could withstand the elements.

What are some of the items that are unique to Bronners?
It would have to be all of our own Christmas ornaments designs. As I said, half of our ornament collection comes from our own design studio.

What are your biggest selling products?
In terms of number of units, it is our ornaments. In terms of size, it would be our giant fiberglass Santa. Available through our commercial website, he stands 17′ tall and costs around $8,000.

How has the Website contributed to the company’s growth in the past decade?
We’ve always had a national reach due to the popularity of Frankenmuth with tourists. Every summer, we welcome tens of thousands of visitors and they help spread the word. The website and our print catalog, of course, continue to expand our market. We mail about 3 million catalogs every Fall, usually starting in October.

Is the Website more for selling products or promoting the retail store?
It does both. The site and catalog both help drive store traffic. Bronners.com is also a way to keep in touch with former Michigan residents who have moved away. We frequently receive comments on catalog orders about how people loved the store and are so happy to be able to shop with us again, even if they’ve moved to Arizona.

There are few things more seasonal than Christmas. Are your sales distributed throughout the year or concentrated in Q4?
We are definitely a Q4 business, although summer tourism provides considerable sales from June to August. We hire a lot of seasonal help in the fourth quarter. Business during December has grown so much, in fact, that we actually schedule our staff Christmas party in January.

How has your customer base been affected by the economic downturn since 2007?
Thankfully, our sales have held their own. Catalog and Internet sales have continued to grow and retail sales have been solid. Expanding our sales efforts outside of Michigan has been very important in cushioning the really difficult situation our home state is experiencing.

Can you describe the typical Bronner’s customer?
The Christmas lover. We don’t necessarily go after the high end Nieman Marcus customer; we go after middle America. People with families, people who really celebrate Christmas.

Is this customer profile the same for all of your sales channels, or have you attracted a different kind of customer online?
It is a little different. Online purchases are driven through search behavior. People might be looking for a specific ornament and find us through a specific keyword.

Who are Bronner’s main competitors?
When people start thinking about Christmas, we compete against anyone, from a local hardware store and specialty online sites, to Wal-Mart and other big box retailers. The main difference is that we do Christmas year round. It is obviously not a seasonal merchandising event for us and we don’t sell through our inventory with half off sales, starting on December 26.

Thanks Maria for your time. Tomorrow, we’ll post the second half in which she discusses what it takes to run Bronners.com.