KEY POINTS:
Local retailer Barkers Men's Clothing launched a website less than 18 months ago and says the e-commerce portal now generates as much revenue as one of its 26 bricks-and-mortar stores. Simon Hendery asked managing director Zac de Silva what the company had learned about trading online.
When did BMC launch online?
We launched our website - barkersonline.co.nz - in September 2007 on a bit of a shoestring budget because we're only a small-to-medium company. We've learned a lot of hard facts along the way - you learn and improve all the time.
What have been some of the main lessons you've learned about running an effective website?
To start with we weren't sure if our site would be an e-commerce site or a marketing site and initially I think we got it wrong because we decided to make it more a marketing site backed up by a sales feature.
But really online business is all about sales and making a profit. We had a pretty poor success rate in terms of sales when we first launched because it was too hard to try and buy something, the functionality was poor.
Our conversion rate [the percentage of site visitors who make a purchase] was about 0.5 per cent. Gap.com, a world-leading fashion site, was getting 3 per cent conversion. So we had to go through a process of improving our 0.5 per cent, which wasn't economic, to getting somewhere near Gap.
How did you do that?
You look at good websites and do things like them. We took on a couple of consultants and got good ideas from them, but if you're a reasonable business person you can also look at 20 effective sites and you'll pick up elements you like.
We've tried to simplify the whole buying procedure and we've implemented basic things like Google Analytics.
We do serious reviews every quarter as to where we're losing people, then we put in place something to fix it and review it next quarter.
We've spent in the tens of thousands of dollars developing the site.
How effective is the site now?
Our conversion rate is now between 3 and 5 per cent, so we're doing better than Gap. In turnover it's now about the size of a shop which is good because we didn't think that would happen so quickly.
We've still got things to improve and I'm confident that with further changes we have planned we'll increase that conversion rate further.
Our sales are now 700 per cent higher, on an annualised basis, than what they were a year ago. Our plan for this year is to grow a minimum of 100 per cent again. Hopefully more.
Some retailers probably fear an online presence would simply cannibalise their existing bricks-and-mortar business. What has been your experience?
If your wife or partner is in the shop they can ring you up and say, "Look at this item online. I want to buy it for you." That's definitely helped in-store sales. We also find we get a lot of referrals from people who get our emails, look at stuff online and then go into the shop.
The other advantage we have is that we have a lot of people still buying online but if the item doesn't fit them they can go in and exchange it. So having 26 shops around the country helps back up the website.
What other advice do you have for businesses considering e-tailing?
We try to make sure that our homepage mirrors our shops. We always have the same offers. We have the cool brand photos. In-store visual merchandising is very important and we try to take the same approach online. Having a really strong email database helps. If you don't have a good email database it's going to be a fairly slow slog.
Has the demise of Telecom's online shopping portal, Ferrit, affected your business?
We were doing about 5 per cent of our sales through Ferrit. So the fact it's gone doesn't affect our business in a material way. I know some businesses were selling 20 or 30 per cent of their product through Ferrit, so it's obviously had a massive effect on them."
What were the lessons from Ferrit?
At the moment New Zealanders don't want an online shopping mall. I think kiwis are sophisticated enough to know that if you want to buy whiteware, clothes or whatever online you go to certain websites. They like to stick to tried and tested brands, and Ferrit had a lot of little brands. For those brands it's been harmful for their web business because that was the extent of their online sales and they didn't even have their own website.
I think Kiwis know what brand they want and that if they are into niche brands they probably know how to find them through Google.
How do you plan to grow online sales further?
The focus for the next year is to get more orders from overseas. We currently have about 25 per cent overseas orders but we'd like to get a lot more because it's a way of increasing sales without cannibalising local business. A key target is Kiwis living in the UK, but so are non-Kiwis who will find our prices quite competitive in their local currency.
