As the business
environment becomes more and more complex and our industry continues to rapidly evolve, it is becoming more important than ever that as a business
owner you don’t ignore the obvious opportunities
that e-commerce has to offer.
E-commerce for the Imaging Supplies Industry: Part 2 of 3
1. & Marketing
Sales
Do Business Faster and Better:
E-Commerce for the Imaging
Supplies Industry
by Dr. Dimitris Constantinou • Easy Group LLC
I
n the October 2009 Recharger, I presented the
first of a three-part series of articles regarding
e-commerce for imaging consumables. As the busi-
ness environment becomes more and more complex
and our industry continues to rapidly evolve, it is
becoming more important than ever that as a busi-
ness owner you don’t ignore the obvious opportuni-
ties that e-commerce has to offer.
While the term “e-commerce” to most people sug-
gests the mere transaction of “buying or selling goods
through the Internet,” the concept of e-commerce for
me is more than that. Simply put, e-commerce is
about using the Internet to do just about everything
for your business faster and better. It is about giving
customers access to information and systems and let-
ting them serve themselves. It is about exchanging
information, buying and selling products, establish-
ing and maintaining an ongoing and dynamic rela-
tionship with your customer, and more. It is the
online equivalent of all forms of communication with
www.rechargermagazine.com • November 2009 • 45
2. Sales & Marketing
It is about exchanging information, buying
and selling products, establishing and
maintaining an ongoing and dynamic
relationship with your customer.
your customer, and the efficiency and competitive- make a big difference. Consider the following (per-
ness it can bring to your company is extremely pow- haps oversimplified) example:
erful … if done correctly. • You have 50 percent profit margin (cost of
The following represent what I consider the main goods/sales price)
building blocks of a successful e-commerce driven • You have 20 percent overhead
company: • Your conversion rate is 4 percent and your aver-
1. Market and Product. age order is $50
2. Pre-sale Marketing (Traffic Generation). Assuming the only other “cost” is your marketing
3. Conversion. cost, what can you afford to pay in marketing costs
4. Post-Sale Marketing (Maintenance). (per visitor) to break even?
5. Infrastructure. If you have a 4 percent conversion rate, that means
The focus of last month’s article was on the first that four out of every 100 (or one in 25) visitors will
two building blocks (Market and Product and Pre- place an order. With an average order value of $50,
sale Marketing). you would have an effective RPA (revenue per one
In this article, I will focus on the next two building visitor) of 60 cents (see below for calculation).
blocks (Conversion and Post-Sale Marketing). What that means is that you can afford to pay up
A final discussion about “Infrastructure” will be to $0.60 in marketing per unique visitor. If the mar-
presented in December ’s Recharger. keting costs you less than $0.60 per visitor, you make
a profit and if it costs you more than $0.60, you lose
Building Block One: Conversion money.
I am defining the “conversion” of a Web site as the Here’s a closer look at the mathematics behind this
number of customers that actually place an order as a analysis:
percentage of unique visitors to that site. Obviously,
conversion rate plays a huge role in the overall suc- Average order = $50
cess or failure of any Web site, but so does the dollar Cost of goods (50 percent of order) = $25
value of the average order. Both conversion rate and Overhead (20 percent of order) = $10
the dollar value of the average order are factored in
to different metric systems that are used to calculate Profit (before marketing) = $15
overall Web site “conversion.”
Third-party affiliate programs such as Commis- Marketing cost (per visitor)
sion Junction, calculate conversion through what is in order to break even = $0.60
termed the “EPC” (earnings per 100 clicks), while
Google Analytics calculates conversion as the “RPA” With 4 percent conversion rate, 1 in 25 visitors
(revenue per acquisition, which is equivalent to the place an order, if you pay $0.60 in marketing
earnings per one click). costs per visitor, that equals $15 in marketing
It doesn’t matter what measurement system you costs per sale (0.60 x 25 = $15)
use, the bottom line is that you want to have a higher
percentage of visitors placing an order, and a higher
average order dollar value. Now let’s change the scenario and assume you can
Even small increments to your conversion rate can achieve a 5 percent conversion rate and an average
46 • November 2009 • www.rechargermagazine.com
3. Sales & Marketing
You want to captivate the customers’
attention as fast as possible, and hone
them in to what is most important for
them to know or see.
order of $60 (keeping profit margin and overhead the Getting quality traffic to your Web site is a very large
same). The RPA now becomes $0.90. discussion topic, and was briefly presented in last
month’s article. However I want to impress on you
Average order = $60 again the importance of delivering quality visitors to
Cost of goods (50 percent of order) = $30 your Web site that are in the “right frame of mind.”
Overhead (20 percent of order) = $12 Quite simply, that means that you need to attract
visitors that are not only interested in the products
Profit (before marketing) = $18 and solutions that you offer, but are also in a “buy-
ing” mode (not just a “research” mode).
Marketing cost (per visitor)
in order to break even = $0.90 2. Web Site Aesthetics/Design. The look and feel of
your Web site goes a long way in making a customer
With 5 percent conversion rate, 1 in 20 visitors “comfortable” in buying from your Web site. Simple
place an order, if you pay $0.90 in marketing is always best. You want to captivate the customers’
costs per visitor, that equals $18 in marketing attention as fast as possible, and hone them in to
costs per sale (0.90 x 20 = $18) what is most important for them to know or see. You
also want to make them comfortable in ordering from
you, by providing them with a professional looking
By increasing the conversion rate from 4 percent to Web site and all the necessary security features such
5 percent and the average order value from $50 to as SSL security certificates, privacy statements, con-
$60, we effectively created an opportunity to afford tact information and more.
paying up to $0.90 in marketing per unique visitor,
whereas in the previous example you could only 3. Product/Solution Offering. As discussed in the
afford to pay up to $0.60. prior article, never underestimate the importance of
So what can you do to increase the conversion rate positioning products as comprehensive solutions. If
(and effectively, the RPA) of your Web site? Conver- you position and market your products as solutions
sion rate is a much larger topic than this article with all the associated benefits, you are already one
allows me to expand upon, but I will touch briefly on step ahead of the competition and have differentiated
some factors that affect conversion rate: your product from a sea of homogeneous products.
And, as much as possible, offer options to your cus-
1. Quality of Traffic tomers. Offer original brand cartridges, remanufac-
2. Web site Aesthetics/Design tured cartridges, refill services, and more depending
3. Product/Solution Offering on your business model. And make sure your cus-
4. Web site navigation (Can your customer find tomer can find all their options in a quick and efficient
what they need quickly and easily?) manner. That brings us to the next factor that affects
5. Cross-sell and Up-sell features your conversion, your Web site’s “navigation.”
1. Quality of Traffic. Conversion starts with targeted 4. Web Site Navigation. Different people will give a
traffic. If you don’t have targeted traffic going to different term to what I am referring to as “naviga-
your Web site, you’re wasting your time (and money). tion.” Some may call navigation your Web site’s
www.rechargermagazine.com • November 2009 • 47
4. Sales & Marketing
Customers often like to have a human
touch, guiding them and assuring them
that they are buying what they need and
getting the best overall value.
“cross reference guide,” or “printer cartridge compati- human touch, guiding them and assuring them that
bility guide” or some other term. Essentially, by “navi- they are buying what they need and getting the best
gation," I am referring to the tools that you offer your overall value. Never underestimate the importance of
customers in order to find the products they need a human touch, no matter how automated or e-com-
quickly and accurately. Basically, how your customer merce centric your company becomes.
will “navigate” to see your product offerings.
In the imaging consumables industry, navigation is Building Block Two: Post-Sale Marketing
an even more critical component and can make a huge (Customer Maintenance)
impact to your conversion rate. You could have the Be sure to stay in front of your customer, even after
exact product the customer wants, at exactly the right they place an order. Don’t think of it as though you are
price, but if that customer does not find that product trying to sell more products to the same customer,
quickly and accurately, they will not order it. think of it more like building and maintaining a rela-
Navigation tools for our industry are very hard to tionship with the customer, more sales will follow.
assemble and/or manage. You need to know all the There are many things you can do to stay in front of the
printer and cartridge models in existence, how they customer in your post-sales marketing and relation-
interrelate, and what specific products work for which ship-building efforts, but a few obvious things you can
specific printer or cartridge models. And that’s just do are:
part of it; you also need to stay abreast with new • Include offers with your orders.
printer and cartridge model releases, and we all know • Manage an effective and spam free e-mail mar-
by now that this is happening at a faster pace than ever keting campaign (offer coupons, information, product
before. Consider also that many aftermarket manufac- updates and more).
turers and remanufacturers make products with differ- • Call your customers.
ent compatibilities (consider for example a universal Customers appreciate the follow up. A simple call
cartridge or chip versus a cartridge specific model), to your customers to ensure that they received their
your “navigation” tool could become extremely over- order and that everything is working fine goes a long
whelming. way in retaining trust and continued relationships.
That effort also becomes an opportunity to get to know
5. Cross-sell and Up-sell Features. Every second that your customers a little better; perhaps they have more
your customer is on your Web site, and every page they printers, other locations, or other ways that you can
visit, is an opportunity to sell them on what you have help them (and thereby of course also increase your
to offer. Take advantage of multiple cross-sell and up- sales and customer retention).
sell opportunities, such as “free shipping” prompts at A more detailed analysis on e-commerce infrastruc-
checkout (example: display an automated message that ture will be presented in the third part of this series of
reminds the customer that if they “spend another $20 articles in Recharger ’s December 2009 issue. R
they qualify for free shipping," etc). Another way to
cross-sell is to get the customer on the phone. In my
experience, with a trained phone sales rep, you will get Contact Dr. Dimitris Constantinou at
a higher order value per order over the phone than dimitris@easygroup.us.
through the Web site. Customers often like to have a
48 • November 2009 • www.rechargermagazine.com