The recent decision byUSdealer group TriMega to acquire e-commerce site SmartXpress appears to bear more than a passing resemblance to the SupermarketOnline initiative launched byUKgroup Superstat about a year ago.
opi.netspoke toChrisArmstrong, Commercial Director of TheSupermarketOnline.com, to find out how the business has developed since the site went live at the end of February 2010.
The rationale behind Supermarket was to give Superstat and Praxis members access to internet browsers, a fast growing area of the market dominated by a handful of big players and specialist suppliers such as Euroffice and UK Office Direct.
Armstrong points to the fact that office products dealers in the UK have difficulty accessing this market as they need the skills, time and money to rank at the top of Google for the important search terms. The Supermarket model is based around a group of Regional Partners who contribute "a manageable amount" to a central marketing fund to stimulate orders across the UK.
This, it would appear, is very similar to the SmartXpress model which is using the effect of mass to aggregate marketing spend to promote a single site, as opposed to dealers’ individual e-commerce sites.
Armstrong says that while a keen eye is kept on price, the main driver for sales is actually being found by potential customers in the first place, primarily via the Google search engine.
"We’d already created and tested the websites so that they had ‘aged’ on Google and we were confident that all our systems worked properly when we officially went live," he said.
"Once the dealers’ contracts had been finalised and signed it was a case of following through the activities in our marketing plan, which was primarily pushing the pay-per-click campaign (PPC) button and starting to send email marketing while constantly adding new content to the websites."
While PPC is successful in driving immediate traffic and sales to the SupermarketOnline sites, Armstrong admits that one of the most important lessons learned during the first six months is that PPC should be used as a short-term, initial strategy in order to manage costs properly.
As he explains: "When we turn PPC on we immediately see site traffic and sales, which is great, but as soon as you stop spending the site traffic and sales subside. Consequently, we’ve transferred our primary focus to organic activity. This takes longer to develop but provides a longer-term benefit."
Armstrong says that current PPC activity is "much more focused" in order to provide a better return on investment.
SupermarketOnline’s organic search engine optimisation (SEO) strategy is obviously working. A search for "cheap office supplies" on Google UK prior to speaking with Armstrong saw the site right at the top of the non-paid rankings.
While Armstrong was understandably reluctant to reveal the secrets to the site’s organic SEO success, he highlighted a number of key areas such as: continual updates to the site with accurate and relevant content; links from other relevant sites into the SupermarketOnline site; promotions with vendor partners; and making the most of Google tools such as Google Places.
"Over the last four months we’ve seen a 165% increase in organic traffic to our websites and a 100% increase in direct traffic as customers are increasingly aware of the brand name," he says.
Armstrong adds that sales have been increasing fairly consistently since the site was launched and are currently growing at 12% month-on-month, with the current run-rate close to the £1 million ($1.6 million) mark.
One major difference between the SupermarketOnline model and TriMega’s SmartXpress proposal is that in the UK the dealers are responsible for the ‘last mile’ of delivery, essentially ruling out stockless dealers who rely solely on third-party carriers.
This was done partly as the dealer itself provides a better level of customer service and also to reduce delivery costs, but mainly in order to give dealers the opportunity of adding new business accounts.
"What the programme has done on numerous occasions is provide dealers the all-important ‘in’ to large corporations or public entities such as universities who they have been prospecting for years to no avail," states Armstrong. "Obviously taking an order into the buyer personally helps to open these difficult-to-crack accounts."
Interestingly, Armstrong also says that the site has played a kind of CRM role in a number of cases, helping dealers to identify existing customers who they thought were loyal, but who in fact browse the internet and buy specialist items.
"This gives the dealer the chance to go back to customers and really brief them on the full range of products and services they offer," he notes.
Another eye-opener about the internet browser market has been its widespread use amongst different user groups, from individuals to blue-chip companies.
About 30% of all orders so far have been to private addresses, not necessarily a target customer, says Armstrong, although a growing number of substantial-sized business are being run from people’s homes. Even so, average order size is so far around £71, not far short of the initial target of £80.
The growing popularity of corporate purchasing cards at large firms or government departments is another factor in the growth of the browser business, notes Armstrong, as workers employ internet search techniques used at home in a workplace context.
"At the end of the day, you can’t govern who is going to find you with the browser business," he says.
After initially launching theofficesuppliessupermarket.com website in February, two further niche sites for safes and shredders were launched in 2010. Looking ahead, the goal is to roll out a further five niche sites (for categories such as furniture and printer ink) by the end of 2011, approximately one every two months.
Other immediate plans include tapping into the strength of Amazon and developing an Amazon Marketplace offering. Armstrong also says that he is currently weighing up the possibility of having some kind of presence on eBay.
With the first anniversary of the official launch of SupermarketOnline about a month away, Armstrong admits that some Regional Partners have decided to leave the programme, but does not appear to be unduly concerned by this.
"We knew that there was bound to be some turnover with our partners," he states. "What this does mean is that there is now an excellent opportunity for dealers to buy into attractive territories with the additional benefit that the programme has been up and running for a year."
Looking across the Atlantic at TriMega’s recent move, Armstrong comments: "There do seem to be a lot of similarities between our business and their plans.
"It seems that the intention of TriMega is to target very small businesses and domestic users. However, I think they’ll find a surprising number of decent size businesses also find the website organically, and this will be a useful way for local dealers to identify and address leakage from their existing customers."