Hot topic

 

Small fish in a big pond

 

by Heike Dieckmann

 

The potential is huge, but have independent dealers got what it takes to benefit from the sales opportunities of the internet? OPI finds out

 

The internet is big business – no surprises there. According to German market research firm ystats.com and its 2009 global e-commerce B2C league table, Amazon’s annual revenues of approximately $20 billion ($24.5 billion for FY 2009) total those of its nearest three online rivals combined.

 

And while that’s staggering in itself, the fact that the three follow-ups are all involved in OP – Germany’s OTTO Group (comprising OTTO Office), Staples and Office Depot – is testament to the huge potential of selling office products online.

 

Are independent dealers getting a fair share of that enormous cake? According to George Adams, CEO of Spicers, less than 20 percent of its dealers across Europe have a fully-fledged web store. As far as pureplay online players are concerned, Adams estimates that there are fewer than 20 individual dealers per country it operates in.

 

In the US, SP Richards’ (SPR) Director of Marketing Information, Paul Gatens, estimates that there are fewer than 20 independent dealers that have a comprehensive B2B as well as B2C online presence. This number increases to about 50-60 when it comes to pure online B2C dealers.

 

These numbers – admittedly just random estimates – stand in stark contrast to the spiralling e-commerce figures of the big boxes. Are dealers making the most of the potential out there?

 

They certainly should, says Ron Books, President of US technology and system provider ECi: "It’s not really about what the dealers want or what ECi wants, it is about what the end consumer wants. The end consumer wants to order online, have self-service functionality and the ability to access the information they want when their schedule permits."

 

He admits that smaller resellers are often limited by resources to champion an aggressive e-commerce strategy. That said, and as Books well knows, technology is no longer just at the disposal of the big boxes. While pricing and fee structures cause ongoing disputes, the general consensus is that every independent dealer should be able to afford a technology package that will give them the basics in EDI, ERP and a whole variety of front- and back-end solutions – with the help of system providers like ECi, Red Cheetah, Thalerus, AOS Ware etc, their wholesaler and even their dealer group.

 

And the ROI – although often long-term – is not to be dismissed. As online strategies have evolved from offering customers simple ordering tools to other functionalities such as viewing order histories and invoices, paying online, creating personal shopping lists and preferences, it is saving dealers and their employees time that allows them to focus on other core parts of the business.

 

In reality, however, while plenty of dealers offer online solutions that manage specific customers through password-protected sites, few have an online presence that could be called comprehensive web stores, competing with the likes of Staples, Depot, Shoplet or Euroffice in the B2B, SOHO and B2C markets.

 

But perhaps that needn’t be the ultimate aim. As Mark Austen from UK dealer group Office Club says, "there are many ways to skin a cat". He believes that it is definitely feasible for a small dealer to trade successfully online. It’s just a question of approach. The likes of Viking blast out lots of shots, metaphorically speaking, hoping to hit something. Dealers have to take the rifle approach, aim carefully and target where they believe they can hit something.

 

"In my experience, there are relatively few dealers that truly sell online in anything other than a specific niche," says Austen. "You might find a number of specialist pen websites run by independent dealers or one focusing just on shredders. Another dealer we have employs someone who is financially incentivised to sell certain items from its range, mainly on Amazon and eBay, at a competitive but profitable price."

 

Operating through marketplaces and auction sites like Amazon or eBay has the advantage that traditional dealers which view the internet as a ‘nice to have’ sideline and don’t want to spend too much energy and money on it don’t have to concern themselves too much with Google rankings and search engine optimisation (see SEO tips, page 22).

 

This is where particularly small dealers – below $5 million in sales typically – often lose the battle with the big boys. They have a website, yes, and encourage online ordering, but they haven’t got the budget or indeed the expertise to drive traffic to their site. The costs associated with a comprehensive eMarketing plan can be prohibitive for them and their business models. A Staples.com spends tens of thousands of dollars a week on web marketing alone.

 

And despite the technology support of the industry’s system providers, websites powered by the likes of ECi and Red Cheetah are not search engine optimised and as such do not score highly – if at all – on search engine rankings. They are structured in such a way that they look like mirror sites to search engines like Google and as such get discounted and not indexed.

 

Says SPR’s Gatens: "If you’re on an ECi active site, for example, to Google’s web crawlers, every website looks the same and they just view them as a bunch of copies of each other and don’t count them. So dealers with such sites really can’t get themselves to come up high on a search for office supplies because Google doesn’t like the way these sites are structured."

 

Red Cheetah’s CEO Steve Kahle admits that there are aspects of these systems that are not search engine friendly, partly because so much content is hidden behind a customer login (which Google doesn’t like). This is done by technology providers in cooperation with their dealers, because they often want to create a very customer-specific experience with individualised content for clients.

 

Also, he adds, while some of his dealers are having success with focusing on SEO and paid search initiatives within a narrow slice of their range, like specific toner SKUs, it’s marginal business. "The brutal facts of our dealers’ reality is how the superstores tend to dominate both organic SEO and paid search initiatives. If I were a dealer I would focus on building and maintaining loyal B2B relationships rather than trying to compete directly with the superstore sites. "

 

All that said, Kahle and his team are acknowledging the importance of Google rankings and visibility and are due to roll out Outpost, the first part of its Savanna suite, at the end of this year. It will create a more open site for dealers and, says Kahle, be capable to rival the offering of the superstores.

 

ECi’s Books is equally realistic about the opportunities that exist for web marketing and SEO and is looking for partners with expertise in this area. He says: "We are creating tools like integrated eMarketing so that dealers have the ability to expand this area of their business. We are currently looking for approved vendors that have SEO and email marketing as their focus and who can help dealers use these tools."

 

The only software provider that provides a website that is formatted in a way that currently allows search engine optimisation (SEO) is AOS Ware.

 

For Jennifer Stine Schulman, VP of Strategic Marketing at AOS Ware and owner of its sister company Fortune Web Marketing, it’s all about finding your company and brand on the web. And that needn’t necessarily be very expensive. In real terms, that means finding it on the first page of a Google search.

 

She says: "Having key words in the domain name gives you an immediate jump on organic rankings. I’m not saying you can’t have a successful website without having keywords in the domain name – Shoplet doesn’t – but it gives you a head start. If you’re in the printer cartridge market, for example, printercartridge.com is a great domain name to have, because you’ve got exactly what you’re selling in your web address."

 

But while the choice of domain name and a comprensive pay-per-click (PPC) campaign are important ways to drive traffic to a website, Stine Schulman urges dealers to have an all-round marketing plan.

 

"I truly believe that in order to make any online business successful you have to have a good marketing mix. You can’t just say, ‘I’m just going to focus on my effort organically’ or ‘I’m going to focus on PPC’. Every business succeeds because it has great strategies that contain a mix of marketing mediums within their marketing plan.

 

"So the majority of your marketing budget is probably going to be spent online, whether it be PPC, SEO, social media, email marketing or what have you, but you still need catalogues, you still need advertisements, you still need flyers."

 

Dr Benedikt Erdmann from German dealer group Soennecken agrees entirely with these sentiments. While the total German e-commerce market was estimated to be in the region of N17.5 billion in April by statistics bureaus EHI and Statista, 36 percent of that figure are accounted for by large pureplay online operators. A further 33 percent goes to mail order companies.

 

There’s plenty left for the little player, including those in OP, but it’s a tough market, Dr Erdmann says. "The German online market in the paper, office supplies and stationery sector has very intensive competition and it’s not easy to score points against the global players. It is possible, however, in small, clearly defined regional areas to run successful campaigns and be even more successful than the large internet mail order companies."

 

Web-based marketing efforts – like SEO or search engine marketing, for example – are very expensive, however, he adds, and not available to every dealer. "That said, Soennecken’s specialist independent retailers are increasingly relying on web shops, but even if their web presentation is good, that is not enough by any means."

 

Jeff Kressmann from United Stationers Marketing points out that the dealer’s specific customer focus has a bearing on the importance of its web marketing strategy.

 

He says: "Many resellers today focus primarily on B2B and for them employing email campaigns and driving order size may be more important than their ranking on Google. Defining your target audience is the first step, and sometimes it’s better NOT to be all things to all people.

 

"Unless the dealer is actively pursuing and targeting customers beyond their local selling area, visibility on search engines may not be the optimal selling solution."

 

Having a well established and recognised brand always gives resellers a boost, be that on- or offline. Enter Mark Baccash and his global Office 1 brand. Up until recently, Office 1 has been very much a bricks-and-mortar operator, mostly in the B2B space, but Baccash’s latest venture is transporting the company’s franchising concept online.

 

The first fully implemented Office 1 branded website will be launched in the UK, likely in early summer, followed swiftly by France and later on this year in Ireland and Italy (there have been ‘soft’ launches in Ireland and Italy already, but with existing dealer websites and software).

 

Baccash refers to web shops defined as an individual having access to a logistics supplier’s web platform (or its very own platform backed by third party logistics) to sell independently as the penultimate evolution of the stockless concept.

 

But, he adds, the challenge is to have a well known brand name that raises a dealer above the competition. "While…a website will help empower individual entrepreneurs and faciliate market entry here and there, it will not measurably alter the playing field and help new entrants scale the formidable obstacles presented by existing bricks, large advertising budgets and established brand names."

 

Baccash is hoping that the solution to this is Office 1 web franchising, where individuals can benefit from the backing of a logistics supplier, a common web platform and an umbrella brand name.

 

The missing ingredient for now are partners willing to invest in the venture. Baccash is actively seeking JV partners in the US and some European markets to help implement the programme.

 

The idea of web franchising is currently being tested in a different guise by Spicers in France through some of its Calipage-branded stationery retailers. Several retailers have taken the Calipage bricks-and-mortar franchising concept and moved it online, effectively operating a B2C Calipage-branded web store, run by Spicers on the retailer’s behalf.

 

Much is being done by the wholesalers and dealer groups in western markets, all of which helps their dealer customers become a bigger fish in the big web pond.

 

The Supermarket Online, the brain child of UK dealer group Superstat, is bringing some of its dealers together under one big web umbrella, with the premise that they are assigned specific geographic regions where they can service a given number of customers.

 

While the venture, headed by Managing Director Chris Collinson (see April OPI, page 18) has ambitious – some might say unrealistic – plans in terms of projected revenues, the concept plays on the dealers strengths of service, locality and a personal touch.

 

Challenges abound, including the not unimportant factor that regions vary widely in terms of population figures.

 

The project also requires a lot of trust by dealers in their group to essentially market their business online (they pay a fee for the privilege). And, as not all dealers are part of Supermarket Online, Superstat is acutely aware of needing to manage the venture sensitively and without spending too many resources on just this part of its business.

 

One project that stands out as very much against the interest of dealers is Vasanta Group’s controversial Caboodle business, the online store that appears to still be operating.

 

Former Group CEO Richard Martin was very bullish about the legitimate existence of Caboodle, despite the fact that the business competes head on with VOW’s wholesale customers – its dealers. And while Caboodle, at last year’s figures, ‘only’ generates about £1 million a year, it’s a sum many dealers would dearly like to have a share of.

 

Vasanta Group’s new interim CEO Alan Barclay was unavailable for comment when contacted by OPI on the state of Caboodle’s business or indeed the challenges that dealers face in establishing a coherent online strategy and presence.

 

The last word goes to ECi’s Books who believes the core principles of dealers succeeding on the web are education and focus. "Dealers have to learn about e-commerce, understand their website’s functionality and be able to communicate that value to their customers. The most critical point to get right, however, is a top down approach.

 

"Company leaders are the ones who need to drive this behaviour. We have many dealers that are doing over $1 million a month through the internet and all of them have the common thread that e-commerce is being championed from the top.

 

"They incentivise their employees – especially sales reps – to push their customers to the internet. It’s a proactive approach requires evaluating and driving change to all parts of your business: marketing, support, sales, compensation, accounts payables."

 

The secret of SEO: Top 10 Tips

 

To be a serious contender for a web-based business of any kind, search engine optimisation (SEO) is key. SEO, quite simply, involves designing your website to improve its ranking in organic search results on search engine results pages (SERPs). And by optimising for terms that your target audience will use to search, you will drive relevant traffic to your site that has a better chance of generating a sale.

 

The likes of Staples, Office Depot, Shoplet and Euroffice in our industry – not to mention the world’s largest online shop Amazon – spend millions of dollars on their e-commerce businesses, SEO and indeed search engine marketing (SEM).

 

Independent office products dealers haven’t got the budget or indeed with limited staff the time or expertise to compete with the big boys. Basic website SEO, however, needn’t cost a fortune and the key concepts are fairly straightforward: Relevance, discoverability, and ‘crawlability’.

 

Relevance means keeping to a topic and helping the search engine understand what your site is about. Discoverability means telling the world about your site. The technical details and environment may have changed, but search marketing is still just that – marketing.

 

Finally, crawlability means making the site accessible. Search engines regularly send out automated programs called web crawlers, and it’s these crawlers that will visit your site and try to understand your content. Help the search engine crawlers find every page on your site and make sure they can understand what they’re seeing.

 

1. Keyword research is the first step in SEO. Take the time to figure out what words are used by the people you want to visit your site, and then use these words on the relevant page. In particular, make sure you use these keywords in the first few words of your page title because this is the most important bit of the page from a search engine’s perspective.

 

2. Get trustworthy advice from SEO sources on the web. Not everyone knows as much as they say they do online and far too often SEO forums are full of bad advice, so choose your sources well.

 

3. Look after your code. This means building a website that is easy for the search engines to understand. Your website should make use of up-to-date technologies like Cascading Style Sheets (CSS) to minimize the amount of formatting in the HTML page code.

 

4. Make navigation easy. You can do this by building clear text links to all parts of your site. Search engines can’t follow image links or clever animated links like Flash; they like their navigation plain and simple – as do many users.

 

5. Get links from trusted, relevant sources. Links are like a vote for your site and you can’t rank well without them. Unfortunately, buying links or being indiscriminate in the places you link to and places you request links from is no longer a good way to raise the importance of your site; think quality, not quantity. Links must be relevant to the content of your site and they must be from reputable websites.

 

6. Build a sitemap page. Building a sitemap helps search engines discover every page in your website. The best sitemaps list the pages in your site along with brief keyword-rich descriptions of the page. If you have too many pages on your site, create as many sitemaps as you need and make sure they’re linked together.

 

7. Don’t forget the technical stuff. There is a lot happening technically in the background that can cause problems with the way the search engines see your site. For example, if you use a cheap web hosting company, you might be bundled on to the same web server as a site that Google really doesn’t like – guilt by association. Also, does your website use techniques that search engines don’t like, like certain types of redirection? If in doubt, ask your web design company.

 

8. Track your progress with a web analytics program. There are lots of options to use; Google Analytics in particular is easy to use, versatile, and it’s free. Web analytics can tell you much about how people interact with your site and how much traffic the search engines are sending you.

 

9. Tell search engines where you are. You can do this by submitting your site details to search engines. This doesn’t guarantee a better position in the results, but it certainly helps. Google, Yahoo, and Microsoft all have a facility to submit a list of all the pages in your site.

 

10. Remember that content is king. Building great content and keeping it up to date is the key to SEO. Search engines love sites like blogs, which are highly topical and regularly refreshed. But always remember to put your visitors first. At the end of the day, even a site that ranks well and gets lots of traffic is no good if the visitors don’t like what they see and – most importantly – buy.

 

Top 10 Tips from www.searchengineland.com