What Cyber Monday Looks Like for a Mid-Tier Retailer

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 |  Includes: AMZN, EBAY, WMT
by: Scot Wingo

At ChannelAdvisor we have over 3000 customers that are all involved in internet retailing. We generally put them into categories that are pre-defined by Forrester research:

  • Enterprise - Usually name-brands that are primarily click and mortar companies, but some pure plays. They are usually doing $100m online GMV annually.
  • Mid-tier (or midsize) - Some name brands are in here, but mostly these are interesting niche companies and up and comers that are too big to be called small, but too small to be called Enterprise. Their sales are in the $10-100m range.
  • SMB (small business, small/medium business) - With sales < $10m this group may seem insignificant, but in our experience a lot of SMBs become mid-tier and many mid-tier become enterprise. So in the world of e-commerce you can't just dismiss someone because of size - they could be the next eBags or CafePress or Zappos. All of those companies started as SMBs and matriculated up the tiers to the top.

Interacting with companies across this broad spectrum is one of the most fun aspects of what we do at ChannelAdvisor. We literally will be on the phone with Wal-mart (NYSE:WMT) one minute and then talking to a mid-tier retailer about strategies to diversify their channels and then talk to Joe the sporting goods SMB person that wants to hone their eBay-only strategy.

I mention all of this because there are lots of stories out there about the Enterprise players, but unfortunately the mid-tier and SMB online players don't get coverage. There are occasional local news pieces and Internet Retailer tends to dip down into the mid-tier, but the mainline press on e-commerce is usually all about Amazon (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Walmart.com, etc.

There was a great piece in the NY Times Wednesday that was more of a how-to that featured one of our mid-tier customers, Sophiasstyle.

In an effort to shine a bit of a spot light on what it's like in the mid-tier, I thought this was an interesting picture-inspired story to share.

Cyber Monday at a mid-tier e-commerce company

We have a customer, beadaholique, that is in the bead/craft/DIY space. Their story is interesting, but not unique at all - we literally have hundreds of customers that have followed this roadmap which makes them a great case study of how an eBay-focused SMB can become a multi-channel mid-tier player very quickly.

Here's the inspiration for this post - check out this picture taken at Beadaholique on Tuesday morning right after Cyber Monday.

Beadaholique-orders_cybermonday_09

You can make out 4-5 people rushing around and see a bit of their storage bins in the back. The subject of this photo though is that stack of paper there in the foreground. That is their Cyber Monday orders printed out to go in the shipments and to help with pulling/pick/pack/ship. That's one order per page and it took them 7, yes 7!, reams of paper to print out the orders. This is Beadaholique's biggest day ever by a long shot and sets them up for not only a killer holiday, but all of the customers they have acquired will give them the ability to really crush it in 2010.

How did Beadaholique get here?

For all of the readers out there with e-commerce aspirations, you don't just open up shop online and get 7 reams of invoices on Cyber Monday... It takes a lot of time, patience and strategy to get there.

Beadaholique started from $0 on eBay and found a ready-made audience for their products. They used eBay to really understand the bead niche - what products are buyers looking for, what are the best sources, what are the best prices and how do you build the back end to support > $100k/m sales. How do you list and manage 10-20k SKUs? Once they got their business ramped up on eBay they realized they needed to diversify to decrease risk in their business and also get to the next level.

They then expanded to Amazon and those sales ramped up quickly. Finally, they really spread their wings and opened up their own e-commerce site where they leverage search and comparison shopping. The e-commerce site gives them a platform to offer items to their long-standing customers and they are very active with email marketing as well. Finally, they've recently launched on Buy.com - completing what we call the marketplaces hat trick!

Are you diversified?

One of the coolest things about their business now is the level of diversification. Beadaholique has nailed the diversification game. Jim Cramer has a segment on his show called 'Are you Diversified' - obviously from the stock market standpoint. I've always thought it would be interesting/fun to do this for retailers. Every day we run into online retailers who are 100% eBay or 100% Amazon or 100% search. Then they hit a rough spot on that channel and it can easily cause a serious problem. Also when you are well diversified a plethora of strategies open up across your business that help with scale.

Beadaholique was nice enough to allow me to show you some graphs from their account that I thought you would find interesting. Here we see at a high level that they have a healthy 45% e-commerce, 55% marketplace split:

Bead_chart1

Drilling into the marketplace side here, you can see further diversification (the store is the same with search/cse):

Bead_chart3

Here you can see Amazon at 52%, eBay at 47%, and Buy.com at 1%.

Those charts are a 30 day diversification view. Here you can see the time series of sales as well as diversification:

Bead_chart2

In this chart, the red is their e-commerce site, the next two bars are eBay FP30 and auction and the bottom bar is Amazon. This is a great chart as you can see the power of diversification right there. If they were eBay only or Amazon only or e-commerce only, they wouldn't have had nearly the impact of having all of the channels hitting on all cylinders.

Conclusion

There you have an in-depth view of not only what it's like for a successful mid-tier internet retailer on Cyber Monday, but also a bit of the back story on how they got there and how diversification has played a key role. eBay Strategies readers - tell us your Cyber Monday stories in comments, send us your pictures and definitely think about your diversification strategy!

Disclosure: I am long Google and Amazon. eBay is an investor in ChannelAdvisor where I am CEO.