Jigantus.com

In an earlier post, I mentioned I got a call from an EBay representative that was trying to help us to raise our sales. One recommendation was that we offer FREE shipping on our listings.

As a background, in one of my e-commerce businesses, we are a Powerseller with over 8500 sales done over a period of about 1 1/2 years. We list limited products and don’t really try. EBay was and is a place where we wanted to learn about this market and see if we could make a buck.

In the beginning, we experimented with Free shipping. This would result in us pricing the units higher to include our shipping costs. Then we tried pricing our units lower with shipping as an additional cost.

We found the latter to be more effective. I think this worked well because the price appeared to be lower, and most customers know shipping is a real cost and agreed to buy. Perhaps we came up higher in a sort by price as well resulting in more traffic. Whatever the main reason is, we got more sales by not offering free shipping and charging on the side.

The EBay representative told us that FREE shipping would generate more sales, that one of the most popular search terms was “Free shipping”. EBay is also offering a discount for sellers offering free shipping until Christmas. This would help reduce our fees, as EBay takes fees on the sale price, not the shipping cost. By pricing the unit higher and including shipping, EBay would generate more fees when the discount ended.

So we changed some of our listings to include free shipping and actually lowered the overall take on the revenue to make the pricing sound attractive (we originally were taking in $51.99. With free shipping we charged $49.99).

On another less active listing, we got only 25% of the average sales by offering free shipping while still lowering the overall price. 

Our final result is about the same, not more sales, a bit less actually. So we are doing worse then before.

Don’t get me wrong, I believe customers like free shipping, but as long as you state your ship rates up front, they will be ok with it. In most check out systems that don’t include free shipping, the buyer has to go thru the check out process to find out. Right there, you loose buyers as the process gets longer. Buyers don’t like to do extra work and sometimes sellers charge inflated shipping prices to make up for the lower priced item, so buyers loose trust.

Seeing a set price that includes free shipping takes the guess work out of it.

With the poor result,  I think Ebay is making a grab for more revenue at the expense of merchants. Get sellers used to free shipping and after Christmas take the discount away and make more money overall reducing the sellers take.

According to comScore, eBay had 70.7 million unique U.S. visitors in October, down 11 percent from the year before. EBay is on the decline and is looking for ways to get back their lost revenue but, if you are going to run any good business, you have to make it work for everyone. In our case, their recommendations appear one sided.

When we launch our site, our goal at Jigantus is to make it a win win proposition for everyone.

Jigantus recently applied for and got accepted to a mentorship program that will provide feedback on the investor pitch. The panel will consist of up to 6 people including VC’s, Angels and other industry experts. Only 1 company per month is accepted into this program so we are eager and appreciative of the opportunity.

This is a great chance to improve our business and get known.

It happens January 15, 2009, we’ll let you know how it goes

On Nov 20th, 2008 Google launched a new “wiki” type feature that allows users to mark up Google search results, meaning the results you get from a Google search can be personalized by the user by allowing them to delete, raise or lower listings. This feature apparently is for users own results and does not affect anyone else.

http://googleblog.blogspot.com/2008/11/searchwiki-make-search-your-own.html

Google is already an excellent search engine and playing with it risks turning off some users. At first glance, it would seem to add confusion to users, sometimes simple is better.

I would also question the use it would be to individuals. Why would one re-rank their own results for a search term they may not search for again?

I see people on message boards begging for this feature to be removed, so it has stirred up some controversy, but any new change usually does and especially amongst a user base as vast as Google’s.

What likely is happening, is that Google is using this NOT just for individiual users, but is being used as a data point on their organic listings. I watched the Techcrunch50 conference, and in it, a representative from Google stated that 90% of search has been done to date, the remaining 10% was to be done by humans.

This makes sense to me, computers can only give you so much, the remaining 10% needs to be fine tuned by people. I believe this is Google’s way of getting this done. Perhaps they will learn what they need to know, then turn it off? Either way, it can only make their already great results, better.

At the same conference, a VC who used to work at Altavista, when they were a top engine at the time, indicated that they had a chance to invest in Google when they were starting up. He mentioned that they thought they didn’t need to, that they had the market and that they could not be displaced. His point was, you always need to look over your shoulder and improve what you have, so somebody else doesn’t come along and take it away from you.

I think this is another example of how Google is keeping itself on top. From what I have seen. Google has done some brilliant things, and have many more pieces of the puzzle coming along. This is another.

I have to take this as a lesson for Jigantus. Never stop resting, always improve, keep new things coming and don’t be afraid to innovate and somehow find a way to be better then Google

I recently got a call from an EBay representative. They were trying to help Power sellers grow sales by offering a few best practices. The person who called me had been at EBay for 7 years and told me that the most changes have been in the last year under the new CEO.

As a background, I have been an EBay member since 2002. Buying and selling a few items here and there. I have to admit, is was a fun process,  winning auctions was exhilarating. Selling things that I didn’t really need was also useful.

For the most  part, I’ve had good experiences. Except my wife did purchase a fake hand bag from a seller who had good feedback scores. That seller delisted themselves shortly after we made our purchase.

A few years later I started selling product on EBay and acheived Platinum Power Seller status. EBay was not somewhere we were trying very hard at, but wanted to learn the EBay market and happened to do well. However, in selling at EBay, we noticed many counterfeit sellers selling product for low prices. As an authorized seller for our brands, we know what legitimate product is.

Despite reports submitted about these sellers, EBay continues to allow these sellers to operate and dupe buyers. This can’t leave a good impression for buyers. Buyers are precious to any business and must be given the best experience, this is not happening at EBay. This has been going on for years and I think is part of the reason for EBay’s decline. I wonder if EBay looks the other way as they continue to generate fees from these sellers, while buyers think they are getting a great deal.

Buyers not only get a poor taste but legitimate sellers do too. Even with sharply priced items,  we still can’t beat counterfeit sellers. This forces us and others to lower our prices to compete, unfairly,  thus reducing our margins and profit. It is barely worthwhile to sell there anymore.

EBay’s fees coupled with their other company Paypal are also high, further reducing margins. If you look on the Power Seller discussion boards, there is no shortage of people griping about this.

The new CEO has made many changes, including feedback rules and pricing, and I can see what he is trying to do. In my opinion, things have just been rearranged with a focus on driving buyers, not in favor of sellers. If sellers don’t get a favorable environment, they will find elsewhere to go.

Apparently many sellers have left EBay, reducing selection and appeal to buyers.  Our sales have dropped over the last year 3 to 1. I mentioned this to the representative who called me, who pointed to the economy, but our sales outside EBay are growing so this doesn’t make sense to me. I see Craigslist and Amazon taking away much of their business.

EBay is still a great place offering hard to find items but has many problems to overcome. With the changes so far, I just don’t see this happening. EBay is on the decline and is in the fight for it’s life.

Google , who owns YouTube, just announced that they are allowing people, companies basically anyone to create Sponsored Video Listings based on their standard CPC format.

http://googleblog.blogspot.com/2008/11/promote-your-video-with-youtube.html

In an effort to monetize the site, they have decided to implement this feature, after all, it is what they know. I think it is a smart move and will become a great source of revenue for them.

One of the tricks will be to properly screen the videos, with text advertising on their Google site, this can be done, including an evaluation of the landing page the ads link too. But how do you screen a video? Can inappropriate videos be created and posted?

What about search relevancy? When an advertiser bids for terms, how do they insure that the key word matches what is actually in the video?

Google must have thought this through and have a plan, but I still would be interested to see how this actually works out. If they can’t serve relevant content, then they are going to upset some searchers, especially ones that get tricked into clicking on something they really didn’t want to see.

It will take awhile to smooth out the kinks, but Google never stops innovating, they have deep pockets and can hire the most talented people. I like the way Google is starting to tie their offerings together and anything they do, they do well. Will anyone stop Google?

Jigantus.com hope’s to.

I recently saw a slide of Amazon.com’s performance as presented by Mary Meeker from Morgan Stanley at a recent Web 2.0 conference.  It shows how strong they have become at the expense of competitors like EBay. You can see by the chart below that they have grown at a much faster pace then the e-commerce retail industry sales by far. In fact, even as growth declines, Amazon.com continues to show increases.

Amazon Metrics

Amazon originally started out as a discount book seller, selling a HUGE selection of books at great prices and service. I recall ordering a book from them when they first started. This first order turned out to be a  miss shipment. When I called customer service, they were prompt, courteous and replaced the book and allowed me to keep the first book for the “trouble”.

With sharp prices and this type of service, customers will continue to come back. In my other e-commerce business, they are fierce competitors. We could beat their prices, but because of high ad costs, we don’t normally list prices lower.

Amazon doesn’t make much margin, but they get repeat business because people trust the brand. Amazon makes this up with large volumes.

If they have a weakness, it is their large product line. Their customer service representatives lack expertise in many of the products they sell. This is where I can see niche companies with competitive prices and product specific knowledge gain traction. Companies that try to spread themselves too thin experience mistakes when recommending product selections resulting in a higher percentage of returns and unhappy customers.

My other e-commerce business has had success in this regard.  Offering competitive prices with knowledgeable service, we have managed to become top sellers in our space in a short period of time. Even though Amazon might list better prices, we enjoy reasonable sales because we are specialized.

E-commerce is a tough game with fierce competition. To stay alive you have to offer competitive prices, great service and have the knowledge to back it up. Beating Amazon head on would be a tough game, but carving out a niche specialty might be the foot in the door.

I see weekly the progress we are making. The development of Algorithm’s to do what we need to do are coming along nicely, although we continue to tweak. 

This system will be the heart of our site and is game changing. It will be bigger, better then anything before us.

Around that system, add another game changing Ad system, and I think we have a winning formula. Trick is, to get people to notice once it’s up. Anyone reading this Blog can help. Pass the link along, and when it’s time to show you something, you’ll be the first.

Our target for Prototype development is Jan 09.

Also on our development, we met with representatives from the NRC and the SRED program, who tell us that we should fit into their programs. This will help our cash flow along and get us further down the line before we need to take outside money.

Email me at rjh@jigantus.com if you want to get on our list when we’re ready to test.

I recently read a book from Randy Pausch who was famous for writing “The Last Lecture”. If you haven’t heard about him, he was a Professor at Carnagie Mellon who died of cancer. Before he did, he gave a last lecture about “Really Achieving Your Childhood Dreams”. (Video link below).

It talks about life and his take on how you approach it. It has some good points, I would actually recommend watching the video as it has most of what the book has. It is over 1 hour long but is entertaining, insightful and worth it.

I have taken a few pointers from it, and one that I found interesting was to “Play Without The Ball”. Randy was a football player whose coach told him to “play without the ball”, meaning, there is only one ball, not everyone can have it, learn to play your game and things will happen. I have used this myself to great success, you just have to have patience and discipline. Sometimes you won’t even see the results, you just know it’s there.

Recently, Google killed the deal to present their ads on Yahoo’s network. They were trying to get approvals first to eliminate Yahoo’s Search Marketing and take all PPC ads. There were competition issues, so they adjusted it to a limited percentage of their ad service and were in the process of trying to get through regulators.

In a email from Yahoo regarding the failed deal from Hilary Schneider Executive Vice President, Yahoo! U.S. :

“As you know, Yahoo! has long focused on how to improve the user, advertiser and publisher experience. We will continue to enable you to easily connect with the consumers you most want to reach, by creating a more open, efficient and effective marketplace for advertisers and publishers. We also plan to continue to provide the cutting-edge advances in products, platforms and services that the industry needs and expects, by leading the way in helping advertisers navigate the converging contextual and search ad markets. Finally, we remain committed to innovation in anticipating the needs of Yahoo!’s audiences–one of the largest and most engaged populations of consumers on the web–by creating the unique context that delivers results for brand advertisers online.

In short, even in the absence of a commercial agreement with Google, we intend to become an ever-stronger player in online advertising. Our certainty on this front comes from the progress we continue to make in many areas, not the least of which are the significant innovations we’re making in search.”

To me they talk about being strong innovators and advertisers, but if they were so confident, why would they want a deal with Google? I don’t want to see Google get their space, as it would drive up ad costs and reduce competition.

But what I see Google doing, is that they are playing without the ball. Yahoo has had trouble with staff departures and reported dissention in the ranks. Once you lose good people, you are in trouble.

Their failed deal with Microsoft, plummeting stock price, erosion in ad inventory vs. Google’s innovation in almost everything, I think Google is going to let Yahoo go down even further. Just let the market take care of them. Why give them a boost with ad revenue when Google will get it anyways? They don’t need the ball.

The e-commerce environment is, in many respects, simply a new geography for the market economy and for this new market economy to take root firmly it has to overcome the same institutional obstacles as the offline economy Key among these is trust.

• Secure check out
• Phone number
• Address
• Written policies including a friendly return policy
• Trust seals