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Switching Payment Processors: The Empty Bag

Posted on February 25, 2008 by Brian

Any small or medium size business owner understands the importance of getting paid and the value of getting paid quickly.  We internet retailers really enjoy the ability to get paid quickly via credit card rather than having to invoice and collect on services rendered.  So much so, that “three day money” has become a key financial consideration in a world of 60, 90, or even 120 day money.  We must be careful though… our cash is only in transition to us for a matter of days rather than weeks or months, which may give us the false impression that a day or two here and there is of little consequence.

In our case, we’ve recently began considering new payment processing options as alternatives to our existing merchant services.  Amongst the monthly charges, transactional charges, integration requirements, PCI compliance implications, etc., we quickly came to the cash flow impact, which may trump them all.  Our current suite of products allows for each days credit card transactions to settle in our account the following morning.  Some of the options we have looked at can have that cash tied up for 3 to 5 days, or more.  There may be some associated process or rate savings but that transition is certainly an issue to address.  A simple example:  Let’s say a company sells $50,000 a day via credit card transactions and those funds are deposited next day.  If that company transitions to a payment processor that requires four days to deposit, the day they flip the switch they start four days with no deposits.  $200,000 just got moved from the “in the bank and available for use” bucket to the “in transit and unavailable” bucket, for good.  Better be ready.

Of course a loan, credit line, reserves, etc., can provide the working cash needed to cover the new transit time if other benefits, such as new customers who will value the convenience and security of alternative payment methods, make the switch worth it.  The small or medium size business owner needs to have those tools in place before they’re left holding the bag, the empty bag.

 

Google Search Engine Results Pages Illustrated

Posted on February 22, 2008 by Zach

I have been asked several times over the past few months what the different parts of a Google search engine results page are and how everything is put together by Google. While the whole process of using Google is pretty straight forward, there are certain things to look for, and an understanding of where the data comes from that can lead to improved searching and overall use of a search engine. I have put together a quick screen shot of a Google search engine results page to explain its main parts and where Google is getting that data.

Pictured is a search using Google for the term "Access Doors". With this search engine results page or SERP, I will illustrate the different pieces of this page and how it’s put together.

 



SERPS are typically made up of three core elements: (1) the search box, (2) paid results and (3) organic results.

1. The Search Box

The search box is where users enter their keyword(s) for what they are searching for in order to find related websites. Make no mistake though; the search box is a powerful tool in helping find the data and or websites you are looking for. Here are a few tips when using the search box: more general words or terms will typically always yield more results while more specific or particular words or terms will typically yield less results. This strategy of keyword choice and number of keywords can help refine or broaden a search. Most search engines also allow the use of modifiers or have an advanced search form, which can better define or change what data is returned for the keywords. In this Better Searches, Better Results document from Google they explain some of the modifiers which can be used in the Google search box to refine searches and get better results. Always remember though that the search box holds the power, what is put into the search box drives all of the results that will show up on the page below.

2. Paid Results

Paid results are advertisements from advertisers that typically pay Google on a per click basis (pay per click / PPC) to show ads for a particular or related keyword based upon what was searched. All of the information in the listing is supplied by the advertiser to Google and the rank of the listing (where it will show on the SERP page) is based upon several factors including how much the advertiser is willing to pay relative to what other advertisers are paying for the same keyword (if you are willing to pay the most, your ad will show up at the top of the page such as ours and the rest of the advertisers are displayed accordingly). Paid results are made up of the following data, ad title (dark blue text), display URL (green text), ad copy (black text), landing page (where the user is taken to when the ad is clicked) and any badges such as the Google Checkout badge.  The Google Checkout badge shows because we offer Google Checkout as a payment option. All of this is sometimes referred to as the creative of the ppc ad.

3. Organic Results

Organic results are a set of results put together by Google based upon the keyword(s) searched and their algorithm which ranks sites based upon relevancy, website importance or popularity along with numerous other criterion (their goal is to give you the best set of websites as related to the keyword(s) searched that they possibly can). This listing is made of the following components: the blue text is the title of the page which is typically defined by the webmaster or website owner via the Title Tag. The Black text is a description of that web page which can also be specified by the webmaster or website owner via Meta Tags but can also be pulled from other sources such as the Open Directory Project or put together by Google based from the content that resides on the page. The green text is the website URL or the page on the website which you will be taken if you click on the listing. The Cached link in gray will take users to a snapshot of that web page which Google saved the last time they crawled that web page. And lastly, the Similar pages link in gray will execute a search for web page URL the with the related: modifier (exp related:www.plumbersurplus.com/Cat/Access-Doors/606) which will use that modifier in the search box which shows other web pages that are related to that particular listing.

Optimizing Searching

These three main elements make up the Google SERP page and while there are many more features and ways to search for websites, these three elements make up most of that experience. The Google SERP page is also similar to other search engines results pages so when using another search engine look for these elements, which can help lead to better searching and overall use of a search engine.

 

Vanessa’s Variety for the Week of February 22nd 2008

Posted on February 22, 2008 by Vanessa

I don’t know about the rest of you out there, but my desk is looking awfully cluttered from this week’s activities!  In case you didn’t have a chance to check out some of the great insights provided by our fellow ecommercers here are a few of my favorites from the week.

  • If your title is “Director of Human Resources” you may think about changing it to “Director of Talent”, Seth Godin explains.
  • Talks of recession, and the credit crunch are already circulating gloomy data for businesses, but internet retailers may have an upper hand in the long run.  Barbara from 3W Design Group - Media presents a positive outlook on the situation.
  • Think you know about ecommerce?  Test your skills here.
  • Great news internet retailers!  According to a University of Michigan study “Online retailers are delivering the goods and better customer service than traditional stores”
  • Darren Rowe has a thing or two to share about link selling, in “Conversations with an Underground Text Link Seller
  • Lunar Eclipse caused by eBay fee changes?

 

Showrooms: Who decides what the customer wants to see in a showroom?

Posted on February 21, 2008 by Jeff

In my last post I discussed the question “Showrooms: Do They Reach the Customer that the Manufacturer is Targeting?”  The showroom series continues today as we will focus on the second question I proposed, “Who decides what the customer wants to see in a showroom?”

In my last post I stated, “Simply put, these showrooms are seen by manufacturers as an opportunity to physically show their wears.”  There is an alternative to the showroom model though; the internet provides a viable solution to display a large product offering with low overhead costs.  The internet is also a vehicle to efficiently offer consumers vast product offerings, and robust data.  Exploring the traditional showroom model will help us arrive at this conclusion.

Showrooms can range anywhere from several hundred square feet to an excess of 25,000 square feet. Both the sunk costs as well as the recurring costs of these showrooms grow proportionally with the size of the showroom.  Not only does size increase the costs associated with the showroom, but the complexity of the showroom can raise costs exponentially.  I classify these showrooms in to three main types: business card, project based, and living spaces.

The Business Card

Here is an example of a typical local wholesaler showroom. These showrooms serve more as a business card for anyone who walks through the door. It quickly identifies that this business serves the plumbing industry. Icons such as the toilet and pedestal sink, help set this environment. Wall hangings establish the technical abilities of the wholesaler.  As manufacturers try to improve the ways in which they showcase products, more detailed and intricate showrooms have been developed, such as the project based showroom.

The Project Based

Project based showrooms are similar to studio shots in the photo industry, these studio showrooms allow customers to enter complete project layouts that highlight specific products, say the toilet and sink combination, while providing the design of the entire room to showcase what the products could look like in a well designed setting.

The Functional Living Space

Plumbing industry showrooms move well beyond “studio shot” showrooms to fully functional living spaces.  These showrooms not only showcase the products in a well designed room but they are also fully functional, with running water, lighting, etc.   I’ve watched wholesalers spend anywhere from several months to well over a year in building or remodeling these showrooms.


“Who decides what the customer wants to see in a showroom?”

In answering this question I have to first state, I’ve never set up a showroom, but am familiar with the subject after years of supply chain management experience in the field.

If you have, there’s no doubt that a lot of work goes into it and many questions have to be carefully thought out and answered before you begin:

  • What do you have to spend?
  • How much space do you have available?
  • What manufacturer’s do you partner with?
  • Which products should be highlighted?

The list goes on and on. For the purpose of this blog we only have to look at a single question to show the limitations of the traditional wholesaler showroom, “How much space do you have available?” PlumberSurplus.com  currently offers products from more than 175 manufacturers representing tens of thousands of active products. Let’s say we sell 50,000 products and limit the number of products in our showroom to the top 1%. A bit of math will help us here.

50,000 products x .01 = 500 products

Let’s estimate that each product has a showroom footprint of 3 feet x 3 feet. That’s 9 square feet.

500 products x 9 square feet = 4,500 square feet of showroom

I’m no mathematician but according to my calculations this works out to be 4,500 square feet of showroom.  That doesn’t even include the rest of the layout, such as hallways, walkways and entries, just to sit the top 1% of your available product line. From here you can only imagine the associated ongoing costs of showing a measly 1% of your available business. If you are not familiar with the plumbing industry it is common practice for wholesalers to expect 20% of their product offering to produce 80% of the revenue.  If we used our example above and applied it to the rest of the industry we would need 20 times the amount of space in our previous calculation to showcase 20% of our available products.  Now for those of you who don’t feel like getting out your calculators that comes to a whopping 90,000 square feet of showroom space needed. Can anyone say the word “overhead”?

What does all of this mean?  It means that when you enter a showroom, the products shown are the top 20% performers of that manufacturers or wholesalers line.  That doesn’t necessarily mean that those are the items the consumer wants to see.

The Alternative

The internet offers a cost effective manner for showcasing a breadth and depth of product not easily replicated with the traditional showroom!  I know it’s not revolutionary, but if you read my last post you would remember that the plumbing industry is still very traditionally structured.  Let’s take our previous examples above.  In using the internet as our showroom to showcase the 50,000 products we previously discussed, we need a grand total of 0 square footage of showroom space.  So now that we know that there is a viable alternative to this showroom issue, the next post will discuss “How can the dollars behind manufacturer showroom incentive programs be better spent?”

 

3 Steps to Designing for Success in eCommerce

Posted on February 19, 2008 by Archives

Recently, our Search and Marketing Manager, Zach, was interviewed for eCommerceOptimization.com.  The interviewer was really kind in saying:
 
"You have one of the cleanest, nicest looking designed sites I have seen in a long time."
 
As one of the contributors to the site design, I was a little taken aback at that compliment.  It’s easy to be overly critical of a site you’re a part of, and sometimes you look past what’s really good about it because you’re mostly focused on improvement.

However, as a team we have learned a lot about design since we opened in 2004, and in this post I outline 3 key steps we’ve identified. Specifically, I’m going to talk about the design of intra-site buttons and banners since that’s one of my responsibilities at the Surplus.
 
It’s common practice to use buttons and banners to help customers navigate within a site. However, eye tracking studies, careful testing, and our own experience show that it’s all too easy for people to completely ignore buttons and banners that are poorly designed.

Eye Tracking Studies 

Every once in a while you come across an article about eye tracking studies – usually telling you stuff you already know. However, if you’re anywhere near as geeky as we are at the Surplus then those articles are usually interesting.
 
A popular one this year explained a study about the U.S. Census Bureau website. A test was set up, and the goal for participants was to find the current U.S. population on the site. Simple enough, right? What’s interesting (and amusing) is the fact that 86% of the participants failed to find the information on the front page of the site despite the fact that it was right there on the homepage in giant red letters.

Banner Blindness

Now, what can we learn from that? Maybe not a lot. Maybe we can’t learn anything significant from the findings, and you should be very aware of that possibility in regards to any study you come across. However, combined with the results of several other experiments and studies as well as plain common sense, studies have shown that people generally ignore things that resemble ads.

Ok, so people ignore things that resemble ads. What do we do now? Strip our pages of anything resembling an ad? No, but what we need to explore is - what are the exceptions? In which cases are people less likely to ignore a banner or button?

1. Designing for Success: Don’t wear orange socks with your nice suit

If your site is mostly NOT orange, and yet you have a big orange banner that says something like, “Get $10 Off Everything”, you’re probably going to have a LOT of people clicking on it. However, in the end, the value of that banner is temporary and shallow. For two main reasons, it doesn’t create the trust you need.
 
Firstly, not every button or banner on your site is going to lead to $10 off of something. That’s not what most banners and buttons are for, and you don’t want to create the expectation. You want to create trust with your audience by showing them buttons and banners are valuable ways to navigate the site to find what they’re looking for.
 
Secondly, it plays into the stereotype that buttons and banners are supposed to be flashy, obnoxious, and over-selling. But what people are really looking for is simplicity, clarity, and value. And in the long run, these are the things that create happy, repeat-customers as opposed to the one-shot sale on an item on which you break even.
 
For example, one of the banners we had running on PlumberSurplus.com was a seasonal banner which you can see here. Our goal with banners is to design them as cleanly as possible, to use colors that match the main site design, and to use plain but elegant text that is easy to read.
 
The bottom line is that buttons, banners, and promotional text that blend well with a site design are less often ignored and more often used. And importantly, they create value and trust with the audience.

2. Designing for Success: Calls to action and linking relevantly

Since “success” means “happy customers” at the Surplus, all of our buttons and banners must lead our customers to what they’re looking for. Sounds stupidly obvious, right? Not so fast. Browse around some popular eCommerce sites, paying special attention to buttons and banners. You may be surprised to find that banners and buttons often link to pages only loosely related to the information conveyed in the image. In other cases, images aren’t even links (and that’s just plain blasphemous).
 
At this point, it’s pretty much common knowledge that plain text (versus heavily formatted text or images without text) is what people look to for information. People also respond better to text that is –get this- actually informative, and specifically: instructive.
 
That’s why text of this nature should be in the form of a call to action, such as: “do this” or “click here” or “click to find out how” or “go here to see this”. What you want to do is make your calls to action as clear as possible, such as:
 
“Click here to see products with free shipping!”
 
Further, make the links from your buttons and banners go to relevant pages. In other words, if the image includes the above call to action then it better link to a bunch of products that ship for free. If instead it links to a page about your returns policy, or kittens, or bad poetry, then you should probably be publicly flogged.
 
Returning to the example of our seasonal banner for Milwaukee Tools -- The copy reads, “Take advantage of our best deals on Milwaukee Tools.” When you click on the banner you are taken to a list-o-products specifically chosen due to their being our best deals on Milwaukee Tools. You see a pattern emerging here Scully?

3. Designing for Success: Track your results and revise appropriately 

The third step for designing for success is testing. All of your refinements mean nothing if you have no indication of how they’ve helped your business.
 
At the Surplus we use a combination of tracking methods, including Google Analytics and website optimizers. We use this data to gain a better understanding of how our customers want our site designed. And while there are general principles of design that will attract customers in all markets, there are probably things you can learn about your customers that are specific to them.
 
One piece of advice I can give you is to be smart about how you interpret data. For one thing, you need to analyze data collected over an appropriate period of time. You can’t compare all your previous data with the ONE week of data you’ve collected since making some change.
 
Lastly, don’t jump to conclusions too fast. Analyze the data as a team (even if it’s just two people). When you have some preliminary conclusions, search around the web and ask people who know. Find out if your conclusions are those anyone else has come to. Then, you’ll be able to make informed revisions based on actual data about how your customers want your site designed.

Conclusion 

Some people have such a bad case of banner blindness that you just can’t help them find what they’re looking for. But for those not fully infected, when your calls to action are clear and your links are relevant, you create trust and value. People suddenly know that buttons and banners on your site are actually worth clicking on, and you’ll see conversion rates go up for those links. To further add value to your graphics, keep your site uniform, assume your customers are smart, and don’t wear orange socks with your nice suit. Lastly, use a website optimizer (or some form of tracking) to gather data so you can reassess your design periodically and make small adjusts.


7 Reasons Why I Don’t Think CJ’s Affiliate Network is Rubbish

Posted on February 15, 2008 by Archives

I recently read a post that discussed the refuse-like quality of Commission Junction from a publisher’s side. I haven’t been on CJ’s network that long but I have nothing but great things to say about my experiences thus far as a top merchant. I’ve put together 7 reasons why I think CJ’s affiliate network is a great choice for larger volume merchants.

1. Increased Profitable Sales - Since adding the CJ network to our affiliate program, we have grown affiliate sales over 140%. I mention the profitability in this point because more sales are great, but it doesn’t take a rocket scientist to know that more sales at a less profitable level is not as good. We were able to successfully add CJ to our repertoire of marketing methods and it has been proven successful.

2. Program Performance visibility - publishers (the folks who sign up for our affiliate program), are able to quickly and easily see the merchant’s offers and compare them side by side to determine which program to apply for. On the merchant side, we are able to see how well our program stacks up to the competition. When we first developed an affiliate program via another affiliate newtork, we had a hard time finding out where we were positioned relative to a.) Other merchants in our category, and b.) Other merchants on the network.  CJ’s functionality gives us the ability to do so.

3. Extendable Commissions - I mention this one not to sound naïve to the despicable practice of some affiliate program managers, but on a serious note. We regularly have orders that become cancelled completely, or partially cancelled. With our returns process it may take 1-2 weeks before the product refund is issued or replacement item is delivered. When we find affiliate based orders that have an RMA (Return Merchandise Authorization) request, we extend the commissions in order to ensure no changes are made to the order total once the RMA is completed. This helps us protect ourselves from affiliate driven orders that might be cancelled beyond the default 30 day period.

4. Automation of Approvals - CJ has made automated publisher approvals easy to configure, which saves the merchant a significant amount of time. In our program, as with any other affiliate program, a good deal of our time is spent processing applications. Through the use of some simple automation rules, based on publisher category, publisher location, and performance criteria I can approve or deny publishers in my sleep. If there are publishers who solicit certain types of offers, or who don’t meet your performance minimums, they are automatically denied from our program. We try to avoid allowing publishers who have certain types of websites or who promote particular genres of offers to avoid unfavorable affiliate activity.

5. See number 1

6. Personable Publishers - I have not met an affiliate publisher in our program who is not friendly and personable. I treat them with respect and take into consideration how actions to our program can directly or indirectly affect our publishers. Any affiliate who I’ve contacted for a discerning reason has been more than willing to correct the problems and have offered many apologies. I believe that simply bringing up the issue to the publisher in a non-confrontational way leads them to realize you are willing to let them stay versus a hasty expulsion from the program similar to the “shoot first, ask questions later” mentality.

7. A Surplus of Support - I have yet to encounter a situation, as a merchant, that I was not able to get a quick, detailed answer to, by any of the many questions I've had for the folks at CJ.  Ranging from questions about basic account settings to advanced program terms like tiered commission levels reset time frames, I have always received clear, concise answers. Even questions involving URL tracking and forwarding have been answered promptly and thoroughly.  Their online CJU (Commission Junction University) advertiser support and account managers are all supportive and helpful, and offer a wealth of information quickly.

So while Aaron Wall of SEOBook may think that Commission Junction is garbage, I have reason to disagree.

 

Vanessa’s Variety for the Week of February 15th 2008

Posted on February 15, 2008 by Vanessa

I know that most of you have been at eTail all week and may be behind in the blogosphere so I am here to catch you up.

  • eTail 2008 seems to have been a great success, I myself participated in the search day and the merchandising day, but other Surplusers spoke, participated in the CEO summit, and went to a few great dinners!  On Wednesday, DJ Van Hameren, General Manager of Global NIKEiD, addressed several topics including online and offline channel integration where he used the NIKEiD.STUDIO as an example.  He shared a remarkable metric with the audience regarding the studios, commenting that it’s a good metric and the only one Nike is comfortable sharing.  DJ stated that if customers come into the studio and sit down that the conversion rate is greater than 90%.  I guess when they say “Just Do It” they mean it, don’t we all wish we had conversion rates like that!

    DJ Van HAmeren, General Manager of Global NIKEiD, speaks at eTail 2008

  • m0serious made a rap song to explain SEM called “Paid Search 101”, one of my favorite lines from the song is “SEO and SEM they are co-existin”.  You can check it out on YouTube here.
  • Redesigning your current website, or working on a new one?  Seth Godin recently posted a link to colors that work for the web.
  • Need an update on the Yahoo, Microsoft debacle?  Check out what Microsoft is saying.
  • I am not the biggest fan of Valentine’s Day, and in fact I probably avoid it, so I thought I would let Bruce Clay’s, Lisa Barone, discuss it for me.

 

Power Reviews Gives the Power to the Customer, and Helps the Retailer

Posted on February 14, 2008 by Archives

Power to the People: Customer Reviews on Your Website

Let’s face it: no one wants to go it alone any more. James Dean died young, and with him the rebel that wanted to do things his way. Now it’s all about what others think.

Now it’s your turn, and thanks to PlumberSurplus.com, you too can be the owner of a faucet, tankless water heater, or sump pump that other users with experience think are cool. That’s right – it’s your turn to join the cool crowd now. And it’s all because we recently rolled out PowerReviews, a third party application for customer reviews. Let the sharing begin!

User reviews are all the rage these days. Ushered in with the web 2.0/social networking phase of the last few years was the concept that you care what someone else thinks about something you’re interested in. And there are very good reasons for this.

Why Reviews?

Customers like reviews because it helps them make a more informed purchase. Someone may not like the product, and because of the background and reasons they share, you can confidently assume you won’t like it either. Or they may not like it for a different reason, one that doesn’t bother you. Of course, the glowing reviews only make your decision that much more informed.

Retailers like it because it stops the sale, and subsequent return, refund, and poor customer experience involved in purchasing a product that is sub-par. And customers who purchase products with good reviews are more likely to be happy with their purchase, thereby decreasing complaints and returns.

Why Power Reviews?

So deciding to implement customer reviews was a no-brainer. And the decision to go with PowerReviews was almost as easy. PowerReviews offers:

  • Fast, easy implementation
  • Great technical support
  • They took us to dinner at Arcadia Modern American Steakhouse (I had the filet mignon)
  • Our Products are automatically on Buzzillions, a PowerReviews shopping engine

Competitors

We looked around a bit, but quite honestly not too much. PowerReviews has a great reputation, and a well-deserved one in my opinion, making our decision that much easier.

When I say fast and easy implementation that is exactly what I mean. I’ve successfully implemented other so called “easy” integrations. You know, the kind that offer convoluted, ill-informed documentation and obscure, decidedly not “best practice” techniques. PowerReviews provided a very helpful timeline, complete with what tasks happen when, and by whom (developer, marketing department, network admin, etc.) and an implementation guide that was actually useful! The actual development needs on our end were relatively simple and very straightforward. Not to mention Blake was there in an email with an instant response any time I had a quick question. Seriously – the technical implementation of PowerReviews was a breeze. Trust me developers.

Another cool thing about PowerReviews is Buzzillions, their comparison shopping engine that acts like an affiliate -they only get paid on conversions. Affiliate sales are great for us. Their ROI is significantly better than that of our ad spend, such as some of our SEM campaigns. And since we are on all the major shopping engines already, the addition of Buzzillions was great for us. Another great part about Buzzillions is that there is no additional development involved for it. It is all based on our reviews data. And that is good, since developers don’t really like building data feeds for every shopping engine under the sun.

Oh yeah, and the best part: the price is right! There may be no such thing as a free lunch, but a simple integration, your products on an up and coming shopping engine, a steak dinner and Johnny Walker Blue (if you are lucky) can be yours for the grand sum of zero dollars. Yep, you read right. They offer all this for free! They are in the data aggregation business, and are happy to offer all this in exchange for honest customer reviews and access to over a million products to list on Buzzillions.

Truly a win-win. I can’t recommend PowerReviews highly enough. You can be up and running with a great customer review product in a week (or less). Your customers will thank you, your customer service team will adore you, and your returns team will bring you donuts.

Special thanks to Blake, Tara, Cathie, and Jay from the PowerReviews team!

 

Jay and Cathie of Power Reviews at the Power Reviews Booth eTail 2008

One of the Surplusers had a chance to speak at eTail 2008 this week.  While there, he stopped by the Buzzillions booth and the Power Reviews booth.  Pictured above, Jay and Cathie struck a pose.

 

 

Showrooms: Do They Reach the Customer that the Manufacturer is Targeting?

Posted on February 13, 2008 by Jeff

I was recently perusing the plumbing, heating, and cooling industries monthly staple, The Wholesaler, December 2007 issue. The Wholesaler highlights the news, trends, and happenings for the industry’s distribution channels.

Each month I’m struck by the number of articles that, summarized, celebrate the remodeling, expansion, or establishment of new wholesaler showrooms across our country. Simply put, these showrooms are seen by manufacturers as an opportunity to physically show their wears. Manufacturers like Kohler, Moen, Delta, and others look to entice customers; dare say end users, to purchase their product offerings using this tried and true brick and mortar channel.

As an eCommerce company, our showroom is far from traditional. Our showroom is dynamic and far reaching although we have "0" square footage; in other words, our showroom is the internet.  As a Supply Chain Manager, ever time I read on of these articles touting some wholesalers' Taj Mahal showroom, I ask myself the following three questions:

  1. Showrooms reach a particular customer, is it the customer that manufacturers really want?
  2. Who decides what the customer wants to see in a showroom?
  3. How can the $’s behind manufacturer showroom incentive programs be better spent?

Look for the answers to these questions as I look further in to this “Tried & True” channel.

“Showrooms reach a particular customer, is it the customer that manufacturers really want?”
 

An elementary understanding of the plumbing industry’s distribution model is necessary in answering this question. It generally looks something like this:
Plumbing Industry's Distribution Model


If you yelled “confusing”, correct!  In looking at the journey of a product, from manufacturer, each stop on the way is, in some way, with a customer.  But at the end of the day if the product doesn’t reach the end user the rest is simply an effort in futility.

Where then are the showrooms you ask? Just through the doors of the wholesaler. Referring back to our chart, you might notice that there’s no arrow from the wholesaler to the end user.

As 1 of the 301,139,947 end users, you’re considering remodeling your bathroom. All you know is you want to replace your old dingy faucet. It isn’t likely you’ll locate 1 of the 1350 wholesalers with names like McJunkin Corp., EMCO LTD., and Johnstone Supply, Inc. even if your fingers are doing the walking. I didn’t pick those names from obscurity either; they’re ranked among the top 10 national wholesalers by, The Wholesaler, August 2007 issue.

But should you come upon the doors of a wholesaler, no matter how inviting they may look, I assure you the end user isn’t welcome. There is no opportunity for the end user to purchase anything sitting on a wholesaler’s showroom floor, no matter how shiny that Danze faucet is. Before I move on let me give you a quick note about retail: Space, Space, and Space.  Retail only stocks, at best, the top 20% of any given product line, several A’s and some B’s, meaning their top selling products.  So if you think you’ll find that exact faucet at retail, chances are you’ll be disappointed standing in the aisles of your big-box-store.

The showroom customer is the contractor.  Even if the showroom is successful in convincing the contractor they prefer American Standard over Price Pfister, the big box model tells us the Do-It-Yourselfers aren’t asking the contractor. And if they do solicit the contractor for installation, isn’t the contractor going to cater to the end users interest?

PlumberSurplus.com saw three key shortfalls of the showroom:

  1. 1350 Wholesaler locations vs. 301,139,947 End Users
  2. The end user is disenfranchised from the showroom
  3. Retail provides limited breadth and depth of product

To overcome these shortfalls, PlumberSurplus.com complicated the diagram in an effort to simplify purchasing for the end user.
By establishing purchasing relationships with the manufacturer, manufacturer’s representative, and wholesaler, PlumberSurplus.com is able to tap into the 301,139,947 end users by bridging their disenfranchisement while providing a breadth and depth of product unequaled by a single channel.

Regardless of the project, the end user is able to research complete manufacturer product offerings across multiple manufacturer lines resulting in purchasing at a reasonable price without ever having to understand either of the above diagrams. Isn’t that the customer the manufacturer ultimately desires?

Next post, “Who decides what the customer wants to see in a showroom?” Understanding breadth and depth of product.

 

The Gatekeeper: How to Prioritize Development Projects (Without Making Enemies)

Posted on February 8, 2008 by Archives

In this era of economic insecurity, with talks of recession on every news channel, job security is hard to come by. That is, unless you are a developer at a growing e-commerce company. Job security: solid. Relaxing schedule: non-existent. With a list of projects longer than Paris Hilton’s rap sheet, I’ve got worked lined up from now till Web 3.0 finally comes around. And while it is good to sit on top of the list of PlumberSurplus.com’s most wanted list, wandering around the office like a plate of bacon at a Weight Watcher’s convention, it isn’t all bon-bons and champagne.

A Wanted Man

As the Development Manager at an e-Commerce company where most of the business is run on custom built software, I am constantly inundated with requests for new features, changes, and even completely new systems. These requests come from all departments, and many are very valid requests. Executive management needs a custom tool to track financial adjustments. Marketing needs a new feed for a shopping engine. Customer service needs a way to track order notes. Some are quick, small projects. Some would take months to develop. Prioritizing, scheduling, and developing these solutions in an effective manner is crucial to the success of any growing organization.

Sometimes these requests are just not realistic. They may affect a very small number of users, and their value may be too low to ever move up on the priority list. And while I don’t like to be the bad guy, sometimes I have to say “I’m sorry, this just isn’t important enough”.

The Development Dilemma

However, many times these requests are valid, good ideas. So how do I go about this process of evaluating and prioritizing development requests? In a word: Bribes. For example, when our marketing team leader Vanessa needed something done, she dropped off her request with a gift card to Pick-Up Stix, my favorite lunch joint, and diet destroyer. Her project got done that afternoon.

After all bribes are factored in, I have to make some hard decisions. I really can’t satisfy every need, and this is tough on everyone. Sometimes people are left not getting their pet project done, and I’m left feeling like the bad guy. And the projects that do get worked on sometimes get rushed out so we can move on to the next project, without giving due diligence to the full optimization and enhancements that could have gone into it were time not a factor. It’s the same principal as a mechanic who has more cars than he can service; they all get pushed back and delayed, and the ones that get fixed sometimes get the bare minimum to get it working and out the door, with no time to check the radiator fluid.

The Evaluation Process 

When I am prioritizing projects, I look at several key factors:

  • Revenue – projects that are going to create sales and generate revenue get top priority.  
  • Cost Savings – saving the company money is almost as good as bringing in more money
  • Efficiency – Does this significantly make an impact on efficiency? Is this something that will automate a process and free up man-hours?
  • Enhanced Customer Experience – Is this going to help in customer satisfaction? Will customers be more informed and satisfied with their experience?
  • Benefit Scope - How far reaching are the benefits? Will it help many users, or just a few select users?
  • Resource to Benefit Ratio – is the end goal worth the development efforts?
    • If it takes 4 hours of development to save someone 20 hours a week, it has a good ratio.
    • If it takes 20 hours of development to save someone 4 hours a month, well, those are called “government jobs”.

These factors, based on our business needs, are the guidelines I use to evaluate and prioritize development projects. However, they are not firm. Executive requests seem to get higher priority for some reason. So do bug fixes or anything perceived as a barrier to customer satisfaction and conversions.

Often I will work on a larger project, then when I finish I will dive into a bunch of smaller ones that may not be the next on the priority list, but are valuable and can get done quickly. If at all possible, I don’t like to make requests wait for too long if they can be done relatively quickly.

Sometimes projects get whittled down, broken into segments, and those segments get prioritized. For example, when we wanted to start using Google Checkout, our end goal was Level 2 full integration, where we pass information back and forth to Google in an automated fashion. However, we wanted to get in early since Google was running their $10 off $30 program, and that project would have taken longer than we wanted. So we broke it up into stages, where we implemented Level 1 integration and allowed customers to check out with Google Checkout, then later on upgraded to our current Level 2 integration.

As you can see, there is a lot that goes into deciding what projects get worked on and when. So go easy on your development team; we aren’t just playing Second Life all day. And remember – a Starbucks Caramel Macchiato goes a long way, if you catch my drift ;)