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Attention Plan B Entrepreneurs: Line for Plan C Starts Here

Posted on June 22, 2009 by Tim

Over at GigaOm, Stacey Higginbotham digested some data showing that the Gordian Project is in the minority.  Apparently, "the demographic with the highest rate of entrepreneurial activity consists of those between the ages of 55 and 64, according to a study released today by the The Kauffman Foundation. The study found that folks in the 20-34 age range were the least likely to start companies."  As a majority of our founders, including myself, represent the latter class, we're glad to carry the torch for the "tweens" of entrepreneurs.  Nonetheless, as we age, given our unquenchable desire to build creative solutions, I predict that we'll climb into the ranks of majority, venture after venture.  True entrepreneurs are built to build, over and over again, regardless of demographic.

The author of the study, Dane Stangler, also a senior analyst at the Kauffman Foundation, posits that “Recent economic trends—away from lifetime jobs and toward more and more new companies—will thus gain even greater cultural traction".  Considering Stangler's predictions moving forward, Stacey fears that we're headed toward an era of forced entrepreneurship and wonders how much of this entrepreneurial activity is voluntary versus carried out by those who have headed out on their own after buyouts or layoffs.

If a healthy percentage of this activity is being orchestrated by those who had no other options, for the sole reason that they had no other options, it will, no doubt, be interesting to watch the outcome.  Although successful startups have emanated from founders who were forced into entrepreneurship when the absence of opportunities eliminated other avenues, I doubt it's the norm.  Moreover, for the "plan b" entrepreneurs who are successful, a strong argument could be presented that they were likely entrepreneurs at heart who had yet to realize their passion or been given the opportunity to do so.  By and large, entrepreneurship is difficult, daunting and daring, and successful entrepreneurship requires founders with brains, brawn, and bellies with an iron stomach (as well as the ability to integrate clever, albeit unnecessary, alliteration, at will).  Building a successful enterprise, although not impossible with a bunch of luck, isn't likely if the only motivating force is the fact that there isn't anything else to do.

Although I don't discourage these "plan b" entrepreneurs from joining our ranks, regardless of what demographic they fall in, I warn that entrepreneurship is incredibly challenging and admonish that if success is to be given a fighting chance, it will be in the wake of promoting "plan b" to "plan a".  Those who remain "plan b" entrepreneurs should have a "plan c" at the ready ...

 


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Amazon.com Settles Toys R Us Lawsuit for $51 Million

Posted on June 17, 2009 by Tim

After being given an excellent bill of health post Q1 2009, especially given the poor economy, rough news came from the world's largest internet retailer.

Last Friday, Amazon.com announced that it would pay $51 million to settle a breach of contract lawsuit filed against the online retailer by Toys R Us in May of 2004.  In a regulatory document filed with the Securities and Exchange Commision, Amazon stated that the payment must be delivered in quarter three of 2009, but will be accounted for in the retailer's second quarter earnings.  According to Amazon, in response, Toys R Us has agreed to dismiss all claims.

After unsuccessfully attempting to develop its own online presence, Toys R Us teamed up with Amazon by agreeing to pay $200 million for exclusive rights to sell certain products on Amazon.com.

The lawsuit, which ended the relationship between the two retailers, accused Amazon of selling products online in which the companies had agreed Toys R Us would have exclusive rights.  More specifically, Toys R Us claimed that Amazon violated the terms of their partnership, which began in 2000, by allowing other merchants to sell certain toys on Amazon.com.

In response to the suit by Toys R Us, Amazon filed a counterclaim, and a request to prematurely end the agreement.  Amazon alleged that Toys R Us failed to fulfill contractual obligations due to the inability to supply demand for top selling products and solicited $750 million in damages.  In March of 2006, a New Jersey Superior Court sided with Toys R Us which lead to the partnership being extinguished.

According to Imran Khan, a J.P. Morgan analyst, the payment reduces Amazon's Q2 and full-year EPS by $0.08, to $0.20 and $1.45 respectively.

 


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Venture Capitalists and the Silver Bullet

Posted on May 20, 2009 by Tim

Some business models are more difficult than others.  Many times, difficult business models are a direct result of businesses attempting to solve hard problems that need solved.  Enter eCommerce...

Ecommerce is Difficult

Ecommerce is difficult.  Extraordinarily difficult.  Drop ship eCommerce is even more difficult, magnitudes more.  Scaling a drop ship eCommerce model is, for all intents and purposes, all but impossible.  If it wasn't for the talented people we've surrounded ourselves with at the Gordian Project, we certainly wouldn't have been able to win at it.

The incredibly daunting task of managing a multitude of vendors while creating lasting relationships that encourage strong performance, competing in various independent verticals, housing a massive product selection and an accuracy of the product data, efficiently managing the returns of these products, designing complex algorithms and logic, maintaining quality and future-safety in an industry where the primary requirement is immediate results, developing a custom platform, stitching that platform to numerous third party systems, meshing with a plethora of partners, traversing dozens of advertising and marketing channels in order to develop the right mix of paid and free marketing that drives revenue, managing thousands and thousands of affiliates while controlling spend and analyzing and understanding consumer trends, catering to every beck and call of marketplaces, leveraging tools available to meet the increasing expectations of customers, while managing and balancing the needs of the company with the wants and expectations of team, in one of, if not the, most competitive spaces in the world, is seemingly insurmountable.

Now, try doing that profitably.

Now, try doing that profitably, while bootstrapping.

Now, try doing that profitably, while bootstrapping, while growing.

Oh, and do all that scalably.

What’s that?  You're up for the task?  Oh, hold on.  Just a minute.  Let me get some popcorn and some friends, this is gonna be hilarious ...

Online Advertising is Difficult Too

Since eCommerce is so freakin' tough, it's refreshing to notice other industries that are difficult as well.  Online advertising isn't as difficult as eCommerce, but its pretty close.

Last year, journalism lost an icon with the passing away of NBC commentator Tim Russert, the longest serving host of "Meet The Press," the longest running television program in history.  Russert's fervor for politics, understanding of politicians and the media, aggressive yet elegant interview style, knowledge of the landscape, and hard working attitude revolutionized both news and politics.

Of course Matt Drudge headlined with the story, and, as a fan of politics and taken aback by the loss of Tim Russert, I followed Drudge's link to washingtonpost.com's article headlined "NBC's Tim Russert Dies at 58".  A glance at the article I landed on made me sick, if only for an instant.

This is what I saw ...

Qantas Ad conflicts with story regarding Tim Russert's sudden death


Although I knew that I would be landing on an article about Tim Russert and his passing away, I wasn't prepared for what I was about to see.  Once I landed, I saw immediately that Drudge had sent me to the Washington Post and quickly read the headline "NBC's Tim Russert Dies at 58".  Then, scanning the article I saw what looked to be an image of a man, lying dormant, eyes closed, head on a pillow, white long sleeved gown, thin cotton blanket, in a hospital bed.  My heart sunk.  For a fraction of a second, no, a fraction of a fraction of a second, a terrible thought crossed my mind.  "Did the Washington Post actually publish a postmortem image of Tim Russert alongside an article addressing his death?"  "Impossible!" I thought as my eyes quickly scanned over to the image.  Shortly, I learned that it wasn't an image associated with the article, but an ad for the airline Qantas showing off their "sleeper beds".

My first thought was one of sympathy for Russert's family.  Then, my second thought was something along the lines of "What kinds of idiots are running advertising at the Washington Post?  Who on earth would allow this ad to be tied to this article?"  My next thought was something along the lines of "What kind of negative reaction might Qantas receive?”  Then, fuming for Tim Russert and his family, I wondered how upset I would be had I seen a similar article about a family member, paired up with a similar ad.

After taking a minute to pause and catch my breath, I realized that ... automated, scalable, relevant online advertising, is, well, difficult.

What a very hard problem to solve.  The ability for an automated system to understand the content and context of an article, to understand what an image in an advertisement is portraying, to understand that the image might be interpreted as something different, and then to understand that associating the article with that "something different" may be quite inappropriate so as to negatively affect the advertiser, disserve the goals of the advertisement, put the publisher in poor light, and offend the visitor.  This is the perfect storm of terrible online advertising.

Wow.  What a very, very difficult problem to solve.  And to do so scalably... magnitudes harder.  If you tossed any reasonable human at this example, say an employee in Qantas' marketing department, they would have immediately exclaimed "No, no, no!  We're not sticking this ad here, are you insane?!?!?!"  However, tossing humans at problems like this is very much the opposite of scalable.

Great Rewards

When you see that others, like Google, are trying to solve very difficult problems, and are doing so with great, but not perfect, success, you're reminded that the ability to develop solutions to the most challenging of problems reaps great rewards, even if you make some errors along the way.  Solving easy problems is easy.  However, solving easy problems can be duplicated overnight by copycats with a few dollars who inevitably saturate the market and dilute the incentives.  Solving difficult problems takes a lot more.  It takes amalgamation and brilliance, which I'll address in a minute.  And it can't be duplicated over night.

Now, don't get me wrong, online advertising isn't as tough as eCommerce, but it is tough indeed.  Google, you're in good company.  If you need any help, don't hesitate to call.

Turning the Head of Venture Capitalists Toward Difficult Business Models

Given the difficulty of the problems that the Gordian Project continues to solve, more and more frequently these days, Venture Capitalists will come across information regarding our success and are interested in chatting.  Sure, what the heck, its good experience and good fun!

I love it when my partner and I are on the phone with a VC.  Once we plow through the formalities, the bios, and the story, we quickly get into some meat: the model, the talent, the success, the future, the market, the opportunity, the growth, the scalability, the financials, the pace, the target, the exit, etc...  In essence, the "how much money am I (VC) going to make and how fast".  Great.  No problem.  That's a softball.  "Lots, because reasons, reasons, reasons ...”

Then, invariably, the question arises: "So what makes you different from everyone else?  What I mean by that is, why can't [insert random, unsophisticated, fly-by-night operation who wants to make a quick buck] I buy [insert cookie cutter, off the shelf, ecommerce software] and reproduce what you've built tomorrow?"

When this question first arose, I was like, "Is he delusional?"  Then, after my brain mouth filter kicked in, I was like, "That's a fair and decent question."  The VC cares about investing in a company where VC #2 isn't going to jump in tomorrow and chip away at all his "Benjamin’s".  So we would answer with great examples of areas where we are very different from everyone else out there trying (or soon to be trying) to win at eCommerce.  A high level example might be "proprietary technology".  But then a VC, who isn't well versed in eCommerce specifically (let alone a drop ship model), would get all wrapped up in the details of those examples.  "But what about this, but what about that ...”  Then, since those questions are also typically "fair and decent" and have some merit, we have to spend a bunch of time helping them understand why that example really does set us apart, and why they should care about that example.  They always come around, but understandably want more.  "Well, what else sets you apart?"  So, another super example comes out, and round and round we go.  Ten or twenty minutes later, we've discussed, at no deeper than surface level, maybe two out of infinity examples of why we're great at eCommerce and why so many others aren't.  Great, only infinity more minutes to go.

After a couple of those instances, my partner and I sat back and thought about the question and, more specifically, the forum.  You, VC, want me, entrepreneur, to tell you all of the arenas where my company is different from the countless other losing players, or players-to-be, out there and how we successfully solved one of the most difficult business models on earth, in ten minutes, on the phone, when you barely understand eCommerce???

Um, that just might be harder than drop ship eCommerce or online advertising, combined.

Amalgamation

The reason that we are different is that we have successfully amalgamated the brilliant execution of a million on-the-verge-of impossible problems in an arena so very hard that even the most well funded and sophisticated players barely stand a chance at success.  The VC wants us to spend a morsel of our hour long conversation, and try to tell him why we're different.  Well, I could tell you that "amalgamation" thing.  Does that help?  Otherwise, it's impossible.  The VCs question can only be answered by getting in the trenches.  The VC would have to successfully apply for a job at the Gordian Project and work here for, I don't know, six months?  In that time they won't answer their question entirely (remember the whole infinity thing), but they'll know we were telling the truth about the "amalgamation" stuff.  However, that whole "brilliant" thing might work against the VC in the job application process, which means he may never get close to his answer. ;-)

Venture Capitalists Searching for the Silver Bullet

In recent conversations with VCs, we've fielded their question with the "amalgamation" answer and invited them to come spend some time with us, to get their hands dirty with us, to experience the amalgamation and brilliance.  It's so funny.  Venture Capitalists and the Silver Bullet

They know it’s true, and an incredible answer, and that it makes our company so much more valuable than the silver bullet they were hoping for, and that it’s so much better than anything else we could have said in the very few minutes they afforded us, and that if they took us up on our offer they would clearly see opportunity or see its absence.  However, when we give that answer, they just seem to squirm.  They pause, "But, um, ok, hmmm, so, I see, yeah, well, right ..." then they pause again. It's like they know it is true, and wants it to be true, but wish that there was some teeny, tiny, little morsel that we could cite that was the difference.  Sorry VC, teeny, tiny, little morsels that can be described in ten minutes can be duplicated overnight.  Not amalgamation though.  Not brilliance.  They've got their Checklist-O-Good-Company-To-Invest-In, and halfway down the list is "Silver Bullet".  They know they should check it off, but their pencil just fights them.  Screw triple digit growth.  Screw profitability.  Screw negligible debt.  Screw scalability.  Screw talent.  Screw success.  Screw solving the most difficult business problems on earth.  I want TEENY-TINY-LITTLE-MORSEL-O-SILVER-BULLET that can be described in ten minutes but can't be duplicated overnight!!!

Ok, ok, ok, Mister VC... I know you want to hear how we have no idea how big the market is, and that you have to find five other VC's to tag along in order to aggregate $100,000,000.00 to keep us afloat for another year, and that we have no idea how to monetize our product or service, and that we don't have a solid business model, and that we're not even sure what the product is going to look like at go live, as long as we have a clever domain name and our idea is SEXY.

How's that strategy working for ya?

Yeah, Yeah ... Reality

The reality is that it's hard to sell a difficult business to VC's, in an hour, on the phone.  For the most part, VC's aren't stupid, but this issue is a challenge to the smooth flow of a potential transaction.  And, of course, certain VCs, such as those dedicated to retail, may be better than those dedicated to Green.  Moreover, part of the challenge is that VCs can't get their hands dirty with everyone they end up on the phone with who swears they've got amalgamation and brilliance.

This is an exciting and difficult challenge.

If our best answer is "amalgamation" and "brilliance" and they can't afford to see if we're right or not, in their eyes, then how do you get through that impasse?  Maybe it boils down to financial performance as the key factor when they decide who to get dirty (due diligence) with and who not to?  If a company is brilliant, and has solved a very difficult problem, and simply needs money to scale, a VC should see it in the financials, right.  However, what if a company needs money to scale, in order to reach those financial targets that demonstrate brilliance ...?  Yep, we're back to getting in the trenches...

I wonder how many VCs have punched themselves in the face over and over and over again reminiscing about a chat that ended without a silver bullet...

VC: "So guys, in ten minutes or less, what is the one thing, the one morsel that makes Google different from everyone else?"

Larry Page and Sergey Brin: "The reason that we are different is that we have successfully amalgamated the brilliant execution of a million on-the-verge-of impossible problems in an arena so very hard that even the most well funded and sophisticated players barely stand a chance at success."

VC (unsatisfied and confused look on his face): "But, um, ok, hmmm, so, I see, yeah, well, right ..."

Larry Page and Sergey Brin: "Why don't you stick around with us for a few weeks, and hang out in the trenches with us?  You'll see soon enough."

VC (tone of Bill Lumbergh from Office Space): "Yeah ... We're gonna have to get back to you on that."

VCs would be well advised to tread cautiously. Heaven forbid we be tempted to just make up a pretend morsel that will satisfy the thirst for the silver bullet, skip the trenches, and end up with a bunch of rich VCs...



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Just to be Clear: Staples' Products are FOR SALE!

Posted on August 13, 2008 by Tim

A while back I was perusing through a brick-and-mortar Staples and I saw this.  The "Beauty Bamboo Ceramic" priced at $9.99.

 

Products are for sale at Staples



What caught my eye wasn't the beautiful foliage or the simple ceramic pot.  What turned my head was the "FOR SALE" sign in ALL CAPS affixed to the plants branch.

Even though the plant was in the middle of Staples (the largest office supplies retailer on the planet), on a rack chock full of fake plants, in the middle of the furniture section, and product names and prices were clearly posted in association with the plants, someone (maybe the manufacturer?) saw fit to make sure everyone knew that these plants were "FOR SALE".

I wonder how many people are walking through Staples and notice this plant thinking "Man, this is such a great fake plant on this entire rack full of fake plants in the middle of the furniture section with all these price signs everywhere.  I sure wish it was for sale, instead of just decorating Staples.  OH CRAP!  Look at that sign.  It is FOR SALE!  EUREKA!".

What if we had to do this in eCommerce?  What if on product detail pages we had to display a banner shouting "FOR SALE" in order to make sure customers understood that our products were, indeed, for sale.  Shoot, do we?

One would hope that any sophisticated internet retailer presents itself in such a manner so that customers understand when they are looking at a product that happens to be... FOR SALE.

 

Google Docs Takes My Docs Hostage: A Lesson on Dependency

Posted on July 9, 2008 by Tim

I’m a huge fan of web applications.  Moreover, I’m a huge fan of Google’s web applications.  The less dependent we are on applications tethered to computers, operating systems, licenses, and updates, the better.   The more we can share, network and collaborate, the better.  And of course, the free-er, the better.

At the Gordian Project, we’ve been taking interesting steps recently in an effort to capitalize on the value associated with web applications, especially Google’s web applications.  One product that we continue to integrate more and more into our environment, is Google Docs and Spreadsheets.  Google Docs and Spreadsheets is a great web based application for small and medium sized business.

Google Docs is Great, Great, Great

The features and functionality of Google Docs are great: Create new documents, upload existing documents, familiar desktop feel, easy editing, sharing tools, choose who can edit or view files, everyone sees the most updated version of your file, a record of who added and deleted what and when, all you need is a web browser, secure online storage, save a copy to your computer to work on documents offline or distribute them as attachments, invite people to your documents, make changes together at the same time, sharing tools are integrated with your Gmail contact list, and, last but not least, the Coup de grâce… its free!

Great, great, great.  Google Docs is great.

This assumes, of course, that Google docs is up, working and isn’t holding my documents hostage.

If I can’t access Google Docs, then I can’t receive any of those great benefits.  Even worse, if I can’t get to any of the documents I’ve already created in Google Docs, then I can’t get any value out of those documents, until they release the hostages.  Although Google gives me the ability to save my documents offline, saving my documents offline as a defense to Google going down defeats most of the reasons one would use Google Docs in the first place.

Um, Google Docs is Down, No Longer Great 

Yesterday, Google Docs & Spreadsheets appeared to be down.  I needed to work on a document that I created in Google Docs and that my team was collaborating on.  I went to the Google Apps Start Page and clicked Google Docs & Spreadsheets under the Google Apps Links section. 

Here is a screenshot of the error I received:
 

 

Google Docs Error

 

Then, I went to the Google Docs home page, to try my luck there.

Here is a screenshot of the next error I received.

 

 Google Personalized Start Page Error

Hmmm.  That’s not good.  Now I can’t work on the project I started in Google Docs.  Neither can my team.  We don’t have the document saved on anyone’s system, since, again, that would defeat the purpose of using Google Docs in the first place.  Now that I’m stuck, frustrated, and wondering when Docs will be back up, I’m wishing I hadn’t used Google Docs at all for this project.

Now what? 

I know!  I’ll blog about the negative consequences associated with becoming dependent on free web applications supported by third party vendors.  Oh crap.  I usually write blogs in Google Docs so that I can receive all the benefits enumerated above.  Now I have to use Microsoft Word.  No collaboration!  No sharing!  No web browser access!  No secure online storage!  Well, at least Word isn’t down. 

A Dependency on Web Applications and the Cost Benefit Analysis

So what’s the lesson here?  Earlier, I ranted and raved about web applications by implying that the less dependent we are on non web based applications, the better.  However, today’s circumstances exemplified the other side of the coin.  The more dependent you become on third parties and web based applications, the more opportunity for failure you introduce, such as having documents taken hostage.  The more critical the area is that you outsource, the more painful the consequences are when they arise.  The free-er the product, the less support you’ll receive at all, let alone in an emergency.

 

  • What if your business utilizes Google Apps for email and Gmail goes down?
  • What if your eCommerce site uses Google Checkout as its payment method and Checkout goes down?
  • What if your Search Engine Marketing ROI is calculated based on data pulled from Google Analytics and Analytics goes down?
  • What if your videos are hosted on YouTube and YouTube goes down?

 

As sophisticated businesses continue to charge down the path of web applications, Software-as-a-service, cloud computing, outsourcing almost all features and functionality to third party vendors, and free everything (sans AdWords), we must understand the consequences associated our decisions every step of the way.  The Google Docs web application has a plethora of benefits that are absent from Microsoft Word.  For those reasons, I use Docs every chance I get.  However, the costs associated with the worst case scenario, when and if that scenario plays out, are high, very high (think disappearing documents, not just temporarily inaccessible).  As businesses charging forward, and making strategic decisions associated with the web and the future of our companies, a cost benefit analysis is critical every step of the way.  Every decision that introduces a benefit while introducing a dependency must be made with that dichotomy in mind: buy v. build, outsource v. inhouse, web application v. stand alone, SaaS v. hosted.  Google Docs isn't really free, it's costs are just difficult, if not impossible, to quantify.  However, if you understand that this cost exists, you know that the cost benefit analysis equation isn't one sided, which means your headed toward a good decision.

Hey, Google Docs is back up!  Web App Hostage Negotiators = 1, Google Docs = 0…

Now, I’m going to import this blog post to Google Docs, so that I can share it with a colleague, who can collaborate online using only a Web browser, edit it quickly at the same time, and make sure it’s stored securely online!!!  Hmmm, I’m having Déjà vu.

To give you an idea of where I currently am on the cost benefit analysis, I’m not going to back up the original before I import.  Let’s see if I regret my decision…

Zappos.com Reminds Me They Sell Shoes, Just When I Hate Shoes

Posted on June 26, 2008 by Tim

Zappos.com has been all over the blogging world lately, mostly due to DSW's lawsuit.  Considering a lot of people in the eCommerce community are speculating that this is a linkbait ploy on DSW's part, Zappos may be benefiting from the links as well.  Zappos.com is also trying some traditional marketing campaigns that may surprise you.

A few weeks ago I had the "pleasure" of passing through security at Ontario International Airport. On this trip, I took a drastic tack from my classic approach. I packed light. Really light.  I'm talking one bag that satisfies as a carry on for a trip almost a week long. Although this is old school to many, this is a monumental feat for me. In the past, my philosophy was to toss it all in, and be quite certain I packed any options I'd want, than to spend any time at all figuring out what I actually needed. However, now that getting in and out of an airport, plowing through TSA security, and flying in general, has become the second most inefficient process on earth (second only to the continental plates shifting to create new land masses) I've had to evolve.

Quest Through Security

So I checked in, showed ID, showed luggage, got our boarding passes, showed ID again, and headed to the Field-O-Metal-Detectors.

The family goes through the metal detectors first, without any hiccups, then I send the stuff through the machines for them to retrieve on the other side.  Now, it's my turn.

I take my laptop out of it's bag and stick it in the bucket.  I empty my pockets.  Out goes the iPhone, the keys, the wallet, all into the bucket.  Let's see if I can make it through the metal detector...

Beeeeep.  Nope.

The TSA lady points at my face, but she's really trying to point behind me.  "Go back through the metal detector!", she admonishes.

While trying to figure out what I should ditch next, she yells, "Take off your belt!"  Belt ditched; in the bucket.  Back through the metal detector...

Beeeeep.  Nope.

"Back through!", she scolds.

"Take off your watch!"  Watch ditched; in the bucket.  Back through...

Beeeeep.  Nope.

The line behind me is gaining in length, and losing in patience.

"What else do you have?", she chides.  "Nothing", I retort, while slapping my pockets.

No ones happy.  Not me, her, the crowd behind me.  Actually, everyone's getting frustrated.

She has an epiphany and looks down.  I follow her eyes.  Crap, my sandals are still on.  I'm not sure why I didn't ditch them yet.  Maybe I forgot.  Maybe I thought since they were small, light, and open toe, they wouldn't matter.

"TAKE OFF YOUR SHOES!!!!", she cries.  Like I'm an idiot.  Like I want to go through the freakin' metal detector four freaking times.  Like I want my family to have to wait for me with all our stuff on the other side.  Like I want the whole damn airport hung up.

Frustratingly, very frustratingly, shoes ditched; in the bucket.  Right now, I pretty much hate the airport, hate TSA, hate metal detectors, and hate, well, shoes...

But, this time, before I go back through, I notice a familiar face in the bottom of the bucket.  It's Zappos.com.  Here is what I saw.

Zappos.com Advertisement


The Zappos X-Ray Bucket Advertisement

The ad says...

IT'S MAGIC!
KIND OF LIKE THE X-RAY MACHINE.
Zappos.com
POWERED by SERVICE
PUT A LITTLE ZAPPOS IN YOUR DAY
MILLIONS OF SHOES, CLOTHES and BAGS.

How ironic.  Zappos.com reminds me they sell shoes, just when I hate shoes. (As an aside, they also reminded me of those advertisements on grocery store carts in that section of the cart where a baby rides.  Those ads always have pictures of people that look really shady.)

What is Zappos trying to do?

Recently, Zappos dumped their free overnight shipping and their 110% Price Match Guarantee.  Since then, I've noticed a decent amount of Zappos marketing directed at branding and other marketing campaigns that has difficult to measure ROI, such as these x-ray buckets. So with this campaign, is there more than meets the eye?  Are they trying to do more than create brand awareness?

Maybe Zappos is hoping that I'll be thinking about Shoes and Zappos simultaneously so that the next time I think about shoes, I'll think of Zappos?  Now, that would be great, as long as I also don't think about how absolutely freaking ticked I was and attribute that attitude to Zappos.

Maybe they are targeting the customer that is thinking about how they wish they would have worn an easier pair of shoes to slip on and off?  In the moment people might think like that, but in the morning, on the way to the airport, do people decide what shoes they'll wear and take with them on a trip, based on which pair will be most easily removed at security?

Maybe Zappos is thinking that people are getting to the airport earlier and earlier due to airport security, delays, etc., and that they can influence them to pass the time doing some online shopping?  I spent all my time going back and forth through the metal detector so that didn't work for me.
Maybe the idea is to get people to start thinking about shopping at online stores even when they aren’t online.  This is especially important since shoes are traditionally something that people like to try on before they buy.  Hence, Zappos' absent restock fee and free returns shipping.

Good Idea?

So is it a good idea for Zappos.com to remind me that they sell shoes, just when I hate shoes.  Good question.  I don't know the answer.  I know they convinced me to write a blog post about them.  AHA!  THAT'S IT!  It's a viral marketing campaign secretly targeting eCommerce bloggers who Zappos knows will question the value of their campaign.  Genius.  Just Genius.

By the way, once I ditched the shoes, it was smooth sailing through the metal detector.  Dang steel toe sandals... 

 

PayPal Error on PayPal.com's Home Page: Page Not Found

Posted on June 16, 2008 by Tim

On the heels of Google Docs giving me a 404 Error that doesn't follow Google's own guidelines and Amazon going down to the tune of a $2.3 million, the largest alternative payment method provider couldn't just sit on the sidelines.  PayPal, not to be outdone by Google and Amazon, has now joined the ranks of mega sites dealing with recent errors and outages.

This last Wednesday, I went to PayPal's homepage, paypal.com, by typing the URL directly into my browser.  The page only partially loaded, showing lots of empty whitespace, noticeably absent formatting, and little navigation.  A big, almost empty, rectangle included two links in the lower left.  The first link read "Click here to retry".  The second link ironically read "Return to the homepage".  The title of the page read "Page Not Found - PayPal".  Several refreshes didn't clear up the issue.  Neither did clearing my cookies, cache and temporary files, restarting my browser, and retyping the URL.  Several minutes later, PayPal.com loaded fine.

Here is a screen shot of PayPal's home page give me the Page Not Found error.

 

Man, what's in the internet water and who will drink it next?

Amazon.com Website Goes Down: Mega Retailer Arguably Loses $2,276,866.80 in Revenue

Posted on June 6, 2008 by Tim

Last night (late last night) we temporarily (very temporarily) took our eCommerce properties down for maintenance. The downtime lasted about two minutes. Since not being down is, obviously, absolutely necessary for a pure play Internet retailer to function at all, staying up is of the utmost importance to success.  In order to gain some perspective as to the cost associated with downtime, this morning we performed an exercise to calculate how much revenue we lose a minute while we're down.  Although that number makes me sick to think about, we had no idea what we were in for today, or how timely our exercise really was.

Amazon.com Goes Down

This morning, while I was researching our competition on Amazon, I was shocked to see that none of the links were working.  I tried best sellers, a different category and then finally the homepage.  It was such a surprise to me that Amazon was down that my first instinct was to think that it was my connection, my computer, or something I typed wrong in the url.  So I asked a colleague to try to connect to Amazon.  Unexpectedly it wasn't me, my connection, or my computer, it really was that Amazon was down.  I can't yet tell how long they went down, however this article was published at 11:02 AM Pacific Standard Time and our team saw that they were back up by 12:11 PM Pacific Standard Time, so maybe an hour or so. 

Om reports that it was two hours:

"A word from Amazon’s spokesperson: 

The Amazon retail site was down for approximately 2 hours earlier today (beginning around 10:25) - and we’re bringing the site back up.

Amazon’s systems are very complex and on rare occasions, despite our best efforts, they may experience problems. We work to minimize any disruption and to get the site back as quickly as possible.

Amazon’s web services were not affected nor were our international sites."

An Unfriendly Error Message

Currently I get a Http/1.1 Service Unavailable which is a fairly generic and unhelpful error when visiting one of the largest ecommerce properties on the Internet. It seems that nothing is being done to update users of the issue or note when the site will be back up. Even though we have two Amazon accounts we sell through, no e-mails or contact has been made mentioning the outages.

Here is a screen shot of the error page.


Amazon downtime screen shot

 


We wanted to make sure the issues was not location based or an issue on our end so we tested Amazon utilizing a proxy service.  Here is a screen shot of the error page through the proxy service.

 

Amazon Proxy shot


Every Minute Amazon Loses $37,947.78 

Since it's infancy, Amazon.com has had it's share of tough times.  The weathering of the dot-com-bomb, perpetual uber lean margins, massive growing competition, an ever growing infrastructure, and now a softening economy, In order to survive, Amazon has been forced to innovate in a myriad of ways.  Everything from longstanding and aggressive free shipping promotions to the Amazon Seller Central Marketplace to Amazon Web Services have helped the retailing giant push forward.  Interestingly, recent metrics have hinted that the mega retailer has swung the pendulum.  Amazon's first quarter results were stronger than expected, thanks in part to strong sales in electronics and general merchandise.  Moreover, Amazon issued a forecast for the current quarter and year that indicates a stronger outlook than Wall Street's current estimates.  During the first quarter, revenues increased 37 percent to $4.13 billion, verses the same period last year.

Jeff Bezos, Amazon.com's CEO, stated that "Our sales growth this quarter was driven by low prices and millions of in-stock items available for immediate shipment."  He added "We're grateful to our customers."

I wonder if what Bezos really meant say was, "Our sales growth this quarter was driven by NOT BEING DOWN.  We're grateful that we AREN'T DOWN."

Let's do some rough math see what Amazon.com might be losing during every minute of downtime.  Amazon expects to generate between $19.1 billion and $20 billion in revenue this year.  Wall Street's projections are on the lower end of that spectrum, at $19.3 billion.  Let's go the optimistic route and say that Bezos will figure out how to reach $20 billion.

($20,000,000,000 projected annual revenue / 366 days in a leap year) / 1,440 minutes in a day = $37,947.7838 Amazon loses every minute of down time

My stomach just fell out of my stomach.

Now, of course, this math is a bit dirty.  They might not reach their projected revenue high.  They obviously sell more during certain times of the day, week, month, and year.  They generate a significant portion of their revenue during the run up to the holidays.  Their international sites may not have been affected.  They generate revenue via other channels, such as Amazon Web Services, that might not have gone down.  Many, many unknown variables could affect this math.  However, we do know this, the number is big.

Let's see how much they lost, assuming they were down for only one hour (Om's post indicates two hours) using the math above.

$37,947.78 Amazon loses every minute of down time x 60 minutes in an hour = $2,276,866.80 lost due to this morning's downtime

Holy freaking crap!  My stomach already fell out.  Nothing is left to fall out.

Let's say it was only half of that.  It's still seven figures.  Wow.  In the word's of Tommy Boy, "[Tommy running into a glass wall] Ow, That's gonna leave a mark."

I don't know what takes Amazon.com down for an hour, but I hope it was something big and something new.  I think our downtimes are inexcusable and our revenue per minute pales in comparison to Amazon's.  Around the Gordian Project we're always talking about scalability.  One of the issues we think about is as pertains to scaling is, if we find a hole, a bleeder, an inefficiency, and we don't plug, bandage, or efficient-ize it, and then we grow, how does that issue or problem scale with the company.  If the hole grows at least linearly with the growth of the company, then we could be in trouble, depending on the size of the issue, relative to the size of the company.

For whatever reason Amazon.com went down today, I wonder if they went down for the same reason when they were just a "tributary".  If so, maybe back then, when the company was smaller, the dollars lost didn't seem so extraordinary, and as such, the issue one that didn't make the top of the "plug, bandage, or efficient-ize" list.  Now that the company has grown up, the issues relative size, although maybe not bigger as a percentage of the size of the company, means that the dollars lost have much more of an impact.

Maybe Wall Streets more conservative revenue estimates had issues like this built into them.

As Goes Amazon, So Goes Ecommerce... 

Retailers can and do use Amazon's marketplace as their sole internet sales channel or as an additional sales channel to their own website. Amazon's brand and traffic drive sales for the less known retailers and in return Amazon takes a commission of the sale.  Obviously sales were not coming in like they normally do via our Amazon marketplaces.  I would hate to think what we would do if Amazon was our one and only way of selling products on the internet.  Not only did this issue cause Amazon to lose money but it also caused tons of other retailers to lose money, including us.

Alas, the company, "remains the leader among e-tailers" according to the American Customer Satisfaction Index's fourth-quarter 2007 survey.  This shouldn't surprise anyone considering the numbers referenced above.  I guess the bigger they are, the harder they fall.  Not that we would mind having the problem of generating $37,947.78 per minute...

 

Google's 404 Error Page: Not Good, Not Effective, and Not Google Friendly (According to Google's Guidelines)

Posted on June 3, 2008 by Tim

Sometimes Google creates guidelines for webmasters that Google doesn't follow itself.  Let me elaborate.  Last night, I went to Google Docs and was pleasantly surprised with a 404 error.  It was only pleasant because it's nice to know that even Google can't always satisfy Google standards, so I'm in good company.

For our non-nerds, in general, a 404 error is what users receive when they attempt to access a non existent page on a website.  This can happen for several reasons: the user may have incorrectly typed a URL, the page may no longer exist because it has been deleted, the page may have been moved to another location, the page may have been renamed, the link they followed may be broken or outdated, or a URL redirect, such as a 301 or 302, may have problems.

Google's 404 Error Page

I triggered the error by typing in the URL www.google.com/docs which redirected to http://docs.google.com/.  By the way, don't worry mankind, one browser refresh lead me to a working Google Docs home page.  Earth's productivity as we know it will have to halt another day.

Here is a screen shot of Google's 404 error, as presented to me:


Now, although I was surprised to have seen a 404 error from Google at all, this isn't what really surprised me.  Even Google's army of data centers can't get it right all of the time.  Also, I don't know of any uptime guarantees that come with Google Docs or any of Google's free services for that matter.  Some of Google's paid products or services do offer uptime guarantees, such as Google Apps Premier Edition, which includes a 99.9% uptime guarantee for Gmail.

What really surprised me, what really "pleasantly" surprised me, was the 404 error's presentation.

The text on the error page was extraordinarily simple, stating "Not Found Error 404".  The text was black on a white background.  Similarly, the title tag read "Not Found".  Also, the Google Docs favicon appeared in the FireFox browser tab.

However, Google's 404 page was not customized to provide help to Google's users.  Now, a non helpful 404 page is no epiphany.  Plenty of sites have 404 error pages as unwelcoming and unhelpful as Google's and plenty of great, free custom 404 error page recommendations are out there just waiting to be implemented.

Based on Google's definition of a "good custom 404 page", Google does not have a good custom 404 page

The irony in this example is that Google Webmaster Help Center provides Guidelines for creating useful custom 404 pages which recommends that webmasters create a custom 404 page.  The guidelines state "If you have access to your server, we recommend that you create a custom 404 page. A good custom 404 page will help people find the information they're looking for, as well as providing other helpful content and encouraging them to explore your site further."
Google's 404 page didn't do any of these things.  It didn't help people find the information they were looking for (Google Docs), was not customized to provide other helpful content (no other content was provided) and did not encourage them to explore their site further (no exploration opportunities existed).

So, based on Google's definition of a "good custom 404 page", Google does not have a good custom 404 page.

Based on Google's definition of an "effective 404 page", Google does not have an effective 404 page

Google's guidelines go on to describe how to create an "effective 404 page".  The guidelines state:

"Because a 404 page can also be a standard HTML page, you can customize it any way you want. Here are some suggestions for creating an effective 404 page that can help keep visitors on your site and help them find the information they're looking for:"

Then, the guidelines provide a bulleted list of suggestions.  Let's see how well Google does, in implementing their suggestions:

  • Tell visitors clearly that the page they're looking for can't be found. Use language that is friendly and inviting.

Well, although the text doesn't say "what" isn't found, the page certainly presents the text "Not Found" loud and clear.  Obviously, the text "Not Found Error 404" is neither friendly nor inviting.

  • Make sure your 404 page uses the same look and feel (including navigation) as the rest of your site.

Google's 404 page doesn't use any look and feel, or navigation, let alone a look and feel that is the same as the rest of Google.

  • Consider adding links to your most popular articles or posts, as well as a link to your site's home page.

Google's 404 page doesn't contain any links to anywhere.

  • Think about providing a way for users to report a broken link.

Google's 404 page doesn't provide a way for users to report anything.

  • No matter how beautiful and useful your custom 404 page, you probably don't want it to appear in Google search results. In order to prevent 404 pages from being indexed by Google and other search engines, make sure that your webserver returns an actual 404 HTTP status code when a missing page is requested."

I didn't check the HTTP status code on Google's 404 page to see if Google's webserver returned an actual 404 or not.  Currently, it doesn't look like the 404 page appears in Google search results.

So, based on Google's definition of an "effective 404 page", Google does not have an effective 404 page.

Is Google a Google-friendly site?

What's really funny, is that Google's "Guidelines for creating useful custom 404 pages" are found under Googles' "Creating a Google-friendly site", which naturally begs the (very long) question:

If Google does not have a "good custom 404" page based on Google's definition of a good custom 404 page, and if Google does not have an "effective 404 page" based on Google's definition of an effective 404 page, which means that Google does not have a "useful custom 404 page" based on Google's "Guidelines for creating useful custom 404 page", and these guidelines are an element of "Creating a Google-friendly site" then...

Is Google a Google-friendly site?

 

 


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Google Defines Search Engine Optimization (SEO)

Posted on May 5, 2008 by Tim

This week, "The Official Google Analytics Blog" posted an article dedicated to website optimization.  The article, authored by Laura Melahn from the Google Analytics Team and Jon Stona from the Website Optimizer Team, focuses on optimizing websites for conversion utilizing Google Website Optimizer and Google Analytics.

Early on in the post, the authors clarify the difference between website optimization and search-engine optimization by defining both terms.  In this clarification, Google defines search engine optimization as the following:

 

  • Search-engine optimization means adjusting the content of your site so it ranks higher in the list of search results for a particular keyword or keyword phrase.

 

 

optimizing websites for conversion utilizing Google Website Optimizer and Google Analytics

Now, it's no epiphany that Google's definition of Search Engine Optimization (SEO) focuses heavily on site content, since the user experience exiting Google is at the top of their priority list.  However, the noticeably absent elements of raw link juice, anchor text weight and domain authority is interesting.  In general, when site owners think about Search Engine Optimization, as Google mentions, their primary objective is to be sure that their site "ranks higher in the list of search results for a particular keyword or keyword phrase".  However, for the most part, the term Search Engine Optimization is utilized in association with this goal, namely ranking higher, versus in association to an attribute that contributes to this goal, such as adjusting content.  This goal can be reached by improving a healthy amount of arenas, only one of which is site content.  Although Google's definition is likely accurate from a historical perspective, if Search Engine Optimization has become more synonymous with ranking higher than with adjusting content, and ranking higher is influenced by a slew factors, some of which arguably have more or less influence than content, maybe the definition of Search Engine Optimization should be something like the following:

 

  • Search-engine optimization means adjusting the content of doing things like W, X, Y, and  Z to your site so it ranks higher in the list of search results for a particular keyword or keyword phrase. 

 

Where W might be "adjusting content", X might be "building inbound links", Y might be "earning domain trust", Z might be "creating new content" and so forth.

This definition focuses on the goal and includes some of the attributes that contribute toward reaching that goal.  This approach would certainly align with industry practice.  Companies that provide Search Engine Optimization services typically provide a laundry list of ways for you to spend money.  Many firms who tout themselves as Search Engine Optimization companies provide a slew of services, including "adjusting the content of your site".  However, few firms run around touting themselves as, say,  a Link Building company, and provide search engine optimization (content adjustment) services as well.

Maybe it's just semantics...