Is your business suffering a Group Buying Hangover?

Posted on by Billy Tucker

Group Buying helped good businesses access revenues that had previously eluded them, improving utilisation, buoying their P&L and promising a sustainable new revenue stream from this exciting new consumer channel.

But now that the sector has waned and desperate Group Buying businesses have become fixated on stack ‘em high sell ‘em low product chuff – those once buoyed businesses are left feeling a little queasy.

Just one of the problems they face stems from prepayment, one of the headline benefits touted by most group buying companies (including me).

Although quick access to cash is manna from heaven for most business owners, prepayment has left behind a tequila-like side effect.

The problem is this. A top priority for all online businesses should be around Funnel Conversion, i.e. the ability for the business to convert leads into dollars, however in a world of prepayment, conversion becomes somewhat unimportant. In fact, if breakage (unused vouchers) is a profitable exercise for the merchant, higher conversion may actually mean lower short term profits.

Now that Group Buying is providing an ever declining proportion of revenues, many online businesses that signed up to breakeven or lossmaking campaigns in order to grow their subscriber base, now find they are unable to monetize that base due to poor site performance, especially in the area of conversion.

Faced with lower than expected revenues, these companies often head back to Group Buying to find that like-for-like offers work only half as well as they did before. Now the business is in a pickle, the drug is half as effective, risk its brand by doing twice as much? Surely you know your drug dealer is never your friend?

The key is to get the fundamentals of your businesses working right before looking to Group Buying or any type of Marketing for that matter. Ensure that the purchase funnel is converting 60% or more of the people who hit “Buy Now”, that your Subscription Channel is effective, and your email strategy is delivering appropriate Open, Click and Purchase rates.

When cloaked by the shiny veneer of Group Buying dollars your site performance will look a whole lot better than it really is. Time to sober up, shake off that hangover and see if your bedfellow looks as good as you remember.

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The seismic shift toward Online

Posted on by Billy Tucker

I met with Business Spectator’s Alan Kohler and recorded an interview for Qantas inflight Radio in June. I was flattered to be invited to the show, the interview is now available below.

A link to the file is here.

Alan was particularly interested in a topic I have spoken about on a  number of occasions, the slow but steady adoption of the internet by all but the most tech-resistant and the impact that shift is having on traditional commerce.

Now that over 3/4 of the Australian population have a connection to the web, businesses of all types are finding that their typical customer is spending an increasing amount of time online and can be reached there quite cheaply for Brand building as well as ecommerce.

Two other significant factors beyond the amount of people online are – the nature of connectivity, i.e. fast connection speeds are no longer the preserve of early adopters – and that almost all internet users are willing to shop online, with only 5% of internet users showing concern about online security.

The shift towards fast access speeds has been so rapid that in 5 short years the issue of access for all has all but disappeared. Mobile internet use has also accelerated with many online businesses signalling that 10% or more of page impressions are from mobile devices and mobile transactions are catching up fast.

Where the online activities of the older demographics were once limited to banking and email, this is no longer the case. Over 20% of the discount shopping audience is 60+ suggesting that older folks enjoy the process of shopping online even if they don’t have to.

I think it’s fair to say that not being online in 2012 is akin to not having a mobile phone, at some point it looks a bit weird!

Meanwhile, as the Internet population has swelled to include your parents and most their friends, technology has evolved that enables Advertisers to single out their target customer and provide a customised offer on the fly – further extending the economic advantage of online commerce.

For the first ten years of the web the economic engine that powered its growth was display advertising (And subscription Porn but that’s another post!), publishers funded their growth by making money from page impressions – a refit of the existing TV and Magazine advertising model. In 2000 Google started selling ads in a new way – through search keywords which provided advertisers with a way to talk to customers based on what they were looking for, rather than what they had already found.

Now the model is shifting again, more people and more data means that publishers are now making an increasing portion of revenues from who you are, rather than just your location on the web. publishers can connect advertisers with their target Market with reasonable precision using browser tags. No longer are marketers confused about which half of their dollars are wasted, in the new world of the Internet, they spend half as much and almost none is wasted.

The rapid shift towards a more personal web has occurred in the past couple of years and the pace of change is accelerating. It was only 5 years ago that Facebook emerged as a public service, touching a Billion or so lives since.

The amount of change we see in the next 5 years will be as dramatic as the last 5, with an even greater emphasis on devices, mobility, personalisation and online commerce, bring on 2017!

Does Microsoft’s Surface announcement mean the Courier is still possible?

Posted on by Billy Tucker

courier

As a design study the Courier was a tremendous success back in 2010, but as a PR exercise it was something far more sinister.

I heard when I was visiting Microsoft HQ in Redmond that Microsoft had made the Courier concept public to demonstrate what could be built on the Windows platform and had provided the build specs to at least one OEM, however the Courier quickly turned from an innovative design exercise into an unfortunate metaphor for their inability to compete with Apple.

It made no real sense to me at the time that Microsoft was actually going to build the Courier, however with the announcement of their Surface Tablet, I clearly don’t know shit.

Regardless that Microsoft obsesses about competing with Apple (And Google for that matter) the fact is Microsoft doesn’t compete head to head with Apple, their OEM partners do, such as DELL, Sony and HP. Those same OEMs are are on the Android bandwaggon as a fashonable and low cost alternative to Windows. Faced with flagging consumer relevance and an uncomfortable 3-way with Google, Microsoft clearly had two options, try to woo the channel and win them back from Google, or go head to head, Google style!

Google led the way in Partner-shafting when they formed the Open Handset Alliance to build Andriod powered phones whilst building its own Nexus device to compete with it! But then, Google always seem to struggle with the notion of boundaries. Microsoft, on the other hand, seemed to take a Partner-first approach.

Microsoft is in a sticky spot for sure. I mentioned before that Microsoft could hold its breath for a long time, meaning that it could afford to make short term sacrifices for the long term good, but those old lungs are not what they used to be, which, combined with an astonishing run for Apple, has clearly led to new thinking in Redmond. I can’t see how this is winning.