Income Report: How Our Online Store Performed In 2011

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The new year has already begun which means that it’s time to report the annual numbers for our online store. Just yesterday, my wife closed the books on our financials and I’m proud to announce that we had yet another record year with double digit growth!

I know that I say this every single year, but my wife and I are continually amazed by how our little online shop continues to grow. Seriously folks, while our store does cater to the wedding industry, our niche is actually quite small. But apparently, we haven’t yet saturated the market for wedding hankies and we’re not done growing yet.

Here are some of the highlights for 2011

  • Year over year revenue grew 39%
  • Year over year profit grew 44%
  • Except for just 2 months out of the year, our store had higher revenues than the previous year’s highest month.
  • Our SG&A went down as a percentage of revenue due to the fact that we had no major travel expenses.
  • Our average order size remained relatively flat but the pure number of orders per day went way up
  • Our margins increased significantly due to the introduction of higher end products
  • Website traffic increased by about 31%

As you can see from the numbers above, we had another killer year with over 44% growth! If you look at all of the years that we’ve been in existence, that is now 3 straight years of at least double digit increases!

To put things in perspective, if my wife had stuck with her six figure day job, she probably wouldn’t be receiving double digit raises every year.

In fact, I can’t even remember the last time I got a double digit raise at my current job! It really pays to have your own business on the side and the internet allows you to that with very little upfront risk.

Other Highlights

In addition to a pretty healthy uptake in business, we were also featured in a few major publications and our handkerchiefs were even used in a celebrity wedding though I don’t have permission to publish the name.

  • Our personalized handkerchiefs were featured in the annual Martha Stewart Weddings DIY Issue
  • Our tea napkins were featured in the Jan/Feb issue of Lonny Magazine
  • Our cocktail napkins made the “Homes” section of the Wall Street Journal in the Dec 10th, 2011 issue!

Breaking Down The Numbers And What We Did Differently This Year

The bottom line is that more traffic equals more sales. The reason our revenues increased as much as they did was because our traffic increased by a proportional amount.

And these increases were a direct result of our search engine optimization efforts, our increased advertising spend and word of mouth.

Last year, we already ranked in the top 4 spots for our targeted keywords phrases. So this year, instead of trying to get all of those keywords to the #1 spots, I started focusing on long tail keywords that were just shy of the front page.

It turns out that our online store ranked for a whole bunch of keywords that were in the top 20 and required just a little push to make the front. These extra long tail keywords contributed to much of the traffic gains for the store.

In addition, the direct traffic to our store increased by 39% as word of mouth continued to spread. Seriously, we’ve been recommended by many of our existing customers as evidenced by some of the phone calls and emails we’ve received.

We Revisited Our Adwords Campaigns

The bad thing about running an Adwords account is that campaigns can quickly go stale. Since I had a lot going on in previous years, I’d been neglecting our Adwords account and many of our campaigns got out of whack.

So in the first quarter of last year, I did a major overhaul of all of our advertising campaigns and got back on track.

For keywords that performed well, I maxed out our bids to the point where we were getting the most clicks possible while still making a profit. For keywords that weren’t converting well, I made the keyword phrases more specific to improve the conversion rate.

We Introduced More Product Lines

As I had mentioned in a previous post, the textile industry in China is in major flux. Fabric prices have been shooting through the roof due to increased labor costs and labor shortages so we’ve had to adjust by continually finding new backup vendors to add to the mix.

Thankfully, last year things settled down a bit and my wife was able to introduce a few new products lines to our store.

We now carry products that span across the entire gamut of price points. In other words, we now carry lower end products, middle range goods and a new high end line of hankies that are imported from Germany.

By increasing our high end product lines, we’ve managed to increase margins which have added to the amount of profit per conversion.

Lowlights For 2011 And What’s Ahead

Despite all of the great profit growth, unfortunately there were some lowlights for the store as well. For example, both the average number of pages per visit and the average time on site went down about 7% compared to the prior year.

Based on my last article about why my online store needs a mobile website and how to tell if you need one too, I attribute this reduction in time on site to the increased number of cell phone users that have shopped at our store and the lack of optimization for these customers on our part.

There’s no doubt about it. The number of mobile customers is going to explode this coming year and I’m currently in the process of taking appropriate action. In fact, I’ve been working on the mobile site for my online store for the past 2 weekends and it’s almost ready for prime time.

As I mentioned in a previous post, most of my competitors don’t have a mobile site up yet so I’m hoping that having one will allow me to steal some business away from them.

If you are curious about creating a mobile site of your own, I’ve documented everything that I had to go through in creating mine and I’ll be sure to have a series of blog posts about it.

There are many different approaches to making a site mobile and I evaluated each option thoroughly before deciding to completely gut my site and custom code most of the pages from scratch.

In any case, I’ll keep you all posted once the mobile site goes live so you can check it out. Here’s to a successful 2012!

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23 thoughts on “Income Report: How Our Online Store Performed In 2011”

  1. That’s great to see! Your story is truly inspirational. I recently made some major changes to my store and have just had my first sale of the year. Last year was a learning experience and I’m feeling hopeful for this year. So yes, here’s to a great 2012!

    1. Congrats Carissa!
      The first sale feels great doesn’t it?

  2. JB says:

    Awesome! These are great results and love the picture of you and your son!

    1. Thanks JB,
      Most of the pics on the blog are of my daughter so I figured it was time to introduce my son to the blog

  3. Congrats on your success! You mentioned adwords – I am curious how important paid search is to your store and in terms of cost vs. profit how that works out. We are starting a telephone service and are considering using Adwords. Thanks! Marshall

    1. Hi Marshall,
      Paid search is about 20% of the business and the profit varies depending on the product line. My campaigns are all profitable but it takes time to optimize your account. In the beginning, you will waste a lot of money

  4. So happy for you Steve! Congrats!! Love the picture of you and your son…where’s your wife?

    1. Hi Bettie,
      The wife doesn’t like to be in pictures:)

  5. Hi Steve,

    That’s awesome! Congratulations!

    Looking forward to hearing all about your mobile site: what worked, how it affected your business, etc.

    1. Hey George ,

      Good to hear from you!

  6. Steve, well done! Thank you for sharing so we can enjoy and learn from your success.

    All the best from your friend in Toronto!

    1. Thanks Alexa. Good to hear from you too. All the best from your friend in sunny California:)

  7. Congrats on your 2011 successes! So very happy for you and all your accomplishments, and looking forward to reading about your mobile site development and process. Our online store is launching in a couple short weeks and your blog posts have been instrumental to making sure we set it up the right way. Thanks again!

    1. Thanks Michelle,
      Once you figure out your store strategy, I’m sure I’ll be seeing similar posts on your blog:)

  8. Rick James says:

    Looking forward to reading about your experiences with your mobile site. I know that I probably need one too but I have no clue where to start or what to do.

  9. Another excellent post! Take-away about pushing page 2 keywords to page 1 is really interesting, that seems like a very overlooked tactic.

    1. Thanks Laura! Yeah, you’d be surprised at how many keywords you rank for that are right on the edge. On an individual basis, it’s not much traffic but collectively, it all adds up.

  10. Congratulations! You are definitely on the right track. Be very careful of AdWords – that was my specialty for 5.5 years but I could not abide the stealing from advertisers so I stopped doing it altogether. Yes it CAN still generate profits but do watch it like a hawk.

    I once worked extensively with a wedding related ecommerce store and have several ideas you can implement immediately that would cost you very little but will give you multiple alternate sources of income. If you would like to hear more my contact info is on the contact tab on my blog.

    At a minimum, do drop by and leave comments in all my wedding related posts properly using CommentLuv and Keywords in the name field or send me your preferred anchor text and landing pages and I will add links for you to those posts on multiple blogs (GrowMap and ExecGiftsBlog).

    I will link this comment to a post that explains what CommentLuv is and how to use keywords in the name field.

  11. Congrats on a great 2011! I’m looking forward to the updates on the mobile site. We’re considering one as well but don’t even know where to start.

    Steve, you mention 20% of your traffic is from paid search, would you mind saying where you generate the rest? Is it entirely SEO?

    Thanks, and here’s to a great 2012.

    1. Hi Lily
      Not sure where you got the 20% traffic number from, but our traffic percentage from CPC is much less than 20%. Most of our traffic is obtained through a combination of direct traffic, organic search and social media.

      1. Hi Steve,

        I mispoke (typed), I meant 20% of sales, not traffic. I was referring to your reply to Marshall.

        Thanks for the info.

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