Mid Year Income Report: How Our Online Store Performed In The First Half Of 2013

Before I get into any specifics, I just wanted to say that so far this year has probably been the most challenging year we’ve ever had with our online wedding linens business.

Google Panda Penguin AlgorithmLike most ecommerce stores, we derive a decent chunk of our business from search and Google has been making so many changes lately that it has kind of thrown our search engine traffic into quite a loop.

In fact, I now officially dislike all black and white animals, especially pandas and penguins:) In general when the search algorithms change as much as they have, I tend to go into a holding pattern until things settle down so I don’t make any snap judgements or rash decisions.

But just to give you an idea of the mass fluctuations with our rankings, I’ve seen some of our keywords go from the top 3 down to the top 40 and then back to the top 5 all within the span of 2 weeks.

It has been quite the roller coaster ride but thankfully, I’ve finally managed to get a good handle on what needs to be done.

How Search Has Evolved

Bottom line, Google has started favoring the big box stores in the search results. Whereas my competition used to be shops run by 50+ year old women, I now find myself going up against major department stores for some of my products.

bigbox

The good news is that I still offer a superior product selection over my competition and there really is no contest for our primary money earners. But it is quite annoying to find a weak page with practically no backlinks outrank us in search.

In fact, it really pisses me off and has made me extra determined this year to diversify our revenue sources!

Highlights During The First Half Of 2013

Anyways, let’s start with the highlights.

Despite having an overall year over year DECREASE in traffic, we still managed to pull off a double digit increase in revenues. To date, that is now 5 straight years of double or triple digit growth!

bbl mobile siteHere are some of the numbers below.

  • Year over year revenue grew 12%
  • Year over year profit grew 7%
  • SG&A went up as a percentage of revenue
  • Our average order size increased by $2 and the average number of
    orders per day went up as well
  • Our overall conversion rate increased by 17%
  • Our average value per visitor increased by 25%
  • Our margins grew by 2% as we started shifting to higher margin goods
  • Our year over year revenue from mobile sales increased by 141% (These numbers are slightly skewed because our mobile site launched in early February of last year so there’s one month less data)

Let’s Talk About The Numbers

The first number that probably stands out above is that our profit increase was significantly lower than our revenue increase.

If you recall during my last income report, my wife and I have been making a conscious effort to outsource our entire business.

Late last year, we rented a larger office space in preparation for more employees. And this year, we brought in another full time employee to help pack and ship orders as well as handle customer support.

We’ve also invested in some new equipment for the office as well. While all of these costs come at the expense of lower profits, it frees up my wife’s time tremendously to perform other tasks. In fact, she’s already been talking about starting a new business:)

The other thing to note is that our conversion rates and our average value per visitor have increased dramatically. And I attribute this to the fact that we are now attracting more targeted leads through the shopping cart comparison engines and social media outlets like Pinterest.

Lowlights During The First Half Of 2013

Remember how I mentioned that traffic was down? While our search rankings have finally stabilized, our overall year over year traffic levels have actually decreased by about 6.8% primarily due to search.

We also experienced a really bad month of February due to inclement weather in some of our primary markets. For example, the storms in New York pretty much decimated all of our business there for a period of about 2 weeks.

It also didn’t help that we took vacation during the month of February and had to shut the store down briefly. All in all, it’s been a challenging half year but I’m quite happy with the results.

How To Grow Your Business With Less Traffic

The one great thing about losing 6.8% of my online store traffic is that it has lit a major fire under my butt. When I first started noticing the downward trend in late February, I immediately set forth a long term plan to boost our revenues and reduce our reliance on Google search for business.

internationalFirst things first, we decided to expand our customer base internationally. If you’ve ever shipped a package outside of your home country before, you probably already know that it can be a major pain in the butt. And it’s quite expensive as well.

Looking at our analytics reports, we noticed that Canada, UK and Australia were the countries with the highest levels of referral traffic so we decided to initially launch in those countries. And in just the last few months, international orders now make up over 2% of our revenues. 2% might not sound like a lot but it’s 2% we wouldn’t otherwise have had.

The great news about international orders is that they also tend to be 25-30% larger as international customers tend to buy more to offset the high cost of shipping. As soon as we get a good handle on our international fulfillment, we plan on expanding to other countries as well.

comparison shopping engines

The other thing we did to boost sales was we put out an all out assault on the comparison shopping engines. As you may or may not be aware, there are a bunch of CSEs out there and each one of them has a different product feed format that your shopping cart needs to be compatible with.

I was too lazy to do the implementation before but desperate times call for desperate measures. So I decided to bite the bullet and coded up support for each and every one. Needless to say, the comparison shopping engines have been very good for us and the conversion rates are fantastic. At some point, I’ll write up my own review and experiences with each one as a follow up post.

Finally and most importantly, we’ve made drastic changes to improve our website. In fact, I have written a completely separate article that will discuss the exact changes we made to improve usability and conversion rates. But just to give you a taste, we launched our redesign in June and the year over year revenues in June were about 30% higher than last year!

Conclusion

With so many changes to the search algorithms, I have been especially determined to diversify our traffic sources as much as possible.

The plan for the second half of the year is to put more emphasis on our social media presence and email marketing as well as make more conversion improvements to our website.

Just because Google traffic is down does not mean that our store revenues will decrease as well. Quite frankly I’m pissed off and as fired up as ever to keep this little store of ours growing in the double digits yet again!

Expect a stronger second half of the year!

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9 thoughts on “Mid Year Income Report: How Our Online Store Performed In The First Half Of 2013”

  1. Coy says:

    Must be missing something. If revenues grew at 12% and SGA went down as a % of sales (which would include the new FTE, the larger office space, and the office supplies), and margins increased, how can profit increase at a slower rate than revenues?

    Lower SG&A as a % of revenue would mean the profit as a percent of revenues would increase. Which would mean profit would increase at a higher rate than revenue.

    Like I said I must be missing something and it’s driving me crazy.

    1. Hey Coy,

      I’ll let my wife take this one as I just cut and pasted these stats from her email. I’ll have her respond once she wakes up.

    2. Hi Coy,

      You are absolutely correct. SG&A went UP as a % of revenue. Can’t explain why I wrote that initially except to say Oops and I need to proofread more. =) I asked Steve to update the report.

      Jennifer

  2. Darrin says:

    Hi Steve,
    I’m a new reader to your blog and I wanted to say thank for sharing so much good content for us! My question is.. do you feel that creating a profitable online store is going to be much harder with google now favoring big box retail sites in the search engine results ?

    1. Hey Darrin,
      Great question. I didn’t mean for this post to come across as doom and gloom. Small niche shops will always have a place in the market.

      In general, big box stores do not carry a large variety of niche products. If you pay attention when you shop, you’ll notice that large stores tend to carry only onesie twosies of many items. Therefore, if you specialize on a very specific product line and do it well, you should be able to beat out a big box shop.

      I didn’t indicate this clearly in the post, but all of the top search results in the picture I posted lead to single products whereas my link leads to full on category displaying a wide variety.

  3. Mark W. says:

    Unfortunately, welcome to the club Steve. It’s been an interesting dance with Google over the last year or so. We were solid for years, then dropped quickly last summer. Got that fixed up as our site was a bit over-optimized, then this spring and summer we’ve jumped all over. And you’re right on about big box getting a shift up.

    Fortunately when I look at our traffic breakdown, google is still tops but we apparently diversified enough because our sales and traffic are still solid and climbing. We certainly get more out of the long tail stuff and less out of the main keywords we’ve always targeted but in the end, the lesson of course is to just not rely on google all that much if you can do it.

    We have a large email list, over a hundred youtube videos and other distribution, and our separate blog seems to do well in getting some traffic too. Social has been OK but still a long ways to go.

    Anyway, I’m getting less and less concerned about what google does and more about what we’re doing to truly market our business in the most effective and efficient ways…google will always play a part, but putting too much in their basket is just too darned risky and can cause some sleepless nights. Not worth it.

    Going forward I’m interested in seeing if it might be possible for a small but dominating online retailer to build enough authority in a tight little niche and see if you can still beat the broader big box…I don’t know as yet how, or if that will be feasible but to me it’s worth further research, only because I still like being ranked high in organic search…guess I’m just greedy that way:)

    Thanks for sharing your experience!

    1. Hey Mark,
      Sorry. I completely missed your comment from last week because I wasn’t getting comment notifications for some reason. I’d be very interested to hear about how the Google changes have affected your store as well and what you have done to diversify. You are welcome to write a guest post anytime!

  4. Mark W. says:

    Hi Steve,

    No worries. When I get some time it would be good to compare notes, although our markets are quite different. In the end, it’s kind of been a round about way of coming back to where business starts…google isn’t the only connection we have with our customers…it might be a pretty big one, but Lord you can’t give up the farm to them…too risky. Down the road I’d love to talk about doing a post…always loved the content on the site and how it’s helping those who take the time to read it.

    I’ll be in touch again once things settle down here a bit…it’s chaotic but in a good way:)

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