From Affiliate to Merchant
Dom Hodgson finished the first day of A4U off with his story of selling pick and mix online; an amusing tale of just doing it, rather than getting over cautious around having a business plan. For anyone who went to BrightonSEO in April 2012, then this talk would have been familiar.
Dom set up clicknmix.co.uk about a year ago, simply to sell sweets online. With the task of ‘making buying sweets actually fun’, he chose to go down a merchant route, rather than be an affiliate for two key reasons:
- He would own the inventory
- He could custom build the experience from the ground up.
Basically, being a merchant gave him far more control – the most important ingredient since he wanted to change people’s attitude towards buying sweets.
Rather than do much in the way of forecasting or a business plan, he built the site in two days and launched it over a weekend. Initial traffic was strong, but they experienced some problems:
- For all the traffic, no one converted in the first few hours. Dom soon realised they were in sandbox mode and people couldn’t check out. He switched this and gained 5 orders.
- People started complaining almost from the off – with ‘problems’ such as being confused about his squirrel mascot, and there not being enough selection (he had 17 varieties of sweets).
With not much of a business plan to speak of, he found that his margins were squeezed by high delivery costs, PayPal fees and VAT. He also ran into problems selling giant snakes, because he sold on per sweet, but the delivery was done by weight. Often orders including the snakes cost more to deliver than the revenue gained.
After the initial flurry of visits and orders, things tailed off for a period and Dom had time to think about how to take it to the next level. He had the site usability tested, and the conclusion was to scrap most of the framework and start again – including the squirrel mascot. He also hired an employee and changed the delivery options.
This final point hurt margins. The average order value moved from £3.50 to £5 to gain the free delivery, but then Dom had to pay for the delivery. He also put in live chat, but found this had 0% effect on sales.
Finally he settled for some new delivery options, with free 2nd class for £6 orders, and premium delivery for £2. This saw a healthy increase in sales, with average order value increasing from £5 to £9.
In all, this was an interesting talk about the challenges of being an Internet vendor, particularly when you have no business plan. Dom thinks if he had planned it out, much less would have been done because it wouldn’t have seemed like such a great idea. As it is, he has a site with a greater chance of breaking even due to the work he’s already put in.