Overstock.com Had 3,400 Affiliates In New York State

Pay attention to the small print toward the end of this argument about internet sales tax collection.

While it is important to consider the issues with internet sales tax (issues that are largely meaningless, because customer behavior doesn't fundamentally change as sales tax is added), it is so much more interesting to consider that Overstock.com had 3,400 affiliates in New York State!!

You're probably looking at, what, 30,000 to 50,000 affiliates in total, nationwide, at Overstock?

This is what I mean when I talk about micro-channels. It is easy to go to Abacus and ask for one-time access to 1,000,000 households that yield you 8,000 new customers after matchback.

It is hard work to manage 40,000 affiliates that will drive 8,000 new customers to your brand. You'll quickly note that this style of marketing "doesn't work --- half of your affiliates wouldn't generate any new customers over a two month period of time"!

And yet, each method generates the same result. Results are all that matter.

Our future is an endless array of 200,000 micro-channels that yield one or two or three or seven-hundred new customers a year. There will simply be too much competition to leverage Google effectively, and all of the old-school mass-audience methods are slowly dying.

Retailers Using Social Technology, Community, And RSS

In addition to the Saks Video Catalog, many retailers are using social technology, community, and RSS feeds in interesting ways. Many in our catalog audience are looking for new ways to have a relationship with customers. Let's review a small sample of brands using social technology in one way or another.

Urban Outfitters has an interesting site that features articles, videos, an RSS feed and a MySpace page.

Neiman Marcus communicates fashion via their InSite Blog.

Ice.com's Just Ask Leslie Blog combines customer questions and short features.

eBags uses bookmarks to tag items you are interested in.

Mac Cosmetics, a $274 million division of Estee Lauder, has customers who are literally inventing products for the brand, sharing the ideas on YouTube. Their product development folks should take a peek at this! My wife found the video when searching for ideas on how to store Mac products. Take a peek at YouTube to see how other folks are doing marketing and product demonstrations for you ... heck, this young lady has almost 14,000 views.

Nordstrom has a MySpace page for their BP division.

Paperspine, an online book rental brand, hosts a blog about books.

Zappos is using Twitter to allow folks to communicate about the venerable online shoe brand.

Patagonia hosts The Cleanest Line, a blog for employees, friends, and customers.

Overstock.com offers a diverse array of community-based options.

Crutchfield has a community section on their website.

Burpee Seeds features their RSS feed on the homepage.

Hallmark has an interesting blog for their Shoebox division.

Here's the Shutterfly community.

Use the comments section to share other ways that retailers are using social technology, community and RSS feeds to partner with consumers.

Annual Report Update: Overstock.com

In addition to EBT being -12% of net sales, the following quote by management clearly directs blame --- and management doesn't believe blame rests with the merchandising organization:

"Our fourth quarter revenue declined 7%, the same percentage decline we experienced in Q3, and our annual revenue was down 1%. We believe that these decreases were primarily the result of our infrastructure upgrades in the last half of 2005, which resulted in an unsatisfactory shopping experience for many of our customers and affected both repeat and new customer revenue in 2006. We believe that a key to future revenue growth is to increase our Website conversion rate-defined as the percentage of visitors to the website who make a purchase. The areas of our business that most directly affect conversion rate, including personalization of the website, customer retention, e-mail marketing, and site design and layout, are the responsibility of our internal marketing department."

Those comments may be true. Still, making money in a direct-to-consumer business that has 12-14% gross margins is VERY DIFFICULT. Repeat, VERY DIFFICULT.

Top Four Articles From November

November saw a 40% increase in traffic. Thank you! Here's what you enjoyed reading the most in November.

• Number Four was a tie. "Business Review: Overstock.com", a discussion about profit and loss at the low-cost, low-margin online pureplay. Tied for fourth was "Return on Investment Equation and Copywriting". Google helped this out (do a search on ROI Formula, and see what appears in the top 7 results).
• Number Three was "Mergers and Acquisitions", a discussion about Eddie Bauer being purchased.
  
• Number Two was "Williams Sonoma, Incremental Online Sales and Matchback Analysis". Our multichannel retailing audience enjoyed this post.
• And the Number One article was, in a landslide, "Please Help Our Industry Measure Advertising Effectiveness!". The spreadsheet, which needs to be solved by January 31, 2007 (all valid answers will be published here), has been downloaded by individuals in nearly a dozen different countries. My hope is that a good mix of data miners, and folks from industry leaders like Abacus, Merkle, Acxiom, Unica, Experian, SAS, SPSS and others genuinely try to do good for the multichannel retailing and online industry, and provide a solution to this problem.