Groupon says its focus is on the bottom line, rather than top-line growth.
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Another key ingredient for Backcountry`s strategy is a common back-end operation for all of the sites, a less costly option than building different operations for each niche, Holland says. "It`s the same infrastructure that is supporting all these sites," Holland says.
But a common back end also poses some challenges. With the same systems for shipping, picking, warehouse inventory and product packing in a 100,000-square-foot warehouse in Salt Lake City, it`s often hard for a staff trained in one system to separate products for six sites, Holland says. For example, all the products are stored in the same warehouse and come down the same conveyer belt to be packaged at the same location. "You have to be on your toes at all times to make it happen correctly," he says.
The mix of products offered on Backcountry.com will change as the company spins off new niche sites, Holland says. For example, once Explore64 builds up momentum, products such as school backpacks will be pulled off the main site. "It`s not really a hardcore Backcountry thing but there`s a big market for it," he says.
The power of viral
Key to Backcountry`s strategy is creating a system to get products out to customers as quickly as possible, Holland says. "We recognize that far and away the first thing we can do to knock the socks off our customers is to get the gear to them so fast that it makes their heads spin," he says.
Backcountry uses different channels to market its sites, including affiliates. It also uses keyword marketing, primarily through Google and Yahoo Search Marketing, formerly Overture Services Inc. However, Google doesn`t recognize the various Backcountry sites as unique enough to list separately, Holland says. "This is the challenge that we have to overcome," he says.
Google in January announced a new policy under which it shows only one paid ad per search query for affiliates and marketers displaying the same URL. Under the policy, if multiple ads compete for the top keyword position under the same URL, Google shows only the ad with the highest AdRank. The AdRank is based on the ad`s cost per click rate and the click-through rate on the ad.
Comparison shopping sites also play a major role in directing traffic to the niche sites. For instance, in one of Tramdock`s early months, nearly 95% of the traffic for the site was generated through comparison shopping sites.
In some cases, word of mouth is generating business. A link to SteepandCheap is featured at the top of the Backcountry`s home page, but it`s not being marketed elsewhere because it is a low-margin site. Yet SteepandCheap is getting some real traction, Holland says. "We`ve been pretty much blown away with just the viral nature of it," he says.
From the beginning, SteepandCheap has had a link for customers to e-mail friends about the site. "We`ve also relied on our employees and loyal customers to spread the word within their circles," Holland says. "Once the word gets out and the deals substantiate the hype, it is just a matter of time."
Mean, clean, focused
References to SteepandCheap have popped up on sites such as Widespread Panic fan message boards, Swedish outdoor forums, FatWallet.com, Teton Gravity Research`s message board and other related forums.
The niche strategy appears to be succeeding, Holland says. "We were having a tough time moving skis from the carve ski category on Backcountry.com while they were steadily selling at full retail price on Tramdock.com," he says. The skis finally began to sell at the main site after Backcountry put them on sale.
"This tells us volumes about how powerful the niche sites can be in attracting the right customer," Holland says. "A skier wants to buy skis from a ski shop because that`s where they feel comfortable, for the same reason you`d feel uncomfortable buying auto supplies from the grocery store. Sure, they`re likely have some things like oil and antifreeze, but you`ll feel much more inclined to purchase these products at AutoZone or NAPA."
Certainly, spinning off web sites is nothing new. But for Backcountry, it marks a return to what Holland calls "mean, clean, focused" brands, an approach that proved successful in the past.