E-commerce software provider Shopify had 275,000 clients at the end of the first quarter, up from just over 162,000 a year earlier.
Second 500 growth leaders use search marketing, narrow product offerings and technology to drive sales, according to Internet Retailer’s newly published Second 500 Guide. Other smaller merchants can use those tactics to thrive in an e-commerce world dominated by larger players.
Jewelry retailer and manufacturer Alex and Ani LLC will note 2012 as a hallmark year. Its online sales increased 752% to $12.03 million from $1.41 million in 2011, making it one of the fastest-growing merchants in Internet Retailer’s 2013 Second 500 Guide, according to the new Internet Retailer Second 500 Guide, which ranks the retailers Nos. 501 to 1000 in North American web sales. That growth came from development of a paid search program, investing in lead-generation programs and implementing new marketing elements, says Ryan Bonifacino, vice president of digital strategy.
“The ultimate goal was to simultaneously plan, build and scale in a way that allows us to track and fully attribute marketing dollars to new and repeat revenue across all channels,” Bonifacino says. The merchant also built its web infrastructure in anticipation of higher sales. “We knew we were going to grow at a rocket-ship trajectory and needed to be prepared for that growth.”
Each quarter, Alex and Ani (No. 629), added new marketing components or expanded infrastructure in one way or another. In the first quarter, for example, it expanded staff and added e-mail services from Sailthru, a personalized web marketing firm. In the second quarter, it launched a branded paid search and natural search program. In the third quarter, Alex and Ani began spending on lead-generation efforts that linked ads to e-mail sign-ups, he says. Spending was allocated to the best-performing sources. In the fourth quarter, the retailer conducted A/B testing to gauge the site experience for customers and new visitors through creative, navigation and segmented product presentation models.
Growth leaders like Alex and Ani helped merchants ranked in the 2013 Second 500 Guide increase online sales by 15.6% in 2012, putting them on par with total U.S. e-commerce growth of 15.9%, as calculated by the U.S. Department of Commerce. These retailers face increasing competition from larger web retailers such as Amazon.com Inc. as well as from retail chains and catalogers that are becoming more focused on growing web sales. But this year’s growth leaders show that a combination of narrow product offerings, traditional search marketing tools and keeping their web sites current can produce strong sales growth.
2012 was also a big year for web sales at The Garden Gates. It was the first year the upscale home furnishings retailer had a full-time art director working on its brand image and e-commerce site design, and work began on expanding product category descriptions on TheGardenGates.com to improve natural search results on Google.
Those efforts paid big rewards, as the retailer (No. 919), which also has a store in New Orleans, grew 2012 sales by 265.5% to $3.6 million from $985,000 in 2011, says Chad Harris, co-founder and managing partner. The merchant updated its web site three times in 2012, including using larger images, says Harris, who started the company with his wife Beth in 1999 and launched the e-commerce site in 2003. “We did tons of work on the home page, category pages and the product page layout.”
Combined with updated coding carried out by internal programmers, the e-commerce site loads faster, and the merchant has been rewarded with steadily improving search positions, Harris says.
Search engine optimization played a major role in 2012 growth for niche retailer TipsyElves.com (No. 987). Evan Mendelsohn and Nick Morton, co-founders of the garish Christmas sweater e-retailer, saw a niche market emerge firsthand as they attended ugly Christmas sweater parties every holiday season during and after college. They launched TipsyElves in 2011, with web sales of about $370,000, and grew by 134% in 2012 to about $861,000. Mendelsohn says search engine optimization helped drive the site’s growing popularity, as the duo places a high priority on ranking in the top five for key search terms such as “ugly xmas sweaters.”
One trait that makes TipsyElves.com different from many other online retailers is its penchant for charity. The retailer’s “Sweaters 4 Sweaters” and “$1 for 1 Like” Facebook campaigns, which donate a portion of each sale to children’s clothing charities in the San Francisco and San Diego areas, raised over $60,000 last year.
The emphasis on optimization led to about 10,000 unique visits a day during December, TipsyElves’ busiest month, with about 75% of those coming from Google, Mendelsohn says. While serving such a niche market means most sales only come in the final two months of the year—about 80% of sales in December, most of the rest in November—he says the retailer is looking to expand in several ways, without losing focus of its primary market.
In early 2013 the merchant launched two other “ironic fashion” e-commerce brands—Extreme80s.com and FannyPackAttack.com.
The tactics used by the Second 500 growth leaders can be adopted by other smaller retailers, says Paula Rosenblum, an analyst with Retail Systems Research LLC. “Some form of search engine optimization is key for smaller retailers. You've got to expect that the ‘big guys’ will spend money to get their links at the very top of the page, but you can get quite near there even without paying for search or with a relatively minor investment.”
While there are many retailers selling similar products, there's a bit of “big box fatigue” going around that works in favor of the smaller web retailers, Rosenblum says. “As long as a smaller retailer can remain competitive on price, consumers will have a propensity to buy from them, especially if there's a big dose of customer service once the consumer makes contact.”
The 2013 Second 500 Guide is available in three formats: print, digital and as part of the all-new and completely updated Top500Guide.com. Information on how to order the brand-new 2013 Second 500 Guide is available here.