We’ve since stopped selling on Amazon, but I’ve continued to receive emails about the post. Once such email was from a graduate student, Baojun Jiang of Carnegie Mellon, who was writing a thesis on the topic of topic. I think it’s absolutely awesome that someone would want to delve deeper into Amazon’s awkward relationship with their sellers. He asked for my permission to cite my post, which I of course gave him, and we exchanged several more emails about the details of our experiences with Tastefully Driven.

The paper was finally published online last week. The math was waaay over my head (it’s been quite a while since I took calculus and differential equations, and even then I’m not sure if I’d “get it”), but I nonetheless found the paper very interesting to read, especially considering that this potentially controversial topic doesn’t seem to garner very much attention.

Here is an excerpt from the paper, sort of a “guest post” by Baojun and his partners:

While millions of products are sold on its retail platform, Amazon.com itself stocks and sells only a small fraction of them. Most of these products are sold by independent sellers, who pay Amazon a fee for each unit sold. Empirical evidence clearly suggests that Amazon is likely to sell the high-demand products and leave the long-tail products for independent sellers to offer. However, for “mid-tail” products, those that it cannot classify with certainty as either high-volume products or low-volume products, Amazon’s strategy is less clear. While Amazon may let independent sellers offer such a mid-tail product, it may be tempted to offer the product directly, especially if the product shows the promise to become a bestseller. Amazon’s “cherry picking” of the successful products, however, gives an independent seller the incentive to hide any high demand by lowering his sales with a reduced pre-sale service level unobserved by Amazon.

A closer examination of product sales on Amazon’s platform reveals an interesting fact – Amazon indeed sells a disproportionately large number of products with high demand. For example, though Amazon directly sells only 7% of all electronics products listed on its website, it sells 64 of the top 100 bestsellers in that category. Digging a little deeper, for the “Digital SLRs” camera subcategory (with 928 products listed), we find that the percent of products sold by Amazon decreases sharply as we go down the list of bestsellers—Amazon carries 16 of the top 20 bestsellers, but only 5 of the products with sales ranks from 150 to 250

For a mid-tail product whose sales potential is not readily obvious, Amazon can initially let the independent seller sell it, track the early sales of the product, and then decide whether or not to offer the product directly. And therein lies the inherent risk faced by a midtail independent seller: If the product sells well, Amazon can observe this (since it processes all sales orders on its website) and is likely to enter and offer the product itself. In doing so, Amazon can eviscerate the independent seller’s market, driving him out of existence. [Amazon's] agreement with independent sellers allows it to terminate any seller at any time without notice for any reason. But Amazon does not actually have to take such an extreme action. After it starts selling the product directly, Amazon can boost its own sales in various ways. For instance, it can display its own offering very prominently, and given its advantages in scale and not having to pay its own sales fee it typically offers lower prices along with free shipping, etc.

Anecdotal evidence from popular discussion blogs suggests that Amazon indeed does this kind of cherry picking of relatively high-demand products, and that once Amazon starts selling a product directly, independent sellers essentially lose most if not all of their sales to Amazon.

This creates a dilemma for the high-demand independent seller. He may make more profits early on by selling many units of the product, but if he sells too many units, Amazon will learn that this product is worth selling directly, and the seller will lose substantial future sales. Thus, if the seller has a relatively high-demand product, he has an incentive to reduce his unit sales, perhaps through a lower pre-sale service level to the potential buyers. For instance, he may carry a lower inventory level and periodically post out-of-stock notices. He can also devote less time and resources to dealing with consumers’ inquiries about his product or related post-sale services (e.g., he may answer inquiries less conscientiously and with a longer time lag, hence losing some potential sales). Such pre-sale interactions with consumers typically occur outside Amazon’s sales platform and cannot be directly observed by Amazon. Moreover, with hundreds of thousands of independent sellers, Amazon may find it too costly to monitor even the somewhat observable aspects of seller services. Hence, Amazon may face a demand-learning problem for mid-tail products—if it observes not-so-high unit sales for the seller’s product, it may not be able to infer whether or not the product has the potential for high-enough sales to warrant direct selling, because the observed not-so-high unit sales may be due to either a not-so-popular product or a popular product but not-so-good seller services/efforts.

Therefore, the mid-tail products on online retail platforms give rise to an interesting market in which the independent seller benefits from selling on the platform, but he may also be in competition with the platform provider itself. We find that if Amazon’s ex ante belief is that a product has high demand with a high-enough probability, it will set a large fee such that only the high-demand seller chooses to sell on Amazon’s platform. Therefore, Amazon will be able to identify the high-demand product and sell it directly in the later period. But if the probability of high demand is small, then Amazon will charge a low fee such that both types of sellers will sell on the platform. This, however, allows a high-demand seller to mask himself as a low-demand seller by under-investing in service. As a result, Amazon is unable to learn the seller’s true type; in the first period, both types of sellers will have the low-type seller’s first-best sales (conditional on Amazon’s fee), and in the second period, the high-type seller will choose his own first best service level and price. In this case, Amazon will actually make a higher expected profit if it commits ex ante to not selling the product in the future.

Furthermore, we find that both types of sellers may make higher profits if Amazon keeps its entry option than if it forgoes it. This is because if the probability of high demand is not large, the possibility of the low-demand seller will deter Amazon’s entry, while the possibility of a high-demand seller mimicking a low-demand seller results in a lower fee charged by Amazon. In addition, we find that Amazon’s threat of entry may actually reduce consumer surplus in the early period though it increases consumer surplus in the future period. This is because in the case of a high-demand seller, the lost demand in the first period due to his reduced service level to mimic the low-demand seller more than offsets the consumers’ benefit from the seller’s lowered price.

Effective March 1 the e-commerce store will be closed down and we will sell any remaining inventory (non-detailing of course) on Amazon. We’re running a 30% off sale to try to blow out as much of the inventory as we can before that date. We’ve already pulled all detailing items down from Amazon and have no plans on listing them again in the future. As soon as the fitness items, poker cards, and personal care products sell out, we’ll close our Amazon account.

This is the first of several key pieces to our 2010 puzzle. I’ll continue to write about them one at a time as they unfold.

Why?

As you know, I’ve had my issues with Amazon in the past. But if it was profitable and we already had the warehouse space, why not keep them both running?

The short answer is that they were both very labor intensive processes for the relatively small percentage of our revenue that they brought in. It just didn’t make sense to either A) teach our employees these processes that aren’t very refined and have high potential for error, or B) invest the time and money necessary to refine them.

The long answer is that there were a lot of factors. Here’s the (rather long) list that I came up with:

• Amazon was a relatively small part of our business. A very unprofitable small part. Consider this: in 2009 Amazon accounted for 22% of the orders we shipped out the door, but only 5.7% of our e-commerce profit.
• The expenses add up. Amazon has a very basic system for quoting shipments. We had a hard time balancing affordable shipping with losing money. Several attempts at finding cheaper shipping alternative failed for one reason or another. Add in the $39.99 monthly fee, 15% per order, plus materials (box, tape, peanuts) and the margin was about half of what the same product would be on Detailed Image.
• When we accepted that we’d trade margins for volume on Amazon, it was under the assumption that we’d be able to use that volume to take market share away from our competitors, we’d be able to secure lower discounts with our vendors and FedEx, and that we’d be able to solicit those customers and entice them to shop on our sites. Amazon was still a relatively low percentage of our sales, so the volume discounts never really came into play. And while we were taking market share away from our competitors, we were indirectly making it impossible for us to lure them over to our sites. To gain the market share we had to undercut our competition and our regular retail prices. If a customer can get it cheaper on Amazon, why would they buy it from us in the future? I suspect this happens to all sellers. There’s no motivation for customers who buy regularly on Amazon to all of a sudden start shopping elsewhere.
• Since the customers aren’t loyal to you or your brand at all (like many are with DI), they were much more difficult do deal with. Not always, but certainly a higher percentage than DI.
• Even when you’re right and a customer is wrong (like when they violate your policy or Amazon’s policy), they always have their “Feedback” hanging over your head. We often spent extra money to please a disgruntled customer so they wouldn’t leave negative feedback. A customer who cares nothing about us at all. That got old. We’d rather focus that attention on the loyal DI customers we do have.
• We had trouble getting the technology to work. Order processing and inventory management were semi-automated, but a far cry from the faster and more accurate system we have for DI. It takes under 5 minutes to run all of DI orders, regardless of volume. It can take 30 minutes or more to run Amazon/TD.
• As we move towards hiring full-time employees in 2010, we didn’t want to devote the resources necessary to improve the Amazon/TD/DI syncing. Nor did we want to devote 75% of our training towards such a small part of our business. DI works great. Almost perfect. The time it would take to get Amazon and TD to that point wasn’t worth it. The programming maintenance is a lot of work on my end. It just doesn’t make sense to have complex systems for a small part of your business when the larger part of your business has simple, scalable systems.
• Speaking of work on my end: as it stood, I did all of the Amazon/TD programming, customer service, and site maintenance. Not that it was a ton of work, but we probably just freed up 15% of my time.
• On Amazon, you’re one crazy seller away from being screwed. We have a few fitness products that move regularly and we profit quite a bit on. The problem is, all it takes is one new business undercutting us and we’ll never sell another one. Maybe they’ll think like we did and try to take market share and gain the customer email addresses. Or, Amazon could pick up the item and undercut us as well. That constant threat is tough. You can’t ever keep inventory high, even if you have the historical sales data. One day the sales could stop in an instant and you’re forced to sell products at a loss or sit on the inventory.

What went wrong with TD?

Still, while this was the right decision for us, I couldn’t help but be a little sad as I was putting up the closing sign and writing the “official” announcement on the TD blog. We had high hopes for TD when it launched. In the end, it didn’t work, and any time something I believe in and work hard on doesn’t work it hurts a little.

We really had a grand vision for TD. We wanted to create this new form of social shopping. We wanted to become an “Amazon for nice things”. And to be honest, that was probably the problem. Not the grand vision per se, but the fact that we were reaching for something that we really couldn’t do correctly with the resources that we had.

We didn’t have enough money to buy the right products or start the right stores. We didn’t have the money or time to invest in marketing the way that it needed to be done. We underestimated how much needed to go into moving into the warehouse, growing DI, and becoming profitable. And ultimately, we weren’t capable of building it the way that it needed to be built, and we learned that the hard way.

The funny thing was, it worked in the beginning. I remember one day, about a month in, when TD had more orders than DI. But we were spending time and money to get those orders. We couldn’t keep up the PPC spend. We couldn’t keep creating content on the blog and the forum. So eventually it took a back seat and essentially became our “Amazon store” that had all Pure Adapt products.

I think up until the middle of this year we held out hope that we’d be expanding into non-detailing e-commerce, but we’ve realized that just isn’t a financially viable option right now (and personally, I’m just not that interested in more e-commerce at the moment, but that’s another story for another day). So there really was no point in keeping it.

And then there was the Commerce with Conscience program and the awesome experience that we had working with the Regional Food Bank of Northeastern New York. It’s hard to kill that program (for now at least), but we’re working on other ways to “give back” in 2010.

Was the decision hard?

Surprisingly, no. I threw it out to my partners at one meeting. Then I went back and ran some numbers to confirm what we suspected. We met again, and within minutes agreed to give it that ax.

Which is what I love about our team. When we killed our client services in February 2008, there were months that the consulting revenue was greater than 50% of our profit. But we looked at the big picture, at what we wanted from our business in the long term, and we made a decision. One that we haven’t regretted. It might not have been the right move for other people if they were in our shoes, but it was right for us. I have a feeling this will be the same way.

In my continuing efforts to prepare for the holidays, I’ve spent the last few weeks reviewing and improving our product listings in our Amazon Seller Central account.  We sell on Amazon under the Tastefully Driven name. We list almost everything that’s up on the TD website, but the majority of what we actually sell is either fitness equipment or detailing supplies.

I automated a few of the mundane tasks, added new products (which involved building a bridge to easily migrate products from DI to TD and then to Amazon), and reviewed pricing.  There’s one other thing I’m really excited about that will make a huge difference, but it’s not quite ready to roll yet so I’ll refrain from hyping it up.

The more time I spend working within their marketplace, the more I realize that the system is absolutely brilliant…for them. We pay $39.99/month plus 15% of each sale.  They give us access to selling on the largest online shopping site.  It sounds simple, and seems like an equal trade-off.  But what Amazon does – and I can hardly blame them – is use the seller program to conduct market research on a massive scale, and then uses that data to obtain an even bigger advantage as a marketplace.

Let me explain.

Amazon.com has basically everything for sale.  If you can buy it online, there’s a good chance it’s for sale on Amazon, but not necessarily sold by Amazon. There are thousands of sellers like us that list their products for sale, products that Amazon does not stock or sell.  We make up the “long tail” of products in their marketplace. 

Most items are for sale by multiple sellers, all competing for every sale.  Amazon let’s us play a game of limbo with our competitors to see who can afford to lower their prices more.  When you factor in the 15% fee, we’re barely making money on those listings.  We do it because of the volume – we can steal sales directly from our competitors, gain access to new customers who buy our products, and get bigger discounts from our suppliers.

Eventually though, if the competition gets high and the sales volume becomes high, Amazon notices.

From my experiences, they do one of two things when they notice:

1. They stock the product. They offer Amazon Prime and Free Super Saver Shipping, and the total cost to the customer (product + shipping) is impossible to compete with.  Amazon gets all of the sales. Tough shit. Game over.
2. They harass the crap out of you to let them fulfill your orders with their FBA (Fulfillment by Amazon) program. I’ve been contacted numerous times by several different reps trying to get us to let them fulfill our products.  They are persistent.  I generally say “thanks but no thanks” and they say “can we schedule a phone call for tomorrow?” or “how about sending us just one pallet of one item?” (the one item they list is inevitably always one of our best sellers).  To which I respond, “no thanks, I’ll contact you if I’m interested”.  And then a month later I’ll get contacted by a new rep.  Rinse and repeat.

Think about this from their perspective.  Why risk stocking a new product?  Why try to pick which model or which brand will sell best? Just let other online retailers pay you to list  all of the products on your site. Collect data on everything.  If the numbers look good, swoop in and start selling the product.  Use your size to get volume discounts on the product, warehouse space, and on shipping.  Take all of the sales away from the seller. If not, let the retailer continue to pay you for a sale here and there.  They actually get sellers to pay them to do their market research.  The data couldn’t be more perfect – it’s in their own marketplace!   It’s not just free data, we pay them the money for our sale and also give them the data.  I wonder which they value more?

So basically, the moral of the story is that Amazon always wins.  Sellers never really quite win, but also can’t afford not to participate on Amazon’s terms.

It’s damn near the most brilliant business model I’ve ever seen.  Can’t fault them for that.

When we started the program, we figured we’d pick a charity, mail a check, and that would be that.  Boy was I wrong.  This experience has been so much more than that.

It started rather innocently.  In the midst of our warehouse move and all the work involved in getting Tastefully Driven up and running, we didn’t have a chance to sit down and pick a charity.  Growing up I had always admired our regional food bank and had even done a little volunteer work there as a kid with my church.  The fact that some people in our area do not have food to eat blows my mind.  I absolutely cannot comprehend what it would be like to not know where your next meal will be coming from.  It’s so very sad if you stop and think about it.  So, I chose the Regional Food Bank of Northeastern New York as our first charity.

The plan was to make a series of smaller donations every quarter so that we made four donations to four different charities each year.  However, when I sent an email to the food bank notifying them of our impending donation, I received a phone call back from director Mark Quandt, someone who I knew from their TV commercials, news segments, and articles in the local paper.  That alone was really cool.  He told me that he had never heard of such a thing and that he wanted to know more about us and our business.   I told him how much I admired what he had accomplished with the food bank.   The conversation was really awesome.  Subsequently we decided to extend the food bank to the end of the year and give them our entire donation for 2008…especially because sales for a new site are so small for the first 3 months.  We wanted to make sure we gave them a substantial donation.

Fast forward to a few weeks ago.  I received an email from Mark about their annual auction event.  They sell 150 x $100 raffle tickets to raise $15,000 for the food bank.  Combined with the live auction, silent auction, and tickets to the event they planned on raising $90k.  Unfortunately they were short quite a few of the $100 tickets.  He mentioned that this year the demand is higher than ever before because of our hard economic times:

I know it’s a hard time to ask because the economic news is so bad. But it’s even worse for the agencies and people we serve (food pantries are being overwhelmed with a huge increase in requests and many people are seeking help for the first time). We are very concerned about the upcoming winter months.

I forwarded the email over to my partners and we decided to make our yearly donation in $100 raffle tickets.  We projected our sales for the end of the year and then added a bit of a cushion in.  I then contacted Mark and received the following response:

Wow! That’s great news. We would love you to make your donation through the sale of raffle tickets. The Auction is very important to us, and we want it to be a big success. Your donation will help immensely. We were worried about selling all the $100 raffle tickets in this tough economy. Now with your decision to buy tickets, I think we will make it.

That might be the best email I’ve ever received.  We then inquired about attending the event and decided to purchase four tickets, one for each of us, at $85 each with proceeds benefiting the food bank.  The event was Wednesday night at the Crowne Plaza Hotel in downtown Albany.  The food was amazing (plus there was an open bar) and the people were amazing. I was so impressed with the turnout – there were over 40 tables with 8 people per table.  Everyone was very generous in bidding during the live auctions.  Greg, George and I all won silent auctions with all of the proceeds again benefiting the food bank.  I got tickets to the Baseball Hall of Fame in Cooperstown, NY (one of my favorite places on earth, I’ve been probably seven times but none since the 2004 inductions), George won the entire series of Everybody Loves Raymond on DVD, and Greg won a very very nice mountain bike.

I just did a quick post on Tastefully Driven about the event:

With the struggles our economy is facing, more people than ever will go without food this holiday season.  Our Commerce with Conscience program donates 5% of Tastefully Driven’s profits to local charities in the Albany, NY area.  For 2008 we were proud to make our donation to the Regional Food Bank of Northeastern New York a few months early so that they would be able to use the funds to help families in our community this holiday season. This past Wednesday night our team attended the 19th Annual Auction to benefit the Regional Food Bank at the Crowne Plaza Hotel in Albany.  In addition to the company donation, our team won several auctions to directly benefit the Food Bank.  Thank you to all of our customers who were able to make this donation possible.  The Food Bank estimates that for every dollar donated $10 – $12 of food is given to the hungry.

Here’s a photo.  From left to right:  George, me, Mike, Greg.  It’s not exactly my favorite photo of me, I was kind of leaning back and slanted.  I also never realized how much taller I am than Mike…

Of course, we all rocked our CwC wrist bands too:

When I take a step back I can’t help but think about how proud I am of our team.  With our raffle tickets, event tickets, and auction winnings we contributed quite a bit towards that $90k goal.  When I looked around at all of the faces and saw local business owners, CEOs, politicians, and local news “stars” I realized that we have no where near the net worth that these people do.   But that didn’t stop us from giving all that we could. I really hope we keep that mentality as we grow.

Their response?  Push the product more.  Give out samples, hold contests, give some away to bloggers in the industry.  Not bad ideas, but the premise is that WE need to push THEIR products.   Thing is, their product is very up-and-coming and does not have the name brand recognition that our other lines do. We rank multiple times in the top 10 in Google for all of their products.  Our main disappointment in sales isn’t because we haven’t pushed their product enough (hell, we’ve hardly pushed any of the products on TD), it’s that their isn’t more of an existing demand for their products.

Don’t get me wrong – it was our choice to carry the line and the responsibility lies with us to research the demand for a product before selling it. We’re just disappointed that the existing demand for it isn’t stronger.  Who knows, maybe it will pick up and we’ll capitalize on our solid rankings.

Which got me to thinking – there are really two types of products that we can pick up:  push products or pull products.  Push products, like the one described above, are products that we have to push on to our customers through newsletters, mailings,  announcements in the blog, on-site cross-product upsells, or other promotions.  Customers have never heard of the product, so we’re relying on ourselves to sell them on it.  Pull products are products that have such an existing demand that by adding them to our shopping cart we automatically generate sales due to their auto-inclusion in our product feeds and on our extremely SEO-friendly site (a large portion of TD products already rank top 10 in Google without us really doing anything).  Any pushing we do is just an added bonus.

Why would anyone want to carry a push product?  IF you have a built in audience that listens to you, push products give you the power to push the products you want to sell.  Maybe it’s your own brand with a higher margin, or a brand new product that you have exclusive rights to.  A site like Detailed Image for example, has 3+ years of forum presence in the (relatively) small auto-detailing community.  Everyone knows “George and Greg from Detailed Image” and therefore they have the ability to push products.  If they tell people that a new polish or wax is better, people will listen…at least initially.  If there are two comparable products and they decide to support one over another for any number of reasons, customers will likely listen and buy the brand they recommend.

Tastefully Driven is only a few months old.  It’s not in a niche like auto detailing.  Maybe someday we’ll have that kind of loyal audience, maybe we won’t.  It’s two different types of businesses and that’s fine. One thing is clear:  for new sites or sites built to generate sales via search like TD, you had better do your research and pick up only pull products.  Taking advantage of existing demand is far easier than creating the demand.  Otherwise it’ll just remain sitting on your shelves collecting dust while you’re wishing you had that money available to pick up a more popular line of products.

We carry things like iPod cables and headphones, HDMI cables ($15 for a 6 foot cable!), component video cables, USB cables, and Nintendo Wii component cables.  These items are also the types of things that we can easily sell on eBay – a place where we want to have a presence but nothing else we carry really fits (some of our products are prohibited by the manufacturer from being sold, others – like personal care products – just won’t sell much based on our research).

While we’re on the topic of Tastefully Driven, my guess is that at least half of you are saying to yourselves “where are they going with this?”  The direction of the site, of the business, is very defined in my mind but it definitely doesn’t look like it from the outside and I’ve probably done a bad job (or no job) of explaining it.  I think from the outside it just looks like they’re just picking up random product lines left and right of things that interest them.  While there’s some truth to that, here’s the overall big picture:

Our cart is very SEO friendly.  Each page has a dynamically generated unique title tag, all of the text is indexible, each page is URL rewritten, we use proper formatting, etc.  We know that on equal footing – most notably the number of links and the age of our domain – we can outrank the majority of the competition.  So the reasoning by putting all of these loosely tied stores on one domain is to get all of those links pointing to ONE domain and not to many domains so that each product benefits from the success of the others.  Think about how every page on Wikipedia ranks high.  Now apply that same strategy to e-commerce, a place where most sites aren’t very SEO friendly.

Which is then where the Lifestyle Blog and our quest to get a team of writers comes in.  Links directly to products are hard to come by.  Links to great information, on the other hand, are relatively easy to come by.  Create lots of great posts, get lots of links, help out every page on the entire domain.  So this post about polyphasic sleep really does help us sell more shit drops even though the connection isn’t obvious.

So far it’s already worked for a few products. In time, it should work for all of them.   Not saying this is a foolproof plan or that it couldn’t fail, but it’s the plan we’re going with.

If it works, we should end up with a pretty solid community on the forums/blog and then we can step everything up to the next level and become a “social shopping” site like we originally envisioned.  For example, displaying ads on the forum/blog for our products based upon your conversations and your purchase history.  If we ever get to this point, that’ll be where the fun really begins.

The goal of the blog is to present a vast array of lifestyle tips, tutorials, videos, articles, and more ranging from sports to technology to fashion…and everything in between. As long as it fits our demographic – men in their twenties and thirties – we consider it fair game for the blog. I wrote a post entitled What You’ve Been Missing on the Tastefully Driven Lifestyle Blog about a month ago if you’re looking to get a flavor for some of my favorite posts.

Overall I think we’re putting up very good posts, but we’d like to post more frequently and with a broader array of topics (we only know so many things well). That’s where you come in: we’re looking for writers to post on the blog. We’d like to start with a post or two, but are willing to make it a more regular thing if both parties feel like they are getting value out of it. If you have an area of expertise like sports, fitness, video games, audio, movies, music, poker, fashion, etc we’d love to have you do a post or series of posts for us.

What do you get out of it? For every post you’ll get a by-line at the beginning of the post (i.e. “By Adam McFarland of Pure Adapt”) with a link to your site and a longer about the author section at the end where you can write a paragraph about your business and link to your sites. You also get a wholesale account to purchase anything we have for sale on Tastefully Driven at a large discount. The discounts vary by item, but you can usually expect 30%+ discounts to start. If this becomes a more long-term thing we’ll increase the discounts. Even if you don’t buy a lot of stuff for yourself, the discounts are great for buying gifts (see our Father’s Day suggestions). I know that most of my friends and family can expect TD gifts for the indefinite future

The best part – even if you only do one post with us the links stay and you can keep your wholesale account. Drop me an email at adam [at] pureadapt [dot] com if you’re interested.

The other day in the comments field of a Tastefully Driven order someone said: “please include a card saying ‘Happy Birthday – Love Patty and John’”. My first thought was we don’t do that. Then we had a conversation and realized that not only should we do it, we should make it a policy to allow our customers to do it for free with any order.

See, Detailed Image’s holiday season is the summer, when people obsessively care for their cars. In the past it hasn’t really been a traditional holiday-driven e-commerce site like most. As volume has picked up we’ve become increasingly aware of holiday-specific marketing. We also quickly realized that many of the products on Tastefully Driven are great gifts and that TD needs to capitalize on holiday orders to be successful. We were planning on starting with Father’s Day next month but hadn’t really talked strategy yet.

This order sparked that discussion, and it became pretty obvious that allowing people to include a custom card at no charge was a no-brainer decision. We figure that as long as we do a good job making our customers aware of this service they will take advantage of it on holidays/birthdays. I think we’ll also probably give them the option of having it shipped without the receipt in case they don’t want the recipient to know the price.

Yesterday morning I ran to CVS and picked up 10 blank cards for ~$6. We decided that was too expensive to pay for a card if we were going to offer this for free. After looking around online at blank cards, we decided it would be far cheaper to use our wholesale printing account where we can get 1,000 custom tent cards (3.5″ X 4″ with a fold in the middle) for $54.99, or ~5 cents a card. Below are the designs that we’re having printed up. We will then hand-write the message on the inside of the card…check that, Mike will hand-write the message because the rest of us write like a five year old.

Anyway, we’re averaging about a post a day and overall I think we’ve covered a broad array of lifestyle topics in the past month and done a pretty good job of it.  If you haven’t been subscribed, here are a few of my favorite posts:

• The No Excuses Workout – a 20 minute exercise routine that requires only a few feet of space and uses your bodyweight for resistance (video of yours truly performing the exercises included in the post).
• Audio, the Quest for Individual Nirvana – a series of posts by our guest author (and speaker expert) Robert Wayne about the extensive process of choosing a home stereo system.
• 2008 NFL Mock Draft – Greg did a fantastic job of breaking down each teams needs and potential picks for this weekend’s upcoming NFL draft.
• Whey Protein vs. Casein Protein – a post breaking down the differences between the fast-digesting whey protein and slower-digesting casein protein.
• How to Clean and Maintain Your Laptop – a short post and video of how to keep your laptop in pristine condition.
• How to Read 72% Faster in 20 Minutes – the results of a little speed reading experiment I did.
• RSS Explained:  the free technology that will change your life – everything you need to know about RSS.

Enjoy!

Nonetheless, there’s still a lot of cool stuff on TD that isn’t completely obvious if you just scan the site for a few minutes. So below are my Top 10 favorite things about the site:

10. One Account
When you have a forum on an e-commerce site, I think it’s utterly important to tie the two accounts together. Instead of just throwing up a copy of vBulletin and making the colors match, we took a bare bones copy of bbPress and hacked it apart until we were able to mesh it seamlessly with the shopping cart. Right now the only benefits of this are that you log in once (at the top of any page…another cool feature) and that you have the same username/password across the board. In the future – assuming the forum becomes somewhat popular – this opens itself up to all sorts of interesting social-networking-type opportunities: for example, imagine getting product suggestions (via PM, email, or displayed inline on the site) based upon your previous purchases and the threads you participate on the forum. In 2-3 years this could be how we make that jump from large e-commerce site to “social shopping” platform. It’s a ways away, but we laid the foundation now.

9. Integrated Affiliate Program
A lot of affiliate programs make it ridiculously difficult to sign up and create links. Using a 3rd party affiliate software is something we didn’t want to do for Detailed Image and we brought the same system over to TD. Our payout rates are posted for everyone to see, and signing up is really easy: in your My Account page there is a message enticing people to sign up:

If you click ‘Apply Now’ you only have to choose a payment type, click ‘Apply’ and you’re good to go. We also make it super-simple to create links. In addition to a tutorial page, we now display an affiliate link on every single product page for that specific product when you’re logged in:

8. Forum Product Recommendations
When you are viewing a forum topic we display a banner ad of up to five related products at the top of the page. So if you’re in a discussion about caffeine it will “recommend” the caffeine capsules for sale in our nutritional supplements section. Again, this has large potential to be highly customized in the future based upon more than just the forum topic.

7. Personalized RSS Feeds
This is one of the few features that came with bbPress that we kept in tact. Every user can mark their favorite forum threads and then subscribe to a custom RSS feed to track the progress of the conversations they’re interested in.

6. Blog-Forum Sync
One of the other things I saw as absolutely necessary was merging the blog comments with the forum. Each time we post in WordPress, a corresponding thread is opened in the forum. If you click to comment on the post, you are redirected to the forum. Blog posts also pull the conversation from the forum and display under the post just like normal comments.

5. Upsells
Inline upsells offering a 5% discount was one of the most fruitful moves we made with Detailed Image. Average order value went through the roof. With TD we changed the page structure around and moved the upsells up “above the fold”. This may or may not be better – we’ll see.

4. Image Upload System
One of the most time consuming aspects of Detailed Image was uploading pictures. Each picture needed to be re-sized several times, watermarked, and then linked to in the database. For TD, I built an image upload system to automate all of this. After we’ve entered the product info in the database, we can log in to our admin section and upload a 500 x 500 png file and the script automatically re-sizes it, saves it, watermarks the images, and creates the appropriate database relationship. Big, big time saver.

3. Shipping System
Sure, this is basically the same as DI, but it’s the backbone of our company. This system is the single most efficient process we’ve put into place. If we didn’t have it we would have a full time employee processing and shipping orders right now. Each morning we click “Process Orders” in our admin section: the PDF receipts pop up to print and save, along with a text file to import to FedEx Ship Manager, which prints the shipping labels and gives us a text file back with tracking numbers, which we upload to auto-email each customer their tracking info. It’s a 2 minute process whether there are 5 orders or 25 orders (or 250 orders down the road).

2. Design
The design of the logo and the site was all Mike. I think he did an A+ job aesthetically conveying exactly the image that we want our customers to see….especially by differentiating each store with it’s own unique color scheme. The Games store, for example, has an orange color scheme but you still know that you are part of TD:

1. Commerce with Conscience
The icing on the cake for me: we’re donating 5% of our pre-tax profit from the site to local charities with our Commerce with Conscience program. Sure, 5% isn’t much now, but it will be as we grow. We’re choosing new charities quarterly, and the first charity – The Regional Food Bank of Northeastern NY – has been very supportive (I got an email back from the Executive Director, which is pretty cool). Along with participating in events like the Climbing UAlbany Event, we hope this program is how we funnel some of the money we pull in online from all over the country/world back to our community. I anticipate that as we grow we will spend more time personally working with each of our charities so that we give back more than our money – our time and expertise can do equal amounts of good. My favorite part about this program is that it ensures that no matter how big we grow we are giving a corresponding amount back to the community. Target does the exact same program and you see the immense social impact they are able to have because of it. If we can even have a fraction of the impact locally that they do nationally, it will be a huge success.

We’re also all rocking Commerce with Conscience wrist bands:

The bands are included with any order over $100 for free, or can be ordered for $4.99 on the site (with all of the profit from the wrist band being donated).

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What’s next? I’m a firm believer in letting things settle for a bit before diving back into more development. Aside from a necessary focus on marketing, I’ve learned (the hard way) that you need to provide ample time for data/feedback to accrue before jumping to any conclusions about what you do and don’t need. By the end of 2009 I hope to have expanded the forum functionality with the aforementioned social-shopping stuff and to also integrate some AJAX into the cart in places it can really help (coupon codes and add/update cart come to mind), but other than that changes will be dictated by our users and the data.

All in all, we couldn’t be happier with the site we put out. We’re a small team and we did it on an extremely tight time schedule. I’m ridiculously excited to see where this cart takes us over the coming years.