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Designing a website

Step 1 - Planning your site

Making money from product sales

It's perhaps the first rule of retail: A store should seem alive, inviting, and, of course, legitimate—that is, if you expect people to shop there. But so many merchants abandon the basics when they go online. "A lot of people, when building e-commerce stores, just totally forget to treat it like a store," says Lance McDaniel, VP of Creative at SBI and Company.


Hilary Billings is one of the few who stuck with what she knew. Previously a vice president at Pottery Barn, Billings joined RedEnvelope in 1998 as chairman and chief marketing officer. "One of the reasons I came to the web is that I found the web shopping experience to really be lacking as a consumer," she said.


"There was an enormous amount of energy and money and time going into the development of features that I felt were ahead of the customer," Billings explained. "Whereas some of the basics—just having an easy-to-navigate website and images that were beautiful and easy-to-see—were missing."


Over the last five years, Billings built RedEnvelope into one of the web's most compelling stores; its secret lies in a simple interface and striking images.


"I've always been a deep believer in the fact that people want a functional shopping experience," Billings said. "But that alone is not enough. It also has to be an enjoyable shopping experience. So everything we've done is to try—within the constraints of a website, of which there are many—to make it as pleasurable and enjoyable as possible."


What are you selling?

  • A few unique products

  • Gifts or luxury items

  • Considered purchases

  • Big-ticket items


What customers want

  • An easy way to find products they want.

  • Competitive prices.

  • Help making decisions— especially if it's a considered purchase. Photos, descriptions, and product reviews help.

  • Security for users when submitting their email address and credit card number.

  • Responsive customer service to give customers the sense that someone's minding the store.

Whether you're selling the perfect mousetrap or hand-woven carpets, the trick is finding the people who want them—or rather, helping them find you.


gifts or luxury items When you're selling things that aren't a necessity, it helps to make shopping fun. For inspiration, look at RedEnvelope, which focuses on stylish gift-giving. The site's creative categories let you choose gifts by the recipient, occasion, or lifestyle (the spa seeker, the gadget guru). And their signature packaging leaves an impression.


considered purchases Considered purchases are those higher-ticket items—like computers and consumer electronics—that people research before they buy. The key here is offering context: The more you can help customers research their decisions, the more likely they are to buy from you (so long as your prices are competitive).


big-ticket items Big-ticket purchases include cars and homes; they can be researched online, but are purchased in person. The key here is to move customers toward closing the deal: Encourage them to phone or email you, provide a dealer locator, suggest appointment times—anything you can do to both build trust and move the relationship forward.

Making money from advertising

Since almost any site can accommodate ad banners, almost every type of site has. A revenue model that was once restricted to media companies is now open to all comers: chat rooms, software products, personal home pages—you name it.


But the simplicity of the model is deceiving. Advertising—as any site owner who's tried it can tell you—is a far cry from easy money.


Advertising revenue depends on:

  • Traffic to your site, which correlates with the number of ads you can serve.

  • Price advertisers are willing to pay for ads.

  • Performance of ads, which is usually measured in click-through.


A common misunderstanding among site producers is that traffic = money. The more traffic you have, the more ads you can run. But that doesn't mean anyone will pay you for them. You need to have a user base that advertisers value—or a way of targeting ads toward a specific subset—to lure advertisers.

price Ad revenue is based not only on the number of ads you serve, but the price each ad commands. Prices can fluctuate widely, depending on the type of ad, the type of site, and even the time of year. But price generally correlates with the perceived value of the users and the context: The more valuable the audience, the more interactive the ad unit, and the more targeted the placement, the higher the cost.


performance All advertisers in all media are looking for results: They want to increase sales, raise awareness, create desire. Whatever their goal, they want to reach it.


But the impact of most advertising is fuzzy at best: How do you know the effect of a given TV ad? How many people actually saw it? How many people will buy your product as a result?


What advertisers want

  • A targeted audience. They want to reach the right people at the right time.

  • Impact. It's not enough to reach the right audience. Advertisers want to know their message was heard.

  • Proof. Advertisers expect to receive reliable, audited accounts of how their ads did on your site.

All this changes on the web, where everything is quantifiable. You can tell exactly how many times an ad appeared and exactly how many times users clicked through. But this accountability hasn't worked in favor of websites. The more sites deliver, the more advertisers demand of them, and the less tolerant they are of campaigns that don't yield high results—as measured in click-through.


"The expectations of what the medium can deliver have never tapered off," said Internet advertising pioneer Rick Boyce. "The pressure has been on the Internet to do more, and deliver more, than any other medium has been expected to. I used to really resent that."


"In fact, I still do," he added with a good-natured grin. "Unfortunately, what marketers want, are expecting, and now increasingly demanding, is to understand what's happening along each step of the 'purchase funnel.' And that's extraordinarily difficult. And they want all that from the Internet media marketplace, which continues to face tremendous downward pricing pressure."

"It's really a hard business."


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