Comments on Sarah Tavel / Adventurista: The Staples 2.0 Effect

BTW (forgive the pun), one last thing. AMZN and ot...

2009-01-31T12:45:00.000-05:00

BTW (forgive the pun), one last thing. AMZN and other big guys have the distinct advantage of data. They know the best keywords to buy, and have unique insight into the "land grab" at exactly the right times. An advantage that shouldn't be overlooked.

You're right! While the Internet certainly remove...

2008-12-05T09:11:00.000-05:00

You're right! While the Internet certainly removes some barriers to compete against the bigger players, it does not equalize brand, operating cost advantages and a whole host of other things that make businesses successful.

It all comes down to a smaller firm able to compete in a particular niche market segment in a way that matters to the customer enough to tear the person away from the advantages of incumbency. It might be much better price, it might be more prestige, it might be customer service, it might be a way to be different - whatever, it just has to matter enough.

Sarah, great post. You've highlighted what I've a...

2008-12-04T20:07:00.000-05:00

Sarah, great post. You've highlighted what I've always thought is a remarkably underrepresented conclusion that e-commerce will come to more closely resemble retail in the long run. My thoughts got a little long, so I put them into a blog post:

http://rodgerv.wordpress.com/2008/12/05/staples-20-when-online-resembles-offline/

another benefit of scale, and of having a communit...

2008-12-01T22:28:00.000-05:00

another benefit of scale, and of having a community both within and outside your site, is an improved organic search ranking. this lowers marketing costs.

while great physical real estate can often be bought by a newcomer, great virtual real estate must often be earned over time.*

*exceptions include is the plight of Starbucks in New England, which is thwarted by Dunkin Donuts. Or the domain coupons.com

@Anonymous, thanks for the feedback. You raise an...

2008-12-01T15:47:00.000-05:00

@Anonymous, thanks for the feedback. You raise another good point which I didn't talk about because my post was getting too long, but it's the SEO benefit large e-tailers get from having a community (i.e. user reviews). Folica is a great example of an eretailer that likely benefits from a lot of SEO because they have so many user reviews of hair products. It's hard for a small eretailer to compete with that size community.

Adam, thanks for the comment and feedback. You ha...

2008-12-01T15:44:00.000-05:00

Adam, thanks for the comment and feedback. You have a good point about the importance of writing a good ad. But I'm still a bit skeptical that that would overcompensate for brand equity, in large part because I think mom and pop's tend not to be as sophisticated as larger online retailers when it comes to PPC ads. Consequently, I think Zappos would be better positioned to capture the long tail of search queries than a small online retailer. That said, I'll agree that there is an opportunity to be competitive with the zappos of the world, but I think that has to come from some other "gimmick" (e.g. personalizing tshirts a la zazzle or threadless) than better ad copy.

Great analysis. @Adam, zappos would presumably wa...

2008-12-01T09:10:00.000-05:00

Great analysis. @Adam, zappos would presumably want to target the top selling or most highly searched inventory for SEO. I agree that the smaller players could more effectively SEO the long tail, but the old retail rules still apply to e-tail. The right selection of product, service, and "location" (in e-tail's case it's SEO for the most popular stuff), still make the big winners. And I buy the argument presented here that the winners are consolidating the long tail in this soft environment.

Interesting post. My one quibble is that I think t...

2008-12-01T00:30:00.000-05:00

Interesting post. My one quibble is that I think that the correlation between brand recognition and ad CTR is likely much lower in practice than in theory.

CTR on an ad is dependent on a bunch of things. Having a big brand helps, but writing good ads plays a big role. There are a lot of junky ads out there, and most people aren't going to click on ads that are either 1) completely irrelevant to whatever their search query was, or 2) kinda sorta describe what they were looking for, but are really generic and not tailored to their exact need (ever tried to click an ad from a travel aggregator like Expedia lately?). In contrast, people are much more likely to click on stuff that discusses exactly what they searched for.

This where a Zappos's scale can be a liability rather than an asset. Zappos stocks thousands of shoes and probably can't write unique, natural-sounding ads for every single niche. There's just too many potential queries out there and their time is usually better spent optimizing for value on the high-traffic keywords that bring them a healthy percentage of traffic (think "shoe store"), rather than on all the stuff that gets relatively tiny amounts of traffic ("ferragamo varina patent").

On the other hand, a small boutique might only have a few dozen pairs for sale and can write compelling ad texts for all of them. So for keywords related to their niche, I'd expect the small guy to get a significantly higher CTR (controlling for all other factors like ad position) than Zappos.

So I think that there's still the opportunity to be competitive on AdWords or YSM, even if you're a small retailer, as long as you're clever. It's the medium-sized guys who have the most to worry about - the generalists who want to be Zappos, but aren't there yet. Like the tiny fish, they have little brand recognition, but unlike them, they're stuck with an inferior value proposition, since they're trying to be more or less like Zappos rather than consciously differentiate their business from that big brand.