Small e-retailers gain in many areas of online marketing
June 25, 2014 11:38 AM
Small merchants ranked in the newly released Internet Retailer 2014 Second 500 Guide may not have the marketing budgets of their much larger competitors in the Top 500 Guide, but many made serious gains in 2013 in several key areas of online retailing.
First, they upped their game when it comes to mobile commerce. A majority—251 retailers—in the Second 500 Guide now operate a mobile-optimized site. That’s far less than the 361Top 500 merchants that operate a mobile-optimized site, but it’s way up from the 176 Second 500 retailers with mobile sites a year earlier.
Internet Retailer data show that mobile apps are less of a priority for small merchants, as only 48 retailers in the 2014 Second 500 Guide operate mobile apps, versus 55 in the 2013 edition. In comparison, around 42% of Top 500 merchants—212 retailers—have at least one mobile app.
The up-and-comers of e-commerce also invested time and money in social media in 2013, and the proof is in the numbers: Second 500 merchants grew their collective Facebook fan base 40% in 2013 to 81 million. They grew their Twitter followers by 111% to 10 million, and YouTube video views by 105% to 2.87 billion.
And beyond expanding the size of their social following, many of the fastest-growing apparel merchants in particular, including punk-style clothing e-retailer Dolls Kill (ranked No. 513) and women’s fashion merchant The Red Dress Boutique (No. 792), credit their focus on social media marketing with much of their sales growth in 2013.
Paid search was another focus of small to mid-sized e-retailers in 2013. The Second 500 boosted their collective monthly paid search spending nearly 30% to $14.3 million. The median amount spent per month on pay-per-click advertising was about $13,000, up from $12,000 in 2012, according to an analysis of data provided to Internet Retailer by search engine marketing firm ROI Revolution Inc.
That increase is partly explained by Google now charging for Product Listing Ads, while similar listings in the center of a Google search results page used to be free, retailers and analysts say. Also, the cost of paid search is increasing as competition heats up and more companies are bidding on the same keywords.
Another important factor to consider, some retailers and analysts say, is that small retailers are having to invest more in paid search to compensate for the increasing difficulty in bringing in free traffic from Google via organic search results.
“In general customer acquisition is hard because so many people use Google or Amazon, and it’s hard to stand out,” says Sucharita Mulpuru, principal e-commerce analyst at Forrester Research. “Small retailers say they spend nearly 20% of web revenue on marketing—that’s nearly twice what large retailers spend.”
The Internet Retailer Second 500 Guide is available in print, digital and online database formats. Click here to order a copy.