Be a Christmas eTailer - Post Column - 07 Dec 04

Shops make a significant percentage of their annual sales during the Christmas period. I've seen figures from 30% to 70% banded about on the web. The US Census puts it at more around 20% for the main gift sectors. So I thought that if I was going to try my hand at on-line retailing, then the Christmas period would be the time to do it.

A while ago I'd heard of the concept of Google Cash. Now don't, whatever you do, type Google Cash into a search engine and then go visiting the 51,000 web sites that come up, many offering incomes of $2,000 a day. I did that one evening and my PC picked up so much mal-ware in the process that Internet Explorer stopped working. Put simply though Google Cash is all about buying Google Ads, and using them to drive traffic to a retailer who will pay you commission on every sale they make from your traffic.

It works something like this. Say you want to sell Tamagotchis. First you find an on-line retailer selling Tamagotchis which also has an affiliate program. Amazon is a good starting point. You sign up to their affiliate programme, they give you a URL with an affiliate code, and they promise to pay you a percentage of every sale you make. Then you sign up to Google's AdWords service and write a short text ad, such as “Tamagotchis for £9.99”. Crucially you then set the ad to point to the URL you got from Amazon, rather than your own web site. Next you choose a set of Google keywords on which to show your ad down the right-hand-side of Google's results page. “Tamagotchi” would be an obvious one, “electronic pet” might be another. Finally you set how much you want to pay for each click on your ad, and how much you want to spend each day on displaying the ads. Ads start at 4p per click, not per showing – a vital point.

When a shopper then searches for Tamagotchis Google automatically compares your bid with those of others, and then decides whose ads to show. If the shopper sees your ad, and clicks-through, then Google charges you the price you set. If the shopper then buys the product Amazon will pay you commission on the sale, typically around 5%.

Of course it all comes down to numbers. If you're getting 5% of £9.99 from Amazon for each Tamagotchi sold, then that's roughly 50p. So you need to be spending less than 50p on Google to drive each buyer to Amazon. If 1 in 10 of your Amazon visitors converts to a buyer then you can only spend 5p on each GoogleAd click-through to break-even. A check on Google confirms that spending say 4p on the ads would give you about 20 clicks a day, so that could be two purchases, but only 20p profit, a day!

Needless to say there is no such thing as easy money. For my lead item (another top Christmas toy) I'm getting 9% of Google shoppers clicking through, then 9% of those actually buying the product. I earn 5.25% commission, about £3.50, a sale, and my sales for the period are well into double figures.

GoodleAds are just the tip of the iceberg when it comes to virtual retail. Retailers like Amazon provide enough tools for you to create your own entire web site selling nothing but Amazon products. Such “retail farms” are getting so prevalent that they are becoming a real pain for on-line shoppers, putting an extra click between them and the real retailer. The next step though is more promising. Amazon has in beta testing a system called Amazon Web Services. This gives a virtual retailer direct access to all the Amazon inventory and supporting material (prices, descriptions, images, reviews), letting them build a complete own-branded web site, but with the sale and ultimate fulfillment being made by Amazon.

So, as my Christmas retail experiment draws to an end, I've learnt quite a bit about web retailing, and I've made just about enough money to pay for the company Christmas lunch - well there is just one of us!