Is this the future of retail?

The other big Seattle retailer, Nordstrom, that is, doesn’t think that retail is doomed. Instead, what it needs is a reinvention. And they are willing to spend tens of millions to create a store that takes the best of online and marries it to the best of offline retail. Will they be successful? I am going to check it out, next time I am in New York!

Jewelry Subscription Box Startup Rocksbox Dons $8.7 Million

 

Meaghan Rose, chief executive and co-founder of Rocksbox.
Rocksbox

Rocksbox Inc ., which sends monthly subscription boxes of jewelry to consumers, raised $8.7 million in Series A funds, VentureWire has learned.

New York-based KEC Ventures co-led the round, investing more than it ever has in an early-stage deal, according to Jeff Parkinson, a general partner at the firm. Matrix Partners , a firm that led the seed round $1.5 million for Rocksbox in 2014, was the other co-lead. Both KEC and Matrix are also investors in JustFab, a large, closely held subscription fashion company. New investor SignalFire joined returning backers AOL Inc .’s BBG Ventures and Mucker Capital in the Rocksbox deal.

Meaghan Rose, the company’s chief executive, started Rocksbox in 2012, with Maia Bittner joining later as a co-founder.

“Women love wearing something new. As long as we keep sending jewelry she loves, it’s a Continue reading “Jewelry Subscription Box Startup Rocksbox Dons $8.7 Million”

Former Apple Retail Boss Ron Johnson Unwraps New Web Startup ‘Enjoy’

Enjoy Technology’s headquarters in Menlo Park, Calif.
Enjoy Technology Inc.

Ron Johnson, the former Apple retail chief who was ousted as J.C. Penney’s boss two years ago, is officially taking the wraps off his new startup that aims to bring a personal touch to online retail.

The company, Enjoy Technology, on Wednesday will begin selling high-end consumer electronics – smartphones, laptops, speakers, tablets and even drones – on its website, GoEnjoy.com, but with a twist. Johnson said Enjoy will provide a personal-delivery and in-home setup service that comes at no added cost to customers. Think Best Buy’s Geek Squad for the online generation.

The Web-only startup is entering a crowded space dominated today by Amazon.com and eBay. But Johnson said he expects Enjoy’s free in-home service to give it an advantage over its rivals.

Beginning Wednesday, Enjoy customers in parts of New York City and the San

Continue reading “Former Apple Retail Boss Ron Johnson Unwraps New Web Startup ‘Enjoy’”

Stop calling Groupon “social commerce”.

There is a lot of enthusiasm and attention around “social commerce” right now. People point to companies like Groupon, Living Social, ShoeDazzle and others as examples of the promise of a new generation of social commerce companies. The explosive growth of these companies has certainly been incredible, and I have no doubt that many new, fantastically successful e-commerce concepts will emerge that will leverage social in some way. Nonetheless, I think people have been giving social too much credit when it comes to the “social commerce” examples we have thus far, and have been misplacing our emphasis on “social” in e-commerce.

In e-commerce, there are two truths: Customers will always want lower prices, and once they’ve spent their money, they’ll always want as close to immediate gratification as possible. (A third principle, that customers will always want more selection, though I think probably true, is up for debate. It Continue reading “Stop calling Groupon “social commerce”.”

Stop calling Groupon “social commerce”.

There is a lot of enthusiasm and attention around “social commerce” right now. People point to companies like Groupon, Living Social, ShoeDazzle and others as examples of the promise of a new generation of social commerce companies. The explosive growth of these companies has certainly been incredible, and I have no doubt that many new, fantastically successful e-commerce concepts will emerge that will leverage social in some way. Nonetheless, I think people have been giving social too much credit when it comes to the “social commerce” examples we have thus far, and have been misplacing our emphasis on “social” in e-commerce.

In e-commerce, there are two truths: Customers will always want lower prices, and once they’ve spent their money, they’ll always want as close to immediate gratification as possible. (A third principle, that customers will always want more selection, though I think probably true, is up for debate. It might asymptote given the paradox of choice.) If an e-commerce company forgets either of these two maxims, they’ll soon find that their customers have gone elsewhere.

With “social” however, the same is not true. It’s not the case that a customer will always want their e-commerce experience to be more social. Will customers want and enjoy some social features? Sure. There absolutely is utility in social features (more on that later) not to mention fun/entertainment, but it’s just not the case that consumers will always ask for more social features in the same way that they’ll always ask for cheaper prices and faster delivery (or even, more SKUs). In the customer’s hierarchy of e-commerce needs, social must surely be #3 at best (and frankly, I think breadth of SKU selection would be #3).

What does this have to do with “social commerce” darling Groupon?

Imagine a world in which Groupon had no social elements that form part of the user experience (i.e., no “tipping” once a certain number of people bought a deal). Would the company be the same one it is today? It might not have grown as fast, but with its brilliant and disruptive product offering, I have no doubt it would still be a fantastic business. Now imagine if Groupon had all the social features and more, but no discounts. It might still be around today, but Groupon would have been a shadow of its current form.


Groupon’s current success is not because of the social elements on the site. Consequently, I think it’s incredibly generous to “social commerce” to call Groupon a social commerce site. Its success has always been because of Groupon’s ridiculously low prices and immediate gratification. The same can be said for other “social commerce” examples like ShoeDazzle (fantastic deals on knock-off designer shoes thanks to their vertically integrated business model), and Woot (probably the first e-commerce experience with social elements). The social features integrated into these sites enhance the user experience, but they play second (or even third) fiddle to the real value proposition of these sites: lower prices Continue reading “Stop calling Groupon “social commerce”.”

Stop calling Groupon “social commerce”.


This post is by Anonymous from Sarah Tavel / Adventurista

There is a lot of enthusiasm and attention around “social commerce” right now. People point to companies like Groupon, Living Social, ShoeDazzle and others as examples of the promise of a new generation of social commerce companies. The explosive growth of these companies has certainly been incredible, and I have no doubt that many new, fantastically successful e-commerce concepts will emerge that will leverage social in some way. Nonetheless, I think people have been giving social too much credit when it comes to the “social commerce” examples we have thus far, and have been misplacing our emphasis on “social” in e-commerce.

In e-commerce, there are two truths: Customers will always want lower prices, and once they’ve spent their money, they’ll always want as close to immediate gratification as possible. (A third principle, that customers will always want more selection, though I think probably true, is up for debate. It might asymptote given the paradox of choice.) If an e-commerce company forgets either of these two maxims, they’ll soon find that their customers have gone elsewhere.

With “social” however, the same is not true. It’s not the case that a customer will always want their e-commerce experience to be more social. Will customers want and enjoy some social features? Sure. There absolutely is utility in social features (more on that later) not to mention fun/entertainment, but it’s just not the case that consumers will always ask for more social features in the same way that they’ll always ask for Continue reading “Stop calling Groupon “social commerce”.”

eCommerce Laws: Conclusion

Your first reaction after reading these ten rules may be, “Yeah, sounds good in a world of endless resources and time!” We understand. In the early days of a young eCommerce business, you can only do so much. But we still encourage you to follow as many of these rules as you can and adopt more of them as you grow. Once you reach $10m of annualized gross profit, if you’re ignoring more than two, we’ll bet you won’t make it to $25m.

We hope you benefit from these best practices we’ve gathered from dozens of talented eCommerce executives with whom we’ve had the privilege of collaborating over the years. If you have any thoughts, comments or suggestions, please share them with us (eCommerce [at] bvp [dot] com). We would be delighted to hear from you.

Lastly, I’ve embedded below a pdf of the full rules. Please feel free to download it.

eCommerce Laws: Conclusion

Your first reaction after reading these ten rules may be, “Yeah, sounds good in a world of endless resources and time!” We understand. In the early days of a young eCommerce business, you can only do so much. But we still encourage you to follow as many of these rules as you can and adopt more of them as you grow. Once you reach $10m of annualized gross profit, if you’re ignoring more than two, we’ll bet you won’t make it to $25m.

We hope you benefit from these best practices we’ve gathered from dozens of talented eCommerce executives with whom we’ve had the privilege of collaborating over the years. If you have any thoughts, comments or suggestions, please share them with us (eCommerce [at] bvp [dot] com). We would be delighted to hear from you.

Lastly, I’ve embedded below a pdf of the full rules. Please feel free Continue reading “eCommerce Laws: Conclusion”

eCommerce Laws: Conclusion


This post is by Anonymous from Sarah Tavel / Adventurista

Your first reaction after reading these ten rules may be, “Yeah, sounds good in a world of endless resources and time!” We understand. In the early days of a young eCommerce business, you can only do so much. But we still encourage you to follow as many of these rules as you can and adopt more of them as you grow. Once you reach $10m of annualized gross profit, if you’re ignoring more than two, we’ll bet you won’t make it to $25m.

We hope you benefit from these best practices we’ve gathered from dozens of talented eCommerce executives with whom we’ve had the privilege of collaborating over the years. If you have any thoughts, comments or suggestions, please share them with us (eCommerce [at] bvp [dot] com). We would be delighted to hear from you.

Lastly, I’ve embedded below a pdf of the full rules. Please feel free to download it.

eCommerce Rule #10: Keep it social, but keep your data too

Social media isn’t just for promoting and evangelizing. Sites like Facebook and Twitter now need to be considered a core part of any e-tailer’s sales and marketing strategy. People are spending an increasing amount of time on these sites—a recent study by Nielsen showed that people now spend 22.7% of their time on social networks, up from 15.8% just a year ago. Moreover, according to eMarketer, 41% of all U.S. Facebook members connect with fan pages to highlight their favorite brands.

An extremely connected and network consumer has allowed companies like Groupon to take off, and we expect there will be many new eCommerce models that will emerge to leverage consumers’ social graphs. But all eCommerce companies can benefit from social media, if done right.

That means more eCommerce execs are paying attention to “Like” buttons and corporate fan pages, which allow marketers to run promotions Continue reading “eCommerce Rule #10: Keep it social, but keep your data too”

eCommerce Rule #10: Keep it social, but keep your data too

Social media isn’t just for promoting and evangelizing. Sites like Facebook and Twitter now need to be considered a core part of any e-tailer’s sales and marketing strategy. People are spending an increasing amount of time on these sites—a recent study by Nielsen showed that people now spend 22.7% of their time on social networks, up from 15.8% just a year ago. Moreover, according to eMarketer, 41% of all U.S. Facebook members connect with fan pages to highlight their favorite brands.

An extremely connected and network consumer has allowed companies like Groupon to take off, and we expect there will be many new eCommerce models that will emerge to leverage consumers’ social graphs. But all eCommerce companies can benefit from social media, if done right.

That means more eCommerce execs are paying attention to “Like” buttons and corporate fan pages, which allow marketers to run promotions tightly integrated into Facebook’s feature set and social graph. Brands can also broadcast updates, like coupons and special promotions that appear in users’ news feeds. Quick tip: Studies show that Facebook users are more likely to engage with an offer presented on the site if they don’t have to leave the Facebook ecosystem to do so. Another best-practice we hear is that Facebook fan pages are most effective when the merchant starts conversations with its followers (e.g., by asking a question) instead of just “pushing” offers out to its fans. If you want to have a best-in-class fan page, check out 3rd party products like Involver (BVP portfolio company).

But beware: While it might sound like a great idea to add Facebook Connect integration and Facebook “Like” buttons to your e-commerce site with the hopes of attracting viral traffic from Facebook, proceed with caution. When your customers click that they “Like” a certain product on your site, Facebook records that data and then lets companies target those users with advertising. Essentially, you’re giving your competitors data they can use to target your customers on Facebook. Depending on what you sell and how competitive the market is, it might be worth the risk, but tell your employees to let you know if they notice that they are being targeted by ads from your competitors. If you see one of your competitors showing you an attractive offer, you’ll know why.

If you’re unsure how to best leverage Facebook and Twitter, don’t stress about it. Remember: However social-media trends play out, consumers will always, always want three things when they shop online: lower prices, more selection and better service.

eCommerce Rule #10: Keep it social, but keep your data too


This post is by Anonymous from Sarah Tavel / Adventurista

Social media isn’t just for promoting and evangelizing. Sites like Facebook and Twitter now need to be considered a core part of any e-tailer’s sales and marketing strategy. People are spending an increasing amount of time on these sites—a recent study by Nielsen showed that people now spend 22.7% of their time on social networks, up from 15.8% just a year ago. Moreover, according to eMarketer, 41% of all U.S. Facebook members connect with fan pages to highlight their favorite brands.

An extremely connected and network consumer has allowed companies like Groupon to take off, and we expect there will be many new eCommerce models that will emerge to leverage consumers’ social graphs. But all eCommerce companies can benefit from social media, if done right.

That means more eCommerce execs are paying attention to “Like” buttons and corporate fan pages, which allow marketers to run promotions tightly integrated into Facebook’s feature set and social graph. Brands can also broadcast updates, like coupons and special promotions that appear in users’ news feeds. Quick tip: Studies show that Facebook users are more likely to engage with an offer presented on the site if they don’t have to leave the Facebook ecosystem to do so. Another best-practice we hear is that Facebook fan pages are most effective when the merchant starts conversations with its followers (e.g., by asking a question) instead of just “pushing” offers out to its fans. If you want to have a best-in-class fan Continue reading “eCommerce Rule #10: Keep it social, but keep your data too”

eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals

The rise of social-media services like Facebook and Twitter, and the explosion of niche blogs, means your customers now have very public microphones with which they can broadcast their feelings about you. This cuts both ways: Your disgruntled customers have a louder way to complain. But social media also means that your biggest fans (as discussed in Rule #2 and Rule #5) can be heard more, too. They can use social media to sing your praises all over the Internet.

Make sure you take advantage of this phenomenon. The first step is, identify your best customers. They are your most profitable customers, who come back to your site again and again. Work hard to keep them happy. You might try dubbing your most loyal customers VIPs, as Zappos does. This nomenclature may sound silly, but people are naturally proud of being loyal customers of services they like. Then make these customers realize you value them as evangelists or VIPs. Invite them to VIP-only events or sales, and send them special emails to get their feedback. This also serves to encourage their customer loyalty. But you can do more.

Consider Amazon Prime. With Amazon Prime, consumers must pay a fee to participate. But once customers sign up, they get free shipping on all their orders, not just those over a certain amount. This program is incredibly effective at turning repeat customers into truly loyal customers. The logic is that once you’re a paying member of a retail site like Amazon, you’ll always consider Amazon first when you want to buy a new book, or a movie or a backpack. You’ve got to get your money’s worth, after all, since you paid an initiation fee to get into Amazon Prime. Amazon’s goal with this program is for its site to become a daily habit for its customers. This is an incredibly expensive program to implement if you’re not already at scale, and a huge barrier to entry Amazon has erected (though some retailers are now locking arms to try to offer a similar program and compete with Amazon).  Mobile apps are another way of encouraging customer loyalty. If you are able to get a customer to download your mobile app, you make it that much easier for your customers to find you again and use you when the urge strikes.

If you’re at scale, yet another gambit is to create a loyalty-points system, as MooseJaw, an online retailer of outdoor gear, has done. This site’s program—akin to frequent-flier miles—gives customers ten points for every dollar they spend on regularly priced items, and five points for every dollar spent on discounted products. Customers can then use their accumulated points to buy products on MooseJaw’s reward site.

Now, motivate your evangelicals to sing your praises. In Rule #3, we discussed the importance of Net Promoter Score. To best leverage your NPS, make it as easy as possible for your Promoters (those that rated your service a 9 or a 10) to promote Continue reading “eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals”

eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals


This post is by Anonymous from Sarah Tavel / Adventurista

The rise of social-media services like Facebook and Twitter, and the explosion of niche blogs, means your customers now have very public microphones with which they can broadcast their feelings about you. This cuts both ways: Your disgruntled customers have a louder way to complain. But social media also means that your biggest fans (as discussed in Rule #2 and Rule #5) can be heard more, too. They can use social media to sing your praises all over the Internet.

Make sure you take advantage of this phenomenon. The first step is, identify your best customers. They are your most profitable customers, who come back to your site again and again. Work hard to keep them happy. You might try dubbing your most loyal customers VIPs, as Zappos does. This nomenclature may sound silly, but people are naturally proud of being loyal customers of services they like. Then make these customers realize you value them as evangelists or VIPs. Invite them to VIP-only events or sales, and send them special emails to get their feedback. This also serves to encourage their customer loyalty. But you can do more.

Consider Amazon Prime. With Amazon Prime, consumers must pay a fee to participate. But once customers sign up, they get free shipping on all their orders, not just those over a certain amount. This program is incredibly effective at turning repeat customers into truly loyal customers. The logic is that once you’re a paying member of a retail site like Amazon, you’ll always consider Amazon first when you want to buy a new book, or a movie or a backpack. You’ve got to get your money’s worth, after all, since you paid an initiation fee to get into Amazon Prime. Amazon’s goal with this program is for its site to become a daily habit for its customers. This is an incredibly expensive program to implement if you’re not already at scale, and a huge barrier to entry Amazon has erected (though some retailers are now locking arms to try to offer a similar program and compete with Amazon).  Mobile apps are another way of encouraging customer loyalty. If you are able to get a customer to download your mobile app, you make it that much easier for your customers to find you again and use you when the urge strikes.

If you’re at scale, yet another gambit is to create a loyalty-points system, as MooseJaw, an online retailer of outdoor gear, has done. This site’s program—akin to frequent-flier miles—gives customers ten points for every dollar they spend on regularly priced items, and five points for every dollar spent on discounted products. Customers can then use their accumulated points to buy products on MooseJaw’s reward site.

Now, motivate your evangelicals to sing your praises. In Rule #3, we discussed the importance of Net Promoter Score. To best leverage your NPS, make it as easy as possible for your Promoters (those that rated your service a 9 or a 10) to promote you. One way is through loyalty or incentive programs. These might be simple offers, like “refer a friend” to save money on a future purchase. But there are a number of new vendors that offer unique solutions to motivate users to share their purchases. The space is still very young, but it will evolve quickly. The higher your NPS, the better you’ll be positioned to leverage it.

eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals


This post is by Anonymous from Sarah Tavel / Adventurista

The rise of social-media services like Facebook and Twitter, and the explosion of niche blogs, means your customers now have very public microphones with which they can broadcast their feelings about you. This cuts both ways: Your disgruntled customers have a louder way to complain. But social media also means that your biggest fans (as discussed in Rule #2 and Rule #5) can be heard more, too. They can use social media to sing your praises all over the Internet.

Make sure you take advantage of this phenomenon. The first step is, identify your best customers. They are your most profitable customers, who come back to your site again and again. Work hard to keep them happy. You might try dubbing your most loyal customers VIPs, as Zappos does. This nomenclature may sound silly, but people are naturally proud of being loyal customers of services they like. Then make these customers realize you value them as evangelists or VIPs. Invite them to VIP-only events or sales, and send them special emails to get their feedback. This also serves to encourage their customer loyalty. But you can do more.

Consider Amazon Prime. With Amazon Prime, consumers must pay a fee to participate. But once customers sign up, they get free shipping on all their orders, not just those over a certain amount. This program is incredibly effective at turning repeat customers into truly loyal customers. The logic is that once you’re a paying member of a retail site like Amazon, you’ll Continue reading “eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals”

eCommerce Rule #8: WWAD (What Would Amazon Do)?

Amazon was among the first online retailers to offer many of the elements so crucial to e-commerce today: obsession with customer service, affiliate marketing, product reviews, free shipping, a VIP service, on-site advertising and many others. When Amazon first launched many of these features, observers scratched their heads in confusion (e.g., why would Amazon let consumers say negative things about the products they sell?). But eventually other e-tailers followed suit.

Now, it’s tough to find any sophisticated online retailer that hasn’t implemented product reviews. In fact, companies like BazaarVoice help online retailers launch product-review functionality with minimal effort. It’s now widely understood that product reviews often increase conversion rates by a double-digit percentage.

The newest frontier is onsite advertising. Amazon clearly measures eGPV (see “Conversion Rate” under Rule #3), and every change Amazon embraces improves its eGPV. To this end, Amazon has been running a variety of online ads on its site for a few years now – including Amazon’s own pay-per-click advertising and third-party display ads. The thought of letting third-party sites advertise on your site, after you’ve spent so much money and worked so hard to get consumers to visit your site in the first place, might sound sacrilegious. But mark our words: This train has left the station. Onsite advertising represents a great opportunity to leverage manufacturer trade budgets to generate additional revenues for your onsite clicks. Companies like Hooklogic and Intent Media hope to be the BazaarVoice of onsite advertising and are already gaining traction with some of the biggest names in e-commerce.

Other Amazon best practices we admire:

Metrics-oriented culture. E-commerce is a low-margin business. To make a low-margin business work, Amazon has an incredibly metrics-oriented culture. Amazon isn’t the only one. Time and time again, the most successful e-commerce businesses we see share Amazon’s obsession with metrics. (We joke that it’s no surprise QuidSi’s CEO, Marc Lore, worked in a Wall Street risk-management group before becoming an e-commerce entrepreneur). Take this to heart. You just can’t be successful as an online retailer if you’re not similarly obsessed with metrics.  A/B test and optimize everything – every link, every call to action, every merchandising decision. As one successful eCommerce exec once told me, “If we don’t have an A/B test going on, I get very grumpy.”

Obsession with page-load times. It’s easy to be tempted to add JavaScript tags from different vendors to your Web pages to soup up the functionality on your site. But beware: These tags can slow down performance. And Amazon has long known that the faster your page-load time, the higher your conversion rates. In April 2010, Google took the step of incorporating page-load time into Google’s all-powerful Quality Score, which makes page-load times more important than ever.

Keeping “fit.” Each workgroup in Amazon must build a “fitness function”, a customized equation that incorporates the most important metrics for a particular group. When computed, the fitness function creates a single “fitness number.” This is Continue reading “eCommerce Rule #8: WWAD (What Would Amazon Do)?”

eCommerce Rule #8: WWAD (What Would Amazon Do)?


This post is by Anonymous from Sarah Tavel / Adventurista

Amazon was among the first online retailers to offer many of the elements so crucial to e-commerce today: obsession with customer service, affiliate marketing, product reviews, free shipping, a VIP service, on-site advertising and many others. When Amazon first launched many of these features, observers scratched their heads in confusion (e.g., why would Amazon let consumers say negative things about the products they sell?). But eventually other e-tailers followed suit.

Now, it’s tough to find any sophisticated online retailer that hasn’t implemented product reviews. In fact, companies like BazaarVoice help online retailers launch product-review functionality with minimal effort. It’s now widely understood that product reviews often increase conversion rates by a double-digit percentage.

The newest frontier is onsite advertising. Amazon clearly measures eGPV (see “Conversion Rate” under Rule #3), and every change Amazon embraces improves its eGPV. To this end, Amazon has been running a variety of online ads on its site for a few years now – including Amazon’s own pay-per-click advertising and third-party display ads. The thought of letting third-party sites advertise on your site, after you’ve spent so much money and worked so hard to get consumers to visit your site in the first place, might sound sacrilegious. But mark our words: This train has left the station. Onsite advertising represents a great opportunity to leverage manufacturer trade budgets to generate additional revenues for your onsite clicks. Companies like Hooklogic and Intent Media hope to be the BazaarVoice of onsite advertising and are Continue reading “eCommerce Rule #8: WWAD (What Would Amazon Do)?”

eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.

Affiliates are third parties that charge a commission when a user clicks through a link on one of their sites to a merchant and subsequently completes a transaction (usually a purchase). On the face of it, affiliates look like a no-brainer—the more of them you can get, the better. But don’t be fooled. It’s the Wild West out there, and certain evil affiliates are looking to pick your pocket. You are better served having a very tightly controlled affiliate program, and you need to keep a close eye on affiliates for suspicious behavior. Here are three things to watch out for:

Everyone claims credit. As we discussed in Rule #6, consumers often visit a site multiple times before completing a purchase. The larger your affiliate program, the higher the chance that your average customer clicks on the links of more than one affiliate before converting (perhaps they visit the site of a traditional affiliate, and then an online-coupon site). Because affiliates get credit for a conversion even if it occurred several days, or weeks, after the user first clicked through the affiliate’s link, this means you might find yourself with multiple parties all claiming credit for the same conversion. A 5% commission for one affiliate is fine. But if you need to pay two or more affiliates the same commission rate, your costs can add up very quickly. To minimize this, you’re better off sticking with just one affiliate program (e.g., Commission Junction, Performix, etc).

Watch out for spyware and other scams. The most insidious affiliate ploys are scams like spyware or cookie-stuffing. Ben Edelman of Harvard Business School has a great report describing how some affiliates use pop-ups, pop-unders, IFRAMEs and other little-known industry mechanisms to trick a user’s browser into downloading an affiliate’s cookie for multiple merchants—even when the user hasn’t clicked on an actual affiliate link. When the user then goes to one of the soon-to-be-defrauded merchants and makes a purchase, the affiliate scammer’s cookie claims credit for the conversion.

Other affiliates deploy good old-fashioned spyware. One of our portfolio-company executives recently was combing through his Web logs and noticed that the codes for some of his affiliates were being entered into users’ clickstreams milliseconds before transactions were finalized, thereby tricking the merchant into thinking that the affiliate had acquired those customers. The executive soon realized some of his users’ computers were infected with spyware. The spyware tracks a user’s behavior and, in the first millisecond it sees a shopping cart activated, refreshes the user’s browser and slips in the affiliate’s code. Our executive notified Commission Junction, the leading affiliate program provider, of the ruse and the affiliates were quickly terminated. But remember: no one else is looking out for you, so you need to monitor your affiliates yourself.

Don’t let them bid against you. Left unchecked, affiliates may bid on your trademark search terms, effectively fighting you for keyword ads and driving up your acquisition costs. Whats worse, often, affiliates try to take Continue reading “eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.”

eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.

Affiliates are third parties that charge a commission when a user clicks through a link on one of their sites to a merchant and subsequently completes a transaction (usually a purchase). On the face of it, affiliates look like a no-brainer—the more of them you can get, the better. But don’t be fooled. It’s the Wild West out there, and certain evil affiliates are looking to pick your pocket. You are better served having a very tightly controlled affiliate program, and you need to keep a close eye on affiliates for suspicious behavior. Here are three things to watch out for:

Everyone claims credit. As we discussed in Rule #6, consumers often visit a site multiple times before completing a purchase. The larger your affiliate program, the higher the chance that your average customer clicks on the links of more than one affiliate before converting (perhaps they visit the Continue reading “eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.”

eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.


This post is by Anonymous from Sarah Tavel / Adventurista

Affiliates are third parties that charge a commission when a user clicks through a link on one of their sites to a merchant and subsequently completes a transaction (usually a purchase). On the face of it, affiliates look like a no-brainer—the more of them you can get, the better. But don’t be fooled. It’s the Wild West out there, and certain evil affiliates are looking to pick your pocket. You are better served having a very tightly controlled affiliate program, and you need to keep a close eye on affiliates for suspicious behavior. Here are three things to watch out for:

Everyone claims credit. As we discussed in Rule #6, consumers often visit a site multiple times before completing a purchase. The larger your affiliate program, the higher the chance that your average customer clicks on the links of more than one affiliate before converting (perhaps they visit the site of a traditional affiliate, and then an online-coupon site). Because affiliates get credit for a conversion even if it occurred several days, or weeks, after the user first clicked through the affiliate’s link, this means you might find yourself with multiple parties all claiming credit for the same conversion. A 5% commission for one affiliate is fine. But if you need to pay two or more affiliates the same commission rate, your costs can add up very quickly. To minimize this, you’re better off sticking with just one affiliate program (e.g., Commission Junction, Performix, etc).

Watch out Continue reading “eCommerce Rule #7: Affiliates are risky. Don’t let them pick your pocket.”