A Bounce in Consumer Sentiment? Some Encouraging Numbers, Especially for Amazon & WalMart.

January 28, 2009 Leave a Comment

 

A survey just released by ChangeWave shows that sentiment on consumer spending may have finally bottomed after a prolonged slowdown.  But they also cautioned that this tiny uptick in their data may be shortlived, much like their May ’08 data following the tax rebate checks.

hand-moneyThat being said, their Jan ’09 survey of almost 2,800 U.S. consumers  said that although fifty-seven percent of U.S. respondents said they’ll spend less during the next 90 days than they did a year ago – that is still three points better than last month’s December survey.  Better still, another 13% said they’ll actually spend more, which is two points better than last month.  Finally, 12% said they think the economy will improve in the next 90 days (up 3 points), and the 56% who said they think the economy will worsen during the next 90 days is still 10 points better than the December low.

What does this mean for online & retail?

For the third consecutive survey, ChangeWave indicates that in the home entertainment and network shopping category Amazon.com (+1 to 24%) is the clear momentum leader.   On the flip side, brick & click retailers like Best Buy (-6  to 37%) and bankruptcy-headed Circuit City (-2 to 7%) show significant weakness going forward.

Finally, for retail stores ChangeWave’s consumer surveys have consistently pointed to two retail winners since Feb ‘07: Wal-Mart and Costco (both +6).   The greatest weakness going forward is among traditional retailers, led by Bed, Bath & Beyond (BBBY) (-14), Sears (SHLD) (-12), Macy’s (M) (-12) and JC Penney (JCP) (-10).

For the majority of Americans who are still spending less, the primary reasons remain reduced household  income, saving money, and debt reduction.

Filed under eCommerce, Economy, Market Research, Retailing Tagged with , , , , , , , , ,

DVD/Blue Ray Sales Fall Behind Videogames For First Time

January 27, 2009 3 Comments

 

According to research firm Media Control GfK International and as reported by Videobusiness.com, global retail sales of packaged home entertainment grew 6% to hit $61 billion in 2008, with fast-growing videogames for the first time outweighing DVD and Blu-ray Disc.  That’s because game software sales grew 20% to $32 billion while combined DVD/Blu-ray sales fell 6% to $29 billion.

Continuing the trend, GFK predicts game sales will grow another 12% globally in 2009 to $36 billion, while DVD and Blu-ray combined will decline another 4% to about $27 billion. 

game controllerIt is worth noting that if you look at Blu-ray sales on a stand-alone basis, they are rising.  They doubled last year and should more than double again this year to $2.9 billion.  But it is the U.S. market that appears to be driving overall global decline in traditional DVD sales, off 8% as compared to just 3% in Europe and 4% in Asia Pacific.  Although still the largest geographic market, the U.S. has seen its share of worldwide sales fall 45% and 43% respectively in the last two years.

The top selling DVD title in the world in 2008?  It was Warner’s The Dark Knight with over 15 million unit sold. 

Filed under Market Research, Retailing, Sales Tagged with , , , , , , ,

Loyalty Cards Getting Smarter Means Couponing May Be Getting Better

January 26, 2009 1 Comment

 

Kroger (the nation’s largest traditional grocery chain) and dunnhumby (the British data mining company) have created a joint venture called dunnhumbyUSA that is significantly increasing coupon redemption rates.  

krogerIt turns out that Kroger is mining their loyalty card data in a way that is signficantly boosting their savings via higher coupon redemptions.  It turns out that Americans typically redeem only 1 percent to 3 percent of paper coupons, even in the current recession.  But Kroger, In contrast, says as many as half the coupons it sends to its regular customers are getting used.

The difference is that Kroger is augmenting standard purchase information from its shopper cards (lots of companies do that) with dunnhumby’s consumer analysis and customer interview methodologies.  This “blend” allows them to send customers the right coupons for the products they regularly buy. 

If you’re a retailer or manufacturer you may want to keep an eye on dunnhumbyUSA.  In addition to the obvious work the do for parent-partner Kroger, they have added Coca-Cola, The Home Depot, Procter & Gamble, Macy’s an Kraft Foods and others to their growing list of clients.  In addition, their web site indicates that they have been adding new offices in cities around the globe.

It will be paticularly interesting to see if or what direction this joint venture might take couponing in the online space.  Jedwar.com will keep watching.

Filed under 1, eCommerce, Manufacturers, Marketing, Retailing Tagged with , , , , , ,

Evaluating Online Venture Opportunities – Industries and Markets

January 24, 2009 Leave a Comment

change2 

When launching an important new online product or business there are several questions to ask.  First and foremost is this: Does your new idea change the way people will live their lives and work, or is it an incremental improvement only?  If the latter, then beware in terms of ginning up investor or media interest – you probably have a lifestyle business on your hands that will be hard to garner attention.  If the former, then get your pitch ready because investors and the press may want to hear what you have to say.

 

In terms of evaluating prospective markets, here are 5 additional questions where an affirmative on the former suggests you have a high-growth, investable business on your hands and the latter suggests a lifestyle business.  They are:

 

1.      Does your idea encompass a market-driven recurring revenue niche, or is it an unfocused, one time revenue play?

2.      In terms of customers, are they reachable by you or are they loyal to others?

3.      In terms of user benefits, will they see a payback in a year or less when adopting your product or will it take three years or more for them to receive a positive ROI? 

4.      Is there a high value-add where customers will pay in advance, or is the value-add low with minimal impact on the market?

5.      Finally, is the product a durable one or is it perishable?

 

Shaping your new online business and pitch towards a reachable, market-driven audience with recurring revenues, one year payback, high value-add, and durable products will increase your chances of success with both investors and customers.

Filed under Business, Startups & Entrepreneuring Tagged with , , , , , , , , ,

Are You Talking to Angel Investors? Understand Common vs. Preferred Stock

January 24, 2009 1 Comment

 

Ok, you are a budding entrepreneur with a great idea for a new online business.  To fund that idea you begin with founders contributions such as cash, credit cards, your ideas (fancy term is intellectual capital), and sweat equity.  And if that isn’t enough you seek out your family and friends.

stockBut if you are lucky, at some point your idea becomes bigger than the wallets of your relatives and neighbors.  At this point, the next step in the funding process is for you to seek out local angel investors.  Angel investors are high net worth individuals or clubs who invest their own money in startup enterprises.  Their motivations for doing so vary, but they all share one common goal – an “Exit”.  That means the sale of your business or a buyout – at a profit – and in a timely fashion.  What Angels don’t want to invest in is a “lifestyle” business for you.

So here is where common and preferred come into play.    Common Stock is generally reserved for founders, employees, friends/family.  The problem for Angels is that common stock rights are hard to protect (read dilution) in future funding rounds.  Preferred stock on the other hand offers a series of unique rights which can only change with the consent of the series holders.  These include the aforementioned dilution, as well as liquidation options and downside protection. 

If your business is successful, Angels understand that the next step up in the funding food chain will be Venture Capital firms.  VC’s are sophisticated investment companies who will definitely require Preferred Stock, stripping away some common rights.  In addition, VC’s will often protect management at the expense of Angel common through option programs, etc.

Just remember that the difference between an Angel investor and a VC is that Angels are investing “their own money” while VC’s are investing other people’s money.  Sophisticated angel investors need to be sure that a) their money isn’t unnecessarily diluted, b) that management doesn’t decide that they like their high salary and never want to sell the business at any price, or c) that they are the “last out” in the unfortunate circumstance that your business needs to liquidated.

Filed under Finance, Startups & Entrepreneuring Tagged with , , , , , , , , ,

Startup Advice: Know Your Business Model And Be Able to Say It In 15 Seconds

January 23, 2009 Leave a Comment

So you have an idea for a new business, one with an online component, and you are looking to raise money.  Before any investor pulls out their checkbook they are going to ask you “what is your business model? ”  What they mean of course is ”How will you make money?” 

business-modelUnfortunately, what often happens next is the source of high comedy (or tragedy depending on your perspective).   The would-be entrepreneur launches into a long recitation complete with 5 year pro-forma forecasts and detailed sales plan.  The prospect nods their head appreciatively along the way, but in reality you lost them the moment you said “Glad you asked!” 

Here is a simple piece of advice:  Be able to express your business model in a way they can understand it in under 15 seconds.   And the best way to do that is to identify the business model type to which you are most closely aligned, as well as sharing an example company to reinforce the point.  In doing so you give the prospect a clear and immediate mental framework they can use to pin everything you say after that. 

To get a better idea of what I mean, here is a short list of business model types and example companies:

•          Subscription business model                     WSJ – Online Edition

•          Razor and blades business model             Gillette

•          Multi-level marketing business model      Amway

•          Network effects business model               Facebook

•          Cutting out the middleman model             Amazon

•          Bricks and clicks business model              Barnes & Noble

•          Loyalty business models                            Nordstrom

•          Servitization model                                     IT Services

•          Low-cost carrier business model               Southwest Airlines

•          Auction Model                                              eBay

So work this into the opening line of your business model elevator speech.   You will be glad you did.

Filed under Finance, Startups & Entrepreneuring Tagged with , , , , , , , ,

Bad Economy Isn’t Taking Bite Out of Apple, But SEC Might

January 22, 2009 Leave a Comment

 

Apple just released it’s first quarter financial results and posted record revenue of $10.17 billion and record net profit of $1.61 billion, or $1.78 a share.  Analysts had predicted that Apple would earn just $1.29 a share.  In addition, Apple even excceeded it’s per-share revenues of 1st Qtr 2008 of $1.76. 

 

 It seems that almost everything was up.  Mac sales increased 9% to 2.524 million units, iPods up 3% to 22.7 million units, and iPhones up 88% to 4.36 million.

 

apple-logo1One thing that was not up was a concern over Steve Jobs health and the way the company was disclosing information to the public.  Much like people who buy and sell Berkshire Hathaway stock pay close attention to Warren Buffett’s health, the same is true for a corporate icon like Steve Jobs.  Rarely in American business will you find a person and a company more closely tied together than Steve Jobs is to Apple.  Recently the stock price went up when they said he would still be going to work.  Then it went down when they said he was taking a medical leave.  In the language of stocks, that’s a beta of 1.0.  The SEC is apparently investigating.

 

 In a world that’s driven by HIPPA one might think that such disclosures of health are not a matter of public concern.  But the SEC and investors require transparancy where matters materially impacting a publicly traded business are concern.  And few things are more material than the health of Steve Jobs to a company like Apple.  I seriously doubt this will lead to any fines or penalties.  But perhaps it is a soft warning to other companies that a communications strategy around the health of their CEO should at least be considered.

 

Filed under Manufacturers, PR Tagged with , , , , , , , ,

Top 50 Retail Brands for 2009 Includes Two Online-Only Outlets

January 21, 2009 Leave a Comment

InterBrandDesignForum has just released their 2009 list of the 50 Most Valuable Retail Brands for 2009.  Heading the list of course is Walmart whose brand is valued at $129 billion.  To get a sense of the range, at #50 is Anthropologies at $420 million. 

Of particular note to Jedwar.com readers, two of the top 15 brands are actually online-only sellers eBay (at #11 and valued at $7.9 billion) and Amazon (at #14 and valued at $6.4 billion.)   As online-only brands both have the advantage of all consumer touchpoints – brand and otherwise – being under one experience.   However, being just on the Internet means their primary competitive differentiator is eBay and Amazon rankingconvenience, which is easier for competitors to narrow.  Brick & mortar stores who also sell online can express their value propositions in a myriad of ways including price, design, store-layout, store-location, attitude, etc.

In addition, eBay’s brand has some challenges ahead.  What was once an auction business is now a blurred collection of acquisitions that include Skype (which hasn’t faired as well as they had hoped) and online payments systems including PayPal.  Further adding to the challenge is their move towards fixed-pricing.  Keeping all those consumer experiences tied together logically will be difficut for eBay, just as it was for previous online aggregators like AOL.

Amazon is in better shape.  Their narrower scope allows them to vigilantly focus on making online buying really, really simple.  With fewer levers to pull they continue to drill down on the critical moving parts of their business which is site useability, product availablity, shipping and price.  It would not be surprising to see Amazon’s brand move ahead of eBay in the 2010 list.

Filed under Retailing Tagged with , , , , , ,

Some common SEO Myths

January 20, 2009 Leave a Comment

 

I just came across a good email article from Marc Ensign in SiteProNews where he summarizes some of the popular search engine optimization myths and what to do about it.   Among other things, his advice includes: don’t use rich keywords in your domain name (keep your name short),  beware of search engine marketers who say they have an “in’ with Google, Meta Keyword Tags don’t do much anymore, there is no optimum wordcount for indexing, and avoid doorway pages (lots of single pages that point to you – which is a form of search engine spam.)  He also says avoid using flash (search engines can’t index it) and pay-per-click on your pages won’t help or hurt your ranking.

Net-net, any SEO marketing for your business should begin with paying attention to your site’s tracking data (analytics) including hits, visits, conversion, pageviews, and time spent on site.  Set specific goals for each.  And then constantly translate what the real-time usage data tells you into a friendlier search-engine site design, better use of keywords (internally and pay-per-click), and great content.  Doing this will increase visits and activity on your site, which in turn will lead to increased and sales.   

 

 

Filed under Marketing, Search Engines Tagged with , , , , , , ,

Survey: Allow Your Customers to Interact via Internet and Mobile

January 20, 2009 Leave a Comment

The results are clear.  Even if you don’t sell your products online (and you should), information about what you sell, how much it costs, and special offers need to extend to your customer’s mobile devices and computers.

As reported by SmallBusinessNews.com, a recent survey from NCR Corporation indicated that 72% of U.S. consumers are more likely to shop with businesses that give them flexibility to interact easily via online, mobile, and kiosk self service channels.   “Consumers in these uncertain times are clearly showing a preference for retailers that can meet their expectations through self-service options on the web, mobile and in store. These technologies are playing a growing role in helping retailers deliver competitive advantage,” said Mike Webster , chief strategy and communications officer for NCR Corporation.

Two other datapoints of interest include:  1) 53% of consumers using the Internet more frequently to research products and prices, and 2) 46% wanting to receive price comparisons, product reviews, coupons, promotions and store sales information online or via email. 

And speaking of mobiles, according to Informa Telecoms & Media’s Global Mobile Forecasts, annual revenues from the global mobile market will top (US) $1.03 trillion by 2013, when the number of subscriptions worldwide will have risen to more than 5.3 billion.  Considering that it took over 20 years to reach 3 billion subscriptions, businesses should take note of this accelerating growth rate.

 

 

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