How Many Online Stores are there in the U.S.?

Here at ReferralCandy we got to wondering how many e-commerce retailers there are in the USA and how much they make. Asking Google brought us some possible answers, but nothing about how they were derived, or why they might be the right ones. So we decided to look for numbers we could crunch ourselves to get a good guesstimate.

So where do we begin? We found this June 2012 article about the Internet Retailer Top 500 Guide which had this nugget:

Overall, the Top 500 retailers have a 77% share of the \$198 billion U.S. e-retailing market.

The Top 500 Guide also lists each retailer’s annual sales revenue. We plotted a graph of those 500 retailers and their revenues to see if there was anything useful we could find.

This is what we got:

That graph sure looked like it followed a power law. Could we figure out what the precise function was? After removing the top 10 retailers (since they were “noisy”) and asking Excel for a little help, we found a function with a pretty good fit:

That’s better. Now we’re getting close! Assuming that the power law held for retailers past the top 500, we now had a way of reasonably ascertaining the rank of any online store. Say we wanted the rank of someone running a side business making \$12,000 a year. With a bit of math, we would be able to get the magic number of… 90,501. Plugging in a few more numbers would give us the following table:

 Yearly sales of at least Number of retailers \$12,000 90,501 \$25,000 54,686 \$50,000 33,983 \$100,000 21,118

Our power law formula also gives us a way of estimating the combined revenue of all the retailers making less than \$1,000 a month (spoiler: around US\$1 billion!).

So if we only considered online stores making more than \$12,000 in sales a year, that comes up to about 90,500 retailers with a combined revenue of \$197 billion in the U.S. That’s more than the population of the Seychelles!

So there we have it. Stay tuned for more number-crunching adventures! And feel free to ask any questions.

SOPA: What you can do about it

SOPA. You might not have heard of it yet, but it’s a clear and present danger to the Internet that we love and have built our businesses on.

If you’re not sure what all the fuss is about, check out this video [via BoingBoing]

To show our support for the anti-SOPA movement, we’ve moved all our domains off GoDaddy, who helped to draft SOPA. (If you were wondering, we’ve decided to switch to the quite excellent Gandi.net.)

But that’s not all. We also want to show our support for the Electronic Frontier Foundation’s (EFF) efforts against SOPA. They’ve done tremendous work in bringing this issue to light and we’d like to help out. So till January 24th, if you sign up for a ReferralCandy account using the link below, we’ll donate 60% of your first month’s bill to the EFF. You’ll also get store credit for the remaining 40% for showing your support.

Some other companies involved in the cause are Zopim and UserVoice. You should go check them out.

If you’d like to get even more involved, it’s not too late. Here are some other things you can do:

It’s time to act. Protect the ideals that the Internet was founded on and urge everyone you know to do the same.

Social is Just the Beginning

You know how you keep hearing that social media is the future of marketing? And how social networks are changing the way people behave? There’s clearly something going on here, but it’s only the beginning.

Marketing is all about figuring out what influences purchasing decisions. And being able to tell who a person knows and talks to is central to this. You know why? Because for many thousands of years, we’ve relied on the wisdom of those around us when making choices. Modern social networks cleverly take these support systems and pin them up online. We’ve been given our first glimpse of how decisions are influenced on a global scale.

But not all friend requests are created equal. Your Facebook wall displays your college drinking buddy’s recommendation to try out that fabulous new ice beer. But it also (unfortunately) includes your weird uncle pestering you to sign up with his karate instructor. Your “friend list” goes a long way in identifying the people in your life who can sway the buying choices you make. But that list inevitably gets diluted.

What is it that actually matters here? The real value that’s hidden within a social network is the trust network. Who trusts this person and who does he or she trust. This is the holy grail. It’s who people trust rather than who they know that drives their shopping decisions.

But why is trust such a big deal when you’re about to make a purchase? The answer is simple: because every transaction is based on trust. It doesn’t matter if you’re buying your dream car or just a takeaway dinner for two. You only want to do business with someone you trust will do as they promise. In a world filled with uncertainty and fraud, you need to find merchants whom you can believe in.

And in this scheme of things, your trust network plays a crucial part in connecting you with the right merchants. The magic happens when someone you trust, tells you about who they trust. The recommendation works because trust can be transferred and our relationships serve to pass that trust along.

Networks of trust, and indeed social networks themselves, are as old as the first handshake. And as we take our relationships online, we’ll get better at telling them apart.

That’s when things start to get interesting.

Improving Email Open Rates

Since we’re running a bunch of referral marketing campaigns, we end up sending out quite a lot of email. A hefty enough number that we got around to wondering what was really happening to all these emails. Were any of them even getting read? (Yes, they were!)

We decided to look at the stats for the last 1000 emails that were sent out by ReferralCandye. 51.3% were opened and read. Um, okay. Is that good? What are the industry averages for marketing emails anyway?

After a little digging, we found this insightful post by everyone’s favorite email marketing monkey. Scanning through the open rates of the various industries in the Mailchimp article, we see a peak of about 36.6%. Of course, Mailchimp has been around a lot longer than we have. Their stats are based on millions of emails. But it’s still interesting that ours have a significantly higher rate.

Why do we get better rates?
The increase is most likely because the emails we send out don’t really seem like marketing emails. Our referral campaign emails are sent out immediately after a sale is made at the merchant’s online store.

This means that the referral email is received by the customer along with the invoice right after the purchase. So the email feels a lot like a follow up to the invoice. And customers would be more receptive since the experience with the retailer is still fresh in their mind.

Send emails after you’ve interacted with your customer.
What does that mean if you’re trying to boost the open rates of your emails to customers? Aim to the send the email right after a customer interaction. This could be after he or she buys something or when you’ve just answered a support question. Hopefully this little tidbit will help you increase those open rates!

First SEO Checks

My online store is finally up and running, now what about SEO?

In a perfect world, you’d already have incorporated extensive SEO into your online store while you were setting it up. (You’d also have learnt karate, CPR and cryptography, and you’d have designed a better Internet while simultaneously ending poverty and discrimination.)

Let’s be real, though. Doing business is a complex affair, and if you waited until you were completely ready, you’d never get started. So cheers to you for getting underway.

The quest for better SEO begins with a deceptively simple idea: SEO is about “pleasing” Search Engines.

What do you do with that knowledge?

The two things you can do to improve your SEO immediately without technical know-how: Improve the clarity and navigation of your site.

1. THE CLARITY CHECK

You want your visitors to know immediately what your site is about. Attention is an incredibly precious commodity on the Internet – there are distractions tugging at you from everywhere. (Other tabs, IMs, social media, you name it.)

We easily forget this when we’re looking at our own sites, but we’re typically merciless with not-too-clear sites when we come across such examples.

When people access your website for the first time, the first thing they would like to know is exactly what your website is about. Make it difficult for them to do so, and you’ll lose them as a customer.

I came across this blog post which describes a quick but effective test that you can carry out, the 3-second page content check.

The check: Load a random page on your website and ask someone not familiar with it to tell you what that page is about after a 3-second look.

To make things real, I applied this test to several Shopify shops and here are the results.

Indestructible Dog

When I hit this website I was immediately struck by the graphic in the middle and the interesting smaller images below. While the images were eye-catching, I couldn’t see how an old school television set, dogs and the big brown object fit together. Looking around more, I got that it was selling dog snacks or toys but then my three seconds were up.

Results – Love the branding! But it could do with more descriptive text and titles on their home page products.

Entering this site is like walking into a furniture store, which is exactly what it was.

The five thumbnails showing the different areas of the store (Shop – Dining, Living.. etc.) were also very helpful to me to get a sense of what they sold.

Beat the 3 seconds flat. Results – Great job with clarity!

Open Door Vintage

This site was straightforward and to the point. I quickly got that the site was selling vintage dresses for women from the many images of dresses on the front page. The clarity was good but it was only after multiple visits that I realized they also sold items for men!

Results – Site is almost there! It just needs to do more to make its product offerings apparent .

A well-structured, intuitive site makes it easy for a person to explore your site.

A good navigation bar will not only make the site more accessible, it will also help a person to determine what the site is about.

To see what I mean, compare the two navigation bars below:

Max & Mia Organics

I can roughly tell what Max & Mia Organics is about just from the navigation bar.

They also have drop down boxes from the menu to display their product’s sub-categories. The navigation menu shows their entire product line with a hierarchy included, to allow for easy browsing.

Open Door Vintage

I love the clarity of purpose that Open Door Vintage displays in its home page, but its navigation menu could do more to highlight its product range.

Remember the previous check in which we didn’t know at first glance that they offered men’s clothes too? They can go a long way to fix this by tweaking the menu to show their product range the way that Max & Mia did.

ONCE YOU ARE DONE…

Besides helping with SEO, these two steps will also help to improve the sales conversion rate of your online store.