When executives at Backcountry.com realized that viral marketing was becoming a marketing catchphrase, President and Co-founder John Bresee had an idea.
"[Bresee] came to me and said, 'If we had a site that had insane deals on gear, would you go there?'" says VP Marketing Dustin Robertson. "It was obvious to all of us that we would."
Thus, the idea of SteepandCheap.com -- an ecommerce site that would be launched without the benefit of any paid marketing -- was born.
It was brilliantly simple: create a Web site with great deals on limited-edition, brand-name outdoor gear -- then offer a single item for sale for 24 hours (beginning at 12 a.m. MST) or until the product sold out. If the item didn't sell out by the end of the 24-hour period, a new one would replace it.
The site was given a link from the Backcountry.com Web site for the first two weeks when it launched in February 2005, but traffic from that link was minimal. Employees also told friends and family about the new site. Otherwise, not a drop of marketing was done.
Fifteen months later, traffic “has outpaced any growth we could have modeled," Robertson says. Monthly visits have grown nearly 1700% since February 2005. And, it's profitable.
"In retailing, margin isn't the only way to make money. Inventory turn is so incredibly high on the site that it makes up for the [steep discount] model." Plus, the inventory never has to be stored, and shipping is simple because every item is the same.
Here are five steps Robertson took to launch the site:
#1. Build your communityAs any good word-of-mouth marketer knows, one of the best ways of generating buzz is to give consumers a way to talk about it. On the SteepandCheap.com site, consumers chat about the merchandise, complain about it and chide each other for complaining. At least two regulars post their hard-core outdoors comments in haiku (really).
In the first month of operation, the forum received more than 21,000 visits. Since then, monthly forum traffic has grown 375%.
Word of items on the site spreads to other online communities, which Robertson's team tracks. For example, on a Web site called Telemarktips.com, someone generally posts about SteepandCheap.com when an item of interest for this type of skiing is for sale.
Because items on SteepandCheap.com are for sale for 24 hours only (often far shorter than that), people visit SteepandCheap.com to find out the day's offering, then are immediately posting to other communities.
#2. Make the site attractive to manufacturersRobertson's team knew they needed to offer products attractive to gear freaks, but finding merchandise that could be discounted might be difficult.
"The outdoor industry is pretty price-fixed. Brands don't let their retailers discount their stuff online until it's out of season. And even if it is out of season, they're not excited about letting it sit out there for a year."
By using an ultra-aggressive pricing model, SteepandCheap.com is able to blow through close-out products in a day that otherwise might sit in the back of a distributor's warehouse. The limited window keeps interest high and the supply chain clean of late-model products.
Robertson's team can sell the bulk of the buy on the Backcountry.com outlet site (BackcountryOutlet.com) for a couple of months. The remainder goes on SteepandCheap. This way, they can negotiate better deals, particularly as distributors see that Backcountry.com is able to sell close-out products faster than other outlet sites.
To keep word of mouth strong, the site needs great merchandise. Finding it can be a challenge, especially as traffic grows. "We can sell 2,000 and 3,000 units of something now, and that's hard to find.”
Another challenge is the season: gear fanatics don't want to wait till next winter to use their new jackets or bindings. They'd rather get sleeping bags they can use now. To get the best merchandise, Robertson has a dedicated buyer.
The buyer is constantly in touch with distributors, hounding them for deals, convincing them to hunt through their warehouses for forgotten items. "He'll go so far as to say, 'We'll come out to your warehouse and dig around with you,'" Robertson says.
#3. Create a sense of mystiqueEach product sold on the site gets tagged so visitors can see how many were sold and other data. For example, a tag for a pair of sunglasses that was sold May 8 read:
Sold out!
The last one went on Monday, May 08 2006, 05:21 AM.
We sold 419 items for a total of $15058.86.
An item was sold every 0.77 minutes.
When the items are available for sale, the site does *not* tell how many are still available. Rather, there is a status bar on the left-hand side of the page that visitors can watch as the inventory drops.
#4. Police eBaySome visitors are using the site to boost their eBay businesses. To help stop that from happening, buyers only allowed to purchase three of any item at a time. However, people still can place four separate orders for three at a time, and the gear is appearing on eBay the next day.
But because those people generally "steal" the content and images from SteepandCheap.com, Robertson is able to get most of those pirated items pulled from eBay.
On the other hand, people who want to buy three of an item and sell or trade them on the forum to feed their habit, "That's fine.”
#5. Don't trust conversionsIt's obvious if you think about it, but tracking conversions is nearly useless: a day in which an item sells out within the first few hours would have abysmal conversion rates -- perhaps .005%, Robertson says -- because people who visited the site in the hours after the item is sold out are unable to convert.
"You have to look at intent to buy. People might be intending to buy but can't get [the product]."
On the other hand, if an item with a large quantity sells steadily throughout the day, the site may see a 15% conversion rate. "We don't model the business based on conversion because it's too hard to predict.”
Useful links related to this article:
http://www.Backcountry.com/http://www.SteepandCheap.com/
