What Role Traffic and Conversion Optimization Play in an Online Business?
In this article, I will go over what and why of traffic and conversion optimization.
In an online business, traffic is your lifeblood. Unless you are a big brand like Apple or Proctor and Gamble, chances are that people find your internet whereabouts using Google or another search engine of their choice. This is known as Organic traffic.
About 53% of online shoppers start their product searches on Amazon, according to Internet Retailer survey of 515 U.S. adult online shoppers. 72% of the people visit Amazon to help find product ideas and information before they make a purchase, according to an another survey of 3,100 consumers in the United States, Germany, United Kingdom and France. Finally, 22% of consumers won’t look at another site if they find a product that looks suitable on Amazon.
When you look into why Amazon is outpacing Google for product searches, consumers say that it isn’t about the price per se, rather it is about Amazon’s experience (website navigation primarily), expansive catalog, and their platform reach (likely due to speed of shipping to most places in US and W. EU and customer support). There is another study that shows that Google has won back some of those initial product searches from Amazon on the back of rising mobile and voice-based product searches.
Anyhow, in order to thrive in an online business, you must maintain some product presence on Amazon, solely or in addition to your own website. Using Amazon (with 100M+ Prime members worldwide), instantly solves your traffic or demand problem however at a cost known as “referral fee” which can vary from 6% to 45% depending on the product category.
Outside Amazon, and on your website, there is only one thing that you truly need to optimize for as far as traffic is concerned and that is Search Engine Optimization or SEO. SEO is an umbrella terms, but essentially in order for you to be ranked higher for your niche topics and keywords, you need to do everything to ensure that your content provides value to Google’s customers (i.e. people searching on Google.com). SEO is a very big topic, but it essentially breaks down into technical SEO and content marketing. Technical SEO is about onsite/on-page optimization so that your website can be consumed by Google easily for your keywords and topics. Off-page SEO is essentially about back linking, i.e. moderate to high authority websites (or ones with higher DA/PA) and point back to you with most relevant and non-spammy anchor texts.
Now, let’s move to the other side of the same picture, which is conversion. Traffic in and of itself isn’t worth much is all of those visitors do not turn into paying customers. Going back to Amazon, it leads every other retailer in that area too! Amazon is able to convert its visitors at nearly twice the rate of its biggest rivals, Walmart and Costco.
Jeff Bezos figured out a clever way to charge Amazon Prime customers for “free shipping” in the form of Prime membership fee (which is now $120 per year!). How so? Well, Amazon prime users convert far higher than non-prime members, thanks to the lure of “free and fast shipping” which can be two, one or even same-day in some cases within the US. I’d go as far as saying that Amazon has forever changed the perception of shipping and handling fees in the minds of consumers. When all said and done, Amazon.com is running at less than 1% profit, thanks to deflationary pricing and all the love shown to Prime members.
Amazon prime promotes impulse buying on the basis of massive product catalog and easy and free returns in case if you didn’t like the product at the expense of Prime eligible third-party products (obviously excluding AmazonBasics product line) sold mostly by third-party sellers. I have sold Amazon FBA products in the recent past, due to Amazon generous return policies and ever increasing platform fees, it is super difficult to maintain profit margins even in the neighborhood of 30%.
Walmart and Target also offer free two-day shipping but product catalog is no where near Amazon’s size leading to pretty much less than half conversion rate (8.x% vs. 4.x%). It is worth noting that Costco is the only other company with a highly successful membership but unfortunately most of that fee is used to subsidize prices as opposed to offering free shipping (Costco uses a third-party to offer two-day shipping which is priced at $99 per year as we speak). So far, Costco has been unable to find a way to subsidize free shipping as well.
Anyhow, for conversion, much like traffic, you gotta make sure that you have at least a front-end product on Amazon that helps you get the eye balls as well as some revenues along with backend sales on your website. I can guarantee you that conversion on your website will NEVER reach Amazon’s conversion rates but that is OK since you’re keeping about 96% of the sale price assuming lump-sum 4% credit card processing fees.
In conclusion, Amazon has to be part of your traffic and conversion strategy along with relevant platforms depending on your niche. Platforms immediately solve your traffic and conversion problems in exchange for a referral fee. Now, obviously, you can’t totally rely on platforms as all those fees do add up and compress your profit margins. IMO, the best way to leverage platforms, is to use them to promote your brand using some very high value front-end products.
Last but not least, subject matter discussed in this post, as well as others, is covered thoroughly in various online courses offered by Private Label Mastery. Please feel free to share your questions or comments, I will be answering them over the next few days.