RiverHouseTraders.com, a small online retailer of furniture, has seen traffic and revenue jump considerably after the company switched to a pay-per-click service with Overture.
The service allows advertisers to bid on business-relevant keywords and terms on search engines that link to their Web sites.
“We're spending quite a bit of money [for a small business],” said Michael Sullivan, president and founder of RiverHouseTraders. “We're spending about $10,000 a month on Overture, but what it's done for us is it's absolutely tripled or quadrupled our income.”
RiverHouseTraders became an Overture client Jan. 17. Traffic has increased from 200 to 300 people a day to 3,500 people a day. Those visitors coming from AOL, Yahoo, MSN, AltaVista, AskJeeves.com and other portals that use Overture listings have resulted in sales of $40,000 in February and an expected $80,000 this month. The most recent results prior to the switch were $8,600 in November, $15,000 in December and $13,000 in January.
Based in Pasadena, CA, Overture, formerly GoTo.com, is a network that introduces the users of its affiliate partners' sites and businesses, products and services online.
“One of our biggest sellers is mirrors,” Sullivan said. “If you go to basically any search engine and type in 'mirror,' you'll find us as one of the sponsored listings. We get basically around 400 to 500 people a day just looking for mirrors on our site.”
On March 18, for example, 2,200 people visited RiverHouseTraders.com looking for a variety of furniture items. The company spent $450 on the words and terms that drew these visitors to the site.
If the volume holds up, then RiverHouseTraders.com expects revenue of $1.5 million for the year. Leads from Overture are projected to contribute anywhere from 60 percent to 75 percent of the revenue. Last year, the company pulled in $100,000.
“[Now] we average approximately 70 cents per customer that comes in,” Sullivan said. “Which means that if we have 4,000 coming in to the site, that means we're averaging $2,800 a day. But more realistically, in the past 10 days we've been averaging about $3,700 a day.”
Top ranking plays a key role in driving click-throughs and traffic. The ranking on the listing pulled up in online searches depends on the bid submitted by a client to Overture. So, if another company bids 19 cents on “leather furniture” and RiverHouseTraders.com 18 cents, then the higher bidder gets a better ranking.
For its part, RiverHouseTraders.com makes sure it is among the highest bidders on the 200-odd terms it has bid on with Overture.
“What that does is that you're in the top three,” Sullivan said. “You're considered, what they call, a premium listing. If you're in the top three in Overture, that automatically puts you in the top three in AOL, MSN, AltaVista, AskJeeves and on and on and on. They've worked out a partnership with these search engines.”
Sullivan said he tries to bid on specific terms for more effective leads.
“What I'm doing now is more specific,” Sullivan said. “To pay for the term 'furniture' is crazy. Some people are paying 75 cents to a dollar a click. It makes no sense. I feel that you're much better off having someone coming in and targeted.”
Bar stools is a perfect case in point.
“We sell a lot of wrought iron bar stools,” Sullivan said. “So instead of paying 40 cents a click on 'bar stool,' we're paying 29 cents a click for 'wrought iron bar stool.' We probably got 100 people for that.”
A three-person operation, including investor and IBM veteran Gus Kane and marketing director Sonia Gil, RiverHouseTraders.com, has been online since December 1999.
The store sells all manner of home and garden products, including sofas, bar stools, mirrors, lamps, fountains and weather vanes. About 3,000 SKUs are listed on the site. All items are drop-shipped directly from the manufacturer. Hence the deep discounts extended by the retailer to online customers.
Next month, RiverHouseTraders.com will open its first retail showroom in Harding Township, NJ. The showroom will feature a sample from each manufacturer, plus leather samples and metal finishes.
Most interesting, the showroom will boast a 42-inch plasma screen, remote and keyboard. Consumers can visit the showroom, view the sample and place online orders from the showroom itself.
The showroom was born more out of necessity, particularly to address a credibility issue with furniture manufacturers. Afraid of losing their bigger retail customers to Internet upstarts, these manufacturers increasingly insist on a bricks-and-mortar presence to do business.
“It was very difficult getting started,” Sullivan said. “Especially down South. They didn't want to hear anything about no fancy Internet.”
