85-90% of Search Traffic Comes From Organic Search

August 26, 2010 Roundtable Recap by Sramana Mitra

This week’s roundtable, co-hosted with Volusion, was focused on e-commerce entrepreneurs, and needless to say, one of the key topics of discussion was customer acquisition via search engine marketing.

EcoMowers.com

First up was Andy Humphrey for EcoMowers.com, an e-commerce company that is already at $500k annual revenue selling eco-friendly push lawn mowers. Andy believes that the market for push mowers is about 350k-400k units a year, growing at 20% CAGR. EcoMowers has only 5% of this market, and primarily generates traffic through PPC and SEO channels. In fact he gets 50% SEO traffic through organic search, and 50% through paid search. Now, given that the web's traffic is 85-90% organic search, it is clear to me that Andy has not yet leveraged SEO to its fullest potential, and doing so would give him the biggest bang for the buck at this point. To get from 5% market share to 20% market share in his market, Andy clearly has a low-hanging fruit in front of him.

La Plates

Next Lara Hazelett Shelton presented La Plates, an e-commerce company that sells custom designed melamine dinner plates for entertaining. Lara has built about $200k in revenue through retail and wholesale distribution, aggressive PR, as well as search marketing. Her primary question was around development resources for a software module that allows her customers to digitally design their plates themselves. This will significantly cut down on her order processing time. If any of you are interested in helping Lara build a small software module, please feel free to contact her with your credentials.

EarCoolers

Sally Franz then presented EarCoolers, an earplug aimed at addressing headaches and migraine problems. Sally has designed an easy-to-knock-off product that some health catalogues may be willing to buy from her. I am concerned about the defensibility of this business, and would prefer that Sally makes whatever short-term cash she can, and simply move on to something that is more defensible, which she has some ideas for.

LOGOpremiums.com

Then Jeff Levine with LOGOpremiums.com presented a B:B e-commerce business designing custom logo products for businesses. Jeff has correctly observed that certain search terms such as Logo T-shirts have very large search volumes – 450,000 a month, and he believes that by selling his offerings through custom URLs like www.logotshirts.com, he would be able to harness a large chunk of the search traffic and convert it into business. He has a dozen such high traffic search terms identified that he has bought the URLs for. He would like to raise money to build this business to the next level. Currently, he makes $300k in annual revenue. I advised him to validate the assumption with one search term / URL combination, derive the traffic metrics, conversion rates, and revenue numbers, and then go out to raise money, since it would be much easier to assess the business potential with that validation in place.

FreeLunched

Last up was Michael Dannheim pitching FreeLunched, a free promotional giveaway site that aims to work with retailers to give away a particular item and then do a flash sale to its audience on behalf of the retailer. Michael has been in business for two months, and has 3,000 registered users, largely in the mature women demographic. He plans to charge a $250 give-away fee + 10% of flash sale revenues, which looks like an interesting business model to me. The most important thing for Michael to remember, however, is that he needs to build a highly targeted audience for which he has very precise data on, so that he can segment and target this audience on behalf of the retailers. His pitch to retailers needs to be that he has a very targeted audience on which he can run a very precise promotion.

About Strategy Roundtables

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ methodology, which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to investors and customers through our recently launched 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions.

Also, it is deeply disturbing to see so many kids returning home from college and hanging around without direction, and the NYT and WSJ trying to explain why kids these days are refusing to grow up. Reinforcing the child entrepreneur message, as exemplified in these inspiring stories: Caleb Sima, a Security wizard, started out at 16, Kevin Sproles of Volusion and Scott Wainner of ResellerRatings, is essential for everyone’s future. If you have kids or know kids open to following the entrepreneurship path, we'd be happy to have them in One Million by One Million. Especially in the niche e-Commerce domain, a lot of young people can learn to build sustainable, and eminently bootstrappable businesses, as these entrepreneurs clearly demonstrate. As a final example, I want to bring to your attention our most recent Incubation Radar profile of entrepreneur Judy Schmitz and her company Fabulousyarn, which is already profitable and at $500k in revenue.

The recording of this roundtable can be found here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

About Sramana Mitra

Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, writes a business blog, Sramana Mitra on Strategy, and runs the 1M/1M initiative. She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys, Bootstrapping: Weapon Of Mass Reconstruction, Positioning: How To Test, Validate, and Bring Your Idea To Market and her latest volume Innovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon.