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Shaun Ryan: [0:02] Hi. I’m Shaun Ryan for the E-Commerce Podcast. Today I’m talking to Ian MacDonald from Century Novelty. Ian is Vice President and General Manager. Hi, Ian.

Ian MacDonald: [0:11] Good afternoon, Shaun. How are you?

Shaun: [0:12] Good. Now, traditional first question. What’s the first thing you ever bought online?

Ian: [0:18] Well, surprisingly, I was actually able to remember this without any question. The first thing I ever bought online was a cordless phone from Overstock.com for my fraternity house. And I guess it must have been a pretty memorable first experience since I can still remember it all this time later.

Shaun: [0:34] What year was that, do you know?

Ian: [0:36] It was probably 2000.

Shaun: [0:40] 2000. Oh, cordless phone. That’s the first one of those we’ve had. What was the most…

Ian: [0:44] [laughs] What’s that?

Shaun: [0:47] What was the most recent thing you’ve bought?

Ian: [0:50] The most recent thing was my wife’s Valentine’s Day present.

Shaun: [0:55] Oh, very good. Can you say what that is?

Ian: [0:58] I probably shouldn’t, because she might hear this interview before Valentine’s Day.

Shaun: [1:04] OK. That’s fine, you don’t have to reveal that now.

[1:11] Can you give me some background on yourself? How did you get to where you are today?

Ian: [1:15] Well, I actually started at Century Novelty as a stock boy in our brick and motor store during one summer break between college courses. I think, frankly, I immediately realized right then that we weren’t — our web presence wasn’t as good as it could or should be. So I started to help with some design of the website and some marketing at that time.

[1:41] And I continued to work on our website when I went back to school. And at one point I even created an internship for myself with Century Novelty while I was still attending college. Then after completing my business and communication degrees, I joined Century Novelty full time as our marketing director. And today I am Vice President.

Shaun: [2:01] Wow. That’s a fantastic rise from the stock boy, which I mention is the bottom of the heap all the way up to the top…

Ian: [2:11] It sure was, yeah. I remember some of the pretty cruddy jobs I had to do when I was a stock boy.

Shaun: [2:18] Yeah. At least everyone knows that you’ve been there done that now. So that must help a lot.

Ian: [2:26] I do have to remind people of that from time to time, yeah. It’s always a good feather in your cap.

Shaun: [2:31] So tell me, what does Century Novelty do, what do you sell?

Ian: [2:35] We are a e-tailer of party supplies, favors, and decorations.

Shaun: [2:41] Right. How long have you been around?

Ian: [2:44] Century Novelty has been in business for nearly 60 years. We started with a physical store and catalog back in 1951, and here we are today.

Shaun: [2:54] So you’ve been around for, what, that’s coming up on 60 years.

Ian: [2:57] Yes. Excellent.

Shaun: [2:59] That’s amazing. Obviously business has changed over those years. It obviously started off as, I think you said, a cataloger and a retail store. Do you still have the retail stores and the catalog?

Ian: [3:11] No, we don’t. Today we are exclusively online. And as you can imagine a lot has changed in the last 50 years. Over those 58 years, our core business, our main business for most of the time was a retail store that sold seasonal party supplies, favors and decorations. Pretty similar to what we sell online now. And at different points through history, we got into Bingo supplies, we did Santa Secret shops, which are little gift stores that you would set up in an elementary or primary school for little kids to buy stuff for their parents and other family members for Christmas.

[3:47] And we also were in the business of providing the games and prizes that you would use at a school or church carnival as a fundraiser. So we’ve been through a lot, yeah.

Shaun: [3:59] And when did the retail store close?

Ian: [4:03] We shut down the physical store in 2004. Right around that time — previous to that, actually, I should say maybe four years before that is when we really started getting serious about our website. So probably in 2000 is when we really started getting serious about it. Pre-2000 there was kind of like a glorified Yellow Page ad. You it was just, here is where we’re located, what we sell. But around 2004 we started to put a few products online. They actually sold, so we put a few more products online. And again, to our surprise, they sold as well.

[4:38] And we just kept doing that until we had a good chunk, if not all of our product line, available online. And then in 2004 it was becoming apparent that the web store was actually outperforming the physical brick and motor store. We were selling more stuff online that we were in-store, and it just didn’t make sense to try to do everything, but nothing well. So we really focused on just the web store. We’ve devoted all of our resources to e-commerce now.

Shaun: [5:10] That’s amazing. You don’t hear many stories where the physical store gets shut down like that. I supposed, obviously, with the e-commerce store you just have a much broader reach, and you’ll be selling right across the U.S. It was just one store that you had, correct?

Ian: [5:23] It was just one store. And you’re exactly right about the reach. That was the problem. We had one store here in the Detroit, Michigan area. And there’s only limited or so much demand for party supplies in any given metropolitan. And then around that same time, in 2000, we may have maxed out our demand, but also there was increased competition: Target, Wal-Mart. Everyone was selling similar products. So there was increased competition.

[5:51] And in the Detroit, Michigan area, in particular, our economy has been on a downward spiral. And just the economy was going down the tubes. So we had a lot of things working against the brick and motor store, and with a website, your client base or your market reach, is much larger.

Shaun: [6:10] Yeah. Potentially, it’s the whole world. Do you sell just in the U.S. or do you sell international as well?

Ian: [6:16] Well, we do ship internationally. All of our advertising is just targeted to the U.S., but we do a good chunk of business with Canada. We’re in Detroit, so we’re basically a 20-minute car ride to Windsor. So we do a lot with Canada, and surprisingly, our second and third biggest international areas are the U.K. and Australia/New Zealand, which I guess probably isn’t that big of a surprise to you.

Shaun: [6:41] No. But it’s a long way from Detroit.

Ian: [6:44] Yeah. You’d think they’d be able to find the stuff a little bit closer to home, but I guess not.

Shaun: [6:50] You mentioned the competition. What is special and different about Century Novelty?

Ian: [6:54] Well, I think what really does set us apart is our website and our merchandising. Our site is everything we are, so we make sure we have the features and functionality that are best of breed. Our website is all the customer knows about us. Customers don’t recognize our name, they don’t know Century Novelty.

[7:13] We don’t have a well-known brand. We don’t really have a loyal customer base. And while we’re trying to improve these things with our recently designed website, still most customers are new customers. And all they know about us is what they see and do on our website. So we need to make sure that it’s perfect. Many of the functionalities that we have on our website are not found on other international regional 500 websites, let alone other party supply e-tailers.

[7:42] I think what else makes us special, or sets us apart, is that we focus exclusively on our website. A lot of other retailers in our states are multi-channel with at least a catalog. Quite a few brick and mortars also. And we had the good wisdom, I think, to kill those other channels and focus exclusively on online. So devoting all of our resources to the web makes our web presence the best it can possibly be. And I aim to make it the premier destination for anyone looking to buy party supplies, favors, and decorations.

[8:16] I think that was one part of what sets us apart, that was our website. I think what also sets us apart is our merchandising. We are very critical of bring in new items. Before we bring in a new piece of merchandise we make sure it’s a good fit with our line. It needs to bring value to its category and it needs to fill a need or a void in the product line. Then once we’re ready to sell that item, we take a wonderful picture, we write a compelling description, and we make sure it has appropriate placement throughout our website. And, of course, having the best site search is very vital.

Shaun: [8:52] I’m pleased to hear that.

Ian: [8:54] [laughs]

Shaun: [8:57] For those listeners that aren’t that sure, I believe Century Novelty are using the Acel Isearch. Correct?

Ian: [9:04] Of course we are. Only the best.

Shaun: [9:07] I’m pleased to hear that. Obviously, the merchandising is critical, selling the right thing at the right price and being able to present it to people in such as way that they’ll buy it. You talked about putting all of your resources onto your website. What are some of the features that you have that you think other multi-channel merchants may not have had the time to put on their websites. What are some of the features you’re proud of on your website?

Ian: [9:41] I think there’re really three big features that we’re proud of. One is site search. It’s just very important that you allow customers to find product the way they want. Whether they want to browse through your category tree or if they want to search, or if they want to browse within the search results, it’s very important that you allow them to find the product the way they want to find it.And as your product line increases, it makes it harder for people to find what they’re looking for. The more stuff you have on that website, the harder it is to find what you want. So having a site search mechanism that brings what the customer wants to the forefront is very import.

[10:17] I think the second feature that really makes us special is our real-time inventory availability display. Our merchandise is very time-sensitive. You’re having a party on Saturday for your daughter’s birthday. And if that merchandise arrives just a day late it’s completely useless. Whereas maybe if you order a book from Amazon, if it’s delayed — although Amazon would never delay anything — but if it was delayed, you could live. It wouldn’t be the end of the world. But with our stuff, it’s the end of the world, surprisingly, when it’s late.

[10:54] So we make sure we communicate throughout the website exactly when the merchandise will be delivered with each shipping option. We even take into account if we don’t have enough how long will it take us to remanufacture that item to get it available in your quantity and turn it around to you. And we give you the exact date that will be delivered. So that was the second feature of our site. Availability and transit time information.

[11:21] The third component, I think, that we do really well at is our checkout process. We launched a redesigned website in August of ‘08, and before that we launched a few other versions of our website. With each retooling of our checkout process, we saw dramatic improvements in abandonment rate in the checkout funnel and overall conversion.

[11:43] I think like I mentioned before, we are not a brand name. People don’t know us, and our website has to be very convincing that we’re a reputable place where you’d like to do business. So we focus a lot on the checkout process. It’s where they’re going to give you their money. It’s one of the last times they’re going to decide whether or not they want to give you their money. And you’ve got to make sure everything’s right. So we focus a lot on the checkout process.

Shaun: [12:05] So what are some of the things that you found that you changed that made a difference to your abandonment rate?

Ian: [12:13] With a complete redesign like we did in August, it’s hard to separate out each individual change. Was it this graphic or this process that reduced abandonment and increased conversion? It’s really hard to separate out. It all comes down to does this help the customer make the purchase, and are they going to feel comfortable with it. That’s how we evaluate the changes we make.

Shaun: [12:40] OK. It is quite a science in working out how to reduce that abandonment rate. I’ve heard from many people that that can be one of the more [inaudible] things you can do on your site, is focus on that checkout cart. If you’ve got people that are putting things into the cart, if they can go through the checkout process easily, you’re just going to sell more. And that’s a great area to focus on.

[13:10] Tell me a little bit more about your business. How much do you sell online per month?

Ian: [13:15] Without giving away an exact number, we sell more online now in a day than our physical store would do in a month. It’s been phenomenal.

Shaun: [13:30] I can see why you closed the store down.

Ian: [13:34] [laughs] Yeah. It’s really not worth the headache of dealing with other channels. If you spread yourself too thin, you’re not going to excel at any channel. The only way to excel is really, I believe, to be singularly focused on one goal.

Shaun: [13:48] Yep. So are you still growing? How much did you grow over the last year or so?

Ian: [13:56] We’ve had growth rates in the last few years of 100%. We’ve been doubling sales year over year, and some years. I think our lowest was about 30%, so we’ve seen some nice improvements.

Shaun: [14:09] That’s fantastic. You mentioned the economy earlier. Obviously it’s at the top of everyone’s mind. Are you finding you’re still growing even in this economic climate?

Ian: [14:20] So far, yeah. We have not really seen any noticeable declines in sales attributed to the economy. Our take on it is our stuff is cheap. I think it’s fair to say 80% of our items are under $1. So it’s inexpensive stuff that you use for parties and fundraisers and other events.

[14:44] Our take on it is in this economy, where you’re watching your dollar, or you need to really save money, a family might not go out to eat as often, maybe only go out to eat one a month.Maybe you don’t go on a big vacation. But you still have a birthday party for your kids. The teacher still throws a fundraising event at school. That stuff still happens. That’s not what people are cutting out of their budgets just yet, and hopefully that’s the way it will stay.

Shaun: [15:12] Right. That’s refreshing to hear from somebody that’s running a business, that things are still growing. You don’t get many stories like that at the moment. So tell me, how do you attract new customers to your site. You said you don’t really have loyal customers. So most of your customers are new. How do you get them to your site?

Ian: [15:32] I think we do pretty much everything. We’ve got pay per click, good old fashioned organic optimization. We do a lot with the comparison shopping engines like bizrate and shopping.com. We utilize email marketing to retarget our existing customer base. And we use affiliate marketing programs.

Shaun: [15:52] Wow. OK, so you’ve got a broad spectrum. Basically everything that you can do online that you can think of.

Ian: [15:59] Unfortunately, yes.

Shaun: [16:03] That must be quite a challenge managing all that. Are you doing that, or do you have a bunch of people helping you?

Ian: [16:15] Surprisingly, all that is handled really by myself and one or two other people. We only have four full-time employees. The rest of our staff is in the warehouse and customer service.

Shaun: [16:28] Yeah. Wow. That marketing sort of thing must keep you extremely busy managing all that.

Ian: [16:39] It’s really the vast majority of my day, yes.

Shaun: [16:43] On the merchandising side of things, are you using any technologies to help trend what products your customers want?

Ian: [16:51] We actually use a few very robust reports from SLI. There are one or two reports that SLI offer that show us what customers are searching for that we don’t carry or that the customer can’t find. So we use this information in deciding to bring in new products and new categories. So we are looking for trends. Are people consistently looking for this type of item or this category but not finding it? Or are they not satisfied with what we offer? So that might be a category or product that we’d like to build out. Have more of that category or bring in a new item.

[17:26] Then we also use some of those SLI reports to work on when we see a customer is having a hard time finding an item. So the search results aren’t showing the item, or the search results are showing the item, but the customer isn’t clicking through it. So we look at what can we do to optimize this product. Does it need a new picture, does it need to be a new category, can we tweak the product name or the description to make it more compelling or more relevant. So we do use those reports to build up the product line and tweak the existing product line.

Shaun: [18:00] Yeah. It’s a great way of using that information by seeing what people are asking for in your search box. What are some examples of some products that you’ve started to carry as a result of those reports?

Ian: [18:15] Gee. Now you’re putting me on the spot. I think we’ve built out a few categories like — one was Mardi Gras masks. We’ve sold a lot of Mardi Gras and we’ve sold a lot of very basic cheap, plastic half-masks. And these reports showed us that customers were looking for the more fancy, feathered masks; the masquerade masks that have the handle on the side that you hold over your face. We saw that recurring in reports, so we actually brought those items in for this Mardi Gras season.

[18:51] So that’s actually a pretty relevant and timely example.

Shaun: [18:55] Fantastic. Do you have a marketing campaign that you’re particularly fond of?

Ian: [19:03] I am most proud of our website. But I’m also really surprised at the effectiveness of our email marketing and comparison shopping engines. Email marketing and the comparison shopping engines do surprisingly well. But I’m particularly most proud of our redesigned website. And although our redesigned website isn’t typically just a marketing campaign, it is part of a marketing strategy. And the results and ROI of our recent redesign have been phenomenal. The redesign will pay for itself within six months due to increases in conversion rates. So I think our best marketing campaign is our website, even though it isn’t your typical what you think of a marketing campaign.

Shaun: [19:48] No, though I understand. The redesign, did you do that yourself? Did you get some outside help?

Ian: [19:55] We did use an outside design firm. We scoped out the project and the requirements in-house. We know our customers, we know what we want. We know what has worked in the past and what can be improved upon. So we developed a very comprehensive plan that we give to a design company who makes it happen.

Shaun: [20:13] OK. Do you want to give them a plug? Who did you use?

Ian: [20:17] We used Mathematic Arts out of Wisconsin, I believe. A very excellent team of people over there, very, very intelligent about online retailing. Sometimes design firms or other tech firms in general, are too technology focused and not retailing focused. They’re more concerned about the nuts and the bolts. They’re not really concerned about if it will work, I guess. That has been some of my past experience. So Mathematic Arts is a great change of pace. They really understood what was going on.

Shaun: [20:48] I like the name. Mathematic Arts.

Ian: [20:50] Yeah. It makes it sound very scientific, you know.

Shaun: [20:54] Yeah. No. It’s catchy. You said the email campaigns are working. Do you use an outside email provider or do you run that yourself?

Ian: [21:04] We do use an email service provider, that’s right, to actually send out the email. We design it in-house. Our creative director has a phenomenal eye for graphics and photography, so he designs all the creatives and copy in-house. And then we just send it through an email service provider.

Shaun: [21:22] The other ting you touched on there was the comparison shopping engines. There are obviously a lot of comparison shopping engines out there. Do you work directly with them, or do you use one of these aggregators who will do the marketing through the comparison shopping engines for you?

Ian: [21:42] We use Mercent as a feed aggregator and merchandiser. So they integrate into our backend database and pull out all the inventory information, manipulate it into the way the comparison engines want it, send it off to the comparison shopping engines, and then monitor the results. So I work closely with Mercent then to check the ROI on a weekly basis of these channels. We have used, and continue to use, all of the comparison shopping engines.

[22:12] From time to time some perform better than others. And you might pull products from one channel and focus on the others if one channel has a particularly poor month or something along those lines. But we do use them all.

Shaun: [22:25] OK. Great. What technologies are you using to run your store?

Ian: [22:31] We use a lot of software as a service. We use a software as a service provider for our front end and backend applications. We’ve got a great partner, Beanbasket.com, who designs and runs our web store platform. Using software as a service provider, log SLI and Beanbasket frees me from having to manage and hire technical staff. That time allows me to focus on our core strength of merchandising, advertising and customer service.

Shaun: [23:02] So what works basically, and what works worst?

Ian: [23:06] Well of course SLI is our best platform provider. We can easily measure our SLI return of investment, and we’ve seen it always between 700 and 800% per month. That’s just a phenomenal return investment for any provider. So we’re always ecstatic about that. Our worst vendor, not to name names, was a publicly traded web analytics company who also offered bid management. And that bid management was just atrocious. I recently terminated that contract.

[23:40] One of the other things that really works well for us is Beanbasket, our shopping cart application. It’s great because our website is fully customized to our customer’s needs. I think one of the keys to e-commerce success is giving your customers what they want. And that is a customized experience that varies with each merchant, with each product line. You’ve got to do stuff different.

Shaun: [24:01] Yeah.

Ian: [24:01] So Beanbasket and SLI are fully customizable with each other and just in general they’re fully customizable in their display and their design and their function. And that allows Beanbasket and SLI search to give you exactly what you need for your customers.

Shaun: [24:18] What are your biggest headaches that you have at the moment?

Ian: [24:21] Our biggest headache right now, I think, is Google AdWords. The cost is skyrocketing out of control. We need other advertisers to go bankrupt or something, so the CPC auction price comes down to something more reasonable. Or I think Google needs to recognize that their CPC auction model isn’t really evolving in an appropriate way. It’s evolving in a way that is making it cost-prohibitive for some merchants with lower price plans like ourselves to stay in the game.

[24:54] I guess another headache we’re having is government regulation. We sell a lot of products that are intended, or at least used by kids. And the government has recently discovered that it would like to regulate this sector more. And that has not been too enjoyable for us.

Shaun: [25:12] So there’re are sort of regulations they’re going to have going to be you have to have warning labels and instructions and what type of regulations are they doing?

Ian: [25:27] All that. Lots of warning labels are now in play. And there is a big problem here in the States right now where come next week we have a new requirement where products are not allowed to contain a certain chemical, but it’s a very wide-spread chemical. It’s a chemical that makes plastic pliable And of course that’s in lots of toys and it’s in lots of things you use in your daily life. But the government wants every retailer, importer, and manufacturer of these products to test the product to make sure that that chemical is under a trace amount.

[26:07] But that is just cost-prohibitive to most businesses, having to test every single product, every single batch of that product. It just isn’t going to work. So we’re hoping and writing our congressmen and all that good stuff in hopes that something’s going to change here.

Shaun: [26:25] Wow. Interesting. And obviously there must be a lot of retailers that are selling plastic goods that will be having this issue at the moment.

Ian: [26:37] Yeah, and some of them probably don’t even know about it yet. It was not a very well publicized law. There was really only about a three-month window until when the law was agreed upon until when it went into effect, which really gives no time to comply. And it also, with a very short windows like that, a lot of retailers aren’t going to know about it until it is too late.

Shaun: [27:01] Interesting. So what else is coming up for you in 2009?

Ian: [27:09] Well, I think one big goal is going to be trying to get Google AdWords under control and trying to find other channels that can drive as many sales as Google, but at a much more affordable cost. And we’re always on the lookout for customer service innovations. I think we’ll try to get more product reviews from our customers this year, we’ll get more aggressive with email marketing, and we will continue to fine-tune our SLI search. There’s always things you can do to make the results better, displayed in a more easily findable or usable way.

[27:47] We are going to try to personalize our cross-sales. And I think really refocus on organic search. With the increasing costs of advertising, I think we’re going to see a lot of marketers get back to the basics of organic search and really make that their bread and butter of traffic.

Shaun: [28:04] That makes a lot of sense. You’re going to have a busy year.

Ian: [28:10] We always do. [laughs] Although that’s the plan, that’s the plan.

Shaun: [28:15] That is the plan. That’s definitely going to keep you busy.

Ian: [28:19] Tell me, how do you keep up with the latest trends in e-commerce? I know I saw you at the Internet Retailer Design conference in Miami a couple weeks ago.

Ian: [28:29] Yeah, yeah.

Shaun: [28:30] Do you go to a lot of those types of conferences?

Ian: [28:33] Yeah. I’m a big fan of Internet Retailer. They seem to have the best conferences in the industry and also the best magazine. So I follow both their conferences and their magazine. I also attend the Search Engine Strategies shows every so often, usually once a year or so. And I also like to read the magazines and the e-newsletters from ClickZ, Multi-Channel Merchant, Direct and Shop.org. And I do try to diversify my business knowledge with Inc. and Fast Company. Those are always good reads, too.

Shaun: [29:10] Yeah. Are they great, aren’t they. Excellent. Well, thank you very much, Ian. You’ve given us a lot of useful information. I appreciate you taking the time to talk to me today. And I wish you all the best.

Ian: [29:21] Well, thank you very much for your time, Shaun. I appreciate it.

Shaun: [29:24] That was Ian MacDonald from Century Novelty. I’m Shaun Ryan for the E-Commerce Broadcast. Tune in next time.