Back to EcommercePodcast.com

Shaun Ryan: Hi, I’m Shaun Ryan, CEO of SLI Systems and welcome to the first ever Ecommerce Podcast. Today I’m talking to Jeff Douglas from Nebraska Furniture Mart. Jeff, can you start off by telling me what is the first thing you ever bought online?

Jeff Douglas: Well the first thing I made a purchase online was probably a book from Amazon.com, was a book on web design.

Shaun: Fantastic. I imagine Amazon is going to be one of those, a popular answer to that question. Jeff Douglas, you are the Internet Marketing Manager, is that right?

Jeff: Right, I’ll give you a little background, basically in ‘96, I was hired at Nebraska Furniture Mart as a salesperson. I worked in this area at the company while I attended college and while I was in college I started a multi media company that focused on web design and video production. Then in 2002, Nebraska Furniture Mart management decided that it should start dedicating some resources to the web because it had a potential to be a disruption in the market. So in February 2002 they promoted me to Internet Marketing Manager and tasked me with developing our online strategy and Ecommerce road map.

Shaun: Can you just give me a little bit of background on Nebraska Furniture Mart itself? I read a little bit of history, it looks fascinating.

Jeff: Sure, Nebraska Furniture Mart was founded in 1937, by a Russian immigrant named Rose Blumkin, she established this in the basement of her husband’s pawnshop and Nebraska Furniture Mart and Mrs B followed basically one simple rule – which was “sell cheap and tell the truth.” This motto has been kind of our cornerstone for the last 70 years. In 1983, Omaha billionaire investor, Warren Buffet, purchased the majority stake in Nebraska Furniture Mart on a handshake deal for $60 million dollars and - yep just on a handshake deal - and he basically said he would rather have her word than that of all the big eight auditors, its like, he said, like dealing with the Bank of England. So he really trusted the Blumkin family on everything and it was really, I think the contract was a two-page contract; it was really amazing because it was a big company in ‘83, and, of course, is even bigger now. Today Nebraska Furniture Mart, we operated two main stores, one in Omaha, Nebraska, and the other, which opened in 2003 in Kansas City, Kansas. Each store site occupies over 75 acres and boasts each about 450,000 square feet of showroom space. In addition is that our huge selection and our low prices, we offer nationwide delivery, but most of our customers pick up their purchases immediately from one of our on camp campus distribution centres and these things are huge, each distribution centre contains over 500,000 square feet of furniture, flooring appliances and electronics.

Shaun: Wow, that sounds amazing. The Ecommerce store opened in 2006, how’s it gone?

Jeff: It’s gone great. In 2007, we saw pretty much triple digit growth in almost all areas, so it’s been a great year.

Shaun: It’s interesting that online is growing, it’s something I would have thought a few years ago that no one would ever wanted to buy a couch online or you know, furniture, you always want to touch it or see it. But it is obviously it is still a strong demand for people to come to the website and buy it.

Jeff: Right yeah a lot of people what we find will come into the store to look around and then if they don’t make a buy then, they’ll go online and possibly buy it, but what we’re really seeing is that the customer, today’s customer is a very educated customer, they will go online first, do a lot of research kind of narrow down what they want to look for and then when they come into the store they come and find a product they find a salesperson and they just kind of confirm what they’ve researched online and then they are ready to make the purchase at that point, they are very informed and the whole process goes a lot quicker now.

Shaun: Yeah, and so in that way, I suppose the online store’s a really nice compliment to the bricks and mortar store, they work together.

Jeff: Absolutely.

Shaun: And that must also make it hard to try and work out the value of the online store when so much of the activity that’s happening online is then translating to sales in the store or vice versa, there’s, you know, people in the store, then going to buy it online. Do you put much effort into working out the return of investment you’ve made in your online store?

Jeff: The actual ROI, it’s a hard thing like you said, to put dollars towards, because you have so many people coming to the site and then you know the sales don’t translate as well as you’d like, but you know as long as your in-store sales continue to go up, then you know the websites got to be helping that along. And we’re pretty lucky especially with the way that the economy is and that kind of thing, we’ve actually experienced 70 years of uninterrupted sales growth, so it’s been an amazing run. And usually what we find is in hard times, people, they don’t shop around much, they just go where they know where the good deals are going to be found, and that’s always been us.

Shaun: Right, and that’s very topical at the moment obviously there’s the talk of the US recession, everyone’s talking about it at the moment. How do you think that’s going to impact the store, or from my point of view, the online business going forward for this year?

Jeff: It is an interesting one, and I’ve mentioned before, if you’ve got a good price on something, you know, they are going to find you and they are going to come to you to make that purchase, then, they are not really going to think of anybody else, so, as long as you continue to maintain those low prices and large selection, then they are going to purchase from you. As far as online goes, I think what you are going to see, is, because online is so easy to shop, you are going to see, you know, people will do their research online, find that lowest price and go directly to that area to purchase it.

Shaun: Right, so you think that you are going to fare well because you’ve got such low prices?

Jeff: Right.

Shaun: And the reputation to go with it?

Jeff: Right.

Shaun: So, let’s talk a little bit about how you get people to the site. Do you do online advertising, or is it mainly through the store, in the advertising you do for the store that you get people to the site?

Jeff: Well we do a lot of advertising. We, right now, we do some advertising for our web. As far as web specific advertising, we advertise on local TV and newspaper web sites, you know, banner ads and that kind of thing. We also have a large email database, that we’ve been offering to a couple times a month and within the last few months we’ve started purchasing some keywords on Google and Yahoo.

Shaun: How’s that working out?

Jeff: It’s working out pretty good, we are tracking it pretty closely, making sure that it’s a good investment. It’s too early to tell at this point where we are at because we’ve only been doing it for a few months.

Shaun: Just out of interest, are you doing that in-house yourself or are you paying a search engine marketing company to run that for you?

Jeff: We do have a company doing it for us. We’ll probably use them for a little while longer and then, you know, generally what we do is, if something works well for us, we will stay with that product or that company for a long time, so, or if it’s in the case of this, if we start understanding it ourselves, then, we may decide to try and take it in and do it ourselves.

Shaun: Yeah, from my experience there’s a lot of knowledge and skills go into running those campaigns effectively and making them give a positive return on investment. It is very easy to buy some keywords that look like they are relevant and suddenly you have thousands of dollars being spent and not converting.

Jeff: Right, yeah you have to be really careful when you buy those keywords, because not only do you have to buy the right keywords, you also have to buy the right negative keywords, because you don’t want people to come to your site that are looking for things you don’t offer.

Shaun: Yeah.

Jeff: So that’s an important thing to watch for and so it makes a big, you know, you need to pick the right agency that understands all that, and that understands your product and what you are trying to sell.

Shaun: So, going forward, what do you think of the biggest opportunities you have online?

Jeff: The biggest opportunity really is growth at this point. We are really focused right now on our current five state region. But, you know, it is easy to add incremental sales online without making a large investment in new buildings and staff. You can, essentially, all you had to do is open your doors to those other areas then you can start taking sales. You just have to start marketing to those areas and, you know, the Google and the Yahoo! search engine is a great way to do that without spending a lot of money.

Shaun: Yeah, so have you found that you are shipping a lot more nationwide since you have opened the Ecommerce store?

Jeff: You know, it’s gone up a little bit, it’s hard to tell if it’s attributed to that or just people know who we are.

Shaun: Yeah.

Jeff: But, you know, I think it definitely has something to do with that.

Shaun: Let’s just talk a little bit about the technologies on your site. What are you using to run your online store?

Jeff: The online store is actually everything you see, pretty much, was developed in-house. We’ve a very talented group of web developers here, that have, we think, created a world class website for our customers. We also have some snap-ons, for instance, your search product; we’re using a SLI search to handle all of our site search queries. We use, currently use Coremetrics for analytics on our platform and our email product is managed by Sitebrand. So, we also have a pretty neat little room planner product on our site, made from a company called Icovia, and that allows customers basically to build out floor plans with furniture and get and idea if the furniture they are going to buy is going to fit before they come and buy it, so that helps out, because returns are costly.

Shaun: Yeah, so what’s your biggest headache at the moment? What are you working on? What’s your pain at the moment for the online store, if at all?

Jeff: Our biggest headache right now is content, for example, product pictures and copy. There are some great companies out there that can supply appliance and electronics contents, but getting furniture content is extremely difficult. I’m still waiting for a company to emerge as the place to go to get furniture content for a retailer’s website, but there are a couple of players out there but not as turnkey as, let’s say, a company like CNET Channel is with electronics.

Shaun: Yep, Yep, I’m familiar with that. So you’re producing the content, the images and the descriptions yourself for all of your stock?

Jeff: It’s kind of a bit of a mixture, we’ve done a little bit ourselves, we’ve recently asked our vendors to help us do it, create that for us. We’ve hired a couple of outside companies to help us do it. It’s just a major effort we have. Thousands, hundreds of thousands of product SKUs on our sales floor, so to get it all on our site is difficult, but that’s what the customer expects. They expect to go to your store and see a product and then be able to go online and see that item.

Shaun: Right, and so how many, of your products do you have online now versus, you’ve got hundreds of thousands in your store, how many do you have online?

Jeff: Nowhere close to that. We have roughly about 10 – 12,000 SKUs on our site and that’s the majority items, we have pretty much most of our appliances and electronics mix and we are working on the furniture piece. The furniture area is difficult because the content’s not readily available.

Shaun: And writing the descriptions, there’s quite an art to doing that effectively as well, because not only do you want it to sound compelling, you have to also now take into consideration, how the search engine is going to interpret that.

Jeff: Absolutely

Shaun: Do the descriptions contain the keywords that are important?

Jeff: You know, our site unfortunately is not keyword optimised for the search engines as yet. Our copywriters have just really kind of wrote it from a descriptional standpoint for our customers to read. That’s probably a next step for something that will make do this year, is maybe look for somebody to help us get those descriptions optimised.

Shaun: You talked about your in-house team, how many people do you have on your team?

Jeff: Right now we have three developers, one person that’s infrastructure that really manages all of our servers and keeps them going. We have a Project Manager, that manages really all of their requests that marketing has for enhancements and changes and then we have a DBA that manages all the database enhancements and two Content Managers. Out of that group, only the Content Managers are focused 100% of their work time towards the web. The others also have other projects that they do here at NFM.

Shaun: So, you mentioned before you’ve been working with SLI to provide your search, how have you found that experience?

Jeff: Working with SLI has been great. Getting started, all we required a small amount of work on our end and it continues to be pretty much hands off for us. In addition, they adapted to our business requirements that calls for handling each of our product families different and the best part about the whole process, was that they did all the customisation and set up during their risk free 30 day trial, so, you know, we basically knew before we signed the contract that it was going to work. You know, I really wished that all our vendors worked that way, it would be a lot easier to pull the trigger.

Shaun: That’s great to hear. I’m pleased to hear that you are happy with the way it’s gone. Are there any particular things you’ve been using with SLI that’s worked well?

Jeff: I have found that some of the best things that SLI has done for us is, we’ve been able to, certain words, they are able to target different parts of my site rather than returning product results, for instance, somebody types in search engine ‘customer service’. You know, instead of looking through all my product descriptions for that keyword or them bringing back irrelevant results, it’s taking them directly to the customer service, you know, page with phone numbers and customer service information, which is what they were looking for, so it’s really brought about more relevant results and we’ve had other areas where we’ve had a lot of people searching for specific topics on products that we don’t carry, we carry in-store, but we don’t carry on the web for various reasons and we’ve been able to redirect those people to kind of a landing page to explain why and it’s been a big benefit for us.

Shaun: So, they are the keyword jump pages, now, have you been adding those yourself or have you been working with the SLI Account Manager to add those?

Jeff: I’ve been working with the Account Manager on that, yeah I’ve come up with kind of a plan and a list of words and then I email it to him, and, you know, within a day or so they’re implemented and they are ready to go, so It’s been pretty hands off.

Shaun: Thanks Jeff, and that wraps up the first Ecommerce Podcast. I hope you enjoyed that. Join us next time to find out more about Ecommerce. I’m Shaun Ryan from SLI Systems.

To find out more, checkout ecommercepodcast.com.