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290 Part 2 Strategy and applications

Arena Flowers (Figure 5.13) is an online florist based in London. The business was incorporated in July 2006
and we went live with a transactional website in September 2006. The company delivered £2 million net
sales in year one and broke even within the first 12 months of trading. At the time of the interview they are
forecasting sales of £4m in year two and to make a healthy profit. The head of design and development Sam
Barton explains how he sees opportunities to keep growing both sales and profitability at a similar rate going
forward through various initiatives. For example, the company has developed a Facebook application that
provides 15% of the site traffic – an opportunity that has been missed by many of its more established rivals.
Average order values (AOVs) have developed from an initial £30 and have grown month on month. The
current level is £42. Ways of increasing AOV have included options to add a vase, make a deluxe bouquet
and through selling Prestat’s chocolates alongside the flowers.
The essence of the Arena Flowers proposition is to cut out all middlemen and buy direct from growers,
so they can get great prices and the flowers are exceedingly fresh. There are no ‘relay’ fees with us and,
because of our high stock turnover, we get fresh flowers in daily and they go straight to the customer, rather
than sitting in a hot shop window. Arena Flowers offer free delivery on all of our products and we were the
first online florist in the UK to offer FFP-accredited, ethically sourced flowers. That has been a good ‘unique
selling point’ and enables Arena to offer something from other suppliers such as supermarkets.
Source: Econsultancy (2008b) E-business Briefing. Arena Flowers’ Sam Barton on web design and development, E-newsletter interview
12 March 2008. The full interview is presented at the start of Chapter 11.

As for improving any aspect of business performance, performance management systems
are needed to monitor, analyse and refine the performance of an organization. The use of
systems such as web analytics in achieving this is covered in Chapter 12.

The online revenue contribution
By considering the demand analysis, competitor analysis and factors such as those defined
Online or Internet by Kumar (1999) an Internet or online revenue contribution (ORC) objective can be set.
revenue contribution This key e-business objective states the percentage of company revenue directly generated
(ORC)
through online transactions. However, for some companies such as B2B service companies,
An assessment of the
direct or indirect it is unrealistic to expect a high direct online contribution. In this case, an indirect online
contribution of the contribution can be stated; this is where the sale is influenced by the online presence but
Internet to sales, usually
expressed as a purchase occurs using conventional channels, for example a customer selecting a product on
percentage of overall a web site and then phoning to place the order. Online revenue contribution objectives can
sales revenue.
be specified for different types of products, customer segments and geographic markets.

They can also be set for different digital channels such as web or mobile commerce.
Conversion modelling for sell-side e-commerce
Experienced e-commerce managers build conversion or waterfall models of the efficiency of
their web marketing to assist with forecasting future sales. Using this approach, the total
Conversion
marketing online demand for a service in a particular market can be estimated and then the success of
the company in achieving a share of this market determined. Conversion marketing tactics
Using marketing
communications to maxi- can then be created to convert as many potential site visitors into actual visitors and then
mize conversion of
potential customers to convert these into leads, customers and repeat customers as explained in later chapters on
actual customers. online marketing. Box 5.5gives further details.