With the pandemic’s factory and port closures in the past, operations are running at a more consistent rate in 2022 for online retailers. The new struggle for merchants in 2022 is dealing with factors like inflation and rising fuel prices.
Rising fuel costs cut into PulseTV.com’s margins, says CEO Jaffer Ali. And shipping and handling costs “shot up dramatically,” he says. To combat this, the online retailer began selling competing ads on its website as well as sell ads on other merchants’ websites.
PulseTV.com (No. 1470 in the Next 1000) is an online retailer specializing in underselling, which is selling traditional retail products to consumers at a discount including items like “As Seen on TV” products spanning weight loss, home goods and electronics categories. The 2022 Next 1000 includes online retailers that generated annual ecommerce revenue between roughly $1 million and just over $39 million in 2021.
2020 was a big year for the merchant as it shifted its strategy to offer personal protective equipment (PPE) during the height of the pandemic.
“We sold millions of masks and hundreds of thousands of hand sanitizer bottles ranging from 2-ounce spray bottles to gallon-sized in 2020,” Ali says.
The strategy paid off as the average order value in 2020 reached $51.24, which Ali attributes to PPE merchandise it sold because of the pandemic. AOV has since decreased.
In 2022 AOV is $35.71, down from $39.78 in 2021. AOV for pre-pandemic 2019 was $36.61.
Increased fuel costs also prompted PulseTV.com to increase its shipping prices. Shipping prices in June 2022 are $9.59 per order, up from $7.54 in 2021.
PulseTV.com sells advertising for affiliates
In 2019, PulseTV.com began selling advertising for affiliates, using links that customers can click on that take them to that affiliate retailer’s website. PulseTV.com earns a percentage from each of those purchases. Affiliates also share PulseTV.com merchandise and likewise earn a percentage of those sales as well.
The merchant offers “deal of the day” emails to its 3 million email subscribers along with 15 newsletters spanning such topics as celebrity gossip, Bitcoin and cars. Those emails include revenue-sharing affiliate links.
Ali says it does not dedicate daily emails to affiliates but does send those emails often. “It depends on inventory issues,” Ali says. “This way, we have something to offer when we send out emails.”
Cross-promoting vs. cross-competing
PulseTV.com also allows outside advertisers to appear on its website. The merchant’s strategy is to sell advertising space to competitors on its website to bring in revenue. PulseTV.com also sells its products through ads on competitors’ websites. As a result, advertising revenue in 2022 is over 30% of PulseTV’s profit.
“We would actually send traffic to a different merchant’s website and get a percentage of the revenue,” Ali says. He did not disclose the exact percentage but said deals successful deals including ads for cannabidiol (which is found in cannabis and hemp and is sometimes used medicinally) merchandise.
Advertising revenue brings in $20,000 to $25,000 per month on average and reaches as much as $35,000 during the holiday months of November and December.
“Amazon and Walmart sell advertising, so we decided to sell advertising,” Ali says.
Amazon generated $31.2 billion (about $96 per person in the U.S.) in advertising revenue, making up about 7% of the company’s overall total revenue in 2021. Walmart made $2.1 billion (about $7 per person in the U.S.) in advertising in 2021.
“How else am I going to compete with Amazon?” Ali says. “It’s about cross-promoting versus cross-competing.”
PulseTV.com also plans to increase its SMS text offers. The retailer currently sends out 1.2 million text messages a month to over 91,000 subscribers.
This is an excerpt from the 2022 Next 1000 Report. The report can be downloaded now as a PDF for $499. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as a part of their membership.
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