The Buzz Hut sets up shop online

11 May 2010

Moving business entirely online has allowed Dublin-based outdoor toy retailer The Buzz Hut to change its business model from wholesale to direct sales, growing the company in the process.

Since setting up the company to accept online payments last October, the company now records most of its sales in export markets; some 90pc currently originates in the UK and the company plans to expand its export business into other markets, including France, Belgium and Germany.

At the same time as moving to online payments, the company set up a Google Adwords account to bring traffic to the website

The Buzz Hut appointed online advertising agency to manage the Adwords campaign, which has allowed the company to increase its customer database, grow online sales and attract new customers from European markets.

Benefit of selling online

Thomas O’Leary, managing director of The Buzz Hut, said selling online helped to overcome the problems of being in the distribution side of the business. “One of the main business issues was the lack of cash flow,” he said. “This is a problem for many wholesalers as there is a gap between delivery of goods and receiving payment coupled with high storage costs associated with the wholesale trade.” 

O’Leary said that by selling directly to customers, the company could double its profit margins. “In addition, if I sold my products through the internet I wouldn’t have the same amount of infrastructural costs like insurance, rent, labour costs, etc, that are associated with setting up a high street shop,” he added. 

Keen to make the most of the Christmas market, The Buzz Hut made Google Adwords its main sales and marketing tool. Within six months, the company had realised a 204pc return on investment for its advertising spend. Volume sales of products increased, particularly pogo sticks, which had a conversion rate of more than 10 pc. Overall, the site saw an average conversion rate of 8.7pc across all products lines.

One of the first changes introduced to O’Leary’s online ad campaign was to add Google’s conversion optimiser tool which allowed The Buzz Hut to set a target advertising cost to sell one unit of a product. The conversion optimiser then uses the data in the Adwords campaign to make sales at that price or less. According to Google, this gives advertisers a high degree of control over costs and return on investment.

Alan Coleman of said features like this are not available in traditional print or broadcast advertising.

“Google’s conversion optimiser makes it possible for the advertiser to take a scientific approach to their advertising spend. The advertiser sets their target cost per acquisition and the system works to bring in sales at that price via their Google Adwords campaign. The conversion optimiser eliminates guess work and allows for profitable advertising campaigns.” 

By Gordon Smith

Photo: (From left to right) Ronan Harris, Director Online Sales, Google; Alan Coleman, and Thomas O’Leary, managing director, The Buzz Hut

Gordon Smith was a contributor to Silicon Republic