This isn't really that hard to figure out.

1) The #1 site is really just a very simple, clean home page for ranking purposes - this is no accident. Once he gets his visitors (due in large part to his #1 spot), he then smartly redirects them into the shop with a shopping cart link or relatively few well placed links. The OP, on the otherhand, is using a complex shopping cart as his home page with tons of code. It may be "prettier" than the #1 site, but the #1 site is the one bringing em' in.

2) The OP overuses the work "hookah", I'm not going to count how many times he uses it.

3) The hyphenated domain name helps mainly because everyone who links to him is using his keywords - his keywords are his domain name. Fewer links, but they all use the keywords. This can be overcome but the OP will have to try harder.

4) The OP went completely overkill by adding all those links to the bottom of the home page - use a site map for this. It reeks of spam, sorry.

"If it were me" I'd move that shopping cart somewhere else and build a really lean and mean home page using CSS or something. A few inviting images and some well written text (content). Then invite the users in through a link or two.