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How to beat Amazon

Does Amazon or eBay impact your business?

If you own a small business like I do, you know the dent that Amazon and eBay are putting into your sales. I have been racking my brain, trying to figure a way to keep my piece of the pie. I’m experimenting with this idea, not a new one, but may work to keep those people that use all of my work and effort putting together page after page of helpful information to assist them in buying machinery on my site as well as my brick and mortar store; only to have them take the model or part number and leave my site or store and search for the lowest price on their phone.

Amazon LogoIn my business, people aren’t buying apples or eggplants without part numbers, they are buying products that have a specific product number, model number or part number. This makes it VERY easy to compare my prices against everyone else. Now some of you may be saying, so what, the lowest price wins. My reply to you is, if Amazon always wins, then EVERY single store other than Amazon will go out of business because NOBODY can compete on price like Amazon. Jeff Bezos and his crew don’t care if they have to buy the market and lose a few billion dollars to own an industry. They have deep pockets. If it isn’t Amazon, it’s an Ebayer who has somehow managed to distribute one of our same lines that are living in a doublewide trailer selling things at 5% over cost because he has no overhead. (and no possible way of growing either) There is an old adage in business. “If you live by price, you die by price.”

Another business down the street selling similar products to mine was seeing a phenomenon that he didn’t know how to combat. A customer would come into his Lawn Equipment store and ask for a gear for his riding mower. The employee would look up the make, model, serial number of the mower. They would both pour over schematics (parts diagrams) and finally locate the broken part. After this 20 minute search, the customer would state, “Just give me the part number so I can think about it.” The employee would give out the part number only to never see the customer return. After a while, his boss kept asking why these people never purchased anything. He said, “We had the part in stock and if we didn’t we could have ordered it for him. Why didn’t he buy it?” The employee replied, “Well, they just ask for the part number and then never come back.” His boss finally realized what was happening after searching for that part number on the web, only to find that Amazon was selling this part at a cost that made him spill his coffee all over his keyboard. “When did Amazon get into the Lawn Equipment business?” he said to his staff. His staff told him that they themselves were purchasing most anything for their personal use on Amazon. Sure enough, after a little searching under many different categories, he found that the top selling products from any category he could think of was being sold on Amazon.
“Geez, how are we ever going to sell anything if everyone
riding lawn moweris doing this?” he lamented to his staff. That was the moment that he decided to never give out part numbers again. He was more than willing to help customers, but he starts everyone discussion at the parts counter with, “I’m more than glad to find the part for you, but I expect you to purchase this from me as I do not give out part numbers.” Ever since then, the customer either leaves or gladly supports his local business.

I have an online store

99% of our business comes from our online store and only 1% comes from walk-in customers nowadays. I have seen my profit margins slip every single year as more and more companies start an online store thinking only of profit and not of providing a service. They compete on price alone and figure they will win, only to realize that Amazon is going directly to the manufacturers and agreeing to purchase millions of dollars of the product if they will give them the top 200 selling products to sell. Amazon is glad to sell at a loss with free shipping to boot! Amazon is stealing all of our lunch money so that we can only buy things in one place. Did you know that Wal-Mart is considering scaling down their retail business and going into health care due to Amazon and the other online companies starting to cut into their profits?

My Plan of Action

Ok, so here is my plan. From now on, we are not going to show part numbers on our site. We will, of course, have a list of all of the manufacturers and model numbers along with a plethora of information and parts diagrams. We will continue to have a customer service team that will answer your email questions and talk with you on the phone to help you find that part or unit to keep you going, but we will NOT provide part numbers so that you can search it again to find the cheapest price out there. The last time I checked, my employees don’t want to work for free, my landlord wants his rent check and the lights don’t stay on if I can’t pay the light bill. For those of you that know your part number, because you already used my site or one of my fellow online peer’s sites to research your part number, you won’t find the part number on our schematics. Yes, you can find the part by searching by part number, but we won’t hold out a billboard saying, “Hey, here is the part number and here is my price. Now, go shop me against everyone else in the world to get it cheaper.”

Amazon Tombstone

If every business would start to do this, maybe we could put a dent in Amazon and these crazy Ebayers. It’s worth a try. What do you have to lose?

The 4 steps to creating a successful online business

There are plenty of people telling you how to start an online business and sell a product online, but how many people tell you what NOT to do when it comes to creating a successful online business?

I’m going to tell you what hasn’t worked for me. Sure, I have had much success with my online business, but as I look back, there are a lot of things I would have done differently.

Find a niche

If you want to be successful, you will need to find a niche. You can’t just be another online business that lists your products among the masses and hopes to get a percentage of the sales. You need to be smarter than that. Ideally, it would be great if your product is so unique that someone in China can’t start making it and selling it on eBay or Amazon. Even if you have fantastic customer service, if you merely distribute someone else’s products, you will be competing on price with many other sites. You do not want to compete on price alone because you will starve your way to the bottom. There are too many big fish out there that can play the waiting game selling at a near loss until you go belly up. I have tried it. You may enjoy a few days or weeks of sales until your competition finds out what you are selling things for and drops their price as well. It’s just not a good business plan.

Is your industry growing or shrinking?

We all enjoy a wave of selling for a time, especially in a market where the winds are blowing our way, but you have to keep an eye on your industry and where it is headed. Is it becoming saturated or is there still plenty of margins to be made? You don’t want to be in the sheet music business when tablets are being used by many to store all of their music. You better know where your industry is headed. You can’t rest on what has worked in the past without keeping an eye on the future.  Are you seeing your competition getting out of the business? If so, why? Is there more opportunity this year than there was last year or 5 years ago?

Don’t diversify too fast

Make sure that you can deliver your products to market quickly and that you can keep sufficient inventory to keep delivery times quick. Today, you are competing with ridiculous delivery times. Amazon even has the same day service in some localities. People are now expecting their order expedited at no additional charge. Forget trying to compete with Amazon on this one unless you are only selling to your local market. If you are only serving the local market, have delivery service that fights against the big boys, but put the cost of this service within the price of your product. You have to have everything from ordering and receiving your product to downloading orders en masse perfected. If you try and sell everything from many different vendors, you will have a hard time meeting the minimums that these vendors require. You will also be spread too thin in areas like product knowledge, sufficient inventory, maintaining pricing and the ability to add great content to your existing pages.

Love what you are selling

Do you love what you are selling? Is it something that you get out of the bed looking forward to doing? Are you excited when you talk to others about what you are doing? I’m not talking about how much money you are making. Nobody wants to hear about that. When you do speak to a customer, do you leave that conversation feeling like that person is much more productive for having talked to you? Do you feel fulfilled at the end of the day? It doesn’t matter how much you earn, if you hate what you are doing, you have made for yourself golden handcuffs.
Gold Handcuffs with money linking the cuffs together. Don't let your online business be handcuffed.

Your online business should be a way for you to get your products to more people, not just getting more people to buy your products.

Of course, we want more people to buy our products, but the knowledge and experience that we offer as well as the actual products that we deliver should be an extension of ourselves, something that we are proud to ship.


To learn how to compete directly with and beat Amazon, click here.

Amazon proof your business

It’s been 13 years since opening my eCommerce store. Boy, have I learned a lot. I would love to say that I have perfected my store, that the search engines love me and I am making millions. My store is far better than what it was last year and scads better than 5 or 10 years ago, but it is by no means perfect. We sell over 400,000 products; yes that’s right, 400,000 products.  Manipulating all of that data is not easy.

I have told others that being in eCommerce is similar to surfing. Once you learn to surf, you look for that secret spot.
secret spotThis is a place where you can ride the waves, not being cut off by some hot shot, but enjoy nice long rides in peace and quiet.  I had that secret spot for about 3 years. Sales were increasing at 20% per year, which for my industry was pretty good. I wasn’t setting any records, but when you hit over $3 million in sales per year, it should allow you to start investing in key players and development that will take you to another secret spot. What I did not foresee was our market changing. I know that Google changes their algorithm as frequently as the wind changes, but I did not realize that people were slowly finding my secret spot and beginning to ride the same wave I was riding. Somehow, as I was so busy running my business, I didn’t see them a few feet from me paddling their board into the surf. They were invisible to me or I passed them off as a kid on a rubber raft. What I didn’t realize was that they were learning to surf as well. They were getting their legs conditioned to take the changes of each wave so that they would be able to graduate to a surfboard.

Ok, enough surfing analogies.  I want to help you. I want to warn you about pitfalls that you will surely be tempted to fall for.  I think that most of us open an online store, seeing it as an opportunity to increase our market share. Yes, this will happen, but there are costs involved that you simply do not have as a brick and mortar store. I have always retained a web developer to edit, change or create new features that I simply don’t have a clue how to do. Now, I have several developers working for me, some full time, others part time. I also have to have web content people who can add products to my site, using ad copy that is creative as well as SEO friendly. Let’s not forget data entry personnel who will add thousands of pages and products that your web content person doesn’t have time to do.  I’m getting ahead of myself. Let’s go back to WHY I decided to go on-line in the first place. Where I live, it can be wet and rainy, sometimes for months. I don’t mean raining every day, but pretty moist. My customers are home builders. They build new homes. When it is raining, they can’t pour concrete footings. Without concrete footings, houses don’t get built. Without them using their tools, they don’t need new ones nor do they even need to get them repaired. It rained off and on for months, thus my local sales slowed to a trickle of what they used to be. I had to think of something that would get the ball rolling again. I wish I could say that I had thought of it first, but a friend who was in the pool building business had sold his pool business after starting an online pool equipment business. He suggested that I give on-line sales a try with my product line. I decided to give it a go. I started with one part that someone had called me about from halfway across the country. I had a one page info site, but no products. I decided to offer that one part that they had called about and that’s how it all began. Back then, I had to create each product page one at a time. This was slow and when I had to hire someone to help, expensive as well. Now, we have over 400,000 products. Sounds like a success story doesn’t it. Well, it has been quite a ride, but now a cargo ship has found our surfing spot. That ship is called the MSS Amazon.  This ship has disturbed the natural ebb and flow of the waves at our beach. If you intend on offering a product online that Amazon can also sell, then prepare to watch your margins slip.MSS Amazon The ideal online store will have products that are not sold by these behemoths. They will be sold ONLY to a select few companies or better yet, custom made creations that have not been mass produced……..yet. Remember the surfing analogy. Enjoy your spot for as long as you can and plan on picking up your surfboard every couple of years to find a new spot to surf, because your area, if successful WILL be found out and reproduced, maybe not at the quality of your own product, but reproduced and sold online. You MUST Amazon proof your business. You must also make it Ebay proof, Wal-Mart proof and any big company proof or they will find your spot and come in and steal your margins. Don’t just offer stuff to sell. You must separate your business from everyone else’s business. Mass offerings of stuff just doesn’t cut it any more. There are too many people out there just throwing popular items up  on the web, waiting for a sale; sort of like fishing. They know that they will snag someone, but  is that the kind of business you want?

To enjoy your online business, I would not start with What will make me rich, because money is a short lived bit of enjoyment. You need to do what you love and then utilize the online community to publicize your services or products. Don’t make your online store an end in itself. You will be fighting every person that has access to your products and a computer. If you do sell online, then your product has to be a little different than everyone else’s or you need to offer something that the other guys don’t offer. Do NOT try and just be the lowest price, because it will be a quick losing battle to the bottom as you and your competitor try and beat the other guys price until your margin becomes stupid and you ramenfind you and your staff eating Ramen for every meal.  The big boys have much deeper pockets and buying power than you ever will, so don’t go there.

My other bit of advice is to keep your inventory offering only as large as you need to. Managing 10’s of thousands of products from 30 or more different vendors is a HUGE undertaking data-wise. Find your niche and become an expert at that niche. Don’t try to be everything to everyone. Let Wal-Mart take on that headache. The search engines love rich content. That means having more information, how to articles, video and publications about your products than anyone else. You can’t do that effectively for 50,000 products, but you can do it for 100 or more products.

Let your online business compliment what you do, don’t let it be an end in itself. If you sell widgets, then know more about widgets than anyone else. Become an expert on widgets. You and your company should own the widget world! That is what you do. Your online presence is simply an extension of your knowledge. It’s so easy to get focused on your online store that you forget what you do. Your online store is one avenue by which you connect with your customers. Some people ONLY have an online store and that is fine, but actually talking to your customers, even if it is only on the phone to help them with their purchase decision is valuable. We are not made up of 0’s and 1’s. We are analog beings. We use all of these 0’s and 1’s to serve us, not the other way around. An online store can be great, but make it a place where customers can learn about your products as well as you and your team. Let it be a way to connect to more people than just in your town as well as help others with your products, knowledge and service. Don’t just sell stuff.