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.
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.
The Internet has made life easier in many ways. Buying online, especially if you live miles from merchants allows your Walden experience to exist; for the rest of us, we text instead of call, we like your Instagram pic or Facebook post instead of meeting for coffee or lunch to catch up on how we are doing, looking into your friends eyes to see how their soul is. We buy a part online to fix our car, then watch a YouTube video to figure out how to install it. These are great things and methods, but only to fill in the gap, not a replacement for asking a neighbor or small independent auto parts store for advice on how to fix your widget. As a nation, we have become more isolated. We now lean more to giving a thumbs up to our relatives new baby instead of calling to congratulate them. How about when we write a nasty review about our latest experience at the local restaurant, never to return instead of politely talking to the manager about our experience so that they can explain that their regular chef was out due to a death in the family, missing the opportunity to express our sadness for their loss.
I am just as guilty in many of these “sins of Internet indifference “, yet just as Scrooge intonated, “I will be a different man. I will keep Christmas in my heart every day of the year”. At my business, we used to use Google Hangouts. I turned it off. I want our small team to talk to one another, not text via Hangouts. We need to have real relationships. Stop what you are doing and TALK TO ME. If we don’t talk, then we don’t have a real relationship. We have some pseudo form of awareness of each other’s existence.
I know you can buy stuff online cheaper, believe me, I own an online business, but it was supposed to be an extension of my local face to face business, not a replacement for it. What we offer our walk in customers is expertise, how to install your widget or let us fix your widget and explain why it broke and what to do in the future. While you are here, talk to me about your kids, your struggles with whatever you feel comfortable talking about and I will listen. Maybe God will whisper a few words of wisdom in my ear that I can share with you. Maybe we will share a joke and experience the joy of laughter. I just know that both of us will be richer for having taken the time to talk face to face and rebuilding that community that is quickly evaporating in our world.
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. This 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. 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 find 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.
I have owned an e commerce business for 16 years. Before you go into an e commerce business, you need to be aware of a few things. If this will be your only presence, I mean no real brick and mortar store with actual customers walking into your store, you need to consider your personality type. Do you need people to interact with during the day? I’m not talking employees, I’m talking the people that maybe you currently are helping by providing a service or product. Do you enjoy the banter of these customers, getting to know them, actually establishing a relationship with or are you the type that does not enjoy interacting with customers? If you do not enjoy interacting with customers, then an e commerce business may be just your ticket as you rarely will talk to any of your customers and most likely will never meet them in person.
I thought I was the latter kind of personality; I didn’t really need to interact with my customers, I just wanted to grow my business. For many of my customers, I had become a friend, not just a merchant. I knew about their struggles as well as their successes. I knew the name of their spouse. At times, I felt as though they came in just to chat, even though they would throw me a bone (purchase) when they stopped by. I pride myself on being a good listener and felt that I wasn’t just selling them my services, but also my time, being there to listen, as many of them were business owners who wanted to chat with another business owner about the challenges of being in business. Some of them wanted to talk about personal struggles they were facing. I felt as though I provided a safe place for them to express whatever they were going through. When I started transitioning to a 100% online business, I wasn’t there to greet them anymore. I had hired other staff to do that for me. At first, when they did see me walking to my office they would joke, “Well look, you do still work here. I thought you had moved to CO.” After awhile, they stopped coming by entirely, even though we still had a store presence. My staff had been trained to be very friendly and helpful, but to my customers, it just wasn’t the same.
When you have a brick and mortar store, you can only stock but so much inventory, therefore you pretty much know what you have in stock. When you have an online store, the sky is the limit regarding inventory. You can list millions of products, never stock them and have no clue what has been listed. When you have a brick and mortar store, sure you can order something for someone, but typically most people wand and need it now, therefore, you know what is in the back warehouse. When you have the actual inventory, you know what you paid for it, but when you simply offer it online, you may or may not have it in stock and the price may very well have changed since you listed it online. Instead of maintaining say 2,000 skus, now you are maintaining 500,000 skus and you never know when someone is going to buy a sku that you just haven’t received the most recent pricing for or didn’t have the time to update your pricing online. Whoops. Also, did you put in the correct weight for the item or did you forget that too? When it is in the warehouse, and someone is standing in your store and wants it, they typically are not going to ask you to ship it to their house. They want you to let them put it in their car or truck. No shipping needed and no shipping lost.
Let’s talk about shipping. To get all of these orders to people, you are going to need to hire people to receive the product in, put it in a bin and when it gets sold, you need someone else to download the order, print the pick ticket, then go get the item in that bin, package it properly and get a label printed to ship it. Did you download the most recent shipping rates on your site and does it work or did you forget to do that too? Packaging isn’t free. There is cushioning, boxes and tape that needs to be kept in stock. How about packages that get damaged? Will the shipper cover it or did you pack it wrong? Oh yeah, you need to ship out another one for free because it was damaged. If a customer drops an item carrying it to their car, typically they aren’t going to look to you to give them a new one for free.
Online is all about doing more of this right here, looking at a computer, …..all day long. Do you enjoy this? If so, then owning an e commerce business may be right up your alley. You are going to need access to a developer and by the way, these people aren’t cheap. Many times you are looking at $100/hr or more, unless you bring someone on-board full time. There is also the software that will be needed to manage all of these online orders. You need something that is powerful enough to manage your online inventory as well as synch to your actual inventory software. The more you know about software, the easier it will be for you.
If you have a brick and mortar store, you know all about advertising. You may even use Google and Bing now, but you will need to do much more advertising if you want to sell online. If you are just starting out, your website will probably be on like page 9. You must be on page 1, at the top of the fold (top of the computer screen that does not require scrolling down). The only way to do this is to use pay per click advertising from the search engines. Depending on your market, this could be very expensive or only moderately expensive. We have a lot of product on our site, so we spend upwards of $8K per month, which to some isn’t much at all and we have been online for 16 years. Just because you pay the search engines money doesn’t mean they are going to put your ad on the first page, you must meet all of their criteria in order for them to place you in those top key positions. You can manage your own PPC ads at first, but it is best to have someone else do this for you as you grow.
When you have a brick and mortar store, you have the advantage of talking to your customer and giving them all of the reasons why they should buy your product. When you only sell online, you do not have this luxury of having the customer in your physical presence. You can have all kinds of great ad copy, but it is too easy for people to leave your website and go to another. If you have them in your physical store, you have a better chance of converting them to a sale. You can ask them what it would take for them to buy your product and be willing to negotiate with them, not so online. You get one shot. I do know that all of us use our phones to shop for better pricing many times when we are in a brick and mortar store, but we don’t do that 100% of the time. Sometimes we just want to buy it and leave, we don’t want to price compare to 10 other places. Online, it is way too easy to price shop. If your product is exactly like someone else, you can price shop within 5 minutes, choose the lowest price and be done with it. You will find that if your product is exactly like another, Amazon and Ebay will probably have the exact same item with free shipping. If you start playing that game, it will be a quick spiral to the bottom where nobody is making any money. Having a unique product is your best bet to owning an online store. Have a unique product and your online store should see success, but don’t just be another one of those sites that offers exactly what 10 others offer unless you have some exceedingly great offer that makes you different than anyone else.
I know that brick and mortar stores are closing all over the US due to on-line shopping, and brick and mortar stores need to figure out how to combat this. It’s not 1950, nor 1960, 1970, 1980, 1990, 2000 or even 20015. It’s 2017 and on-line shopping is changing retail. People want delivery to their door. Back in the day, you could simply call your grocer, tell him what you wanted and he would deliver it. On-line shopping allows you to do this EXCEPT, it’s not your local grocer, it’s a company across the country with bulk buying power that is putting your local small grocer out of business; sure you as a consumer saved money, but you do not have a relationship with the CEO at Blue Apron. You are simply one of thousands of orders per week, a number. It’s a tough market out there, and there is a possibility that your site is better than the next guy, but you better have something unique or a new twist for your site or you will be competing on price and that is never pretty. Use your imagination. Don’t just create site number 1,456 of the same stuff that others are selling. If you create something that is unique, it has a better chance of succeeding, but beware that having a business on-line is like surfing. You may have a secret spot, but others will eventually find your secret spot requiring you to keep finding those secret spots.