Tuesday, February 24, 2009

5 steps will tell you if the best lies ahead, or if you should change direction

With the economy slowly rebuilding, we must leave the past year behind as business men and women. Retail sales, and especially online sales are beginning to increase over last year, possibly because we are now 16 months into our recession and running against a dismal sales year. Do not be fooled, online sales are still slow nationwide compared to 3 years ago for most, as consumers still fear the worst due, in part, to our government's attempt to paint a bleak outlook for the economy. While most online businesses likely won't achieve their profitability at 2006 levels this year, we can all gain some ground if we have the correct strategy to maximize our service to obtain some new customers from those who have closed shop.

Just because the economy is showing signs that it may turn soon, that doesn't mean the same old strategy will work like it did with the Ecommerce boom a few years ago. In fact, the strategies from a few years ago landed many businesses in bankruptcy, which none of us want.

Here is what I am doing to position myself for a new era of business, and what may help you.
1. Am I doing everything I can to maximize sales?
Probably not. I have far more inventory available daily than I attempt to sell, and only have posted about 10% of my available inventory on several websites as of today. If I can profit 2% of the total dollar value I offer on my venues monthly, then I must increase what I offer to be profitable. 2% of $20,000 is just $200. 2% of $200,000 is $2,000. It's simple math, but unfortunately, I would be thrilled for a 1% sell through of my total dollar value since November.
2. Am I selling products that actually sell?
Not anymore. At one time, I could sell as many media products as I could stock while barely trying, but that era is quickly dying. Each year, movie and music sales fall 10% or more thanks to downloads, and new book sales have become stagnant as electronic options and secondhand books become the avenue for many more readers. I must reposition my business to meet the needs of the customers who will shop with me, meaning if I have to sell kitchen appliances, then it will be my line. This doesn't mean I have to stop the business I love, but I need to explore elsewhere to make money.
3. Am I offering the best service to those who do shop with me?
Probably not. That's a common staple with a part time business that is difficult to improve, but I am working on options for communicating with customers better than I currently am.
4. What am I doing that is hurting my business?
Not staying focused on what the customer wants. I will be tuned into the social sites revolving around my products at least weekly to see what's hot, checking competition's prices and reviews more regularly, and keeping up to date on price cuts and new products to move forward with this information.
5. Will I make a tough decision?
This means that if necessary, will I be able to shut down my main business and find a new one? Being in business means sometimes I must swallow my pride, admit the good run with my products has ended, and find a new line to sell. It is possible that this may be my one option after exhausting the first four steps.

Now, for the reasons behind this article. Sales have been getting progressively worse since November, and not just because of the post-Christmas slump. This is actually far worse than any other year. I price according to mid-tier (Non-Amazon, Deep Discount, and Overstock levels) to draw business, but this time it isn't working. Those who buy today buy cheap, which is found on those sites, and there are fewer customers looking for personalized service at a slightly higher cost. I knew it was coming when Netflix started streaming movies for their regular monthly rental rate. It was inevitable, and has considerably businesses such as mine.

This doesn't mean all product's sales are terrible. The mass distribution of some products, like those I am selling, has slowed and I have accepted that. Now, It's time for the five steps on my business. The question is, even if your products are hot now, do you need to look at these steps as well? I am on step 2, what about you?

1 comment:

  1. I am still on step one and thinking about step two. I have so much inventory and I just can't get motivated with the listings, a little here a little there. But I am working on it :)