The Seller's Arena

Living while leaving eBay part 3: Just how can I survive Web 2.0?

2009-03-21T05:37:00.000-07:00

I can't believe it has taken me a month to get back to this blog. Even though it will say it only took 2 days, it's really been over a month since I started writing it! It has been a chaotic month, promotion at work, meetings, and just general "stuff" going on has kept me from getting this done. It's taken all of my creative juices just to deal with life, but I'm back!

I've given you ideas to get customers to visit your site, then to get them to stay and buy from you, and finally to return to shop again. But, let's face it, that's going to take some time. This isn't eBay, where you would know that at least something would sell by the end of the 7 day auction cycle and just had to manipulate your auctions to suit that reality. But now, you are in a different world, the world of ecommerce without eBay, and you are going broke fast. This is the biggest complaint of online sellers leaving eBay, is how do they make the money?

Ideally, what I am about to tell you is best to setup before leaving eBay. You don't need a long term presence, but a good running start doesn't hurt.

Other selling venues can make you money in the interim, and may even get a few customers to your site's checkout page. There is one slight glitch in this plan though. You can pick a site with it's own customer base and be in the same boat as eBay sellers, or a site that allows you to build from their base and become independently associated with their reputation. That's what Amazon, New Egg, and Buy.com offer. Here are the questions to ask when finding the right site for your products.

1. Do they cater to my type of customer?
Ruby Lane caters to vintage and antique shoppers, Etsy is for the handmade relic hunter, AllSports is for the sports collector, and Biblio caters to readers. It wouldn't make a whole lot of sense to put newer books on Ruby Lane (although some older pre-ISBN books may work) and it certainly wouldn't be wise to waste your time selling baseball pennants on Etsy.
There is a highly successful non-eBay site for nearly any product line you sell, where your products will be appreciated and sought after by thousands of visitors a week, but you have to pick it out of the stack and test it a bit. The examples above, as well as sites like UBid (electronics), GunBroker (self-defense), Gemm (mostly music) and Liquidation (closeouts, wholesale lots).

2. Is there enough traffic to make it worth my time?
Many sites have hundreds of thousands of products listed for sale, but that doesn't often equal high traffic. Compete.com will give you a good idea of how many folks visit a site before giving it a shot, but it won't give you all you need.
I'll look at Ecrater (1.5 million monthly) Bonanzle (494,000 monthly) and Overstock Auctions (266,000 monthly.) Looking at these traffic numbers, it seems that Ecrater should be first on your list to try, Bonanzle second, and Overstock if you have time, but there are other more important metrics to consider.
A) Take a new site on the rise, Bonanzle, with 500,000 monthly visitors. There are 1.8 million items for sale. This really means that about 2 people visit Bonanzle for every 5 items offered.
B) Look at Ecrater with 1.5 million visitors monthly. They have approximately 1.8 million listings, showing about 4 visitors for every 5 products.
C) Last, look at Overstock Auctions. O-Auctions only has an average of 20,000 concurrent auctions, so a good estimate would be about 100,000 monthly listings. The auction site generates 266,000 monthly visits, meaning that for every auction there are about 3 visitors to the site.
Now, have you re-thought the choices?

3. How to get them to keep buying
While a perfect world would dictate that every customer would come straight back to you when they want to shop, it usually isn't realistic when dealing with a multiple seller venue. It becomes even worse when dealing with everyday general merchandise that hundreds of businesses already offer. Someone is eventually going to notice your success and try to compete with your price, and you'll have to fight that. This is where you will be separated from the pack as a true business person, or relegated to being in the same boat as on eBay... just with a different company.
Can you compete with everyone on price?
No. Don't bother. There are always WalMart.com and Amazon.com that can out-price you on any product, not to mention all the etailers smaller that them that can do the same. Even if you do, eventually these products will be obsolete and you won't have the buying power to force the supplier to accept your returns, or rebate the cost.
Compete on service. Don't let a single customer go away unhappy, and remember even negative reviews are opportunities.

4. Last, don't get discouraged, but always think like a business person. Don't let your personal attachment to a certain product line wreak havoc on your business' profit. You know that those old liquidated 182 copies of Windows 2000 won't sell for more than $10 each, yet you still post on the XP-Haters forums that you have them for sale at $20. Just sell them, and use that cash to buy those liquidated copies of Vista this year.

That's all for this week, well, this month. Hopefully I can finish another entry this coming week!

Living while leaving eBay, Part two: Strategies to gain new customers

2009-03-19T17:20:00.000-07:00

Every eBay seller who leaves for a new platform has the same problem raised: Where did my customers go?

I covered this in the article below, but the real question still lies, "Where did they actually go?" It can't be this hard to find new customers on my own website, or a lower volume auction venue, can it?

I'll take this bet with any eBay seller: Regardless of all the time and effort you have put into your websites and venues outside eBay, unless you have chosen a very high traffic competitor like Amazon (the only one that can match eBay's sales) you will lose more than 75% of your sales the first week of leaving eBay completely. Another bet I will make with nearly any eBay seller, you will only take 10% of your eBay customers to your new platform for a single order, and many won't return for a second order.

We have already established the reasons for this. These customers are truly eBay customers. If eBay kicked all the sellers off their site and setup an affiliate site, those same folks would keep shopping there for quite a while, not caring if they were buying from eBay or someone else like Buy, New Egg, or Overstock through an affiliate link on eBay. Think of it like this... each year, eBay sales fall 5-10%. Those are the only eBay customers that were not truly eBay's customers, but the customers of the sellers.

With this simple fact established with most businesses, the question now changes from "Where are they?" to "How do I get them?"
I discussed ways to market yourself to customers once they have made it to your site, but never did talk about how they got there in the first place.

1. Free feed submissions.
This can include highly popular sites such as StumbleUpon and Google Base, and go as far down the traffic scope as a small blog feed exchange. There are rarely bad submissions to feed engines and shopping directories. I had a question on a site I took down a year ago. This question came from a man who found it on a niche shopping directory I placed it on 3 years ago, and he found the contact email address I left on the index page. I had the message "If you are interested in seeing this site return, email me."

2. Link exchanges
Link exchanges can be tricky, but valuable to a website administrator to build traffic. One particular site I have has over 300 backlinks from link exchanges with other sites. Do not confuse a link exchange with a traffic exchange though.
Traffic exchanges can vary from "placement for clicks" or click swapping, to prizes for large numbers of clicks, or even as far as auto-click exchanges generated by hacker scripts.
A true link exchange will involve you finding a number of complimentary sites that offer a "partner" or "friend" page and adding them to yours as well. If you offer an affiliate commission, this makes it even easier to draw customers from these exchanges.
Always be sure to follow the other site's policies with exchanges, and you usually can't go wrong. If you have any reason to think a site may not be reliable, check the IP address here: http://www.mxtoolbox.com/blacklists.aspx

3. Paid advertisements
Let me first state that no startup site should ever, ever begin with a Pay per click ad program as it's marketing system unless you offer a unique product or service.
The best paid ads don't charge by click. The top ads are monthly or weekly rates, and can be bought on many blogs, forums, shopping sites, and even many high traffic social network users offer placement on their pages to advertise to all their friends for a set amount of cash. For some, this is the primary form of revenue for the site and they are more than happy to negotiate a long term price.

4. Affiliate programs
Imagine how foolish the Amazon critics were in the 90's when Amazon offered a $5 commission for every new customer signup, or how much the critics wished they signed up on eBay's affiliate program when eBay started offering $12 for each new user who made a purchase. Maybe the detractors were wrong?
Affiliate programs can be the #1 revenue booster for any website. Remember how many salespersons Avon and Mary Kay had in the 80's and 90's? That was a face to face affiliate program, where each seller made a commission each month on their sales. This has been adapted online to help a business by offering either a price per sale commission, price per user, or percent commission.
There are many affiliate ad companies that will help you setup your accounts, but you will pay anywhere from 10-50% of the commission back to them. A couple are Clickbank and Shareasale. They have a strong service, very well managed, but are also very costly.
Today, many free open source shopping carts offer an affiliate program system, including OSCommerce and Zen-Cart. Channel Advisor, Volusion, and ProStores have a affiliate program built into some of their carts. It depends on how much time and effort you have to spend on building your program.

5. This will be the last traffic generation method I discuss, and it is a tried and tested way to draw traffic. If you are following this blog, or visiting regularly, you have likely clicked on at least one of these links to the right. Most of these are sites I operate or am affiliated. Everytime I write anything, there is a way to draw traffic to at least one of my sites. I post on many movie forums and always place a link to my sites. I write here, and several other places, where I can freely post any link to any site I want within the content, or near the articles. Why doesn't every site administrator do this? The only negative is perhaps a little finger cramping, and that goes away with a few knuckle cracks. You don't even have to be a fantastic author to do this, because even I can. I have read eBay Titanium Powerseller blogs that look like a 7 year old child typed it, and they actually gained sales. It just takes time, and time management, to make it happen.

There is nothing complicated about building traffic. It can be done spending hours every day, or maybe just a few minutes a day. Would you see an ad for your car repair site on a jewelery store website? Probably not. But a handyman blog would be an outstanding outlet for your ads. Focus on where you would expect to find your own site, and you will see your traffic, and sales, grow.

Leaving eBay successfully... Is it possible?

2009-03-10T12:56:00.000-07:00

It was October, 2006, and I was preparing to leave eBay. Paypal's "random" screening freeze on my account had practically ruined my feedback in less than 2 weeks, and there was no way to recover on a new ID or one of my old ID's in time to salvage my repuation. Preparations were in order. I had contacted my sales rep with my supplier to let him know I would be ordering far less, contacted my past customers to tell them about my new venue, and setup an account with a couple other payment processors. By January, my $30,000 online monthly sales fell to less than $300, and my offline sales slumped after Christmas. I was frazzled, fried, and fed up in less than 3 months.
Where did I go wrong?

There's a big hurdle that a former eBay seller must prepare to jump before leaving eBay. The world of online business is in reality nothing like eBay.

There are customer loyalties that don't match eBay shoppers. For instance, a customer on eBay may buy the same types of products from a different seller each time, while they will only buy that product from one or two independent merchant sites. The reason is, that these shoppers ARE loyal, but loyal to eBay - not to the seller. Have you ever had anyone tell you, "I bought this from eforcecity (or other major eBay seller) on eBay? No, likely they just "bought it on eBay." A customer may be a loyal shopper of Overstock.com, NewEgg.com, and eBay.com. But that shopper may not really care if they buy from these companies or a private seller on their sites.

Before the loyalties even start, a departing seller must be able to prove himself as reliable and trustworthy. I know very few sellers who started right away on eBay selling a high volume of Plasma TV's, but they may have been able to start selling HDMI cables to build their reputation and feedback first, moving on later to the high end products. The same is true with an independent website. A merchant must be able to prove that he is reliable, which can be accomplished in a few simple ways. Remember the HDMI example, and follow this story:
I begin selling handmade leather jackets on a website, but my prices are over $200 each and I haven't been live long enough to build a reputation. Here are 3 options to build trust before being able to sell my jackets.
1. I can run giveaway freebie contests and run keyword ads to promote them. This can work, but even a minimal advertising campaign will reap few immediate rewards.
2. I can give rewards to customers I carry from eBay when they refer new customers. This may work, but would they really put much effort in if they still have to get their reward by spending more money? I could possibly do better by adapting this into an affiliate program paying $5 for each new customer they refer.
3. I can start by selling belts and custom patches for about $25-30, and build my reputation on shopping sites with my merchant reviews. I could even offer free shipping on a future order for each customer that reviews my site, good or bad. Advertising budgets would be kept to a low rate, and I could get to know my customers early through post sale surveys. Who knows, I may even open up a whole new market in leather for myself.

Many leave eBay and think that their regular customers will loyally follow to their new sites. I have yet to witness more than a handful of examples, such as eMovieposter and Bargainland, who were able to pull this off successfully. When I shop on eBay, I don't care about anything but price and feedback. If I bought from that seller before, great, if not, I will hope it goes well.

Last is maintenance. Not maintaining your descriptions and products, but your customer accounts. All a customer expects is for you to deliver their order on time and offer an easy return policy if things go wrong. That's it. It's not complex, but many businesses make it more complicated than it should be.
1. "Sorry, the supplier is out of stock." This doesn't cut it with a customer waiting on their sister's birthday present. The real heroes of ecommerce will fill any backorder from a competitor, even if it means losing a few bucks. That customer receives the email stating, "Do not be concerned if your package arrives in a New Egg box. We made a mistake on our inventory count and are out of this product. We have ordered from a different merchant to ensure timely delivery of your order ot no extra charge to you." Most times, that customer comes back, because it is pretty unlikely that New Egg would do the same to serve them. Even if they start shopping with New Egg, they probably weren't coming back if you didn't fill their order elsewhere. It's a calculated gamble that works most of the time.
2. "Our business hours are 8-5, Monday-Friday." Well, I hate to tell these businesses, but I won't shop there. I don't shop at those times because I work too. If I have a problem, I want to talk to someone quickly, and since I work during their business hours I am out of luck. Honestly, who only reads email 5 days a week in any business, other than sites that outsource all labor from communication to fulfilment.
3. "The product must be returned in new condition, and a 20% restocking fee will apply. Shipping is non-refundable, and you must pay return shipping." They just lost me. If I get something and change my mind within a couple weeks, I want a refund. Their price of return is nearly not worth the effort to return it. Unfortunately, this is normal with thousands of merchants, and they strictly follow their policies.

eBay is a business opportunity, not a way of doing business. Needless to say, it is far easier to build business off eBay while still operating an eBay selling account, but it is possible that after the fact you can start fresh, leaving eBay behind. Just as with all that has been said about leaving eBay, if Foot Locker decided to leave a shopping mall, would the entire foot locker customer base travel somewhere else to shop with them? Probably not, and the shoe stores that are still in the mall would take the extra business gladly. But you can take on a whole new world of online shoppers who never shop eBay, but still don't have loyalties to any particular merchants and businesses. Attract and cater to them, and you can build a long road of success without eBay.

When is the last time you took inventory?

2009-03-03T08:17:00.000-08:00

I really wish I knew why this came to me today, but it may be because I haven't taken a thorough inventory in months.
I was at a regional eBay seller convention in Atlanta a few years back. At the time, the biggest concern was eBay hiking the store fees a few months before Christmas. While there, I was talking to a bookseller about a particular graphic novel my wife wanted. He told me that he really didn't have a clue how many books he had, much less what titles he had. I thought, "How can you run a business like this?" Then again, I have done the same thing, on a much smaller scale, since November. The reality is, he told me later he had over 500,000 books. There was almost no possible way for him and his 2 employees to look at every single one. But there was a way for me to count mine.
At the time I was a Gold Powerseller, and had a 12x15 office with two walls completely covered with bookshelves that were slam full of movies and games. There were over 6,000 at the peak of my business, and each bookshelf held 300.
I took my first inventory when there was just one bookshelf with about 150 movies, and found that every one of the movies I had was listed on eBay. Once I reached that 6,000 mark though, it became somewhat more challenging to ensure they were all listed for sale. Using Turbo Lister, I had everything set to just punch in the UPC, add a line to the title of each, and upload. But, sometimes the UPC wouldn't work, and I didn't catch it. Or maybe the Good til cancelled would cancel. Possibly a non-payment that I just forgot to relist. In any event, I always had at least a few each time that weren't listed.
My strategy:
There were really more movies than I could count at the time, so I devised my own strategy. My wife, or the employee I had hired, would call off the names and the number on hand. I would search my eBay store for them. If they weren't in the store, they would go onto their own little shelf to be listed. That took care of any strays that got lost from eBay, but it didn't help me see if I had any listed that weren't actually in stock.
The easiest way for me was by just matching up total counts. I took a total title count and matched with my store, and if I was within 10 of what I had listed on eBay it was going to be a pretty good month. The entire process took about 4 hours a month.
I would count like this once monthly, and do just a total title count mid month, and it worked.

I have known sellers who take elaborate means to calculate, file, and stock their inventory who couldn't keep up as closely as I did, and take twice as long or longer to count. The truth is, when dealing with inventory I have to treat it like cash.
Rule 1: The less I handle it, the better off I am. I can't mess it up if I leave it alone, right? This goes for any product, in any quantity. If I am selling glass products, I am probably going to mishandle them if I touch them enough. If I am selling clothing, I will possibly stain a piece by moving it back and forth, or get so dust on it requiring me to wash it, costing money. The same with movies. I didn't open cases more than necessary, wouldn't move them around too much except to make room for new inventory, and I certainly wouldn't use them!
Rule 2: The simplest method is usually the most effective. I always shifted the movies and condensed them as far as possible, that way my newest stock would always be on certain shelves. I could have setup a spreadsheet with all the UPC's from a Turbo Lister import CSV file, sorted by date uploaded, and walked each shelf to match up all the UPC's or titles. Just setting up this spreadsheet would have been a couple hours, then setting the counting would have been an all day affair. Then, I am stuck counting them all again later! Sure, I would have been 100% accurate, but I would have missed about 20 questions leading to possible sales that day. So I may have missed $50 in inventory, but I would have lost $150 in sales.
Rule 3: Strive for thoroughness, not necessarily 100% accuracy. I never missed much counting with my methods. When I did, I would catch it the following month. The most thorough methods of counting inventory are the most simple, and I lived by that rule.
Rule 4: If it isn't making you money, it isn't always costing you money either. I would keep thousands of movies in stock for a couple months at a time, with sale prices averaging $7 each. My cost was usually 50%, and eBay fees were a nickel for each month. My newest inventory would always be what sold, but when I ran a special for free shipping over $50, my sales of the long term store inventory would skyrocket. In turn, I made much more this way than selling them at cost to re-invest the cashflow. While this doesn't necessarily work for high ticket products, most that cost less than $10 deserve a couple months to sell at full price.
Rule 5: The final rule... Don't take it too seriously. I could not forget I had a strong personal inventory as well to keep in check. I couldn't spend all day counting and barely see my wife, so she would help if possible, then I'd take her to lunch. It was a very simple way of making sure my inventory, while it controlled our finances, did not control our lives.

I still take inventory, although not for a couple months, but I must when dealing with suppliers at least keep an online inventory working. Keep working to perfect your process, and by all means, keep it simple!

Now if you will excuse me, I am about to start counting.

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

2009-02-24T11:29:00.000-08:00

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?

GoDaddy launches rival marketplace to eBay and Amazon

2009-01-17T07:49:00.000-08:00

It's official. An internet giant with global name power and a marketing super-engine that would embarrass eBay, Amazon, and probably Microsoft, is setting the stage to stick it to the two largest independent seller marketplaces online... and launching it right before the biggest ad date of the year: Super Bowl Sunday.

http://shops.godaddy.com/

GoDaddy has launched their marketplace this week, and let me just say... wow. The design is fantastic, the features for a seller could put any selling platform in the industry to shame, and the shopping experience will leave eBay addicts in limbo.

How many have tried and failed to take on eBay and Amazon?
There is of course, Yahoo!, which seems to fail at everything these days, Last years multi-million dollar startup Wigix that hasn't attracted more than 2,000 daily visitors in a year, and of course, the eBay flooded Google Base which has turned into nothing more than a product search engine, with eBay as it's core advertiser and product submitter. Fairly certain that Microsoft will not launch a marketplace, forcing eBay to stop paying for desktop links on Vista computers, All hope has been lost for sellers who may use, but don't really like Amazon, but hate eBay with a passion.

The time has come. GoDaddy shops are launched. $4.99/month, 10% commission, compared to an eBay Stores commission of 12% with a minimum $16/monthly, and Amazon with 15% and $40/monthly and all sorts of hidden charges. The launch timing is perfect, right before their big annual Super Bowl ad which doubled site traffic for nearly a month.

Not that the 3 million monthly visitors hurt, but GoDaddy plans to also scatter links to products in the marketplace on not only the main site, but on their parked pages and free hosted sites where they place ads.

Features for shoppers:
It's well designed. Easy to navigate and search, of course there are few products so that may change. GoDaddy likely has the second best web infrastructure in the world, right behind Google, so there isn't much reason to worry about future issues with sloiw connection and browsing. Pay online with any major credit card, products shipped within 2 days, and rate the seller through GoDaddy Connections.

Features for sellers:

Listing aspects:
Quick one page lister. 2-Tier basic category structure, allows 3000 characters for the description, plus a 300 character short description. Up to 5 pictures, U.S. shipping only with AK/HI shipping separately charged at a different rate if you wish, keyword/tag list, and last, optional product values and attributes.

Account setup:
Payments are made by check or direct deposit. They are apparently held for 30 days until you reach a point where each sale is less than 10% of your total monthly sales, which is similar to Amazon's initial hold for new accounts. After that point has been reached, you can receive weekly payouts by direct deposit.
http://help.godaddy.com/article/4979

Security and Buyer Trust:
GoDaddy charges a $25 fee for a chargeback, plus the amount of the transaction. Buyers also give sellers a 5 star rating system in GoDaddy Connections to help you build trust in the marketplace.

The last words of warning for eBay: Watch your back. The most unlikely internet powerhouse is out to take you down. Bury the hatchet with sellers now, or become another dot-com bust.

While you are still here, give it a try:
http://shops.godaddy.com/Gravity-Video-Warehouse/

The basics of a business plan

2008-12-22T09:11:00.000-08:00

I am going to briefly discuss a business plan today. A business plan is essential to the success of any business. I have seen thousands of businesses fail because of one reason: They never planned for failure.

In my business plan, I outlined the following sections for each venue and site I operate, Gravity Video Warehouse, House of Blu, and my store on Alibris.com:

1. Mission Statement - What am I offering that sets me apart, and how I will use it to my advantage. For instance, the design of Houseofblu.com, and the product line, is exactly what a visitor would expect to see in a HD movie store. I specifically designed the site to make it as Blu-Ray themed as possible, and cut the product line to cater only to that segment of customers.
2. Goal - Where I want to be in the same time next year, which is updated monthly.
3. Market Analysis of what I sell - This took weeks to research, and I update it at least every couple months.
4. Strategy to succeed, and 5 different common scenarios for failure.
5. Profit Margin - How much I gross per sale, minus processing costs, supplies, hosting cost percentage of the sale, and labor.
6. Excel spreadsheets where I enter sales and profit weekly compared to all projections, as well as calculate cashflow and credit payments for merchandise. If it has a number, it is entered into these spreadsheets.
7. Effect of Competition, which shows the ways I can succeed and fail to win customers over both established online businesses, brick and mortar businesses, as well as mom-and-pop eBay type businesses. On Houseofblu, I was able to get fantastic pricing to offer the product for closely competitive prices to a couple other popular HD movie stores, except I offer free shipping on top of the competitive pricing.
8. Quarterly Projections for 3 years, and I was very conservative. To show how conservative, I have doubled my sales for this quarter already on both Alibris ($5340) and Houseofblu.com ($3058), but have fallen far short on Gravity Video Warehouse mainly due to my marketing strategy.
9. Marketing - How I will bring new customers, and keep old customers to shop with me.
10. Current Goals achieved - This is where I write that I have doubled my projections on Alibris and Houseofblu, and my strategy to continue that trend. It will also show how I intend to build Gravity Video Warehouse to the same success rate.
11. Exit strategy - If the water gets too hot, how to close the business with respect for customers and suppliers, and at what stage to close with zero debt.
This is almost an exact breakdown of a business plan I actually saw from a seller. What a business plan is not:
I want to sell widgets for $50.
I will pay $25 for my widgets.
I expect to sell 100 widgets a month and make $2500 a month doing it on eBay.
I will start moving my eBay customers to buy from me on XXXXXXX's auction site, so I can make more profit since there are no fees.

Unsurprisingly, that seller is no longer selling the same widgets. Unfortunately, thousands set out with the same plan, including myself in 2002 when I began selling. It took about 6 months to realize I needed to account for what I was making from the business, and eBay at the time didn't have all the Quicken downloads and business management sections in "My eBay." I downloaded a free version of Business Plan Pro, and still use it to this very day.

If you do need a business plan (which you do if you sell anything online) then visit here for an outline. http://www.bplans.com/business_plan_template/
You don't need to purchase any software right away, and can probably find the software you need free when you are ready. Take the time to do this, it is more worth it that you will realize until you have failed.
http://www.bplans.com/business_plan_template/

Introduction to Online Business

2008-12-17T22:08:00.000-08:00

While it may be true that anyone can sell something online, not just anyone can run a business selling products online. Selling something online is as simple as creating an eBay and Paypal account, and following directions. I know because my mother was basically computer illiterate, and I told her how to do it over the phone. She sold a few things she didn't want, and hasn't sold anything online since. She was a seller, not a business.

There are many differences between an online seller and an online business, including office setup, software, and shipping supplies, just to name a few. A seller may have a few envelopes, and a box or two in their closet in case they decide to sell something. A business may keep 500 envelopes and several dozen boxes just as a backup if their supplier ships late. A seller will have a program that came with their camera, or from a 1-hour photo booth to edit their photos, while a business will likely have the latest version of Photoshop on their system to enhance and place watermarks on their photos. Last, a seller will typically have things scattered around a makeshift office in their den, while most businesses need extensive organization to save time on their busy schedules.

These are just a few differences between sellers and businesses. Now, it's time to focus on the businesses, and more importantly, the successful ones and what they do.

1. Successful businesses live by two rules: Consolidation and organization.

Without a consolidated business, an operator will find himself scrambled and have more than he can deal with. This may include maintaining a presence on more than 3 selling channels, attempting to sell a wide variety of products, or running dozens of non-focused marketing campaigns instead of a to a few targeted audiences.

Multi-channeling a business presence has turned some businesses into ecommerce giants since the early days of Amazon and eBay. It can give the same exposure as JC Penney or Parisian's could have by opening a store in two malls within the same city, except without paying far too much in rent. A professional seller can use two volume channels, and sell twice as much, and with services like Fillz and ChannelAdvisor, it is much simpler to manage inventory. When a business owner tries to fill orders on many different channels though, it can become too much to handle and seriously harm the business, especially when the owner stocks their own inventory. This can cause long delays or cancellations, and ruin the chances of repeat business from the customer. It is always a good idea for a business to use multiple channels, but never more than they can handle.

I have seen ad and marketing campaigns for sites that have absolutely no relevance to the sites on which they advertise, or even worse, for products that the general public know they can get elsewhere much cheaper. For instance, you can visit nearly any news site and find ads for hair loss treatments, Netflix, and Weight Watchers. Obviously, there is an audience for those products on a news site, but how many wasted clicks could you have compared to advertising hair loss treatments on a site like GQ Magazine. I have seen Netflix ads plastered all over FoxNews, and at the same time on the TV they were advertised at $3 a month cheaper. And when Weight Watchers runs ads all over the internet for a special that ended weeks before, that's a lot of wasted marketing dollars. I have seen all of these types of ads, and they are quite frankly a waste of resources to the companies.

My very first attempt at buying PPC ads on Yahoo several years ago was a complete disaster, but had success written all over it. I found a great liquidated lot of 300 Anime DVD sets, all retailed more than $50 at BestBuy.com, and I purchased them for $15 each. I took a position to make at least $25-35 on each set, and walk away with as much as $10,000 in profit. My problem was that I didn't take into account how many people search Yahoo for "Anime" which was my primary keyword. I burned $200 in 5 days, and sold only one set. Then, I realized I needed to select targeted keywords. Instead of using "Anime DVD Sale" as my lone keyword, I changed the campaign to the actual set titles, and even a little more specific into the directors and studios. If I remember correctly, my highest conversion keyword was something like "Trigun Anime Geneon Pioneer Nightow Complete." I spent another $500 in a month by targeting specific keywords over the next 2 months, and sold nearly all the sets. I then sold the rest off on Amazon for about $10 profit on each, and ended it with about $7,000 in total net profit. If I had stuck to the course where I burned $200 in 5 days, I would have spent $2400 on ads, and been trying to liquidate them just to pay off the credit card I charged the ads to. Anytime I advertise now, I select the most detailed keywords possible, and while I may not get the traffic, I get the conversions.

Last on the two rules is Organization. I started selling pro wrestling videos and DVD's on eBay in 2002. I immediately stood out in the crowd, because I had an eBay store dedicated to just that line. About 6 months into it, I had a few things I wanted to sell, such as a SDRAM card and video card I never used for my computer, so I listed them for sale in my store as well and they sold right away. That's when I had a brainstorm, and decided to buy a bulk lot of computer components on Liquidation.com to sell from my store. Now sure, I sold most of them, but my business selling the wrestling videos took a major hit because customers couldn't search my store without running accross 10 computer "things" on a page. Not only was the store disorganized though, but can you imagine a 1 bedroom apartment with 200 drives, webcams, scanners, and speakers, on top of 3 bookshelves holding 500+ videos? That is what can happen when businesses try to diversify their products. The end result was a full sell of what was left through in a single auction, at a loss, for all the computer "stuff" and a return to the primary business focus targeting wrestling fanatics.

When a business begins carrying too many different types of products, it begins to operate like a yard sale. Any time you have a yard sale, you want to sell the things you can get the most for right away. Look at the weekly classifieds, and you will see TV's, Washer/Dryers, stereos, etc. in the ads for yard sales, but you never see anything like "Come to my yard sale and get some 15 year old pots and pans." The same happens when a business attempts to sell a wide line that have no direct cross-selling potential. This can be found in a multitude of sites, where the shop name is "Mama's Pottery and MORE!" When arriving at the shop, you will find a large line of pottery where the business makes the majority of it's sales with pottery, but adds in candles, towels, books, records, and clothing into the same site to make up the "MORE" aspect. This can cause not only a disorganized shopping experience when browsing a catalog, but can also cause a very disorganized workspace. If selling only pottery, there is a specific way to store and package. When selling all the "MORE" products, the business must not only have medium boxes with foam and wrap, but must also have padded mailers, small boxes, flat boxes, and different sized labels, which can take up the room needed for the primary products. To make matters worse, it can often lead to a "bidding war" with the business owner on which products will create the most cashflow, and the remainder of the items take a backseat, costing valuable space and money for every day they sit on the shelf. This is one good reason to have a basic seller account on eBay maintaining decent feedback, so you can sell off those great finds without confusing our customer base.

2. Customer Service and when to say no.

Customer service is the most important aspect of selling online. With literally millions of sellers and businesses to shop with, it can't be the same as with brick and mortar stores. A B&M store can afford to tick off a customer over something small, say a refund, and that customer may someday come back. If not, they may tell a few friends about the experience, but that's about the extent of the damage. Online, a dissatisfied customer will post on forums, blogs, your own site, your feedback, send emails, IM's, and any other method available to make sure people know you "screwed" them over.

Depending on your business, your return rate may be as high as 5-10%, or may be non-existant depending on your product line. Clothing has a high return rate, but books are usually very low. You can minimize it by following the basics, or what I call "Little Stuff." Add a link in every product listing to your return policies, and do your best to state them clearly at the bottom of your checkout page. This one little convenience for your customer can save you hours down the road.

Everyone has a customer who claims they got the wrong size, wrong color, or wrong item altogether. The first thing to remember is a refund is much easier to deal with than a chargeback. So they bought a hat, and sent the hat back without the tag and smelling like 2 week old baseball field sweat... It may be better to take the loss than deal with your processor and their bank over a $20 hat. If the customer bought a $200 dress, removed the tag and wore it out to a club where she spilled a drink on it, soaked up all the smoke from the people around her, then it may be time to send it back with a polite "Hell No." The way to figure this is to objectively ask, would you expect to get your money back from a store if you returned it like this?

3. Shipping and Packaging

The first rule of shipping is making your shipping policy public. Don't hide that it takes 5 business days for you to ship something unless you want problems. If you say you will, then do it. If not, add an incentive for the possibly dissatisfied customer to return, like 10% off or free shipping on their next order. Next, don't ever say you know how long USPS, FedEx, and UPS will take to deliver. Their shipping times aren't guarantees, and you could leave a bad taste in someone's mouth who likes to tell their friends, chat buddies, email list, and blog readers.

When packaging your order, be sure you know what the industry standard is. If most businesses ship books in bubble mailers, then you'll probably be OK to do the same. But if the majority of businesses ship clothing wrapped in plastic, in a sized box, don't expect good reviews when you stuff your clothing orders into a padded mailer.

And while it may seem logical, even comical to many, if you are shipping electronics, wrap them in plastic to protect from weather. If you are shipping glass, pack one item per box and load it full of foam or paper. And last, if you are shipping something that isn't fragile, there is no need to pack it to the max with bubble wrap and peanuts. This is the one issue I have with Amazon, that they have apparently moved past this year. I used to order a book from Amazon, and would get the 7"x10" paperback in a 12x16x4" box. Inside, I could pull away all the plastic bubbles, paperwork, advertisements, and find my book a few minutes later. This week, I got a book from them delivered in a cardboard mailer, with only a packing slip included. I suppose they realized how much those ads, bubbles, and paperwork cost and cut back their expenses. They finally figured out that usually, a single packing slip (if anything) will suffice when shipping to a customer.

There will be more to come on this article, but since I have hit the high points I believe it's time to stop for the night.

So, you think you found a great supplier?

2008-12-17T22:01:00.000-08:00

At first, I thought I hit a goldmine. I found a business that sold wholesale, and had just started dropshipping their products. Now, keep in mind I had never dropshipped anything until this point, and do not just dropship through just any ole website today either.

Dropshipping basics: You sell the product, you place the order with someone else, they ship it to the buyer with your return address.

There was a small monthly fee, and I setup my account and started listing the products on eBay.
Initial response was great. My inventory doubled, and I started having an extra few hundred sales a month with a 30% profit. What I didn't realize is that if I found this business so easily, anyone could. They didn't require much information to setup a dropshipping account, no more than a any website would, which meant any Tom, Dick, or Harry could compete with me. The ride was short lived, since at least 10 other sellers found them in just a couple months. Now I had to compete with 10 others, and my sales of a few hundred were divided by 10. Then came the addition of this site to the "Wholesale and Dropship Lists" on eBay. I started selling just 10-20 or so a month.

The company did nothing wrong by dropshipping for so many competing sellers. They did it to make a profit, and I would have done the same thing in their shoes. This was simply a middleman's middleman seller. When I found their supplier, I was shocked that their dropship prices were actually 50% higher than I paid, then I found their supplier's supplier, and was floored. What I was paying $8 for originally cost about $2. Sure, I expected to pay a little bit for them carrying the inventory, but I would have never started if I had just looked a little deeper from the beginning. I could have been buying from the original supplier and saved thousands (and made thousands) but I just saw the "perfect setup" and ran with it.

Here are some tips for finding a great supplier:

1. When you find one you like, search Google Shopping/Base for that product. If you see more than 5 sellers with over a 10% markup over their prices, look for another supplier.
2. If you find it in a catalog of dropshippers like Wholesale Central, see tip 1, and monitor it weekly.
3. If you find one that passes the first two, do a search for a product name plus the words "wholesale" and "minimum order." You may have to search through a couple dozen pages, but you should be able to find out if they buy from the manufacturer or from another middleman pretty easily.
4. Last, never tell anyone who you buy from! Someone is probably already looking into your business to find out where you get your stuff, so don't help them out! You need as little competition as possible from the beginning to build your customer base. Once you are established, you can handle others getting into the market, but no startup can survive immediate competition.

No supplier is perfect. I know several online sellers who use Amazon to dropship 100% of what they sell (They sell it, order it at Amazon to deliver to their customer) and apparently they do quite well since one in particular works around the clock on 10 different sites, with a 6-figure income. How he does it when every box has Amazon stamped all over the shipment is beyond me. I also know several others who are the only dropshipper for their supplier and sell more from the supplier than the supplier sells themselves. And I know many, many who use the same supplier as hundreds of others use, and fight down to pennies of profit on each sale.

I will be writing more on dropshipping soon!

Moderation: A key to online business

2008-12-17T21:58:00.000-08:00

This whole post is going to be about moderation. It's a necessity of life. I am the type of person, who even though I work just 3 miles from home, I still leave 20 minutes before I need to be there. The drive is about 10 minutes, and I relax listening to talk radio a few minutes outside before I go in. At the end of the day, I walk in, kiss my wife if she is there, and relax at the computer for about 15 minutes. That's how I do it, and it works for me.

I juggle my job, everyday life, and online business fairly well for one reason: I moderate the part that isn't necessary to exist. My priorities are very simple:
1. Family - This includes my wife, parents, brothers, her parents, and making sure everything with them is well. To take care of us, I have to work, so that makes the top of the "Family" priority. If a bill needs to be paid to make sure we have A/C then I pay it. If I come home and she is dead tired from work, and I'm not, I cook dinner and do the laundry, or vice-versa. Once I have honored this priority in my life, I begin to look to the others.
2. Everyday life includes going somewhere, anywhere, that isn't paying me to be there. I don't care if we just walk around Target for an hour sipping on a coke I bought outside, having a cookout at her parent's house, or we go out and spend $100 walking and shopping around the mall.I know it's not fiscally responsible for us to spend $100 at the mall every day, and we just don't feel like doing anything other days. Anywhere that isn't paying me to be there is necessary to unwind, but in moderation.
3. I had someone ask me, "Since your online business is last on your priorities, you don't take it seriously?" Wrong, it wouldn't be a priority if I didn't take it seriously. Some things aren't priorities: Watching my favorite TV show, playing a game online, and reading a book would be a few of them. None of those benefit the ones around me at all, so they aren't priorities. Sure, I can't make enough money working online part time to provide for us, but I can do some good things working online. I have met people whose experiences are phenomenal, and met total jerks who think they are better than everyone else in business online, and learned more about business from both types. I have had some terrific relationships with customers, even developed close friendships with some. Even when I was on Wagglepop and other small auction venues, I made a couple steady friends to discuss our businesses to this day. The difference is, I moderate this priority more than the first two. This one is not necessary for us to exist, so if I have to go a few days just checking emails and packing up a few orders, then that's all I do. I don't get angry because I cann't spend more time on my stores, with my first day off in 11 days, because my wife wants us to do something together. I moderate the priority that, if that day ever comes, I can live without and be content if necessary.

Moderation took several years to master once I started selling online in 2002, and by the time I mastered it I was doing it full time. I have seen people lose everything, family, business, hope, dreams, because they don't moderate their online activities. Whether it's eCommerce, Social Networks, Chatrooms, or even blogging, it should always be seen as expendable when there are bigger priorities.

Competing against the giants of e-commerce

2008-12-17T21:43:00.000-08:00

I live in a small town, about 7000-8000 residents, and the nearest "big" city is about 20 miles away. The economy in town is thriving, despite the national economy struggling, because it is usually cheaper to shop in town than to drive an hour, in traffic, to shop in the "big" cities. Stores around here include gift shops, clothing stores, a thrift store, a bookstore, drug stores, dollar stores, a game and a movie store, then the staples like Walmart, Lowe's, and a couple grocery stores. There are also many privately owned restaurants and a few corporate and franchise restaurants like Ruby Tuesday. There really isn't much need to go to the mall in the nearest cities, since it can all be found here. This is the way the economy runs the real brick and mortar world. Buy close, buy in bulk, and stay home.

But, in the ecommerce world, businesses are struggling. One would think that it is cheaper to shop online than drive to buy what you want, but that isn't always the case. There are shipping charges, cost of living and operating increases, and supplier increases. Only a few online retailers can have the same buying power as a national chain with hundreds, or thousands of stores. Surveys have shown that over 70% of all e-tailers use a second party to dropship some or all of their products (including retail companies like Circuit City, Best Buy, and KMart) leaving their online businesses at the mercy of supplier charges. The supplier has no incentive to give these 70% any discounts, since every order is processed individually by them. Therefore a moderately successful seller can dropship the same products and get the cost close enough, that with lower overhead, can match the pricing. This is where customer service pays off in the world of ecommerce.

If the suppliers are willing to dropship for any business, there can't possibly be much difference in price among the many e-tailers. In fact, I used the same distributor that Circuit City and KMart use for media products, but I never came near 1% of their sales. The difference between my business and theirs is their reputation of customer service. These are branded companies, I was not. Sure, I had a following on eBay, but they had decades of customer service I could not match. What I had to do is stop competing with everyone else, and just make myself stand out. Here is how I did it:

How can any business succeed against established corporations who sell mass catalog dropshipped products online?
1. Offer terrific service. No corporate online business can beat one on one personalized service. They hardly send real emails to customers, so if you do, you have an edge. This won't win all their business, but it will draw a few away who want that personal touch.
2. Stop competing. Don't sell the exact same products at the exact same prices. They will always win in this economic slump due to their name recognition. I sell the exact same movies as Amazon and Best Buy's sites, and a lot of mine probably cost more. What I offer is a better shopping experience with quick email responses, and quick resolutions to problems if they come up.
3. Sell your servic-ers, not your servic-es. When is the last time you saw a profile of the person shipping packages for Best Buy's website? Let customers know who is handling their order, pictures, short biography, experience, etc, and you will gain trust immediately.
4. Take a few hours each week, and visit customer profiles. For instance, if one customer buys quite a few Sean Connery movies, I would customize a packing slip to print for each order just for them. When I make the order, I let them know that they will receive 20% off their next Sean Connery movie, and tell them the discount will show up the next time they login. Then, thank them by name, and save it for their almost certain next order. Or, if I have a very loyal customer, I may just throw in a freebie I think they may like... I have done this for years, and it never fails to make some new friends when the customer opens a package and finds something free.
5. Finally, instead of just printing a packing slip and stuffing it inside the package, try a little personal touch. Try writing on every one:
"Thank you XXXXX for shopping at House Of Blu.
Sincerely, Duane
Owner, House Of Blu - We Are Blu-Ray"
Boy, wouldn't that just tickle a customer to read a personal message handwritten from the owner of the business they just gave their money to?

Those are just a few tips for competing in a global, corporate dominated world of ecommerce. That's it for today!