Tag Archives: e-commerce

Christmas Preparations

indexThe busy season for those of us who deal with games / toys and other knick-knacks that fit under the tree is coming up.  If you don’t think it’s time to start prepping for the season,you are definitely wrong.  Christmas can be as much as 50% of a business’s sales for the year, certainly for Fortress Geek, we see a significant (like 100-200% increase) in monthly sales volume.

What can you do to make your Christmas Season flow well? Here’s a few suggestions:

  • Advertising banners and on-site, in-season designs should be started immediately.  You want them ready for the Christmas season to put shoppers in the right mood and remind them to purchase what they need now!
  • It’s too late to start shipping Amazon for Toys & Games, but it’s worth considering places like eBay  and other 3rd party sites.  The bump in traffic during this period is definitely worth planning and grabbing at.
  • Get your shipping area ready.  Pick up all the necessary boxes, packing materials and tapes that you will need.   You don’t want to have to slow down / stop shipping just because you forgot to buy paper for the printer.
  • Pre-pack some of your best-selling items to prep for shipping.  If you know you sell 100 copies of the same item, all in single lots, you can pre-pack these to speed up shipping.
  • Make sure to organise multiple pick-ups / shipments as necessary with your courier company
  • If you are hiring extra help, make sure all documentation and processes are already in-place.  If possible, assign people to specific tasks that they can do continuously such that they can get good at that single task (pulling, packing, etc.) without having to learn the rest of your processes.

Do you have any other tips for e-commerce business’s during the upcoming business season?

E-Commerce Ain’t Rocket Science

As much as people might wish it to be.  At least with rocket science there’s a lot more science than art to it, a lot less guesswork and a lot more fixed variables.  It might be incredibly difficult but the vast majority of the factors are known.

E-Commerce Isn’t Brick & Mortar Retail

We don’t deal with walk-in customers.  We don’t have to worry about displays or shelving or the appropriate amount of space between racks.  We don’t worry about the butt brush effect or seeming too crowded for customers.

If you are coming for retail, you have a great handle on logistics and inventory and what to order and when.  You have no idea about site design, usability, conversion rates and marketing.

E-Commerce Isn’t a Service Business

I have a friend. He runs a service business doing IT consulting.  He charges hundreds of dollars an hour consulting on IT.   His problems are very different from ours.  He never has to deal with inventory, but time management is important.  He can only ever sell a fixed amount of time unless he hires more staff.  He doesn’t have to worry about uploading products or designing new sites or generating a thousand customers a  month- just 2.   If you run a service business, your experiences are important but they aren’t part of the equation here.

E-Commerce Isn’t Affiliate Marketing

Affiliates create sites, they generate content, they sell space on their sites and eyeballs and clicks.  They are the front-face and the beginning advertising platform.  Developing a strong affiliate business is very different from developing a strong e-commerce business.  You could potentially develop a strong passive income from affiliate marketing.  E-commerce is all about fulfilling that order – because whether you drop-ship or hold inventory yourself, you got to have stock to sell it which means you have to active in managing stock.

Affiliate marketing isn’t e-commerce.  The skills might help, but it isn’t everything.

So What is It?

It’s not rocket science.  It’s not unique skills.  It’s a series of skills that are required, that you need to put together to make the business work.  You can gain those skills from a variety of areas, but learning to put them together requires time and money and if you’re lucky, assistance.

Revenue Streams Online (1) – E-Commerce

Let’s talk about the various ways you can generate revenue online when you have a website.  I’m just going to do a comparison between eCommerce vs Affiliate Marketing vs Advertising vs Subscription revenue streams and we’ll start with eCommerce.

eCommerce Sales

For those of you who don’t know, it’s where you sell a product on your site and send it to them.  Generally, a physical product but it can be digital and you can drop-ship (have someone else carry the product for you).

Profit margin breakdown using ‘normal’ retail markup for holding stock on your own compared to drop-shipping is 50% to 20-30%.  That is, for every $1 you either get $0.50 or $0.20-30 back.

With digital products of course, if you own the copyright the markup is enormous since your cost of good sold is insignificant (marginal cost that is, not upfront).

Pros:

  • Easier to build a brand, especially if you have products or a product mix that is unique
  • Conversion rates can be significantly better as you are not sending traffic away first – that is you get 1-3% conversion from all your traffic, not just the one’s that travel to the affiliate marketer
  • More control – you can adjust your site to better convert your traffic and have a much better understanding of the needs of that traffic than an external site
  • Lifetime customer value – you are drawing the full lifetime value of each customer especially in a business of repeat purchases.  Unlike affiliate sites where you generally only receive the revenue for a fixed amount of time.

Cons:

  • Inventory can be extremely expensive (requiring tens of thousands of dollars)
  • Building the website is often much more complicated than an affiliate site
  • Developing the brand can be a much longer process
  • A more complicated business model as more ‘moving parts’ from inventory, site updates, design, customer service and more.
  • Generally not a passive income stream as orders must be fulfilled, customer service completed, etc.
  • Ongoing customer service issues compared to affiliate sites (e.g. questions, returns, exchanges, etc.)

Building a site – the cost of using Magento

Over the years, we’ve built multiple e-commerce sites.  We first started on osCommerce and then moved to Magento when it was still pretty early – 1.3 I believe.  Since then, we’ve built over 8 sites on Magento so I thought I’d write about our experience and the costs involved.

The Cheap

Let’s start with the basics – a basic installation of Magento should only cost about $500 with a theme purchased from another company and an installation by the developer.  It’s easy to install the basic system and Magento has a lot of basic, good functionality at that price.

The Basic

So, next up we have what I would consider a basic installation.  A purchased responsive theme, a few minor adjustments to the theme to make it to your liking, a new Search module, social button integrations, Mailchimp integration, Gift card modules and that should be it.  Perhaps add a one page checkout to the system too.

This looks something like Fortress Geek right this moment.  Lots of nice designs and additions, looks professional but isn’t too expensive to set-up and run.

Total cost: $2,000 – $3,000

The Complex

Here, we start looking at a custom theme and design (easily $3 – $5k to start), social button integrations, reward point integration, gift cards, a one page checkout, custom reports, custom product page design and automated upsell / crossell modules.   We’ve also got bestsellers lists, an integrated WordPress blog, multiple payment methods and a shipping module.

That’s what Starlit Citadel is.

We’ve spent over $20,000 easily over the course of a couple of years on this site.  We’ve upgraded, tweaked, upgraded again.  That’s a lot of money, but we think it’s worth it.  These days, we don’t spend much on the site though – it’s just upkeep.

5 Analytic Key Performance Indiactors

Let’s talk about analytics.  If you own an e-commerce store, you want to know what to track.  So, let’s talk about the key perfomance indicators you’ll want to watch.  Remember, if your focus is a specific geographic region, you’ll want to track both for that region and overall with particular emphasis on your target region.

1. Sessions

Sessions or visitors if your analytics program uses visitors instead.  This is the top of the line metric, and will give you an idea of how many people are ‘coming to your store’ each day.  It’s always good to move this number up, especially if you are sorting by your target market already.

2. New Users %

Here’s one that most people don’t think of.  As a rule of thumb, you want to get around 50% new users coming to your site on a regular basis.  Any fewer and it means you aren’t generating enough new leads to sustain and grow your business.  Any fewer and your site is not ‘sticky’ enough. Of course, new sites will find their New User % really high, but you do want people to come back and you need to move those returning customers % up.

3. E-Commerce Conversion Rate

Industry average is 2%.  Frankly, I’ve never been in an industry where I’ve managed to get 2%.  Now, this might mean I’m just really bad at it – but it can also be an artefact of the industries I work in.  Realise that an overall benchmark like 2% can only give you the roughest of numbers to begin with.  You should however be able to hit between 1- 2% for the most part.

Most importantly, what you do want to do is adjust your site and site design to push your e-commerce conversion rate up.  Whatever you do, you want it to go up – not down.

4. Average Order Value

With this, sessions and e-commerce conversion rate you can work out what your revenue is.  More importantly, you know what your average order amount is and what you need to do adjust the value up.  In general, you want your average order value to go up (unless you figure out a way to increase volume transactions instead).  If this number goes down though, then your product mix needs fixing.

5.  Average Pages Viewed

Lastly, average pages viewed shows how engaging your site is.  Bounce rate will tell you if a customer will stay pass the first page, but it’s average pages viewed that tells you how far they have gone in the site.  The deeper they go into your site, the more likely they are to buy from you and/or add more products to their shopping cart.

I find this number better than time on site because if you improve your site’s speed (performance); you’ll find that the time on site will drop but average pages viewed should stay the same (or more likely, go up).

 

More than SEO

When you are building out an e-commerce site, you need to work on more than just SEO.  When you are building out a site, you need to look at not just traffic generation but traffic conversion.

So, let’s talk about the various ways to deal with traffic generation:

  • Search Engine Optimisation
  • Search Marketing
  • Banner Advertising
  • Paid Traffic via social media
  • Social Media generation (organic)
  • Public Relations
  • Blogging & Guest Posting

Lots of options.  Here’s some basic areas to look at for traffic conversion:

  • Design
  • Usability
  • Reviews
  • Trust signals
  • Peer validation / social signals
  • Shipping options / lack-of
  • Payment Options
  • Guest checkout

 

Online Competition

If you are starting an online business now, you’ll realise that you aren’t gong to find it that easy to build traffic. Nevermind getting your message out there; you’ll also need to deal with competitors.  It’s easy and cheap to start up an online business; and the real costs don’t really start factoring in till later.

Need a website? Sure – pay $50 and you can host a website.  Oh? Your server is having issues? I guess you’ll need shared hosting.  We start at a small price of $100 a month…

Oh look, you need a credit card processor.  PayPal works right? Sure, if you don’t mind losing customers and 0.3 – 0.5% of each transaction.  Bah, that’s not much! Except it is when you are processing $50,000 a month.

And on, and on.  You can’t work out your garage anymore, you need a storage space.  You can’t just walk-in and drop the packages off, but Canada Post isn’t picking up from a storage lot so you need a warehouse.  Oh look, you need at least 1000 sq ft for a warehouse.

On the other hand, your competitors are starting up small.  They don’t have to worry about paying themselves a salary yet or the higher cost; so they can be lean machines.  There’s an inflection point there where it goes from a hobby to a business and some never pass it, but till they hit it they’re your competitors nibbling at your heels.

Remember, hold tight to what you know and what you are.  Build it right, it’ll get there eventually.

E-Commerce Business: Web Development / IT Thoughts

If you want to run an e-commerce store, one of the major factors is that your entire business runs off a bunch of code.  You could run a B&M store without a single piece of electronic equipment in the store, but there’s no way you could do that with E-Commerce.  As such, you need to start considering how you want to manage the IT side of the business.

Within this, you have 3 major areas:

  1. Web Design – what your website looks like.  The HTML / CSS / Javascript side of the business for the most part.
  2. Web Programming – sometimes, it’s not a matter of adding new design elements to the site but adding new features.  Upsell / Cross-sell options, new payment gateways, new shipping methods, etc. all fall under this.
  3. Hosting – where your website lives on the Internet.

When considering each area, it’s worth considering whether you want to go to a:

  • in-house solution
  • contracted solution
  • Software-as-a-Service (hosted) solution

Your choices will vary depending on the amount of in-house expertise you have, the reliability of your contractors (and their expertise), your available funds and the frequency of updates in each area.

My personal recommendations generally boil down to keeping hosting contracted and varying between in-house and contracted solutions for web design & development depending on the size of the business.  If you are starting out, and don’t have the skills to back it up, SaaS systems are probably the best option.

E-Commerce Perceptions

It’s strange working in the e-commerce field talking to disparate groups.  If you talk to your ‘run-of-the-mill’ general folk, once you explain what you do ‘sort of like Amazon‘; most of them nod their head sagely and go ‘oh yeah, great field; you are the next big thing‘.

Then you talk to people who work in Brick & Mortar stores, people whose livelihood are impacted by our new venture, by the Internet and you get a completely different point-of-view.  We are predators, we are everything that is evil and wrong with the world.  We destroy local businesses and savage communities. In short, we are the enemies of all the right thinking men.

It’s a huge contrast, from a quiet ‘yay, you’ to ‘death to the heathens’ attitude so many bring.  Sometimes, you’ll see it couched as other forms of discussion, how we are really ‘irrelevant’ or unimportant, how we are a small part of the economy.  If we are (and we are to some extent); why are you bothering to even comment?

It’s funny sometimes standing in the middle, just trying ot make a living.

E-Commerce – A Real Business

So. you want to run an e-commerce store eh? Well, if you do you should start thinking about the various parts of the business you will have and how you wish to handle them.  Specifically:

  • Web Development / IT
  • Hosting
  • Administration
  • Accounting & Bookeeping
  • Legal
  • Human Resources
  • Stock
  • Shipping
  • Customer Service & Sales
  • Marketing
  • Purchasing

We’ll talk about each of these factors one by one, but you’ll want to think about how you want to handle each of these areas if you have an e-commerce business.