Ask me anything about eCommerce (2012)

[mavwrx]

do you use ppc through bing?

 

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[mavwrx]

thanks.

1) Would you recommend using Magento for a 1 man shop? Magento was a giant pain when we rolled it out, across a team. Now that I am on my own, starting stores, I am wondering if its too much for a small operation like mine. I would initially build the store and back end, with occasional help. Most good Magento guys I know charge $90/hr, not cheap. From my experience Magento is a giant undertaking, not sure if its good for small operations.

2) Whats your POV on Wordpress ecommerce stores? Worth it? Again, I am a small operation, building a lot on my own.

3) At what point in an ecommerce company lifecycle do you introduce marketing(SEM, FB ads, Display ads, etc)? From my experience we were live and grew quickly for two years before we spent any money on marketing. We were in a high growth niche with lots of exposure from sponsorships and events. Now its our largest expense.

4) What do you do to identify new trends in retail? Example, in the next few years, wireless electrical charging is going to be huge. It will be in the iphone, and I imagine a cottage retail industry to be created. Do you have any voodoo to spot these quiet potential retail opportunities?

1) Would you recommend using Magento for a 1 man shop? Magento was a giant pain when we rolled it out, across a team. Now that I am on my own, starting stores, I am wondering if its too much for a small operation like mine. I would initially build the store and back end, with occasional help. Most good Magento guys I know charge $90/hr, not cheap. From my experience Magento is a giant undertaking, not sure if its good for small operations.

i've been using pinnacle cart. seems to work good for me.

 

[andviv]

I think the most interesting aspect to me is how you identified the niches you went after.

 

[biophase]

Bio,

Have you ever had success in convinving a manufacturer to dropship for you when they normally wouldn't? If a manufacturer didn't dropship or wasn't familiar with the model, how would you go about asking them/explaining to them how to accomodate you?

Cory

No, I have never done this. I have never requested it from a supplier. I think it would be tough because if a manufacturer is only set up for shipping large quantities, getting them to ship single orders would involve setting up a whole new process.

 

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[biophase]

Isnt that essentially Affiliate Marketing?

No, this is nothing like affiliate marketing. In affiliate marketing you never handle the money or the product or interact with the customer. You just collect a commission check. With dropshipping you are the store, handling the money, talking to the customer.

 

[biophase]

do you use ppc through bing?

No, I only use Google PPC.

 

[Mexidan]

How important is specialization?
For example from what I can see, the thing you do is.. if your market are tennis players, you would open up a store for rackets, a store for shoes, a store for the tennis balls, etc.
What is the benefit of doing this vs having a one-stop-shop for all things related tennis?

 

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[biophase]

How important is specialization?
For example from what I can see, the thing you do is.. if your market are tennis players, you would open up a store for rackets, a store for shoes, a store for the tennis balls, etc.
What is the benefit of doing this vs having a one-stop-shop for all things related tennis?

When you specialize in a niche it is easier to get traffic to your site. It is easier to rank for specific niche terms. This is where your domain name should have your keyword in it. Also, it makes you focus on one product. It's much easier to research those keywords and focus SEO on a small set of keywords than to try to rank for everything tennis.

 

[Mexidan]

Thanks that's very helpful and in-line with what I´m doing right now.
Several people asked me why I was doing it this way and I pretty much said the same thing.. and also that I could make the legit claim to be the biggest and only store specializing in this product.

Second question I have for you is.. A lot of people see you as a great role-model, but how do you feel about your success rate so far.
Do you feel that you are successful or are you still hungry for more.

You wrote on your blog that you sometimes lack motivation. Do you still enjoy it?
What would you consider to be the pro´s and con´s of your current business and life-style.

 

[biophase]

Second question I have for you is.. A lot of people see you as a great role-model, but how do you feel about your success rate so far. Do you feel that you are successful or are you still hungry for more.

You wrote on your blog that you sometimes lack motivation. Do you still enjoy it?

What would you consider to be the pro´s and con´s of your current business and life-style.

I do feel successful at this. But I also felt successful when the stores were making not as much money and I had alot of free time. To be honest, I was never really hungry for the money. I just ran my business treating customers right and making good decisions. I never had the pressure to increase sales because I had no expenses.

I started in 2007. Looking back, if I really pushed hard in 2007-2010, I probably should be at a few million a year in revenue. I could have been the next Wayfair. But I chose to have fun and go on vacations all the time.

Funny thing is the part I actually enjoy in this business is putting the product in the box, taping it up and slapping the Fedex label on it. I still go in on Sunday nights and pack boxes if I get bored. I like the aspect of concluding an order, serving the customer and making the money on each particular sale.

The pro's are making more money doing it with a warehouse and having employees do some of the work.

The con's are more time working because you have to manage people, inventory and cashflow, and there is alot more paperwork.

The pro's outweigh the cons. Because if your store is making say $30k a year and you are doing one hour of work a day, you have plenty of time but not enough money to be free.

You go to the warehousing model and now you are doing say $100k a year, but you need to go into the office. You still have an additional $70k to spend on vacations and since you are your own boss, you can take as many vacation days as you want. So you work just a little harder, but then get to enjoy life more.

 

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[Mike39]

@biophase: i have wondered this for a while, most guys (like me) just upload a picture from the web as their icon, but is that your porsche?

 

[Jake]

is that your porsche?

No, it is not his Porsche. It is his car though

 

[frenchy]

Biophase, do you consider to sell your business one day and get more time to enjoy or this is not an option yet?

 

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[biophase]

Biophase, do you consider to sell your business one day and get more time to enjoy or this is not an option yet?

I'm sure I'll sell it one day. It just has to be the right time or the right amount.

 

[puckman]

need no details, just general info. can you talk about the size of your business, revenue, employees, growth?

Also, can you talk about your margins, and how they change as you go from dropshipping to warehousing to manufacturer? My knowledge is that manufacturing and warehousing will leave you with the best margins and highest risk, while on the other end of the spectrum, dropshipping provides the worst margins and least risk.

 

[spencerr]

Hi Bio,
Thank you so much for offering to do this. I have been a big fan of yours not only here but also of your blog.

Knowing what you know now, how would you start off if you were just starting out today if someone wants to be where you are at in 2-5 years from now?

What do YOU see as the basic steps to starting a successful ecommerce store?

I am looking for the fundamental steps from your perspective so I can do more learning/research about the process.

Any recommendation on books, courses to get started to learn the basics? There is just too much stuff out there that you don’t know where to even start.

Did you ever publish that ebook on Ecommerce you were writing? Any chance I can pay you for a copy?

A million thanks in advance.

 

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[andviv]

I could have been the next Wayfair.

To tell you the truth, this is exactly what I thought when I read about them. In fact, I am sure you could make them suffer a little if you decided to go into the same niches they are working on.

And thanks for this thread. Legendary.

 

[CPisHere]

Great thread!

Have you considered opening brick & mortar store locations? Why did you decide against it?

If/when you decide to sell, how would you go about finding a buyer? Pay a firm to list it for you?

Do you typically do standard 50% margins, or do you price under established retail?

Do you offer free shipping?

And finally, how long do you think it would take a newbie in a good niche to get up to $100k/yr in revenue?

 

[hedgehog757]

Hi Bio,
Thank you so much for offering to do this. I have been a big fan of yours not only here but also of your blog.

Knowing what you know now, how would you start off if you were just starting out today if someone wants to be where you are at in 2-5 years from now?

What do YOU see as the basic steps to starting a successful ecommerce store?

I am looking for the fundamental steps from your perspective so I can do more learning/research about the process.

Any recommendation on books, courses to get started to learn the basics? There is just too much stuff out there that you don’t know where to even start.

Did you ever publish that ebook on Ecommerce you were writing? Any chance I can pay you for a copy?

A million thanks in advance.

\\

Spencerr, why don't you introduce yourself and what you are all about before asking biophase to give away everything to you?

 

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[spencerr]

No problem hedgehog.

I didn't mean any disrespect by it so hopefully no one took offense. To be honest, I have be lurking here for a while checking the forum once in a while but this posting really sparked my interest so figured I ask questions others may be interested in as well.

As for a little intro, I am software developer with primary focus on enterprise CRM solutions and .Net applications. Worked for a CRM company for about 7 years and about 5 years back went independent. I figure if the company I worked for can bill me out for a pretty hefty hourly rate and I can charge about half of that and still do fine.

Going out on my own was scary than having a secured job. I was always worried if I would be able keep myself billable or where the next client would come from. etc.

Five years later I am still doing ok. Making good money but realize that I would love to venture out to other things that are a little more fastlane\passive.

I like what I do but at the same time the software I specialize in is a dying niche and I know eventually the good bill rate will end at some point so I am trying to make a move in the next coming years.

I consider myself fairly lucky. I work about 40-45 hours a week and mostly from home. I travel to client sites only when I have to gather requirements or for various kick off meetings etc.

Not very fastlane but have been able to do well and save a decent amount for myself and family.

Again my apologies if my post came out rude. That was not the intention.

 

[biophase]

Knowing what you know now, how would you start off if you were just starting out today if someone wants to be where you are at in 2-5 years from now?

What do YOU see as the basic steps to starting a successful ecommerce store?

I am looking for the fundamental steps from your perspective so I can do more learning/research about the process.

Any recommendation on books, courses to get started to learn the basics? There is just too much stuff out there that you don’t know where to even start.

Did you ever publish that ebook on Ecommerce you were writing? Any chance I can pay you for a copy?

A million thanks in advance.

Honestly, it's alot harder to start once you have the knowledge of what not to do. I'm sure you've heard it many times how people make a ton of mistakes in their business. That's when you just do things and see what happens. As you learn what not to do, it begins to limit your options. For example, when I started I did not do much market research. But now that I know how to do it, it sometimes kills many ideas I have.

If you decide to sell tape measures online and find out that only 500 people a day are searching for it, you many shelve that idea. But who knows if 500 people a day would have made you a decent store? Also, searching SEO competition will also discourage you if you see the top 5 sites being monster sites. But you never know if you could have pushed them down.

There are so many little details in researching markets that sometimes I just ignore them and put up the store. For me, it's a small investment of time and money and I get real world data instead of what if's.

I never made that ebook, but there is a blog and course that would probably be the same as my ebook if I ever wrote one.

Starting An Online Business When Your Wife Wants To Stay At Home With The Kids | MyWifeQuitHerJob.com

I've read his stuff and it's pretty good. In fact, his story is exactly like mine but he is probably a year behind me. I'm sure he will be moving to an office soon for his business.

 

[biophase]

need no details, just general info. can you talk about the size of your business, revenue, employees, growth?

Also, can you talk about your margins, and how they change as you go from dropshipping to warehousing to manufacturer? My knowledge is that manufacturing and warehousing will leave you with the best margins and highest risk, while on the other end of the spectrum, dropshipping provides the worst margins and least risk.

All I can say is that it grows every year at a decent rate. I have 2 employees and a small warehouse. I think people get stuck on these numbers and many don't realize that you can run huge businesses yourself, out of your bedroom with no employees. I'm talking about multi-million dollar businesses.

Actually dropshipping has good margins. It's sort of the opposite than you would think. The margin on the actual product goes up, but with the added expenses your business profit margin goes down.

Here's an imaginary store:
Dropshipping you get a 20% margin and virtually no expenses. By warehousing you buy bulk at a discount and get a 33% margin. But now you add rent, utilities, boxes, tape, employees, etc... and you lose a chunk of that margin. You could be back down to 20%. As you grow, you add forklifts, heavy equipment operators, accountants, bookkeepers, HR, etc... and your margins will drop to 10%. I would say that medium online stores have margins of 10%. Large stores are at 5%. Look at Zappos, they run at 1%.

The difference is that in dropshipping your revenue gets stuck at $500k, so you make $100k
Warehousing as a small operations your revenue increases to $1m, so you make $200k (BTW, I have alot of debates with myself on whether this jump is worth it for $100k)
Warehousing as a huge operation your revenues is $10m, so you make $1m.
Zappos $1b, so they make $100m

 

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[biophase]

To tell you the truth, this is exactly what I thought when I read about them. In fact, I am sure you could make them suffer a little if you decided to go into the same niches they are working on.

And thanks for this thread. Legendary.

I'm sure they worked their asses off. To run 200 separate stores must have sucked because I don't like running multiple stores and I have less than 10 stores!

 

[biophase]

Great thread!

Have you considered opening brick & mortar store locations? Why did you decide against it?

If/when you decide to sell, how would you go about finding a buyer? Pay a firm to list it for you?

Do you typically do standard 50% margins, or do you price under established retail?

Do you offer free shipping?

And finally, how long do you think it would take a newbie in a good niche to get up to $100k/yr in revenue?

I would never go B&M. I can't think of any reasons to do it. The overhead, employees, the time it takes to make a sale. It's much easier to be 100% online.

I would probably list it with a broker or call some people up in the industry.

You don't get 50% margins online. You are competing with other stores that if you price MSRP you will be way too high to compete.

I used to offer free shipping, now I charge for it. I've found it converts better.

I think that if you work hard, you can be at $100k within a year with the bulk of your income coming in November and December.

 

[Mike39]

No, it is not his Porsche. It is his car though

That sure as he!l looks like a Porsche Boxster to me...

 

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[PatrickP]

Bio, have you ever thought of manufacturing your own products?

That is what I do in the health care industry and the markup is nice. You also don't have to worry about selling direct if you do not want to, as you sell to a couple distributors and a couple large online stores, and let them take care of customer service etc.

I have a fulfillment company which sends out the orders which is why I started selling direct again. So no need for a warehouse, forklift etc. They warehouse for free and charge 1% of the order to send it our plus actual shipping which I collect from the distributor.

You are right about not needing a lot of employees nor an office. I work from anywhere I can get an internet connection

If I pay $7 for an item to be made I sell it to a distributor for $22. Overhead is a commission only sales person and 1 full time employee. I work approx 5 hours a week. BUT the first 4 years I worked countless hours sometimes working 25 or 26 hours straight on my feet filling orders.

BUT I never felt put upon or upset I REALLY enjoyed the physical work because instead of doing it for someone else as I had for years in factories I was doing it for my own business.

 

[biophase]

That sure as he!l looks like a Porsche Boxster to me...

It looks like this?

 

[CPisHere]

You don't get 50% margins online. You are competing with other stores that if you price MSRP you will be way too high to compete.

If you don't mind me asking, how much under MSRP do you typically sell at?

I think that if you work hard, you can be at $100k within a year with the bulk of your income coming in November and December.

This is about what I figured. Thanks!

 

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[MJ DeMarco]

Funny thing is the part I actually enjoy in this business is putting the product in the box, taping it up and slapping the Fedex label on it. I still go in on Sunday nights and pack boxes if I get bored. I like the aspect of concluding an order, serving the customer and making the money on each particular sale.

Strange, I actually enjoy this process too ... signing a book, throwing it in a box, and dropping it off at the post office. While die-hard "Fastlaners" might say "This is a waste of time!!!" I find it enjoyable. I've never had an issue with the *work* of order fulfillment -- curious that you feel the same. I wonder what the psychological reasoning is behind it ... Perhaps it makes us feel more intimate with the customer and the value you are offering?

 

[Mike39]

It looks like this?

View attachment 2925

I'm SO SORRY, i thought it was a maybe 08-09, but this nice guy corrected me, should have never said anything and its a shame to think a Ferrari is a Porsche, my fault


You have to admit they do look similar from the front, but I should have seen the wheels as distinctively Ferrari