Owning the market by cloning your existing business

[GuestUser140]

Hi guys,

I own a (somewhat) niche e-commerce store and recently opened a first brick and mortar location.

If things keep going the way they go now, more physical locations will follow.

I love a physical store because even more so than with a website/email, people give their objections spontaneously instead of just clicking away from your store to buy from the competition because the price was too high, too low, something was not clear on the website, ...

Over the past few days, I have been thinking this:

• There are about 3 other businesses in our market who do a similar thing.
• Our prices are great.
  But some people think they are too low. Too good to be true. A customer we lose.
  Others think they are too high, they can find the same product cheaper elsewhere. Again, a customer we lose.
• The store looks and feels good. But someone looking for product xyz who just happens to dislike our website, could end up buying from the competition. Again, a customer we lose.

What if we just build a second e-commerce store?

It takes 5 hours and is cheap to set up.

We could experiment with pricing (low volume/high margin vs low margin/high volume), a different look and feel of the store, different product photos and descriptions, shorter/longer warranty, ... It's nearly impossible to test options / offer the whole buffet on our current website.

A customer who clicks away from our first website could end up buying from our second store. Again, we are in a pretty small market with less than a handful of others doing the same. This way, we could draw a larger percentage of buyers to us.

​

It's just a front end that needs to be set up, all operations already are in place.


Suggestions? Tips? Poke some holes in my plan ...or tell me to fire away, test and learn!

​

 

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[randomnumber314]

Sounds like a good hypothesis. I'd just test it out. Build your site, throw up some adwords and see what $1k teaches you.

 

[MindWarrior]

Funny that you mention this. I was on my nightly walk last night, clearing my head, and I had a similar thought process. Why not create a second store in the same niche but with a different pricing model? Seems like it could be a win, allowing you to cast a broader net on your market.

I say go for it!

 

[LibertyForMe]

I am pretty sure that another popular forum member did or does the same thing. You can rank up the new site also and it can push the other guys down the Seo totem pole. If two sites work, and you get it figured out, you could even do a third!

 

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[DaRK9]

I've seen it done with niche blogs. Don't see why it can't be done with eCommerce.

 

[Kingmaker]

Good plan. A lot of companies do this, for example Coca-cola also offers vitamin water (Glaceau), sports beverage (Powerade), energy drink (NOS) etc. under their own brands, and as a whole they dominate the beverage market.

 

[GuestUser140]

I am pretty sure that another popular forum member did or does the same thing. You can rank up the new site also and it can push the other guys down the Seo totem pole. If two sites work, and you get it figured out, you could even do a third!

Stop me before I build a dozen

On a serious note: what about paid ads? Would I compete with myself in Google Adwords?

Thanks for the input so far everyone!

 

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[GuestUser140]

Another valid question:

How easily should people be able to find out the two stores are related?

Strategically, I think it's favourable to make it look like they are two completely separate businesses.

A disgruntled competitor/client who discovers there's also store B could be bad news, right? Just to be clear: this is not the reason we set up a second store.

 

[MindWarrior]

Well my thread got removed... this is similar to what we're looking to do except that we have too little cash to do it.

With that said if anyone here wants to partake and make millions let me know.

I will go as far as to say this is in the top 100 business ideas in the world right now easily.

No one else is doing it.

Edit: Oh p.s this is a common thing to do. A lot of businesses are owned by the same entity - buying competing businesses is a very similar thing though on the surface it seems different you are basically creating the "competition" in this case just make sure you do it in secrecy

Don't forget to message me if you're interested in partnering to help do this with what we're working on right now (mentioned above)

How about providing some value instead of making every post about your "top 100" company that doesn't have enough capital?

Congrats you are my first "Ignore"

 

[MoneyDoc]

BestBuy and Futureshop.

Although Futureshop shut down, it worked out for them.

"Hey Dad, lets buy a new laptop. Ok son, let's go to BestBuy. Nah, let's go to Futureshop - it's cheaper!" Little did I know, BestBuy is Futureshop.

I could see it working out for you.

 

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[Berters]

Stop me before I build a dozen

On a serious note: what about paid ads? Would I compete with myself in Google Adwords?

Thanks for the input so far everyone!

If you're offering two different experiences, which you would be, then this should be fine. Technically you would be competing with yourself in terms of ad auctions but just offer up different ads to suit the sites and to appeal to different people.

Another valid question:

How easily should people be able to find out the two stores are related?

Strategically, I think it's favourable to make it look like they are two completely separate businesses.

A disgruntled competitor/client who discovers there's also store B could be bad news, right? Just to be clear: this is not the reason we set up a second store.

If the sites are hosted on the same servers, then you can reverse IP search the domain and find a connection. The WHOIS information can also be matched up, as well as any indicators that you leave on the site yourself.

If you're on a shared hosting plan then matching up via a reverse IP wouldn't be so easy/obvious as plenty of other sites will show up. Use different info for the WHOIS, and make sure none of the content is simply copy/pasted and you'll be good!

 

[GuestUser140]

If you're on a shared hosting plan then matching up via a reverse IP wouldn't be so easy/obvious as plenty of other sites will show up. Use different info for the WHOIS, and make sure none of the content is simply copy/pasted and you'll be good!

Or you could sign up with a different hosting provider altogether. I have shared hosting and can still find out too much about me when I WHOIS myself.

What about company ID and the likes? You are required to put it on your website, but that number is literally one Google search away from linking the two ecomm. stores. What to do?

 

[WorldImperator]

Another valid question:

How easily should people be able to find out the two stores are related?

Open a second company under the different adress and always send packages feom that second location. It can be virtual, but something what you can use on your website and as a package sender. No possibility to check. And a different copywrighting, and, different shop style and different rangę of products. Take out few products from the base shop and add few others which are sold only in b&m. Just differentiate it. It the niche is small, just by the rangę of products is an extremely easy to see which companies are doing two-different-shop model.

 

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[GuestUser113]

I know allen from rego apps did it. One of the very first police scanners for the app store.

Police Scanner+
5-0 Radio Pro

http://regoapps.com/
http://smartestapple.com/

 

[D11FYY]

Sounds really good as you already know the market and can possibly get a few other dearer products if its pushing more expensive prices.
Could possibly register the business details under a *trusted* family member and just give them a small bung for doing so.

 

[lifejak]

That's a sound hypothesis you have there. I think it's worth a try and it might just work out well. Brick and mortar sounds like plenty of risk to me, but then again, having one adds a lot of credibility to your business


Sent from my iPhone using Tapatalk

 

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[Ron Dee]

That's a popular move. I would think you would be best off keeping the connection of the two stores unknown.

 

[Walter Hay]

I think it is a great idea. No individual or online store can satisfy every customer, and price is often not the reason.

When operating my manufacturing business I used two different business names with different addresses and phone numbers.
This began when a major customer had a change in junior management and the new junior manager took an instant dislike to me personally. He told me my product (an essential aid to manufacturing) was not good enough.

I immediately got a salesman friend to contact him under my alternative business name, offering him a product "superior" to mine at a higher price. He got an order, and I continued to supply the same product under a different label at a higher price for years. I repeated that process as the easy way to keep out competition whenever a customer was dissatisfied and I could not satisfy them.

Expanding into bricks and mortar seems a good move. Have you considered franchising those stores? That is what I did with my importing business. None operated bricks and mortar stores, except for one that already had a related business with a store. All the others worked from home.

With franchising, the sky's the limit as long as you have sufficient margin to offer so that they can afford to pay your royalties.

 

[Charnell]

If the sites are hosted on the same servers, then you can reverse IP search the domain and find a connection. The WHOIS information can also be matched up, as well as any indicators that you leave on the site yourself.

If you're on a shared hosting plan then matching up via a reverse IP wouldn't be so easy/obvious as plenty of other sites will show up. Use different info for the WHOIS, and make sure none of the content is simply copy/pasted and you'll be good!

Let's be honest though, I'd guess that over 99% of people wouldn't know how to do that, know you could do that, or even consider it an option. Depending on the niche, there's little to no risk of someone reverse searching the IP or going on WHOIS to see if two different vendors might be the same person.

Selling server racks, switches, and bulk CAT5e cable? Yeah, you might want to mitigate the risks.

Selling propane and propane accessories? You might be able to get away with it.

I'm not saying people that cook with propane don't understand computers, and I'm not saying it's difficult to sign up under a new hosting account and change sales copy, but honestly, how upset could someone be if they found out BulkCables and CablesByTheMile were operated under the same roof?

 

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[biophase]

I have 3 stores and they used the exact same template. The office addresses are all the same. Customers don't care. I even tell them that the same company owns all the stores. My prices are the same across all stores though.

 

[randomnumber314]

I have 3 stores and they used the exact same template. The office addresses are all the same. Customers don't care. I even tell them that the same company owns all the stores. My prices are the same across all stores though.

Do you have stores selling the same thing at different websites?

 

[Legitimate]

@Charnell your profile pic is beautiful

Great examples: Walmart + Sam's Club

In 2005: PartyPoker + PokerNow

 

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[biophase]

Do you have stores selling the same thing at different websites?

Yes

 

[AlterJoule]

Yes, I am all for doing this. Similar to @biophase, I have three .coms and one .org. One is branded, one is more generic, one has different prices, and the .org is positioned as an expert in the industry and refers people to a combination of all three previously mentioned .coms for a variety of reasons. People love a choice....

 

[GuestUser140]

I think it is a great idea. When operating my manufacturing business I used two different business names with different addresses and phone numbers..

First off, I love the input, and smart move on your part.

Brick and mortar sounds like plenty of risk to me, but then again, having one adds a lot of credibility to your business

...unless I'm not the guy paying for the store.

Expanding into bricks and mortar seems a good move. Have you considered franchising those stores? That is what I did with my importing business. None operated bricks and mortar stores, except for one that already had a related business with a store. All the others worked from home.

With franchising, the sky's the limit as long as you have sufficient margin to offer so that they can afford to pay your royalties.

See above.

I have an independent guy run the store under my brand. He rents the place, pays for the interior, hires employees. All on his dime. I pay for advertising, which is just a drop in the bucket. I make 50% of the profit, he makes the same but has to run the whole thing (not to mention work 10+ hours a day).

I've thought about a franchise, but here are the objections I keep running into:

• if I work with some hobby business running from home (nothing against that, we all gotta start somewhere!), I'm afraid it's a quick death for them (and for my franchise fee). I've already had customers who registered a business and bought a few orders in bulk from me. It usually stops after a while, after they notice selling $xxx quality used electronics is not easy.

• if I work with an established store (a <5 person business, not a national chain), it usually takes more time to explain everything and get them to order, than to sell 10x the size of their order to retail customers. And with the latter, we get 100% of the profits.

• Also, I notice few people are as eager to get going/make an impact as I am. "Let's meet in a couple of weeks!" just won't cut it for me. If I could, I would sell stuff yesterday.

• A guy I know has a successful (20+ at $500/monthly + profit on the stuff he sells to them) franchise operation that has both home businesses and a couple of stores signed up. I see him running around all day hiring a private detective to get hard evidence because a few of his franchisees buy their parts elsewhere and then fail to keep up with paying their franchise fee. Not a great life.

What I do now works better: I make sure both inventory and customers make their way to the store, he runs/pays for the store.
Depending on the financials, I'll either have the guy open up a second/third/... location. He gets more responsibility the bigger the thing gets.

Suggestions welcome!

 

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[Walter Hay]

First off, I love the input, and smart move on your part.


...unless I'm not the guy paying for the store.


See above.

I have an independent guy run the store under my brand. He rents the place, pays for the interior, hires employees. All on his dime. I pay for advertising, which is just a drop in the bucket. I make 50% of the profit, he makes the same but has to run the whole thing (not to mention work 10+ hours a day).

I've thought about a franchise, but here are the objections I keep running into:

• if I work with some hobby business running from home (nothing against that, we all gotta start somewhere!), I'm afraid it's a quick death for them (and for my franchise fee). I've already had customers who registered a business and bought a few orders in bulk from me. It usually stops after a while, after they notice selling $xxx quality used electronics is not easy.

• if I work with an established store (a <5 person business, not a national chain), it usually takes more time to explain everything and get them to order, than to sell 10x the size of their order to retail customers. And with the latter, we get 100% of the profits.

• Also, I notice few people are as eager to get going/make an impact as I am. "Let's meet in a couple of weeks!" just won't cut it for me. If I could, I would sell stuff yesterday.

• A guy I know has a successful (20+ at $500/monthly + profit on the stuff he sells to them) franchise operation that has both home businesses and a couple of stores signed up. I see him running around all day hiring a private detective to get hard evidence because a few of his franchisees buy their parts elsewhere and then fail to keep up with paying their franchise fee. Not a great life.

What I do now works better: I make sure both inventory and customers make their way to the store, he runs/pays for the store.
Depending on the financials, I'll either have the guy open up a second/third/... location. He gets more responsibility the bigger the thing gets.

Suggestions welcome!

Great work! You are getting most of the benefits of franchising without the risks. The only possible risk I see is having all your eggs in one basket by working through the one person.

I must say I individually picked all of my franchisees in all four countries. It was hard work but it paid off, with only one being ineffective. Even though they worked from home they all made 6 figure profits, except for that one. I terminated his agreement.

 

[GuestUser140]

I must say I individually picked all of my franchisees in all four countries. It was hard work but it paid off, with only one being ineffective. Even though they worked from home they all made 6 figure profits, except for that one. I terminated his agreement.

How did you convince the first one to be your franchisee? I feel like if I give the money argument, a voice in my head keeps telling me "if it's so easy, then why don't I sell it myself". I don't want to pitch a "be your own boss" kind of thing.

Great work! You are getting most of the benefits of franchising without the risks. The only possible risk I see is having all your eggs in one basket by working through the one person.

The human element...

I could:

• open up a second or third store myself. Then again, taking on the risk / high fixed costs of a brick & mortar vs. eggs in one basket by working through one person. Also, the person has everything to gain from succeeding (his mortgage needs to be paid).

• get an other person involved. Now my risk is divided across two persons. The profit pie perhaps too.

• Build this second ecomm. store clone and develop that brand. I could open B&M locations parallelly, basically copying every move of business 1. Doubting whether I'm better off developing one, strong brand. For the record, no one would know I own both businesses in that case, but I'd make sure they wouldn't bad-mouth each other.

• go for a long walk and come up with a better idea

 

[dirk.wert.3]

I really like the idea mainly because you can test products and pricing but there's also what thought is called shelf space. That companies would sell things under different brands so as to get more room on the shelf. That obviously works on a bigger scale like you where saying.

 

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[Walter Hay]

How did you convince the first one to be your franchisee? I feel like if I give the money argument, a voice in my head keeps telling me "if it's so easy, then why don't I sell it myself". I don't want to pitch a "be your own boss" kind of thing.


The human element...

I could:

• open up a second or third store myself. Then again, taking on the risk / high fixed costs of a brick & mortar vs. eggs in one basket by working through one person. Also, the person has everything to gain from succeeding (his mortgage needs to be paid).

• get an other person involved. Now my risk is divided across two persons. The profit pie perhaps too.

• Build this second ecomm. store clone and develop that brand. I could open B&M locations parallelly, basically copying every move of business 1. Doubting whether I'm better off developing one, strong brand. For the record, no one would know I own both businesses in that case, but I'd make sure they wouldn't bad-mouth each other.

• go for a long walk and come up with a better idea

Convincing the first one, and the next few, was relatively easy because one by one I set up my own pilot operations, ran them for a few months until they had a viable customer base with provable profits. In effect that meant they were buying the right to own and operate a functioning business.

My business was B2B so a customer base led to repeat orders which is somewhat different to retail, but there are many similarities. I always felt out of place when exhibiting at franchise shows because most of the offerings were buy a job systems that appealed to those too timid to go it alone.

I like the way you are doing it at present. I think it could be duplicated, with your biggest risk being that the second person might not be as good as the one you now have. The current operator could probably handle more than one store, but he should not be spread too thin.

 

[GuestUser140]

Thanks.

OK, I'll keep working with the current operator and open a second store in a couple months' time. I'll have some input (as in control, not financially) during the start-up phase of that store (make sure he hires a good sales guy, gets inexpensive interior etc).

I'll report back.