As you may have been following on the Media column here in Sparkplugging, we had an AMAZING trip to Vegas to Video Blog the sessions and speakers BlogWorld Expo 2008 - sponsored by Epson.
One of my goals at BlogWorld was to help my readers understand how they can use blogs and social media in order to help their business.
Dave Bullock took some time to give me his take on what you can do to connect to your customers through social media. Take a look . . .
The next big step you need to take is choosing an eCommerce Platform.
There are several requirements and aspects to consider during this process.
But first, let me make one point – nothing you do here is permanent! Many people get stuck in this phase and take way to long to analyze the pros and cons of every single platform available. But Nothing is Permanent! Please don’t get stuck in the paralysis by analysis syndrome here. Choose something that looks like it will meet your needs and move on.
The most important aspects to look for are:
Reliability – will it be up and running when it needs to be and will it handle whatever volume you bring?
Security & Fraud Protection – credit card security is extremely important to your business and you want to be sure the platform you choose is secure and has fraud prevention mechanisms in place.
Scalability – even if you are starting with a small number of items to begin with, can the system handle adding large numbers of new products?
Usability – how easy is it for you to update and make changes?
Customizability – can you change the design and layout however you want to for all conversion and navigation needs?
SEO-Friendly – some platforms allow you more access to the site structure elements to allow you the freedom to optimize your site.
Shipping & Tax Calculations – your solution should have the ability to setup different shipping options and calculate the charges and taxes associated with each sale.
Promotions & Marketing – does the system have the ability to add coupons, cross sells, gift cards?
Technical Support – once you have your store up and running, it will be critical to have access to a technical support department that can help you if any issues arise.
Of course, I can’t help but recommend the platform I use – Yahoo! Merchant Services – for several reasons.
The setup is extremely easy for anyone to use. Entering products, processing orders, setting up shipping options – all of these configurations are quick and easy.
The solution is very reasonably priced. And, while I do recommend outsourcing the design of your new site, the companies that specialize in Yahoo design are very reasonably priced as well.
Yahoo’s product database engine is very robust with many customizations available to how you store, present and even track inventory of your products.
They are secure and trusted.
Nothing is Permanent! When I outgrow Yahoo! Merchant Services, I will be migrating to an entirely customized eCommerce system, but I will also be able to afford the web development team for such an effort when that time comes. That expense would have never made sense before the business model was proven and the company was profitable.
There are several sites out there that can help you analyze the features and benefits of available platforms. Keep in mind that most sites I have found are “sponsored” by one of the platforms, so beware of that bias when you are reading.
Okay. Now you have found your profitable niche. You researched the market. You found suppliers for your product line.
You are FINALLY ready to get started building a store.
As I mentioned in the last article, you now need to get your financial and legal ducks in a row.
You should spend some time learning about the different options you have when starting a company. You can start out as a sole proprietorship, you can incorporate or you can start a LLC. All three have pros and cons to consider.
5 Legal & Financial Components Required when Starting an eCommerce Biz
In this article, I am going to list the major legal and financial entities you need to have in place to run your eCommerce business.
1. DBA – “Doing Business As”
You must register the business name you are planning to use. You can also go to the next level and incorporate and there are many good reasons to do this as well.
This is an important step because your name communicates a lot to your customer. Some people use a “parent company” concept for their legal and financial setup. However, keep in mind that when your customer is billed for your product, this is the name they will see.
Find out more about filing for a DBA at Business.gov.
2. FEIN – Federal Employer Identification Number
No matter which legal entity you decide upon, you need to make sure you file for a Federal Tax ID.
I highly recommend Harris Bank. They cater to the small business. Any bank will require all of the steps above to be completed before opening a business account.
It is important to keep your business finances completely separate. Also, when applying for a Merchant Account, they will open the account with the name on your checking account. Again, this will be what your customers see when you charge them.
5. Merchant Account in Your Business Name
It’s okay to accept PayPal - you should. But do not allow that to be the only payment type you accept.
If you are serious about your business you must accept the major credit cards.
I found a company that makes signing up for a merchant account easy and painless: Advanced Credit Systems.
Educate Yourself
I know this can be a complicated topic, but you need to learn enough about sole proprietorships, corporations and LLC’s in order to make an educated decision about what will be best for you and your business. An attorney can also walk you through this decision. There are also several companies that will help you with filings for a fee.
Some sources of information on the legal and financial aspects of starting your business:
Once you’ve found a solid market and possible product line, it’s time to find out whether you can source this product at a profitable margin.
This is the part many people skip – because it isn’t always easy. But this step is the key to success for all businesses. You’ve found a solid market segment. You’ve found a product or line of products that they want or need. But the bottom line question now is: “Can I make money selling this?”.
Once again, I am going to recommend that you read the book “What to Sell on eBay and Where to Get It”. There is some invaluable information presented about how to contact and communicate with potential suppliers.
What Comes First? The Business or the Supplier?
One problem beginners will run into with sourcing product is that all legitimate suppliers will require that you have a tax id. You will need to get a tax id eventually, as well as a checking account, in order to work with suppliers and credit card merchant accounts. Now is a really good time to go ahead and apply for at least the tax id. It can be an intimidating first step, but it’s really not that hard. Your tax ID is through your state and all processes are slightly different - but just go to your state’s IRS site for more info.
Some may also require financial references such as a business checking account and references from other suppliers. What they are really looking for are two things: a) Are you a legitimate business? and b) Will they have problems getting paid? As long as you let them know that you are not looking for any financing, such as Net 30, and that you are willing to pay for everything up front, you shouldn’t have a problem if you don’t have these things yet.
Several suppliers also want to see that you are legit by looking at your website. If you are working on this step as a preliminary one to actually jumping into this market, let them know that. A word of caution here - some distributors and wholesalers are going to hold pricing close to the vest - don’t be pushy, just move on to the next one.
It’s a bit of a “catch 22” – you want to know what kind of pricing to expect to estimate your margins. And the distributor wants to know you are a legitimate retailer before they give out confidential information such as their dealer-direct pricing model.
You will find suppliers to work with here. Just be patient and know that it may take several calls to find the right one. Be respectful even if you are rejected - you never know when you may work with them in the future.
Once you have this information, you need to compare it to the top competitors’ pricing to find out if you might have a good profit margin.
Product Sourcing
Once of the easiest ways I found to source product is to work with the folks at World Wide Brands. They have made their business to locate and negotiate with suppliers around the world on behalf of the small business owner. They have already screened their distributors to be sure they are not only legit, but are willing to work with small business owners.
Manufacturer Direct
Another tactic I have used in the RC business is to start out with distributors and once we were really good at SEO, I would contact the manufacturer directly and highlight our ability to rank for their top products. Many times we would be coming up #1 for their top product, which would show them that we were serious about their product line. This worked especially well with the smaller, less-known manufacturers.
No matter how you spin it, our business is about branding. Even if you do not have an eBay or eCommerce store, you still should concern yourself with building an image and a brand. It contributes to enhancing your professional image and therefore to enhancing the trust your customers hold in you.
One of the most effective steps I took toward polishing my image as an eBay store owner was adding business cards to each and every package I send out to my customers. This killed two birds with one stone, actually:
I needed to give my customers something they could physically hang on to in order to remember me. I also needed a way to easily identify the bonuses that I included in each package. Up until that point, I had been including splashy invoices and just writing “Lagniappe” on the bag holding the bonuses to fill these needs.
The solution was simple, brilliant, and highly effective:
At the time that I ordered my first set of MOO mini-cards, I wasn’t very design savvy at all, so I kept mine incredibly simple. I chose the MOO Text MiniCards and created a card that simply said “Lagniappe” on the front and included my name, contact information, store name and URL, and eBay ID on the back, as well as a simple “Thanks” graphic, available right in the MOO options.
However, for you more design-savvy folks, MOO allows you to upload your own graphics for use on all of their products. You can match your cards exactly to your store banners, logos, etc. When I order from them this next time, I will most definitely be doing that, and I’m not even that much more design-savvy than I was before.
I also bought some stickers using MOO’s ready-made designs to use to tape the cards onto each bonus bag. (Again, MOO allows you to custom design your stickers if you prefer.) These I coordinated with the color scheme of my store, as well as the tissue paper I use in each shipment for packaging.
Viola! I had a polished way to identify bonuses and also a very hip business card for my customers to keep. All total? I think it cost me 20 minutes and $20.
But you? Aah, it can cost you even less.
With BlogHer and a handful of other blogging conferences coming up this summer, I contacted MOO and asked them if they would help me answer the question of “Where is the best place to get business cards to promote my blog?” and offer a discount for our readers. Their answer was a resounding, “Yes!”
Please note that these codes are only good through the end of June. Also, MOO is located in London, so they use the British date stamp for their projected shipping date. If they they tell you your order will ship on 12/6/08, that is actually June 12.
I can’t recommend MOO MiniCards enough. And if you ordered them in the past but were disappointed when you realized that they didn’t fit your regular business card holders, MOO was listening. They now offer MOO MiniCards Holders, so you can carry your cards with you in style.
They have everything you need to be prepared, polished, and ready to promote your eBay store, your eCommerce business, your blog, or your self. They are perfect for crafting and to use as gift tags, too, which is the next use on my list for these.
Enjoy and be sure to send pictures of your MOO cards so we can share some of your designs! Also, I’ll be taking a photo of all of the MOO cards people give me at BlogHer this July, so be sure to track me down and hand me your card so I can show it off and link to you, your blog, and your business!
Okay. Finally - the “How To” title that I promised!
By now you have come up with several product ideas. Hopefully, you started with a market and discovered their needs - checkout my article on Choosing a Market First if you missed it.
There are three main components to understanding the potential success of a product or product line.
1. Market Demand - Are They Looking for It?
The first step in determining the potential success of your idea is to identify how much demand there is for the product.
The easiest way to research market demand is through keyword research. Looking at whether potential customers are searching for what you are “selling”. There are several free tools you can use to gather this information plus some paid tools that do a very good job of consolidating the results. My favorite (because it’s free) is actually Google’s Keyword Tool. Another one that I like to use is NicheBot. It is less expensive that most of the others, but still uses the same information. I find Wordtracker to be the easiest to use and the most comprehensive in terms of the data that is returned. However, it is also the most expensive.
The first step is to brainstorm words and phrases that you think a customer might type into a search engine to find the product. For example, in my case, I would use “rc cars” as my search term. Then I might type in some of the specific manufacturers or products that I am interested in selling. When you get back the results from these research tools, take a look at the number of searches to determine how many people are looking for this item. Each of the tools I listed above provides even more detail on the best way to analyze keyword data.
2. Competition - Are There Others Already Selling it?
Competition is a good thing. It means that there are others already successful at selling this line of products. But you do need to analyze the competition carefully to determine if there is “room for one more”. Now some would advise that there is always room for one more. I don’t disagree with that concept - my point is only that you don’t necessary want your first online biz to be an uphill battle against Walmart
The best place to start is to perform a Google search on the top keywords you found in the previous step. The top 10 organic listings are those you want to focus on. Take note of the AdWords competitors too - but you want to know how hard it will be to break into the top 10 organic spots.
The data you want to check with each competitor is pricing & competitor quality. Go to the competitor sites. See what the quality of their site is. Is it professional? Would you be comfortable buying from this seller? What are their product prices like? Record some of these to use in the next step. Are the top 10 competitors similar in price?
When you get to the point where you understand the best practices involved in SEO, you should also check whether they have strong SEO skills. This will give you a much better idea as to whether you can break into the top 10.
3. Product Sourcing - Can You Get it at a Good Price?
This last step is one that I rarely hear people talk about (except in the book I recommended in my last post.) But is is SO IMPORTANT! Don’t skip this one. You can find out that your product idea has a ton of market interest and the competition is beatable - but if you can’t find a distributor, a dropshipper or a manufacturer that will sell it to you at a margin worth working for, you have a “loser”.
This is by far the hardest step because it is going to require . . . . phone calls. I know, I just heard a huge number of you gasp. If you have a fear of talking to people and if you are getting into this business so that you can hide behind the computer, I have one reality check for you to grasp right now: If you want to own and run your own business, you will need treat it like a business. That includes dealing with setting up the proper business entities (business license, bank account, etc.) and creating relationships with suppliers.
I will tell you that this was my biggest hurdle in the beginning - but when I finally got over the hump, I was flying down a rollercoaster at full speed and it was a blast!!
One place that many folks are finding their suppliers is through the folks at WorldWide Brands and their product OneSource. Depending on the product you have chosen to research, you may find wholesalers or dropshippers in their database to contact. The great thing about contacting suppliers through OneSource is that they have already shown interest in working with smaller, online businesses. Which is one hurdle you can skip. Isn’t that Nice?
Take Action
All of these steps may seem intimidating at first.
But just Get Started.
Take Action.
Commit to completing all of these steps on at least one product line.
Once you’ve completed this research, you will feel empowered to keep doing it again and again until you’ve found your “Winner”.
I insist that the only way to become an outstanding eBay seller is to be a consistent eBay buyer first. As such, you learn how it feels to participate in transactions from both sides. You learn what is important to both the buyer and the seller. What qualities make the biggest impressions. What to look for in future transactions.
One of the most interesting conundrums when viewed from both sides? Feedback.
Who says “I love you” first?
Ever since becoming an eBay seller, I’ve been interested in the “who should leave feedback first– buyer or seller?” debate. An endless debate, I assure you.
Initially, I left feedback for my buyers as soon as they paid for their item. It demonstrated trust and gratitude, in my opinion. But as my sales began to go up, so did my problems. Mo’ money, mo’ problems, indeed.
Evolution of My eBay Seller Feedback Policy
The beginning of the end of my eBay feedback naivety honeymoon began with a misunderstanding in terms. Not surprisingly, my first negative feedback came from a rather confused and confusing buyer.
My buyer was a woman who paid immediately and I left positive feedback immediately. I promised to ship her item within three business days of payment, clearly stated in the listing and in follow-up emails, and did so. However, on the third day after the auction ended, she left negative feedback because her item had not yet arrived.
First of all, had I shipped the item the moment the auction ended, it still would not have arrived on her doorstep, yet. Second of all, what?
The negative feedback was the first time I had heard from her since receiving her payment. I was completely blindsided and utterly crushed, as I saw my feedback as vital to my reputation as an eBay seller. I emailed the buyer and explained my shipping procedures again, took her step-by-step through what “business days” are, and explained the logistics of the postal system. All in a very friendly way.
She replied with a simple, “Oops. Sorry. Hope that negative doesn’t hurt your rating too much.”
Deep breath. Remind myself that, as sellers, we must work with the lowest common denominator, and just move on. I tried to broach the option of a mutual feedback withdrawal, although I had not left her negative feedback, but that was a lost cause before I even started. She was so confused by the entire process and genuinely felt that the feedback system could be used as a message system, blindly clicking past all of eBay’s warnings before you are allowed to leave a negative.
Nevertheless, I chose to remain optimistic and continued to leave feedback for my buyers immediately upon receiving their payment. I was doing so with some trepidation, though, as I was quickly learning that a buyer’s responsibility to contribute to a fair and honest transaction does not end with their clicking the “Pay Now” button.
I would soon change my approach to eBay feedback.
No good deed goes unpunished.
I routinely offer bonuses to my buyers as thanks for their choosing my auctions. I call them “lagniappe,” which means “something extra and unexpected.” When a buyer purchases multiple auctions or is particularly pleasant to work with, I will often upgrade their bonuses, sometimes to a duplicate of the item they have purchased. This is always met with surprise and gratitude, not to mention repeat business.
Except for one buyer that would be the catalyst for my feedback policy change.
The buyer was a man who had purchased some bath items for his wife. I knew that he was excited to have found her favorite discontinued bath goodies, so I decided to double the amount of bonuses that he had earned. Since this resulted in quite a few little travel-size bath items, I wrapped them all up in a little reusable plastic toiletry bag. My, what a thoughtful seller am I! He will be thrilled.
Um, no. Not so much.
The day he received his items, he emailed me and said, “Everything arrived as promised, but you only sent one bonus. I should have received three. Please rectify immediately.”
Hmmmm. Well, he must just be confused, because I actually sent six bonuses plus a gift bag. And is he really complaining about free gifts? Yes, he is. No good deed goes unpunished.
I emailed him and explained that what he must be considering “one” bonus was actually one gift bag full of double the bonuses. He had not, in fact, earned three gift bags full of bonuses. I then redirected him to the achingly clear language in my listings, explaining what the bonuses entailed.
His response? “I understand that I misunderstood when I saw the gift bag. However, if you see fit, I would appreciate two more gift bags of bonuses. I particularly like such and such scent. I’ll leave feedback once those gift bags arrive.”
I immediately changed my feedback policy.
Who is the feedback hostage here?
From that auction forward, I began noting in each transaction that I will happily leave feedback for buyers once they have acknowledged receipt of their items. I was very specific that I was not withholding feedback until I had received feedback from the buyers, however. A simple email letting me know that they had received their package was sufficient.
I felt this protected me from several bad buyer habits. Most notably, it ended the free-for-all that I had created by leaving feedback immediately upon payment. Instead, I made it more evident that I expected my buyers to do more than just pay on time: they should also honestly acknowledge that I had fulfilled my end of the bargain. No funny business.
If I had not fulfilled my duties as a seller? I would more than make it up to them and negative feedback would not be disputed. However, I could no longer allow myself to be held hostage by my buyers’ feedback. As I had been handling feedback, there was nothing stopping buyers from scamming me once their packages arrived. And yes, there are plenty of ways to cause havoc long after you have paid for an auction.
Which I think I have illustrated.
Still undecided.
But am I right in my decision to withhold feedback until I have at least received acknowledgment that the buyer has received his package? Is not being an honest and diligent seller enough to protect me? Does it not set a positive tone for the remainder of the transaction when I demonstrate good faith by leaving positive feedback upon receipt of payment?
Would a buyer be more or less likely to take advantage of me once they have secured positive feedback?
That last question is of particular interest right now. eBay has recently implemented a change to their feedback policies: Sellers may no longer leave negative or neutral feedback for buyers. Buyers are the only transaction participants enabled to leave negative feedback, as of May 2008.
A can of worms for another day, in which I ask you, “Who is the feedback hostage now?”
In the meantime, what is your approach to feedback? As both a buyer and a seller? I’ve shared my approach with you, but I admit that I am still open to change. How do you handle eBay feedback?
Let’s talk about some ways that you can generate your product ideas.
Some of you are looking for the overall idea for a new business. Others are looking for idea after idea as to what products to sell on a platform like eBay. And as I mentioned in my last post, you should really consider choosing your market before a product. With all of these strategies in mind, there are so many ways to keep your eyes open and start to come up with ideas. Once you have an idea, you will need to perform market and competitor research, but that’s another post . . .
When I started looking for my first eCommerce idea, I looked within my own hobbies and interests. However, as you know, I ended up going with a product idea that was completely outside of my own hobbies which has worked out great.
One must-read book in my library has helped me a great deal on this topic. It is What to Sell on eBay and Where to Get It. It has some terrific idea generation techniques and the section on “where to get it” is invaluable. One of the habits that I have formed after reading this book is to keep a notebook with me at all time for ideas. I’ve expanded into a “business journal” will all ideas regarding products, marketing, business management - you name it. But for the purpose of this discussion, it is important to have something with you at all times to remember your ideas.
Product ideas are all around you.
Most importantly, you want to keep your eyes and ears open to market trends and consumer desires. Kick off the process with newspapers, magazines, trade journals and newsletters. If you are targeting a specific market, pick up the consumer magazines targeted to that market - there are a flood of ideas based on what both the content AND the advertisements. Trade Journals show you what the manufacturers and distributors are doing which is golden as well.
Something to consider if you have chosen a specific niche or market is to attend trade shows relating to your market or niche. These events, like the trade journals, will give you a mountain of information and ideas as to what is hot in that particular market place. Once you have chosen your market and product line, trade shows are a must to build relationships and stay informed.
Trend Watching
There are several websites, as well, that focus on trends, such as www.trendwatching.com. Keeping an eye on what is hot overall or in the target market you have chosen will keep you on the right path.
I have only scratched the surface on places to find product ideas. You get the idea - hang where your market hangs; Understand their needs, desires and problems. The important outcome of the activity is to generate many ideas. Once we have these ideas, we will research their viability using market and competitor research tools and techniques we will describe in another post.
In determining what to sell, people tend to start brainstorming on individual products. Not necessarily a bad thing to do - in fact, in the next few posts, we are going to talk about different ways to drum up product ideas from the world around you.
However, let me give you some food for thought that might help you to really nail down ideas that can help you build a viable and successful eCommerce business:
Choose a Market First
Instead of choosing a product, choose a target market. You might start with a couple of product ideas, but then take those ideas to the next level and think about the market you will be selling to.
By market, I mean the demographic that will be interested in your products. In my case, my market is RC car enthusiasts. But yours might be young stay at home mothers, golfers, cyclists, etc. The list is endless but I strongly suggest that you try narrow down a smaller niche. For example, golfers is a huge market and it can be daunting to try and understand and market to all of the niches in that market - you might want to focus on beginner golfers or young female golfers or maybe children golfers (well, their parents, really).
Understand Their Needs and Desires
The reason for selecting a market first is that you can study them and dermine their needs and desires which will lead you to think of products and services that will fill those needs and satisfy those desires. Rather than thinking of products first and then trying to figure out if there is any demand - think of the market first and see what they are demanding!
It’s Okay to Move Out of Your Comfort Zone
Similar to our last discussion on passion vs. profit, you can choose a market that you are deeply familiar with or one that you need to learn about. I’ve done both and yes, it is easier to market to a group that is similar to you - you already understand their needs, they are easier to “speak” to and they will readily identify with you.
But don’t limit yourself, there are so many profitable markets out there you may miss out on if you only focus on your comfort zone. Plus, in my case, focusing on a different demographic has allowed me to work closely with my husband to get to know his mindset and passion for the hobby - and that has been alot of fun and very rewarding.
Connect With Your Market
The bottom line is that if you choose your market and research them thoroughly, you will not only be better equipped to choose products that will truly appeal to them, you will be ready to connect with them in many different ways which will lead to good customer relationships and SALES!
The first couple of topics I want to touch on here are for beginners. I know many folks may think “well, that’s not me”, but wait . . . think about reading these anyway. Sometimes, even after we’ve been through it all, it makes sense to take a fresh look at how we got where we are. It may help improve your business in some small ways or it may help you to start yet another endeavor.
What Products Should I Sell?
There is an ongoing debate in many of the internet marketing circles about where to focus your attention when deciding what to sell. Some feel that you should focus your attention on products that you are passionate about. What do you love to do in your spare time? What gets you really excited?
Others feel that you should forget about your personal passions and just focus on what makes money. What are the profitable markets? Where are other people spending their money?
Passion is Motivating
There are many advantages to going with your passion. First, and probably the most important, is motivation! Selling something you are passionate about can be very motivating. And as you know, motivation can be a very large problem for the work-at-home entrepreneur.
I took this concept a step further and chose a market that my husband is passionate about. For all of you that have fought tooth and nail with your spouse about starting a home business - chew on this angle for a moment. You are building a business around and selling something that they are excited and passionate about - there is no better way to get the ultimate “buy-in” from your second-in-command! It has worked wonders for us and made it into a true family business that we both get excited about - for different reasons.
Second, you will have a vast knowledge about your products and your market. You are your market - what better way to understand them? Both writing and marketing become a lot easier when you are submerged in your passion instead of trying to study your market.
Hobby or Business?
If it isn’t profitable, it’s a hobby. Yes, it can take some time, but in the big picture, you are doing this to build an income. In researching your target product and your market, you should always focus on profits - passion or not. If this business is something you want to pay your bills with and build your retirement on, you need to be serious about the numbers.
You need to conduct the proper market research up front (more on this in coming posts) to understand whether the long term potential exists.
Without profits, all of your hard work and passion won’t mean a thing. There are many products and markets out there that sound great at first, but once you dig into them, you realize that the margins are so tight, you couldn’t possibly squeak out the profits you are looking for.
Don’t disregard different ideas just because they don’t match your personal desires. You may find new hobbies or markets to get excited about that you never even knew existed.
Sell What Sells
So the moral of the story here is that I want you to be sure to research, research and then research some more before you put your heart and soul into this business. You certainly can start with your passions and see where they lead, but in the end, make the decision based on the numbers.
I think I can actually hear you all asking “But, How?” and that’s the plan - We’ll talk more about how to go about that research in the next few posts.
Kristie's experience with building her own online Yahoo! store combined with her passion for consulting and teaching others to do the same has catapulted her career in eCommerce and Online Business coaching & consulting. Her online RC toy store is at NitroToyz.com.
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