Mark: Hi Shirley. How are you today?
Shirley: I’m doing really well. Thank you for asking. And yourself?
Mark: I’m doing great. We’re really excited to have you on the interview today. I’m just going to do a little bit of background on you first just to introduce the listeners to your background and some of the companies that you’ve been involved with.
As an early ecommerce pioneer, Ms. Tan has more than 20 years of experience as a retail, wholesale and ecommerce executive building and selling two companies, Rumors, Inc. and most recently AmericanBridal.com, which she sold to The Knot, the premier media company devoted to weddings. Ms. Tan grew AmericanBridal.com from 500,000 to 6.5 million and she grew Rumors, Inc., a wholesale and retail wedding supplies business to 1.5 million.
Today Ms. Tan is a frequent speaker at ecommerce conferences and trade shows and writes about ecommerce on her blog at www.eCommerceSystems.com. She’s also a contributing blogger for Practical eCommerce. So again thank you for being here, Shirley.
Shirley: Thank you for having me, Mark. I appreciate it.
Mark: To get started, I’ve learned about your story a few years ago with the different groups that we were both involved in and if you can give the listeners a little bit of background on how you came into the ecommerce world. I know you have over 20 years of experience that it goes back quite a way and just tell us how you got started with American Bridal and how it progressed.
Shirley: I started American Bridal out of necessity and I used to have a wholesale retail business in San Francisco and we were very limited to the four walls of our location and the people who walked into the building.
If they didn’t walk in the building, we basically had no sales and we went through a couple of recessions and I was thinking back in ’93. I was like there has to be something that I can do that expands my customer base because we were very locale and if people didn’t visit us, we were kind of like missing all those additional revenue.
So I stumbled into the wedding aspect of the retail side of the business and we found more and more people buying wedding products from our store. So I said, “Why don’t I do a wedding catalog type of business?”
At that time, Modern Bride had a customer list that they were selling and we were able to subscribe to that and market to that list.
So I thought it was so brilliant and I would create a catalog, take pictures of the product and become a mail order catalog because at that time, the retail ecommerce side of the business still was nonexistent.
Mark: What year was this?
Shirley: This was like ’93, ’94, in that timeline.
Mark: Oh, wow.
Shirley: Yeah. So we did a catalog. It was like a 12-pager. It was expensive to do and we didn’t know what we were doing. I didn’t know what I was doing but we coped and was able to put a catalog together. We mailed it all out. I believe like our first mailing cost was like $80,000. I was like, “Wow, that’s so much money!” So we have no experience. It was our first catalog. I said, “How much sales do I have to have to get that money back?” And I believe the answer to that question was I think we got $80,000 in sales. So I was like, “Wow, I made money!” No, you didn’t. You broke even.
I barely broke even and I cash flowed. I didn’t even make money and I was like, “Wow, this is a lot of hard work.” We had to do bulk mailing and I hated sorting all that bulk mail. So I was whining and complaining a lot to a friend of mine and he goes, “Why don’t you register the domain name and go on the internet?” What’s that?
So that’s how we came to have gone through a network solutions to register our domain name and promptly scanned our catalog and put it up online. So if you go back to the Wayback Machine, I think it’s still there and I go, “Wow, that is some really ugly piece of work that we put out.” But we didn’t know any better.
Mark: So you just basically scanned it in as a PDF?
Shirley: I don’t even know how we did it. We scanned it and put it up online back in the day and scratching our head wondering why people never order from us. But it was a good experience and of course the technology caught up and we were able to stumble on to the Yahoo! platform and I was determined to make it work.
I taught myself how to add the products in and all that good stuff and even with that story, it took us a really long time because the online piece was not our priority. It was the retail side of the business. We were doing a lot more revenue with the retail and online was just sort of like a side thing, sort of like our plan B but not exactly because we didn’t know that it was our plan B.
Mark: Right, and for people who weren’t around in that time trying to do things online, domain names were about $250 each.
Shirley: It was expensive.
Mark: Yeah. And web hosting it wasn’t like today you can go out and get $8.95 a month web hosting and put up an open source shopping cart or anything like that. It’s funny that you bring up the cost of printing and mailing out those catalogs. We have another business that sells house plans online and back in I think it was probably 2004, my dad who owned the business, he just had it in his mind that he wanted to put together a plan book like you see at Home Depot and Books-A-Million that would have all of our house plans in full color.
Mark: Really nice card stock and so he said, “Mark, make it happen.” So I said, “Dad, that’s going to be a lot of money and it’s instantly out-of-date.” By the time that we actually got them back, we already added maybe 10 or 15 plans that weren’t able to be included.
So I think we ordered 1000 copies to get our “cost down” and it was probably 100 pages, 80 pages something like that full color. I think that ran, I want to say, $14,000 or $15,000 and I was just thinking, “Oh my god, this is $14,000 or $15,000,” and then we have all these boxes and these catalogs. To mail each one of those would have been $3 and $4 even bulk rate and then you’re mailing them out to people who you have no idea if they’re in the market for a house. You can buy a list and segment down as fine as you can. I remember we would get different lists and we have kind of an idealized customer, what their age is.
Shirley: Demographic information.
Mark: We narrowed it down so finely, it was really ridiculous and we still have a few of those books around and it’s just a reminder that it works for many, many different businesses but the cost of doing that, you’re taking a risk, putting out 12 or 15 or even $80,000 and just hoping to get that back before you can start making money. So you have to have a lot of margin in your products to even do that.
Shirley: That’s a really good point and we did and at that time, we did because we came from the wholesale vantage point and we were selling these just slightly above wholesale, just slightly under retail and we thought, “Hey, we have the competitive advantage of the right pricing.”
And I was so positive that people would be just so glad to find us and place their orders and I had the same challenge as you had about outdated material. We would print and take pictures of all these lace for the ring bearer pillow and sure enough after we print the catalog, my vendor is calling me and saying, “I’m sorry, Shirley but that lace that you have pictured in your catalog, we can’t get it anymore.”
Mark: And the price has changed.
Shirley: I was like, “Are you serious? This is crazy.” So what I really love about the ability to feature products online is that oh, that picture is gone. It’s obsolete. We will just replace it and it’s just instantaneous and you don’t have to worry about all the people who’s holding the old catalog that’s going to be calling you and being very upset. So that’s the beauty of internet ecommerce. I was completely enamored and smitten. I was like, “This has got to be the answer. This is my magic eight ball. This is the answer to my prayers.”
Shirley: I don’t sort bulk mail anymore. Yeah!
Mark: Oh, it’s brutal, isn’t it?
Mark: I’ve been through that. You have to go through it once to understand how miserable it is. Now as far as bridal supplies, how did you come to that niche? Was that just something that was particularly selling well in your retail store?
Shirley: It was and I needed to think about a way to just isolate the goods. I couldn’t be a general gift reseller and we were selling a lot of wedding stuff. So I said, “Hey, this sounds good.” Weddings are pretty evergreen and people are going to get married every year consistently and the stuff is usually the same. The goods are always new to the bride. It’s not like a car or a computer or something where it gets dated and people swap things out. It’s not fashion-oriented.
I mean to a certain degree it is but there is a little bit of allowance where you can sell the same goods over and over because the bride has not seen it in that context because they’re just getting married that year. It’s more forgiving in terms of the fashion trend.
Mark: And as far as the way that you set up your business or as it evolved, were you doing primarily drop shipping? That’s basically for all of our listeners, that’s where you find a group of products and a group of suppliers that will actually fulfill your orders as needed instead of having to purchase inventory and not really knowing what will sell to your market. You can then test out a variety of different products with very little upfront risk cash-wise and time-wise and then pay the supplier.
You usually pay them a small packaging and shipping fee and then the actual shipping but that’s a great way to get started. But as you evolve and you do more and more volume, the economies of scale come into play where as you want to either inventory a tremendous amount of products or you want to inventory your best sellers so you can have them close. The biggest thing is you control the relationship through shipping so you can add in tag along flyers. You can include thank you cards, different things that you can’t do if you’re not fulfilling. How did that evolve for you with American Bridal and what did it look like at the end?
Shirley: So for us, because we did come from the retail background, we had a lot of the inventory ready. So, it was more the mindset of hey, the goods are sitting here and the ecommerce side of the business is just another medium. It’s just another channel to sell the same goods that you have in your retail store and in your online store.
So we did not start off drop shipping because we had the goods in hand and we were just trying to basically optimize our inventory turnover. To that topic, if people are starting out and they want to do proof of concept, they want to see if there’s a demand for the goods, then I think drop shipping is a good model.
I think inevitably what happens though is that some entrepreneurs think that drop shipping is the model that they’re going to opt for because they don’t want to handle the shipping fulfillment side of the business, and I think that’s something in today’s world, in the Amazon world today, I think that’s a mistake. I think people have to come in thinking that I will use and leverage my drop shipper vendors’ economies of scale but eventually I will bring all of these goods in, the good sellers. I will source it myself because that’s the only way you’re going to be able to compete in this economy and not to mention compete on price. You have to compete on uniqueness of product. If you’re carrying everything that everybody else is selling, what’s the unfair advantage that you will have over in the marketplace?
Mark: Right, and even now there has evolved to be a hybrid model. So there are some people that drop ship 100 percent number one because they don’t want to have to invest in the inventory and they don’t want the hassle with dealing with shipping and all that. So that’s one model.
Another model is to inventory 100 percent. So after a while, you get a good feel for what products sell, what kind of turnover you have and so you can invest in those products and keep them close at hand where you can optimize that sales process.
Now the last aspect that’s come into play here over the last couple of years and particularly is you know companies such as Amazon, they will do your fulfillment for you. They will house all the products. They will even process your payments if you would like them to and then they’re just basically an outsource fulfillment company at that point. You do lose some of the flexibility or you can lose some of the flexibility and what you can include in the packages going out.
However, it is a good option for people who want to increase the margins they can get per product and to outsource that side of the business with someone who’s experienced in the ecommerce fulfillment world.
Shirley: And you know I agree with that and my personal opinion is if you want to have Amazon take care of all the economies of sale fulfillment which they do an incredible, incredible job at, is that you have to control your goods. You have to be the importer. That’s my take. You import the goods. You control the goods. Amazon can necessarily compete with you. I mean they do already. I mean we all know that but if you come from a point of view where you are the designer, you’re the manufacturer, then I think that model works really well.
Definitely they provide a marketplace. I mean the number of people who are on Amazon, myself included who would do one-click check out, (don’t even think about it. I just click the button and I’m done but at the same time, Amazon is a formidable competitor. So I would just be very careful and the margins on selling on Amazon definitely is not there unless you’re importing the goods. If you’re selling everybody else’s goods, it’s pretty, pretty stiff competition.
Mark: Right, because there’s a total price transparency and often there’s 10 or more different companies selling the exact same product, same SKU. What we do and what we recommend a lot of our marketing clients do is we use Amazon in many cases for lead generation.
So maybe we have a very popular product that we’re able to offer out there on Amazon just to get the eyeballs and to get an initial customer that can get into your sales funnel as it were, that can find out about your business, what you’re about, your website and hopefully then start doing business with you for related products and future purchases. Hopefully you have some sort of product line that lends itself to future purchases rather than one-time buys.
Shirley: Exactly, exactly. If you have the benefit that you can extend the lifetime value of the customer, you look at the Amazon play as a strategy to capture a customer and also branding. That is a good model and you have other varieties of goods that your customers that you recently acquire are going to want to grow into, that you can cross sell and upsell to. Just because they are now familiar with your brand, then that would be a very good option and of course you can’t throw any marketing material because that’s against Amazon’s terms of service. But the key is to ship the goods fast and hopefully that they like the goods and they will remember that they bought it from you.
Mark: Right. I mean in many cases, I cannot tell you the number of times that I purchased something on Amazon and then either the name of the vendor was where I could tell what their website was or whatever it were and went back to that original vendor on their own website because they offered a variety of products I was looking for but weren’t offered on Amazon.
Amazon is awesome. I use I tell you, Amazon Prime shipping is $79 and you get free two-day shipping and $3.99 overnight shipping for a year and it was brilliant because I will tell you, I am their target market. I go to Amazon first over anybody because it’s so easy. You don’t have to look for your credit card and make sure the expiration date is right. You have all your shipping information there. It’s just so quick.
Shirley: It definitely was the game changer in the ecommerce world and that’s why they own 33 percent of the market.
Mark: That’s incredible.
Mark: Now, we’re going to shift gears for a second and go into shopping carts and things like that. I know you have a lot of experience with a lot of different systems and one of the things that we were talking about a little bit earlier was someone starting out whether they’re coming from an executive position right now or they’re looking to make that transition or maybe they’re a small business owner just looking to branch out online. The first question they’re going to ask is, “What kind of shopping cart do I need? What type of website do I need?” What type of pointers can you give someone that’s starting out at that place?
Shirley: That’s a really great question, Mark, and this is the conversation I had with this potential client yesterday and my advice to them was you have to understand how your suppliers are going to be working with you. So they’re in this planning stage and they’re just trying to figure out what is a good platform and they have picked one. I said, “OK, now I heard a lot of good things about the platform that you mentioned to me.” My question is, “How are you going to tackle the backend?” He said, “Hmm, we never thought of that.”
So I think that’s the piece that’s kind of missing. You have to kind of think, “OK. How would you be sending your supplier the orders?” You have to plan. One of the things that I think entrepreneurs one day start building out their websites, they don’t think of the planning for success. How is the backend going to look like? How do the suppliers get the orders? Are your suppliers still traditional? Are they still like faxing the order and they’re entering it back into their system? They still have technologies back in the 1980s. I’m not sure.
Shirley: Are they saying, “Oh, the only way that we take our orders now is you have to log into our URL and you sign in. You enter in your orders”?
I mean that’s a factor too because that’s a manpower that’s going to be taken away from you from one of your staff, that you have to commit to entering orders into somebody else’s backend every single day.
Now imagine how many can they do in an hour. How many can they do in a day? I mean now if you have 300 orders, how many staff do you need to do that, to just do the order processing of entering it into the vendor system? We had that problem as well or just your suppliers as well. Forget that. We only want you to send us XML orders. If you don’t do it this way, it’s not going to happen because they’re thinking of their backend office, their process efficiency.
So there’s a lot more to it than just saying, “Oh, what’s my storefront going to look like?” If you are going with the model where you’re having your suppliers send it through a third party fulfillment, what they call 3PL or something to that effect, what does that look like? How does that company, how do they manage the information? How do they want the orders to be sent to them? What is the system that they use? Are you going to be relying on their system versus having one of your own that talks to theirs?
So there’s a lot of moving parts that has to be considered. If you have a falling out with that third party provider, how easy would it be for you to unwind that intricate process? Is that going to cripple you? Are you going to feel like you’re hostage to their system? So a bunch of things to consider that is very important to how your business moves forward.
I had this one vender to tell you a story, I had this one vendor who had only one product and they were relying on a third party fulfillment to do it for them. So, great product. We sold tons of it. They were selling it everywhere. This one guy went out of business just like that. No warning, no nothing, and for like eight weeks or something, I don’t know what they had to do. They were like up the creek without a paddle and it was brutal. It was brutal. I don’t know if they even survived it. I haven’t gotten the update but that’s the kind of situation you don’t want to be in.
Mark: Yeah, absolutely. As Shirley and I both can attest, as you’re building out your store, you find a niche that you’re interested in that’s profitable. You build up the following then you try to source products. You will typically have two or more suppliers for every single website. Ideally you would only have one but you always need to have a backup and never commit yourself just to one supplier and they vary all over the board. I have some suppliers. They’re just a pleasures to deal with. They have online ordering forms where I can go in and process orders myself.
Some have the ability to batch process things. When you get to a certain size and you’re processing hundreds of orders a day, they have different software add-ons that basically batch pull in all your orders. They figure out who the orders should go to and then they batch send those out in a group. So it saves you a tremendous amount of time that when you’re getting started, typically what will happen is you will get an order on your website and then you will go into some sort of backend administration area on this drop shipper site. Choose your products and ship them that way. But some of them require faxes.
I had one that required faxes and I mean I don’t even have a fax machine. I don’t even think they sell them anymore and so we had this little Word document that we would fill out the information and just a few things would stay the same and then we would make a PDF and then we had an online service where we could email it and it would fax it out. You never knew if it was received because they wouldn’t reply and then if you didn’t do it yourself and weren’t 100 percent sure it was correct, like for example if you had an assistant doing it, mistakes can be very costly.
I met one guy about a year ago and he’s a very successful ecommerce business owner. He sells furniture and it’s custom furniture. So he has to basically process every single order. Most of his materials are drop shipped but his average order is about $1500 to $2500, somewhere in that range. If he gets one little thing wrong, one finish wrong, one accent piece for the knobs wrong, one whatever, it could cost him literally hundreds of dollars and then that’s just the hard cost in manufacturing a product that someone didn’t actually want.
So number one, you have a product that you have to inventory. It’s yours now. You pay for that because typically those types of products aren’t able to be returned to the drop shipper. Number two, you got something that’s extremely expensive to ship that you got to then pay for. Typically the person to ship it back to either you or the supplier, and so you’re very quickly getting into hundreds and hundreds of dollars just for one small mistake and it was so sad to see he was making a fantastic revenue with his website but he was chained to his computer. He basically worked 15, 16 hours a day. He was an older gentleman and he had to physically himself input all these orders just to make sure that they would be correct so he wouldn’t have these types of problems.
Shirley: So Mark, see, I disagree with that. I think this guy was probably a micromanager control freak.
Shirley: Because if he has a good process system in place, it’s impossible that only he can do it right. I mean I have a deeper belief in the human system. If you teach people the right thing to do and how to do it right and the process is foolproof – not the human person is foolproof but the process is foolproof – then there’s no way that this guy has to be chained to his desk. I mean I also find it hard to believe that he never made a mistake. How is that possible?
Mark: The business owners we would never make a mistake.
Shirley: Yeah, yeah, right. Of course not. So I would say that I am probably worse. I’m like the worst thing. I am not very good at the repetitive tasks and I’m just not built that way and maybe he’s built that way and he probably secretly will never admit but he enjoys it. So that’s actually really more probably the situation. So business processes are really key to success and if you don’t want to ever take sleep or take time off, then keep doing it the way you’re doing it. But you know what? It’s not sustainable, right Mark? You and I both know that.
Mark: No it’s not and it’s getting 100 percent totally away from the reason why you build an online business. Like in your case, you evolved to be primarily or entirely online and one of the huge benefits of it is you’re able to better schedule your time. You can take a vacation. You can work in different locations where you don’t have to physically be in an office or a warehouse everyday and if you’re physically chained to a desk having to process these orders, if they don’t get out there, then you don’t make any money. That’s a horrible, horrible place to be. You want to as soon as you possibly can, to outsource all the daily tasks that don’t make you any money and you don’t enjoy doing.
Shirley: Well, you have to find people to help you. In order to, no man is an island as they say right and you cannot do it all. You cannot do it all well as you and I were talking earlier. With all the things that entrepreneurs have to do now to stay competitive online, to market effectively online, to convert their website, to make their site more usable, to do testing, to do product sourcing, to do customer service, to ship the goods, all that crazy, unsexy stuff that is not tied to marketing and SEO and social media. You can’t do it. You cannot do it all. You cannot do it well.
You have to find help. You have to train your people. You have to provide a system in place for them to set them up for success. I was able to go on vacation because there was people around me and they did it better than I could have done it ever myself.
So it’s a mindset of understanding what is necessary to run an organization, to maintain the daily operation and to grow the company and I think now they have to kind of step back. If you’re already in business, my advice is like one advice. If you’re already in business today, you got to step back and kind of say, “OK. What was the goal when I first set out to do this? What was the original mission? Where do I want to go?” If you get that piece out, you go, “OK. Where do I want to see myself in three to five years?” You can’t be burning the candles on both ends. It’s not sustainable.
Mark: It absolutely is and I’ve been in that place until I kind of discovered outsourcing and I want to ask you. If there was one business function that you would recommend outsourcing, when they’re just on the cusp of being profitable, they have enough money where they could hire a part-time person either in-house or outsource, I know my answer based on the different sites that I’ve run is customer service because we got to a place where we were manually entering the orders into the drop shipper websites.
We were responding to customer service. We were dealing with any issues that came about and that single function out of my business has made such a dramatic change for my lifestyle and especially if you look at this as a business where you don’t just have one site. Maybe you have multiple sites. You might have at one point, I had 20 to 30 different sites selling a variety of just totally different unrelated products and there’s no way that you can do that yourself and keep your mind around what exactly needs to be done on each of these sites each day. So if you’re able to centralize tasks to one person or multiple people, it’s always a benefit.
Shirley: So that’s a good question and I’m glad you asked me that. So your question is, “What pieces of the business would I outsource once I can afford it?” Right?
Shirley: So my definition of outsourcing is a little different than the traditional. Outsource to most people means activity that is not done in my premises. What we’ve done with great success in the past is we do a hybrid version of that. So first of all, I do have a little bit of control freak in me and not micromanagement but control freak. So I like to kind of know what is happening and so how we’ve done it in the past is we did a hybrid version of outsourcing.
So as an example, you brought up customer service. I personally don’t want to ever outsource my customer service because it’s the first line of defense for my company. It’s the area where customers are interfacing with the company and I want to be able to sit right next to my customer service gal or guy and say, “What’s happening?” I want to eavesdrop on that conversation and I can’t really necessarily do that if I’m outsourcing to some place in Canada or some other country.
But what we have done as an example, so what we call them you know here outsourcing as an example. All our emails that go to let’s say info app. We would have that go to somebody who filters that email. So basic stuff, most commonly asked questions, things like that, that person is the person who filters those emails to see who’s supposed to get it, what can I answer and sort of rank it by importance.
So that’s one aspect. Cause email and people don’t talk about it but companies get hundreds, hundreds, thousand of emails. It’s insane. So how do you manage that? Right. So another aspect of customer service is inbound calls. So you can as a first line say, “OK, this is a common call about, ‘Oh, can someone call me back or can someone talk to me about this product?’” You patch it through. If it’s the most common things that are frequently asked questions, things that may be on your FAQ but the customers are not reading that. They feel more comfortable talking to someone, a live person.
So you tackle those but if it’s an issue of like a complaint, if you have to escalate the call and things like that, then that’s the kind of stuff that you can patch through; again same concept right but really filtering the type of calls and to see who can help with that. So that way you can maximize the people within your company. To tackle the more pressing issues and let someone else handle the less pressing frequent type of calls. Does that make sense, Mark?
Mark: Absolutely. Just to be clear to our listeners, when I say outsourcing as well, what we basically do is there are services out there where you pay a monthly fee plus number of minutes that they’re basically on the phone. You forward all your calls and you can forward your emails as well and your chats to this service center and then you really don’t have one assigned person. It’s a group of people that work collectively for a number of different businesses.
So we’ve tried that in the past. We’ve never been able to get that to work. What we do is when I say outsource, I have a virtual assistant for maybe a group of stores and what she does is she only works for me and she manages very specific parts of my business. For example, inbound phone calls and so she knows exactly my schedule and when to contact me. She knows general information and then she also deals with the email and forwards that to the appropriate people within the organization.
So she’s focused 100 percent on my business. She doesn’t really work for anyone else but the beauty of that is that she can build an enormous amount of understanding between the two of you and you can systemize things in a way that you never could with outsourcing call centers because those people in those places, even though they’re very, very good customer service reps there, they’re very friendly and knowledgeable, they’re working with probably a hundred different vendors or ecommerce stores.
Shirley: Clients. Yes, yes.
Mark: So they can never know your business like they need to know your business. So what we do is depending on our needs, we will hire a virtual assistant or someone to focus specifically on one task or a group of tasks. When you get to a point where you systematized your process and you have multiple stores, then it becomes very easy to merit hiring either a fulltime person, independent contractor or employee at that point. But when you’re first starting out, you got one store. It’s touch or go if you can afford to do this. Start out part-time. See how it goes and then all the while be building your system.
Mark: One tool that we use and it has changed everything about how I interact with my employees and contractors and clients is Jing Project. It’s a little free software that you download to your computer and it allows you to record up to five-minute video captures. So I can show someone exactly explicitly how I want something done and remove all issues from what I’m trying to get across. I couldn’t actually get it across if I was trying to write it and so every task in my business, I try to record a video on exactly how I need it done and that helps tremendously.
Shirley: That’s great. We use Camtasia and I couldn’t have said it better, Mark. That’s really very helpful because once you do this one time and if you have to let your outsourcing virtual assistant go or something comes up, they leave or you have to let them go, you’ve already done this one task one time and now this next person can just go through it. You can review it with them. They always can refer to it. It’s a really great process to include in your workflow, into your training manual, into your training toolset, to add to your knowledge base.
Mark: Absolutely. There’s nothing worse than losing a key employee and they have very, very specialized knowledge that has never been documented anywhere.
Shirley: Exactly. What made me decide to go into this side of the consulting on working on business process optimization is that that was the biggest thing that kept me up at night. What if so and so leaves? What if I can’t fire them? They know so much. You get to the point sometimes where they just know so much and you feel hostage.
I’ve heard of situations where people not only are the employee not working out but they even felt like they have to give them a raise just to keep them hanging on. You’re doing a disservice to your company. You’re doing a disservice even to the employee because you’re not able to really help them be to their fullest capacity in that job role. It’s not a good place to be.
So I just encourage people to just start documenting. Read The E-Myth. Michael Gerber. He just always talks about McDonald-izing the process meaning McDonald’s the company. Why are they successful? Why can they do what they do around the world cross-cultural? It doesn’t matter where they are. Why can they always repeat and duplicate?
It’s because they have an awesome system and it doesn’t matter what the age. You can stick a high school kid there and he would be able to do the job just as well as a veteran, seasoned (ums and gaps 32:56) employee because it’s the system. It’s not the people. You don’t leave it to the people to have to figure things out. They should make decisions that systems cannot cover. Right?
Mark: Absolutely. People getting started out, this doesn’t need to be a difficult thing. I mean you can get a USB headset like we’re using right now for 20 bucks and you can get this free Jing software at JingProject.com, and then just have a password-protected page on your site where only your admin staff can access that and you just continually add things as you get it. Don’t try to go through and create everything at once because as soon as you create something, chances are it will change.
Shirley: Yes, exactly.
Mark: I remember I was a strategy consultant for a larger consulting firm out in Houston years ago and at the end of every project, they forced us to contribute to this global knowledge base as they called it and we used to hate it so much because basically you had been working on a project for a year and you’re trying to summarize all of the key most important things that you’ve done over the last year. It might have been 12 months before and they give you a few days to a week to do that and we were always just like it was ridiculous because the system was so convoluted, you couldn’t actually find these documents later on if you needed them for another project.
The internet has made things so much easier. You don’t have to rely on your own knowledge. There are so many videos on YouTube. I can’t tell you the number of things that if you’re interested in and you don’t really know how to do anything, you can go out to YouTube or Google and search it and you will find somebody who’s an expert in it and has done it 500,000 times.
Shirley: Exactly. I think it’s an interesting time. We’ve never had so much more tools and access ever in our lifetime, in the course of 30 years that I’ve been in my career life, and it’s just amazing what’s available versus back in the 80s when we were so, if you didn’t know somebody who had something, it wasn’t going to happen or it’s going to be too expensive. It’s cost-prohibitive. But the very nature of all the access is also the increase in competition. So it’s interesting times, right Mark?
Mark: Absolutely. I love WordPress. I use it on most all sites. It’s not entirely appropriate for certain ecommerce sites but it’s so easy to use and it’s easy to add content and you look back to 2002 to 2003, getting a website up there and building a database and including online credit card payment. That was not an easy process or inexpensive and there were none of these outsource sites like Elance or oDesk or any of those where you can find experts that have already done it and have some sort of a systematization built already to build these sites. So it was much more difficult. Then just like you said looking back, that was a wonderful time in a way because if you did figure it out, it was much harder for someone to come in after you and take over your market.
Shirley: Exactly. The barrier to entry has greatly been reduced if not obviated and at the same token, the competition has been more stiff.
Mark: Yeah, absolutely. Now are there any particular tools or online services that you just can’t live without, the ones that you use day in and day out?
Shirley: For companies, I use a product called Podio.com. They just recently got acquired by Citrix which are the people who run GoToMeeting and it’s basically, it’s free I believe for under five employees or something like that and it’s basically an intranet/collaboration tool. It’s like a collaboration tool and my team and I use it to communicate. It’s like Basecamp but not exactly and there’s so many out there so it’s just a matter of what’s the right fit, what’s your comfort level. I use that one and we’re still testing it to see if we like it and all that. There are definitely pros and cons.
I love Dropbox. I love Dropbox but with that, there are also challenges. Google Docs. My ecommerce system is set up on Google. So Google Drive, Google Docs, Calendar, those are some of the tools I use. I don’t have a lot of tools that I use because it’s just one more password I got to remember.
Mark: I know. One of my favorite tools is RoboForm which basically remembers all your passwords because every single site you go to now requires you to set up an account or you have a login for it.
Mark: I can’t remember anything anymore. Ideally you have a one-page checkout on your shopping cart so you don’t have to register and you want to remove everything that could possibly cause the person to leave the site.
Shirley: Yes, you want to reduce friction.
Mark: Because I know at my house, I’ve got three small kids under seven and there is not one second of the day that I’m home that someone is not screaming or crying. Somebody just got hurt.
Shirley: Hugging at you?
Mark: Yeah, and so the iPad has been a revelation because it turns on automatically and you don’t have to wait for booting up and it works fairly well.
Mark: So my wife, I got her one probably a year or so ago and she’s not very into technology and she was like, “Why did you get me this? I didn’t ask for this. How strange.”
Shirley: Now she won’t let it out of her sight, right?
Mark: Oh my gosh. She loves it. She loves it because it’s so quick. When she has just a quick second to look up something or do something, she can just turn it on and it works.
Mark: So it has really changed a lot of things and that’s the mobile devices, the phones, and the iPads. As you’re looking to build a new store, some of the newer service providers, they provide integration where in many cases, the site will relay out based on what type of device people are looking on and that’s huge because I’ve looked on some of my sites and had been really, really surprised. A huge amount of traffic was coming from iPad users.
Shirley: Yeah. It’s so true you have to make your website mobile-friendly, iPad-friendly, tablet-friendly and it’s because people are accessing information different, different ways, different times, different ways and you have to adapt to that and they’ve been saying mobile is coming. Well, it is and more and more people are using mobile to access ecommerce businesses, access websites and there’s also lots of tools now out there in the ecommerce arena to help convert websites to make it very mobile-friendly.
Mark: Absolutely. WordPress has a plugin if you’re using WordPress and then many of the hosted platforms already have that built in. They thought about that during the development which was very wise and you know mobile is here. It’s already here. We’re seeing it. You look at Amazon and some of the press releases that they’ve released over the last few months and a year and mobile has grown incredibly. Their app is a great example, if you’re looking for an example of how to do it right.
They do more testing than probably anyone on earth as to what optimizes conversion, what items to include on a particular page, what items to remove. So they’re a great source of information and to become inspired because that’s something that you definitely need to think about as you’re starting out.
Shirley: That’s a really good segue to the topic of conversions. One of the sad things that I see that a lot of websites, we were just at the Yahoo! Summit and there was a session where there were site reviews. You just see site after site after site. They make this crucial mistake of just trying to be all things to all people. Their website explodes with, “Here’s my product. Look at me. Here are all kinds of products. You don’t like this? How about this?”
Some people don’t understand what the website is for. Their thinking oh um for an example if your If you’re a pet store, site, who’s your target market? You’re going to say, “Oh, anybody who has pets.” Well, that’s not necessarily true. Your specialty is more towards dog owners, cat owners, bird owners as an example and you have to funnel the visitor into your website.
You can’t show them everything. If I show them everything, they’re bound to be interested in something and that used to work when there was less competition. But that strategy is not as effective today and everybody has ADD now, me included. I’m like the worst and it’s like my eyes are going everywhere. I’m looking at everything. I’m listening to music, talking on the phone and surfing the web.
Mark: You don’t want any distraction on your order page and even just back to Amazon for a second. If you go through the order process, you get to your shopping cart. I don’t remember if it’s a shopping cart or the actual last page before you check out but you can’t even get back to the site. All the links are dead. You can’t click on anything. They want you focused on completing your order right there.
Shirley: Yeah, I hate that about that.
Mark: Yeah. It’s brilliant because you have to erase what’s up in the browser bar and type in Amazon.com and go back.
Shirley: That ticks me off to no end. Amazon, fix that if you’re listening.
Mark: They’re crazy like a fox. I think it’s brilliant and it is probably a little pain in the butt to do that but anyway, that’s something that you really have to think about. Anything that removes someone’s attention from completing that order, that can be requiring them to register on your site before they check out. That’s not really necessary in this day and age.
Ideally it would be great if they did but that’s something that you can always follow up with them after the fact by offering them special offers and getting them to come back. You want to make your page layout focus on a particular product. The initial thinking is just as you said, “Hey, if they’re not interested in this, I will show them this over here.” What you get into is people get distracted and then they say, “Well, I like this but this one might be a little bit better. Well I like this one but maybe I like this other color,” and they never make a decision.
Shirley: Yes, too many choices is not necessarily the way to go.
Mark: Yeah, and I have a number of sites that are just one product. That’s all they are.
Shirley: I bet it converts like crazy.
Mark: It does because every single person that comes to that page is looking for that product and there’s nowhere to go.
Mark: You either order or you don’t. So it’s a good route to go but I’ve also had those stores that have three and four thousand products and it’s difficult to manage that many products.
Shirley: It’s difficult to manage. You have to write unique content. You have to optimize all those low-hanging fruit and down to the granular product level. It’s a lot. I think people have to compete in the Amazon world, to compete in the Walmart world, you have to be a specialist.
Mark: What are you talking about writing unique content? Won’t you just use all the descriptions that the suppliers sent you?
Mark: I’m sure nobody else is using those.
Shirley: No, I’m sure. That just saves a lot of time, right Mark? You don’t have to deal with it. We’re being facetious here so we’re joking, people.
Mark: Absolutely. Don’t do that. Write your own product descriptions. There are a million different places you can get that done or do it in-house but it’s funny. One of my clients had contacted me and said, “I’m not getting any sales on this site. What’s going on?” And they had 2000 products and I said, “OK, let me take a look.” Then I just went to one of their random pages and I don’t remember if I copied the SKU or the product name and I just searched in Google and I found 52,000 other websites using that exact same content. They were selling the same product.
I said, “How did you load these products.” He said, “I just copied the information the supplier sent us.” I said, “Well, so did 52,000 others and Google hates that nowadays.”
Shirley: Yeah, there are uses for them, Mark. One way that you can use manufacturer descriptions is for your affiliates as an example. You can use them for people who scrape your site. They take your information and they put it in their website, whether it’s a shopping feed or some other people who are taking the easy way out. Give them that description. Trigger your website to say, “When people are scraping my site, when comparison shopping engines are coming in and crawling my site, give them this,” and protect this content that you rewrite for your website. So there are uses. You don’t have to disregard it completely and if it’s easy, then that’s probably not the route to go.
Mark: That’s right and it’s a cruel fact of ecommerce but the easier it is, probably the less you should be doing it because everyone else is going to be doing that exact same thing. If you don’t differentiate yourself in some way, Google won’t shine on you and you don’t really have a chance of ranking highly for the different types of products unless you have a following already and you can get people to come to your website that way. But the future is social media integration, being transparent, being a face of a business and trying to build a brand versus just being a provider of products.
Shirley: Yeah, exactly.
Mark: Now the final question is, “If you could give one big tip to someone just getting started building their online store or ecommerce site and they were looking at possibly making the jump from what they’re doing fulltime to launching this either on the side or as a fulltime business, what would you tell them?”
Shirley: I would say that you really, don’t get into a competitive marketplace. Meaning that if your business model has to be able to survive, even thrive on paying for advertising. So let’s just say for example whether you’re advertising pay per click on Bing, Yahoo!, or Google. If there’s not enough margin to make it on sending traffic through pay per click to your website, then you don’t have a sustainable model.
Mark: Absolutely. Truer words were never said and I will add something onto there. My general rule is number one, I have to have a significant margin on whatever products I’m selling. I want to sell fewer products, higher margin. Ideally, I don’t look at anything that I can’t make $50 or $60 on and ideally much more than that.
Number two, I don’t sell electronic products because I’ve done that before and depending on the supplier, you’re going to have issues with returns. Returns can ruin your profitability. It’s a horrible thing and you get into with a lot of different products but electronics of any type, if you have returns or warranty claims, it’s just a mess because you get in between the client and the supplier.
The supplier doesn’t want to pay for return shipping and they have very stringent rules on what can be returned and what won’t be and then the client is upset because something isn’t working. They don’t care that you have this friction between you and the supplier and so you’re put in the middle.
Many times you end up eating the return shipping and you end up eating the shipping possibly from the supplier back to the client just to keep the client happy because you’re trying to build that long term relationship. So you want things that are ideally not expensive to ship, have high margins or non-electronics and ideally something that you’re really interested in. Because after a while, if you’re only selling things that are profitable from a business standpoint and you don’t really enjoy the area, it gets really old really quickly, doesn’t it?
Shirley: Yes. It becomes work.
Mark: Yeah, God forbid.
Shirley: It’s a four-letter word and if I could add one more thing to the margin criteria. You need to also incorporate what the business model would really look like if you were to put all your real expenses in.
So that means what it would look like if you had to hire a customer service person. What would it look like if you had to pay rent? So a lot of people do this out of their home office or their home. They have a little nook in the kitchen that they set up a computer and stuff like that. But if you were to actually pencil in all the expenses, is this a profitable business? Because eventually you will have to move out of that garage if it was successful.
So is there enough margin? Is there a marketplace? Is your business going to hit a ceiling? You’re already ranking number one for this, ranking number one for that but the business is only going to plateau at some point. So this happens to big businesses all the time. Why are there so many mergers and acquisitions? Because they have already maxed out in their model and they can’t grow it anymore.
So the only way to grow is to acquire somebody. So of course that’s probably much, much further into the future but if you know this ahead of time, then you can now make the decision earlier on to see if it’s a viable business to pursue.
Mark: Absolutely and profitability is one key point. The margin to some people is the amount that I buy it for and the amount I sell it for. Well that’s not your profit. You have to take out credit card fees. You have to take out a percentage, some sort of way for your hard calls, like you web hosting fees.
Say for example, what I used to do is I figured up an average amount of time that it took my virtual assistant to deal with an order and to process it and let’s say it’s 10 minutes. Well, I divide our hourly rate by 10 minutes and I apply that to the profitability calculation as well because that’s the only way that you really know if you’re making money or not is to get down as granularly as you can on every single order.
In some cases, you have to get down to the product level because you might be selling products in one order from two different suppliers. So if you’re drop shipping, you would have two separate shipping fees that need to be included in that and boy, you talk about a hard lesson to learn. You can go from profitability to losing money really quickly if you don’t take that into account.
Shirley: Yeah, multiple drop shippers to one order. It erodes your margins very fast. Nothing erodes your margin faster than having three drop shippers ship one order.
Mark: Well, I really do appreciate your time, Shirley.
Shirley: Mark, it has been my pleasure. Thank you so much for interviewing me and if anybody has any questions, they can find me on eCommerceSystems.com and I look forward to working with you and working with your group closer in the future.
Mark: Well thank you so much Shirley, and we will be in touch soon. Again, if anyone wants to contact Shirley, they can contact her on her website at eCommerceSystems.com and with that, I will let you go.
Shirley: Have a good day.
Mark: Thank you, Shirley.
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