"Lessons Learned" is an occasional series where we ask ecommerce merchants at varying stages in their business growth for their successes and mistakes. With this setup, we asked Sarah Brown, Co-founder of Twobluepeas.com to talk about her thoughts. The Nashville-based baby boutique has been company for a couple of decades and inventories approximately 500 unique product types. Here we provide Brown's experiences and suggestions.
Third party company resources
"We decided early on that we could not fully handle every last aspect of our company, so third parties have become tremendously valuable to our startup. If for no other reason, partnering with individuals who've already chartered waters fresh to you saves energy and precious time which could be spent fine-tuning the regions you do manage by yourself. When making a decision to outsource or not, we recommend starting by assessing the advantages and disadvantages of these: build, buy or partner."
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"For us, outsourcing the shopping cart infrastructure to ASP.net was absolutely crucial. While we consider ourselves specialists at mapping user-friendly information structure, we had limited knowledge of how to easily have a client from browsing to checkout, catch their payment and manage inventory levels so."
"The next most relied-upon third party is our email service provider, Campaign Monitor. Handling a large database, such as opt-ins and unsubscribes, can find a little overwhelming and leaves room for error. Apart from keeping a fresh customer database, the application enables us to test and compare split messages, conduct segmented campaigns, promote viral spread with forward-to-a-friend performance, remain in compliance with CAN-SPAM not to mention step, measure, measure."
Shopping cart software
"Unlike many little businesses, we'd internet development and technical resources easily available to us. So instead of launching our site with an easy, free shopping cart solution, we're able to associate with a large scale hosted service (ASP.net Storefront and personalize the backend code. Pros: ease of management with no IT staff, easy interface and an information architecture tailored specifically to our client's needs. Disadvantages: relying on a third party for support, limitations because of the tool's capabilities and paying for updates."
Hosting
"Hosting is vital for internet retailers, but it's also costly. At first, we chose a shared strategy but are already assessing options for a dedicated solution. We have enjoyed the pricing advantages of our shared service, but during the holiday seasons and peak shopping periods rate can endure. Changing hosts can be a tedious and sometimes risky process, so picking a provider that provides both dedicated and shared options with a well-defined upgrade program would be perfect."
"We now host our website using DiscountASP.NET. After a substantial period of downtime because of an external assault on their host, we did look into changing hosts in the summer of 2008. The time and energy necessary to run the change, plus the monthly charges assessed by other suppliers, is the reason why we chose to remain with DiscountASP.NET for the time being."
Employees
"Owning a business and massaging your blood, sweat and tears into it makes it incredibly difficult to not micromanage employees. However, you simply can't. Outside vision is invaluable for any company, especially a startup. My management philosophy is pretty simple: always try to surround yourself with people smarter than you, and make an ownership society where each worker has a true vested interest in your success."
"Each of our four workers, including myself, has an ad agency history. Being part of the environment for many years before venturing out on our own really turned us into jacks-of-all-trades. As a team, we consider ourselves a miniature agency. We bring unique strengths to the table. One focuses on innovative site design and brand direction, the second on technology and internet strategy, the third on business research, merchandising and inventory management. I concentrate on PR, advertising, client support and business operations."
Marketing
"I am of the mindset that ecommerce merchants should spend 90 percent of their marketing dollars online, leaving just 10 percent for analyzing and supplementing with conventional channels. Particularly for new companies, traditional marketing is just too costly, difficult to measure and the yield rarely justifies the cost."
"PPC advertising with Google is by far our most successful marketing channel. Clicks are cheap, advertisements are incredibly targeted, and we have complete control over when, where, and how frequently our message is displayed. In addition, we have experienced success with banner ads on business review websites and mommy message boards, where a very large and active community of mothers gathers to discuss parenthood."
"Email sponsorship with tactical, non-competitive partners in the market has functioned fairly well, although sharing lists may get pricey and locating messaging which adheres to branding guidelines of both parties can sometimes be difficult."
"At the beginning, experimentation often. Locate the marketing mix that works best for you, and try everything on the internet which you could possibly squeeze into your budget. Sure, you probably have a great idea how and where to best reach your target audience, but you can't. But make certain to keep track of your online marketing as carefully as granularly as possible. Become a data guru--Google Analytics is the friend. Keep in mind, you get what you measure. And in case you can not measure it, you can not manage it."
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Pay-per-click advertising
"PPC search marketing is by far our most successful marketing channel. We use Google AdWords exclusively and place plenty of time into targeting, ad copy, offers and time. Search engine advertising can appear to be quite economical when clicks cost as little as $0.50, but you need to watch your conversion information. If thousands of possible customers are clicking your ad but few are switching, you might be driving traffic and gaining consciousness, but you are ultimately wasting money if these clicks are not turning into sales."
HT24ML
"We spend as much time on SEO as SEM. Many businesses do not, and it shows if you can not find them using a comprehensive search. Studies show that you will hit pay dirt if you're able to operate SEO and SEM in conjunction to receive your paid and organic listings both appearing on exactly the identical search results page. So be sure your site is loaded with relevant key words, give every page a thorough title label, and spend some time getting link-backs to your website throughout the net. There is much more to SEO, but concentrate on those three areas and it can do wonders. And be patient. SEO takes time and is a more slow win than SEM."
Expense control
"In tough economic times, it is more important than ever that company implement tight controls on expenses. We have always believed that no cost is too insignificant to track. Run cost analyses often on things like packaging and shipping supplies to ensure that your profit margin is staying ahead of increased costs. Additionally, the more entrepreneurial your company and the more workers are spent, the lower your expenses will be."
"As a small business owner, your brain becomes wired to always search for ways to decrease costs. Whether comparison shopping online for packaging materials, negotiating prices with third party suppliers or perhaps clipping coupons for office supplies, tightening all of the tiny budget can make a significant effect on your bottom line."
A fantastic example of a way we cut costs to boost profit margin is our shipping plan. In combination with offering free delivery on all orders over $100, increased prices from FedEx in early 2008 led to a net loss on shipping. We now split our orders into two classes by order value to ascertain whether we send via FedEx or USPS. While USPS has less reliable monitoring capabilities than FedEx and takes slightly longer to process labels, we save an average of $1.50 per package with USPS. So smaller order worth ship via USPS and larger order worth with FedEx, causing a small profit on shipping."
"Also along the lines of transport fees, freight-in on stock can really eat into profit . Replenishing stock on a quarterly, as opposed to monthly, basis helped us to significantly reduce charges paid on sending the merchandise to our warehouse."
Accounting software
"We are like the countless other companies using QuickBooks, and it is a fantastic fit for our requirements. I suggest getting a QuickBooks pro, and if you are not savvy in the accounting world, at least take an internet course or course at a local community college to be certain you recognize the big picture. Relying solely on your accountant only gets you up to now. Possessing the accounting and financial abilities to run and appraise QuickBooks reports is enormously valuable as your company grows."
"Our shopping cart doesn't seamlessly integrate with QuickBooks. This is one of the sacrifices we made when deciding on our shopping cart. Ideally the procedure would exclude any manual steps, but for today we've got a system in place that requires us to export reports in your shopping cart and then import them into QuickBooks for processing."
Order management applications
"We keep a vast majority of our stock in house and just drop ship things from a few important designers, so comprehensive order/inventory management is a must. We now use the tools offered in our shopping cart applications, and it works out very well."
Shipping and order fulfillment
"We partnered with UPS for our shipping needs but quickly changed to FedEx after undergoing a relatively significant proportion of lost and damaged packages. Back to cost cutting; we could negotiate lower rates with FedEx, so the decision to change was a no-brainer. As stated before, we also benefit from cost savings with USPS on reduced order value imports."
"One of our important differentiators is the rate at which we fulfill and ship orders. It's a significant priority for our organization. We can spend our time on the core business in the morning and at night after the last FedEx pick-up. Why not spend the day ensuring all orders are processed and shipped as fast as possible? We provide free delivery for orders over $100 and have made many happy clients with that one easy perk."
Credit card payments
"Make your clients feel as safe as possible in their ecommerce transaction. A large section of the populace can continue to be hesitant about buying from unknown retailers, so give those prospective clients no reason for pause. Prominently display your seal of consent, and be versed on your safety practices to manage customer calls and emails confidently."
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Social media
"Social media is not crucial for all brands and businesses, and we happen to be the sort of merchant that does not put much emphasis within the social area. Part of it's because we only offer products for infants up to 24 months. We have got a brief, two-year life cycle with clients. There are a few mommy message boards we have experimented with. We have tried to spend some time moving in weekly and adding comments, and it took so much time for the tiny return we were getting. Many retailers are following the hype and attempting to create social networking strategies even though it attracts resources and time away from existing, effective channels. It's almost impossible for small company to move the needle using social networking, so why not concentrate on nurturing existing customers and reaching new ones through proven tactics as opposed to dabbling with each new social networking tool for very little return?"
Blogs
"I am bullish on our website (Twobluepeas.com/site ), as we've been blogging since day one. The website allows us to show a more personal side to our business and create a deeper, more regular connection with our clients. We started it about six months or so in. We have tried different strategies with weekly and daily posts, and now we are doing twice weekly with larger more substantial posts. It's difficult to get the time to write frequently, but I highly recommend that all companies develop a blogging strategy. Connecting with potential clients and showing a little personality could just be the thing which makes them store with you rather than a big-box competitor."
Customer service
"We handle customer service as though it were another kind of marketing. It's a lot easier to please an existing client than it is to get a new one, but a lot of retailers invest more money and time on advertising than customer support. I highly suggest reading up on Zappos.com and their customer service philosophy. I am practically a disciple and advocate any ecommerce merchant to drink their Kool-Aid."
General business mindset
"It is not a kill or be killed world out there, and there is room for just about everybody. Do your research, and be sure what you intend to provide is unique or at least better than the next man. Beyond this, just be proud of yourself and do it. We are extremely enthusiastic, treat our clients like we would treat ourselves and are great at what we do. At the end of the day, we work to live, not live to work, and we love every second of it."
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