There are a lot of options when it comes to starting an e-commerce store. You can do dropshipping, offer affiliate products, or try warehouseing. There are a ton of shopping carts to sort through and like any online business you have your pick of marketing methods.
So to make sense of it all I invited Rob Mabry to answer a few questions I had about e-commerce stores.
Rob is the author of the “E-Commerce Blueprint: Your Step-by-Step Guide to Online Store Success“, currently available on Amazon.com. He also runs Mister E-Commerce, a site full of tips and strategies for getting your store set-up and promoted.
He’s had a number of e-commerce site successes and in this interview Rob will share many tips with you on how you can follow in his footsteps.
Let’s get right into the interview…
Rob Mabry Interview
Lisa: I know you’re the author of a great ecommerce book called “E-Commerce Blueprint: Your Step-by-Step Guide to Online Store Success” which would be very valuable for anyone thinking of starting an ecommerce store. How many ecommerce sites have you run?
Rob: Well over the years, I’ve probably opened around 20 different e-commerce sites, but today we are focused on three different stores. We’ll call the other 17 sites “learning experiences” because that’s what they were. I think in the beginning my wife and I who are business partners were pretty naive.
We didn’t understand SEO, what a “niche” really was or how to do competitive analysis. As a result, we opened a number of stores and while most of them broke even, none of them really took off.
So that was all part of the education process. That’s the great thing about e-commerce. The cost to open up an e-commerce site is relatively low so the cost of failure is too. It gives you the freedom to try different products and niches in a way that someone opening a brick-and-mortar business could not.
As we learned more about how to identify a niche and assess how competitive it was, we were able to open stores that were much more profitable.
Lisa: Would you care to share some details on one site in particular? Like revenues, the market, anything interesting?
Rob: One of our sites is focused around a specific type of child’s toy that retails for between $75 and $200. We opened that site in 2010 and only marketed the site through organic SEO and social media with almost no paid advertising.
During the 2011 holiday season we did about $60,000 in sales. The profit margin on the products is around 30%, so that was about $18,000 in revenue just during the holiday period. Those are pretty good numbers for a site that’s less than two years old.
I think a lot of people who get into e-commerce have wild expectations that it will rain cash as soon as they open their online store. In my experience, that’s not likely to happen. It takes time to build up traffic to a site and establish your brand.
There’s a lot of work that goes into it and that’s where most people fail. They tend to treat their e-commerce site as a hobby instead of a business, but you can’t “play” at online retail. It takes an awful lot of hard work.
When we started our business, my wife and I had the goal of replacing her income after my daughter was born so she could stay at home. That was a fairly modest goal, but it still took us about two years to achieve it. The good news is that each year, sales have increased substantially. We anticipate that our 2012 sales will be about 150% of what we saw in 2011.
I think realistically, someone new to the business should expect that they can make a profit of between $20,000 and $50,000 with an e-commerce site after about two years. That’s based on getting all the other big things right like choosing a great niche, designing a compelling store and having a solid marketing plan.
I know there are exceptions to the rule and plenty of entrepreneurs out there talking about millions in profits for their e-commerce sites, but that’s not the experience we’ve had. At least not yet, but we are happy making a profit on every store and generating real income.
We’ve established a system for how to go about launching a store that’s scalable. Our plan is to open a new site each year over the next three years.
Lisa: I know traditionally many ecommerce sites are very busy design-wise. How do you think the shift to mobile will impact ecommerce sites?
Rob: That’s a great question. The mobile revolution is happening now. Over the last 18 months, our mobile traffic has gone from about 5% to 25%. People are shopping on their phones and tablets and as e-commerce store owners, we need to adapt.
Most sites look okay on a tablet, but are impossible to use on a phone. Just this month, I made a tough decision to ditch my existing shopping cart platform and move my store over to a shopping cart host that supports mobile.
I don’t want to sound like a commercial and honestly I’ve never used them before so can’t say ultimately what my review will be, but I am in the process of migrating one of my existing stores to Big Commerce. I chose them for a number of different reasons, but the biggest one was that their cart has mobile commerce built-in. Users who go to a store built on the Big Commerce platform using their phone automatically see a mobile-optimized version of your site.
It looks slick and it’s easy to use.
This was a major decision for us. We know we’re going to take a hit in traffic because moving the store to a new host will impact our SEO to some degree, but I feel very strongly that mobile is critical to our long-term success.
Lisa: What can business owners do to help make the shopping experience easier for mobile users?
Rob: They can choose a shopping cart that supports mobile like Big Commerce, CoreCommerce or Volusion. I’m sure there are others. It’s really as simple as that. I think if an e-commerce store owner is having to think about how they are supporting both their online users and their mobile users they’ve made a terrible mistake. Pick a shopping cart that supports both.
Lisa: What have you done and what do you recommend; drop shipping, setting up an ecommerce affiliate store, warehousing?
We have always focused on physical products and sourced those products with suppliers that dropship. I know there are people who are very successful working as affiliates for Amazon products, but it’s not a model we’ve ever used.
Lisa: Do you have any tips for getting into drop shipping?
Rob: We got into e-commerce in a way that a lot of people do – through eBay. We started selling garage sale type stuff and then I started selling used vinyl records. That worked pretty well but it was time-consuming because you had to grade the quality of every album and my wife got tired of our garage being filled with racks and racks of records.
So we decided to start our own online store, did some research and discovered dropshipping.
We still source our stores with 100% dropshipping. There is a downside to dropshipping. Your profit margins aren’t as high as when you buy in bulk. It can create all kinds of customer service issues because you are giving up control of the order processing and shipping. That can be a major headache. It also limits the type of products you can sell since not every supplier will dropship products.
On the other hand, you have incredible flexibility. If you’re new to e-commerce, you don’t need to invest thousands of dollars in inventory to stock your store. You can experiment with different niches and products without spending a dime up front.
Since you don’t have to warehouse any inventory, you can operate your business from anywhere. Still living in your mom’s basement? No problem.
This summer our family went to Disneyworld and my wife was filling orders while we stood in line to ride the rides. That’s not so easy to do when you have to package and ship the products yourself.
So we’re pretty big fans of the dropship model.
Lisa: How can a new business compete with some of the bigger, established ecommerce sites?
Rob: The first thing you can do is educate yourself about how to assess the competition in a market. There are tools out there like Market Samurai, Traffic Travis and SEO Powersuite that can help you understand the competition in the search engines. If you don’t understand how to do keyword research and competitive analysis, your chances of dominating a niche market are slim.
Most e-commerce sites get the majority of their traffic from Google. So you have to understand what keywords you can target and how the competition stacks up for those keywords. What’s the page rank of the top five sites? What’s the domain age? How many back links to the home page? To the ranking page? What’s the authority of those incoming links?
If those are questions that you don’t understand, then you’ve got some homework to do.
Lisa: How do you suggest getting traffic to a new ecommerce site?
Rob: Organic SEO is important, but relying too heavily on the search engines can put your business at risk. Google is constantly changing their ranking algorithms and what worked last week for SEO may no longer work today. We saw a pretty sharp drop in traffic on one of our sites after the Google’s Penguin update in April.
We didn’t get any nasty letters from Google and we weren’t doing any crazy, blackhat SEO techniques. What our research has shown us is that we optimized a bit too heavily on certain keywords with our off-page SEO. So we had tons of links coming in for a narrow range of keywords when we should have had more anchor text diversity.
The Penguin Update caused that site to slip in the rankings. It wasn’t a freefall, but where we were positioned #1 for certain keywords before the update, we dropped down to #5, #6 or #10 post-penguin. That resulted in a huge drop in traffic since we were so reliant on organic SEO.
The lesson here is don’t put all your e-commerce eggs in the Google basket. Use other methods to drive traffic. Use Twitter and Facebook and Pinterest. Find compatible blogs in your niche and write guest posts. Get on forums and answer people’s questions about your products. Create product review and how-to videos and distribute those on YouTube and other video sharing sites.
There are a lot of different techniques for generating traffic that won’t put you at the mercy of Google.
Lisa: I usually try to funnel my visitors to an opt in form. Is that what you recommend for an ecommerce store?
Rob: I think e-commerce is a different animal than information product marketing. I would consider an opt-in form a barrier to the sale. It’s a bit like walking into a department store and seeing somebody with a clipboard who you know is going to approach you to take a survey or something. A lot of people won’t even go in the store because they don’t want to deal with the hassle.
I discourage anyone with an e-commerce site from forcing a customer to register in any way to shop or make a purchase. You can make it optional or ask for the registration after the sale, but don’t do it beforehand. It will kill your conversion.
Lisa: If so what type of emails would you recommend sending out to prospects?
Rob: I have to confess this is one of my goals for 2012 and time is slipping away. We need to be better about growing a subscriber list and creating compelling emails. Making a note of that now.
Lisa: What are your top tools for setting up an ecommerce site without the hassle? Like shopping cart, autoresponder, etc…
Rob: I have tested and used a lot of different shopping carts. Yahoo Stores, Pinnacle Cart, CoreCommerce, Big Commerce, Volusion are a few that I’ve set up stores on that are hosted and you pay monthly fee. I’ve experimented with open source shopping carts like Zen Cart, osCommerce and Magento that can be self-hosted.
I recommend that new e-commerce store owners stick with the established players for e-commerce and go with a company that manages the hosting for you. While an open source shopping cart like osCommerce is appealing since it’s basically free other than the cost of your web hosting account, that’s not really the case. You will spend more time getting your site up and running and unless you pay for support you are at risk of having your site go down with no one to fix the problem but yourself. That’s a dangerous situation.
There are plenty of people who are thriving with open source shopping carts, so I don’t want to suggest that it’s a bad solution. I just don’t recommend it for new store owners unless you are a real techie and know something about managing a website.
The truth is I believe you should try and find as many free tools as possible to run your business. I share 30 of my favorites in one of my books called 30 Free E-Commerce Tools: No Cost Software Tools to Build Your E-Commerce Empire without Going Broke.
It’s actually pretty amazing how many free tools are out there to help you build and manage your e-commerce site. Google has an amazing array of tools for keyword analysis, competitive research and analytics. There are free graphic design programs, chat software, email marketing tools. You name it.
Lisa: What are the 3 biggest mistakes you see people new to ecommerce making?
Rob: #1 – Bad Niche or no Niche at all. I’m pretty active on a number of different e-commerce forums and the number one mistake I see is people launching a site that doesn’t support a specific theme or niche. They start a site like Megan’s Emporium and sell products that don’t have any rhyme or reason to them.
I remember one person who asked for a review of their site. They had a built a store that had pool tables, eco-friendly baby bottles, Hookah pipes and second-hand electronics. My first thought was “W-T-F?” How could they possibly have decided that those four product lines made sense together?
The more common niche problem I see is opening a mega-mall type store with thousands of products. There’s just no point in trying to complete with Wal-Mart, Target and the other major retail chains. I find a lot of people who want to open an electronics site or a video game site. They don’t understand that the profit margins on those products are razor thin and the market is ultra-competitive.
#2 – Bad design. People can be completely oblivious to the fact that they have created an e-commerce monstrosity. I see so many poorly designed sites that use seemingly random color schemes, low quality images and illogical navigation. If you have any doubts about whether your site is well-designed…it isn’t. Hire a professional.
#3 – No marketing. Too many people think that the journey is over once they open the store. People tell me all the time that they’ve been online for six months and they’re still waiting for their first sale. I ask them what they’re doing to market their store. Are they building authority backlinks? Blogging? Writing and distributing articles? Creating videos? Tweeting? Posting? Pinning?
That’s when they’re eyes glaze over. They’re shocked that they would have to do all that work to get sales. Everyone seems to think e-commerce is like Field of Dreams…”If you build it they will come”…but it’s not and they won’t.
Lisa: How important is branding for an ecommerce site? Do you have any tips for new business owners?
Rob: Branding is important, but you’re not trying to be Coke or Pizza Hut. What you’re really trying to do is establish your company as an authority in your niche.
Wouldn’t it be great if when someone searched for a product you sell, in addition to your product page, they saw one of your blog posts along with a video review you posted on YouTube in those search engine results?
When they followed the link to your blog, wouldn’t it be cool if they were able to go to your Facebook page filled with recent updates from a legion of loyal fans?
Broadening your reach through blogs and social media is the best way to enhance your credibility and establish authority in your niche. It builds trust with customers and strengthens your brand.
Lisa: Do you think anyone with the right determination can break into the most competitive ecommerce markets or do you recommend people new to this should start in a less competitive market?
Rob: Choosing the right niche is the number one factor for success. You can’t just start selling big screen TVs or popular electronic gadgets and expect to be successful. There’s too much competition. On the other hand, you’ll never find a market with no competition. That doesn’t exist.
My idea of a great niche is one where the products cost more than $100 and it’s not something you would find at a shopping mall or a retail store. If I find something that fits into that description, I’ll then start to do some research and determine how fierce the competition is in that niche.
I’ll also verify that I can find suppliers who dropship the products and determine if there are opportunities for add-ons and repeat sales.
In my book, I give the example of hunting bows as a potential niche. Bows are fairly expensive so they offer a good opportunity for profit. You can cross-sell sights, quivers, cases, releases, arrow rests and safety equipment. An archer will continue to need arrows and targets even after they’ve purchased their bow, so you can get repeat sales and establish a strong relationship with those customers.
Bow hunters are passionate about their hobby. There’s a lot of opportunity to create content in this niche – articles, blog posts and videos. So you could create a pretty loyal following of customers.
Some people believe that you don’t need to be an expert or even care about the products you sell. I don’t agree with that philosophy at all. I think it’s important that you have some personal interest in the products you are selling. You’re going to be writing articles, blogging, creating videos, tweeting, writing copy and all sorts of other activities that will require a real knowledge of the products.
If you don’t care about the products, how can you get your customers to care? Building a niche site around your own interests is a great way to get started. Just make sure it fits all the other criteria that make it a good niche.
Lisa: Are you using social media to drive traffic to your ecommerce sites and if so can you give us a few tips?
Rob: I’ll share one of our favorite techniques for driving traffic and promoting our sites through social media.
We love to do giveaways.
This works great for products that women like or use. There’s a huge network of mommy blogs that aggressively promote giveaways. We partner with a popular, high traffic mom blog and give away a product that might retail for between $50 and $100. So it costs us around $30 – $60. The giveaway will run for a few weeks and people can sign up by becoming a fan on Facebook, tweeting about the giveaway, commenting on our blog, liking a product on the site, pinning a product…you get the idea.
Not only does this generate traffic, it also builds our social media following. We almost always get a boost in sales during the giveaway so the cost of the product is covered by the additional sales.
A giveaway also gives you something to write a press release about, blog about, update on Facebook, tweet and mention across all your social media channels. It’s a great way to build buzz.
Lisa: Do you want to share a little about your ecommerce book and what people will learn from it?
Rob: Sure. The book is called E-Commerce Blueprint: The Step-by-Step Guide to Online Store Success. It takes you through every step of building an e-commerce business. You learn how to get legal. There’s advice on how to find suppliers and dropshippers and how to work with them to source products.
I go in-depth into how you research which products to sell and how to do competitive analysis. You learn how to choose your shopping cart software, what your up-front and recurring costs will be and how to choose a merchant account provider.
There’s information about on-page and off-page SEO along with a lot of practical information about how to market your store on a budget.
The book covers every aspect of e-commerce from the moment you decide to start your business through building your store and ultimately driving traffic, converting sales and handling customers.
Most chapters end with instructions to Take Action Now. Follow those instructions and you are guided through the specific tasks that will take you through the entire process of building and marketing your niche e-commerce site.
There’s not a lot of sugar-coated, push the easy button, secret path to riches fluff. I think too many people underestimate the effort required to be successful in e-commerce. It’s not easy, but it is fun and really rewarding once you gain some experience and see your store becoming profitable.
The book is really the guide I wished I’d had when I started in e-commerce years ago. I hope your readers find it useful. I also have a blog at Mister E-Commerce where I offer advice and cover what’s happening in the world of e-commerce.