Author and consultant Shirley Tan has spent some time in a place other e-merchants have probably visited. Yet she was able to work through her challenges and even sell her business, AmericanBridal.com, to a major Internet company. Luckily for other merchants, she has shared her hard-earned expertise in her book, Ecom Hell: How to Make Money in Ecommerce without Getting Burned.
Part 1 of our interview with Tan covered her book's special appeal, her own bad experiences as a merchant, niche markets and a major reason why e-commerce businesses fail. Here, she further explores challenges e-commerce businesses face, discusses "hidden" revenue sources and how to remain sane while running your e-commerce business!
Schepp: As a consultant, what have you found is the biggest challenge most veteran e-commerce merchants face, and what advice do you typically offer?
Many merchants have set ideas about how to do things and have a hard time following through on the things that would make a difference in their business
Tan: Since my goal is to help people, sometimes we have to have a difficult conversation. Many merchants are stubborn; they don't want to try new things. They have set ideas about how to do things and have a hard time following through on the things that would make a difference in their business. Sometimes, when they are willing to try new things, they just scratch the surface and then quit too early. So they wind up not fully committing to the project they took on. Then they are off to look for the next silver bullet that is promised to solve all their problems.
So my advice is: Don't be too quick to sign up with all the latest cool gizmos. Think about how this solves your problem today and in the long run. Then, should you still move forward, ensure that you see it through. Make sure you write down the goals you want to achieve with every project you take on and follow through.
Schepp: Your blog mentions that you educate e-commerce merchants about how to be profitable while maintaining their sanity. OK, we'll bite. How can e-merchants do that?
Tan: By writing out a business plan, including short- and long-term goals, then revisiting that business plan to ensure that you're on track. Also, sharing and being transparent with your staff. I have seen business owners who don't want their salespeople to know how much they sell, in fear that if they knew how much the company made, they would ask for more money. I mean, that is just no way to run your business. You can absolutely do that if you want to be a solopreneur, but at some point your company will hit a wall because you can't do it all by yourself.
Other strategies are foundational, meaning they should have started with them in the first place. Going back to right the wrong is difficult. An example of this would be documenting work processes. They feel that it takes too much time, but while it's true that it takes time, it doesn't take as much time as they think. Many merchants live for today, and fail [to plan] or have poor planning for tomorrow.
If you can personalize a product, you can get a better margin on the item. The big players are not as interested in this because it deviates from their pick-and-pack model
I recently heard a story directly from a woman who shared on Facebook that she pretty much had to start over in her business. The gist of it was that she got sick and there was no one else who could do what she does. Her temporary help, who only handled bits and piece of the operation, quit on her. Then she had to take some time off to get treatment.
Now that she is recovering her health, she also has to work on recovering the loss of sales for her business. The problems she faced could have been avoided if she had structured the business to run without her. Perhaps it wouldn't have run at 99 percent without her, but it would have still continued even at 85 percent. That certainly would have been better than zero. This kind of story really troubles me because these are the aspects of business ownership that are within our control.
Schepp: Your book also mentions hidden sources of revenue e-merchants should explore. What are some of those hidden sources?
Tan: I really like the loyalty program, because it rewards your customers for doing business with you. It also forces you as a company to operate in a way that appeals to your customers—not just today, but for a long time. I ask my clients, if they had such a program, how would they do things differently?
I like anything that is high touch, like personalization and customization. If you can personalize a product, then you can get a better margin on the item. The big players are not as interested in this strategy because it deviates too much from their pick-and-pack model.
Continuity programs are excellent as well, especially if you sell consumable products. If the customers can get their shipments delivered to them just in time before they run out, and without any extra effort on their part, then you provide them a wonderful service. You provide a mechanism to save them time.
You might also include some kind of reward for purchase frequency, so you're saving them money on items they already love and use. Finally, because you know ahead of time the demand for the goods, you can plan out your business better. You can gauge inventory demand, manage cash flow better and everybody wins. The hardest part of business is not knowing when the next order is coming in. A continuity program solves this problem.
People are too caught up in the next killer product. I believe it's more important to focus on providing excellent customer service and value to your customers
Schepp: What have we missed that you'd like to touch on?
Tan: There has never been an easier time to get into e-commerce than today, but there has never been a time that is more challenging to run and grow an e-commerce business. There are many new technologies that make it affordable to start an e-commerce business. But because of this lowered barrier to entry, the competition of the landscape is fierce.
Then you have Amazon to deal with as well. It's a love/hate relationship—you want to sell on Amazon because they have all the eyeballs, but your margins will be slim (for most categories). You will need a very strong strategy to win and then execute well. The margin for mistakes these days has greatly diminished.
Also, I think people are too caught up in the next killer product. I believe that it's more important to focus on providing excellent customer service and value to your customers. Killer products come and go, and they are only as good as the next knock off, or the next mark down. Then it becomes a race to the bottom.
But when you win over your customer's heart and mindshare, you can make mistakes, and they forgive you. If you win your customer's mindshare, meaning that when they think of a product/problem the default wire in their brain says go to XYZ company, that kind of loyalty is almost as good as printing money.
Schepp: Thank you, Shirley!
Read Part 1 of this interview.