Note: This interview was first published on September 23, 2002
Earning online is not easy. In the early days of ecommerce in the 90s, many high profile dot-coms failed by the wayside. These businesses closed because they were not able to find a big enough market, or their funding run out before they can make a profit. So what about the small and home-based online businesses? What is their future in e-commerce?
We interviewed Lee Traupel, founder of Intelective Communications, Inc. (now a Social Media ROI Strategist for Linked Media Group.) Lee has 20 plus years of business development and marketing experience branding products and services and positioning companies in today’s warp speed digital economy. He lives, sleeps, eats and breaths marketing and has been helping companies develop a web-based go to market strategy since the fall of 1996 – making him a grizzled veteran in the interactive marketing space!
Below are Lee’s expert advise on how small businesses can develop their ecommerce strategy and thrive (and survive!) online:
With the big dot-coms dying, how are the small e-commerce sites faring?
Many of the dot-com companies did not have sustainable business models and should never have been funded by the investment community. The true survivors (“digital pioneers”) are the hundreds of thousands of small e-commerce web sites that have correctly identified a market niche (global or local in some cases) – they are using the web to communicate with and market to new customers by blending traditional and interactive marketing processes. But, we are in a tough global economy right now and I think it’s challenging for many small companies that don’t have ready access to capital to see them through challenging times. Many are surviving and growing by cutting costs to the bone, adding value to their products or services to distinguish themselves from their competitors and working very long hours.
Can small and home-based businesses really compete with the big guys on the ‘Net? In what ways?
The Internet to a certain extent is a replay of what many of us saw in the “PC boom times” in the mid 1980’s. It’s maturing quickly for better or worse and the barriers to entry are rising for SMB/home-based businesses. It’s a little trite to say, but I think small businesses have to compete by identifying niche markets that are too small for the big e-commerce sites and/or by offering a level of service(s) that the big guys can’t offer. And, you have to stay close to your customers, be flexible and constantly hone your business model and stay nimble.
How should small businesses organize their e-commerce initiatives?
Identify who their customer is, what their needs are and then build an e-commerce initiative that really works for them! Most e-commerce web sites fail because they are too complex for the user and/or the back end e-commerce components (shopping cart) don’t work for 30-40% of the visitors hitting the web site.
A site must be “well designed” – meaning you can navigate through it in 2-3 clicks, with “universal” menus at the top and bottom of the page and a “local” page menu on the upper left (in most cases); with content that is compressed into 2-3 sentence paragraphs, without a lot of fancy graphics and or flash-enabled pages; incorporate fast load times – people want baseline information presented efficiently; i.e. what the product is, what it sells for, what the return policy is, who the company is and they want to see a formal privacy statement which should be adhered to.
Web site appearance is becoming increasingly important – the site must look professional and up market – a competitor is only one click away on the web.
What are the major challenges that small businesses face in e-commerce?
There are multiple challenges facing small businesses on the web – so it’s hard to hone in on just a few! Having said that, the real critical challenges include:
- getting the e-commerce business off the ground by building/managing a web site that can expand along with the business,
- continually updating the content so it’s perceived as fresh,
- driving qualified traffic to to sustain and grow revenue,
- trying to select and manage a bewildering array of offline and online marketing processes that include print, PR, opt-in e-mail, search engine optimization, sponsorship deals, affiliate programs newsletter inserts, text link advertising, newsgroup seeding, etc. Most SMB companies simply don’t have the time or staffing resources to put together a comprehensive marketing plan; but this is becoming increasingly more important as the web matures.
Any tips on how small sites can turn their visitors into buyers?
- Ensure customer references are foremost in all marketing processes – nothing sells on a web site better than references to other customers.
- Develop hard hitting content (without being crass) that sells and speaks to the customers with “WIFM” statements (“what’s in it for me”).
- Create a sense of urgency by offering “time sensitive” offers if this fits the business model.
- Continually ask customers through surveys why they bought or of equal or more importance, why they didn’t.
Can small sites build customer loyalty? How?
I don’t think there is any magical formula for building customer loyalty – it almost always comes down to “excellence in customer service.” And if at all possible, exceeding the customer’s expectations by providing more than what was promised or implicit in all marketing materials.
How can small and home-based businesses avoid fulfillment headaches that plaque the big dot-coms?
It’s critical for an e-commerce site to build effective partnerships with third party vendor and/or suppliers. We live in an age of specialization and there are many companies that will handle all order fulfillment processes – case in point, Fed Ex and UPS have established “ebusiness” tools that help small businesses to integrate their order entry and/or back end fulfillment with Fed Ex or UPS for a seamless tracking process. But, technology is not an all-encompassing solution – a small business has to develop a practical system in-house for keeping track of their customer’s orders in some or most cases.
To succeed in e-commerce, what should a small business do?
- Build a quality web site (can’t emphasize this too much, perception is reality on the web, for better or worse), that can be expanded as the business grows, target/target/focus/focus on a particular market niche that is underserved; i.e. you can’t sell the latest top ten CD and compete with Amazon but there are hundreds of smaller “musical sub niches; i.e. classic jazz, that you can specialize in and dominate.
- Drive traffic to the web site using integrated marketing processes – start slowly if the marketing budget is small.
- Partner with larger companies if at all possible to offset marketing costs, reduce time to market and to drive incremental revenue opportunities – be sure to identify common goals that force each party to invest resources in the partnership.
- Setup Google Analytics or any web site traffic product and then use it to identify what pages are being visited on the web site, how long people are staying, where they are coming from, what links are broken, etc. Then, use this valuable information to refine and continually optimize the web site and marketing processes. Web site traffic is becoming increasingly more expensive to develop – it’s critical for a small business to know where traffic is coming from and what people are doing when they visit a web site.
Any other advice/tips for the small business entrepreneur doing business on the Web?
The web is not a panacea for instant success – small companies must be patient in building and developing their brand and or market presence. Think about and build a virtual business model to leverage costs – our staff is scattered across three continents and three states. And, two of our most important supplier/partners are outside the United States. Many people forget the real “killer application” on the web is plain/vanilla e-mail which is rapidly being augmented with instant messaging as critical communications tools. We use e-mail and instant messaging to stay in touch with each other and our vendor partners all over the world.