How to Start, Run and Grow an Ecommerce Store

John LawsonEvery week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9 pm ET. This is excerpted from my recent interview with John Lawson, CEO of ColderICE Media (@ColderICE). John is an expert on selling online. He is the CEO at ColderICE Media, Amazon #1 best-selling author, IBM Futurist and eBay Influencer. John is celebrated as one of the Top 100 Small Business Influencers in America. For more information about John, visit JohnLawson.com or
ShoeStringKing.com.

 

SmallBizLady: John, let’s say I have a product and I want to get started selling online, what should I do?

John Lawson: The first thing you want to do is figure out where you want to start selling. There are two primary ways to get started online.

1) The first option would be with a regular e-commerce store. A website that is your own the domain. By domain I mean it has an address like www.yourstorename.com. That would be where you send people to buy your products.

2) Another option is using a marketplace. Marketplaces are like internet malls for lack of a better term. These are sites like Ebay, Etsy, even Amazon where you would list your products, and they would do the marketing for you. It is very competitive, but it does have some built-in traffic that you can easily tap into.

Both of these options are viable ways to start, and both have unique benefits and challenges. You can do either of them in isolation or even a hybrid of both. But my suggestion is that if you are just getting started you probably want to concentrate on one at a time in the beginning.

 

SmallBizLady: How would one go about determining which option is best?

John Lawson: Remember there is no right or wrong path, just differences. If you are an established business as a brick and mortar store, and you just want to get online, and you would do your own shipping, I like having your own domain.

Doing a web store on your own dot com will help with branding and could really increase foot traffic as a possible added benefit. It’s called the halo effect. If I am looking for a product and you happen to be selling it, suddenly I see that you have a store near me, I might be inclined to drive over and visit. But even more likely the fact that your site is attached to a physical presence makes it more “trustworthy” to online shoppers and can increase buyer conversions even online. Hence the term, “halo effect”.

Marketplaces have built-in audiences, and that is the boom factor for them. You can list products on a marketplace and optimize it with the right title and keywords, and you could be selling in hours. Driving traffic to your website is your responsibility. In a marketplace, they do that for you. But it is NOT free! Web marketplaces charge as much as 15% for the privilege of selling in that marketplace. But you do get what you pay for…eyeballs. And eyeballs can and should turn into sales.

 

SmallBizLady: What if I don’t actually have a product to sell yet? Where can I go to find products?

John Lawson: That’s a great question and it is probably the #1 question people ask me…where to find products to sell? Personally, that is the easy part. You can find product EVERYWHERE around you. The harder part is finding the RIGHT product to sell.

The first place and easiest place to find products are in your own house. I know it sounds silly, but there are things in your home that are worth lots of money. When I first got started, I would sell used books from my own bookshelves. Used books are a huge category on both Ebay and Amazon. As a matter of fact, used media of all types can actually be sold online. Everything from LP’s to Video Tapes to DVD’s all of it can be of value.

What I tell people is that the first way to dip a toe into the water is to sell used items around your house on eBay to get a feel for the process. On Amazon I would say try used DVD in good condition and the original packaging. Do this to get a feel for the marketplace and how to fulfill orders to a customer.

For new products, there are wholesalers in your area near you, somewhere. What you will need before you speak to them is a business license. That is very easy to get to your local government office, contact them for the process. Once you have that license, it becomes your golden ticket. With it, you can find manufacturers and wholesale business owners about purchasing from them.

Also, it will allow you to go to trade shows. Look for trade shows in your area and just attend. They are usually FREE, and you get in with your license. A good resource to find shows near you is TheTradeShowNetwork.com, it’s online and lists many of the trade and gift shows.

Another place and this is guerilla for sure; I have found great products right by my house by cruising thru the business parks in my area. Often these buildings have row and rows of offices, and many of them are product manufacturers. I source some eyewear this way, but simply walking in and talking with the owners, asking them about what they did and what they sold.

Keep in mind that these guys who are product manufacturers are looking for sellers just like you and they are happy to talk to you.

SmallBizLady: What about online sources like Alibaba?

John Lawson: Alibaba is one of the most renowned B2B platforms. And one of its core businesses is the “China Suppliers” service. More and more online sellers are choosing to source products via the online B2B platform. The Alibaba platform is a comprehensive domestic & foreign trade platform. Its shops and businesses cover most industries. With more and more people doing business there you do want to take a few thing into account when finding sources to protect yourself.

  1. Avoid Free Account Members – a seller that is serious about offering quality products, they will be willing to pay fees for a Gold account
  2. Avoid Big Brands, Especially Electronics – Branded goods are by far the most common product in these scams on Alibaba,especiallybranded electronics.
  3. Look At The Age of the Account – The longer an account has been running, the less likely it is to bean scammer
  4. Consider The Payment Options Being Requested -Western Unionand bank transfers arefavouritesof scammers because they can often avoid being traced by these methods. Upfront payments in full are also demanded by scammers for obvious reasons.
  5. Ask For References Outside Of Alibaba – Get references from other companies and customers they’ve worked with in the past, ideally in your own country.

SmallBizLady: How can people research and find hot selling items?

John Lawson: 44% of buying consumers today will start their search on Amazon. That makes Amazon a very powerful product search engine and not only for buyers but also for merchants. An easy way to see what is hot and selling is to go to Amazon.com/Best-Sellers/zbgs. That URL takes you the right to the Amazon best sellers list of products in any given category.

Google Trends (trends.google.com) is another resource you can use to find information on what is selling and what people are looking for. We used Google Trends when it came to selling our bandannas online. Google Trends told us that more people misspelled the word bandanna by using only one “n”. So we made sure that we optimized our product titles and descriptions so it would show up for both the proper and the misspelling of that word.

 

SmallBizLady: If I want to start my own store online what e-commerce solutions are there for me?

John Lawson: The e-commerce store selection today is vast. Where there use to be a handful of options today that are probably more than 100 out there. The selection for a newbie can be overwhelming. I tell my students that you really want to figure out what you need and want to have in a store solution. Break it down by the need in one column and wants in another.

You are basically going to get all of the things you need to be covered and as many of the things you also want when comparing the solutions. Having a solid list of things really helps in making your selection. Remember that all platforms are NOT the same, there are differences, and you want to pick the one that works best for you and your back office. In my free online training class, we go thru some of the options and compare them with you. Please check that out at StartTheStore.com and sign up for that FREE class.

A few things you want to consider are:

Inventory size: how many SKUs you will need to manage on your store.

Multi-variation: do you need color and size selection options? Or maybe you need fitment options for customizing items.

Self hosting or hosted: Will you be installing it yourself or do you want an all in one solution where they are hosting the store for you?

Back Office Compatibility: Will it work with your other back-end solutions?

 

SmallBizLady: Once I get my own store set up, how would I start to drive traffic?

John Lawson: Start thinking about traffic and optimization BEFORE you build the store. What I mean by that is having well-optimized product titles, and descriptions can go a long way into making your store “findable” online.

Great pictures sell products, take good shots of the product and also the product in use shots. People want to see products being used. Capturing action shots can really get your items noticed, and they are good fodder for social imagining sites like Pinterest and Instagram.

Of course, social media can not be overlooked when it comes to e-commerce. I pinned a best seller on this subject called “Kick Ass Social Commerce for Ecopreneurs” that goes deep into how best to use social media to sell products. One of the key ideas in my book is the fact that it’s not about likes, it’s about sales. There are strategies that you should take to make actual sales via social. Who cares if they “like” you? We want them to buy something.

Social media and website optimization are what we call earned traffic. The other and often the fastest way to get traffic is with paid traffic. Paid traffic is online advertising using things like Google Adwords, Facebook Ads, Sponsored Pins on Pinterest, etc. Choosing and starting the right ad strategy is tough. What might work for one business may not work well for another. These are things you run into. My recommendation is to start small, test, optimize and then grow from there. It is very rewarding financially once you get the paid marketing dial in just right.

 

SmallBizLady: How long does it take to start making money in e-commerce?

John Lawson: That really is a relative question with no real answer. You can put a popular item up on Ebay or Amazon and sell it within the hour. You can start a store and have orders the next morning. That can happen. But I say you really want to give it up to 6 months to start your empire. You want a business that will last and grow and to has that; you must give it time. Don’t fall for the notion that e-commerce is easy, it’s not. It is very rewarding, but the notion being sold off “build a site” and people will find you is a misnomer. You do need to do some work.

Having said that, we have had many that started and within month one they already had made their money back and were on their way to profits and success. You can do it!

 

SmallBizLady: What shipping company should I use? FedEx, UPS, Post Office?

John Lawson: Over the years that I have been in this business I have used them all. You will probably end up with relationships with all of them in one form or another. When it comes to items less than 1 lbs,

it is hard to beat the USPS starting out. But once you scale that to hundreds of packages a day, FedEx and UPS have solutions that beat USPS

Both FedEx and UPS have similar services these days, but FedEx is my company of choice. We have been with FedEx for nearly a decade and really have been well served by them. FedEx does Ground, SmartPost and their specialty is still overnight, and rush delivery none compares to them on that level.

We have used them all for different reasons and times. Your suppliers may have a different account than you. So many days all three trucks will come to our warehouse. The key is to know your reps and has a good relationship with your driver/carrier. They are part of your team, and if you make them feel that way, they will bend over backward to help you succeed.

 

SmallBizLady: What are your thoughts on drop shipping?

John Lawson: Drop shipping is a tried, tested and viable business model. I am not a fan of it on marketplaces like Amazon because you don’t control the inventory. Mistakes in delivery or missed shipment windows can cause your accounts to be shut down on Amazon, so I like to have control over that process.

On your own website and even Ebay, we have seen companies do great things using drop shipping. A key to finding a good drop shipper is the actually contact the manufacturer directly and create a relationship with them. Again, the thought of this is easy riches with no work is just crap. You need to do your homework and find good suppliers, and you will be in great shape.

For those who have the product but prefer not to ship it themselves, you can get Amazon to ship it to you. There is a service inside of Amazon call FBA which is “fulfillment by Amazon” for a fee, Amazon will take your products and warehouse them. When they sell, Amazon will pick it, package and ship the items on your behalf.

 

SmallBizLady: How do you handle sales taxes?

John Lawson: That is a deep subject matter and somewhat a muddy situation because if you’re shipping products to Amazon, there’s a thing called “Nexus,” where it’s saying that if you have an entity in a state then you have to pay some taxes for the state.

Since Amazon is so wide it has warehouse entities in many states; that becomes a confusion for some sellers that use FBA. If you’re an Amazon seller using the fulfillment by Amazon your products can be in their warehouses and that might be considered a nexus for you. You want to engage a tax professional for guidance on how to proceed.

If you are not using FBA, and you are self-fulfilling right out of your own warehouse, and that’s the only warehouse you have, then you’re only responsible for sales in the state where you have that warehouse, i.e. nexus.
I live in Georgia. Our warehouse is in Georgia. We pay taxes on purchases only from Georgia residents, to Georgia people. If you’re living in a tax-free are like Nevada, Texas, Florida, etc., you wouldn’t pay any taxes for those items being shipped.

 

SmallBizLady: Last question, this is about pricing items…How do I know how much to mark my products up?

John Lawson: Fantastic question, and that really depends on. If you’re selling a Ferrari, and it’s a $200,000 car, I don’t need a huge markup. I’ll take 10% and be happy, but if you’re selling a lower-priced item, like under $20, under $25, that 10-20% may not work so well.

I always tell students that in the industry, wholesale is usually half of retail. You really want to be getting the product at half of wholesale. Or 25% of the retail price. That is a good marker for me. The reason I say that is if it’s a $20 product you’re looking to spend about $5 on that item. Now if that product is not moving as fast as you thought or the market has shrunk and all of a sudden it’s not doing what you would have hoped. It becomes a lot more simpler for you to get $5 back on that product than it would be if you paid anything close to retail.

You make your money when you buy your product; not when you sell your product. Remember that. You make it when you buy, not when you sell. I’ll see people, and they see an item they like, and they say, “Oh, dude, I know that these sell for $25, and it’s $18 right now. I could make $7.”

Not a good look because you never know when somebody else is going to come in that market that also found it for $18 and just undercut you because they want to make $2, and they sell it for $20.

Now you’re in a race to the bottom, and it’s really hard now for you to get your money back out of that product. Had you bought that product at the right price using what we just talked about and that competitor came in at $18? It wouldn’t be hard for you to compete on that same price and match it or even beat it.

 

If you found this interview helpful, join us on Wednesdays 8-9 pm ET; follow @SmallBizChat on Twitter. Here’s how to participate in #SmallBizChat: http://bit.ly/1hZeIlz
For more tips on how to start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

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