Thinking Entrepreneur
An owner’s dispatches from the front lines.
In June, I wrote in a post that I’d decided I am not in the e-commerce business. Actually, I concluded, I am a brick-and-mortar retailer who happens to have a good website. The point was that I have to be careful about the resources I devote to building my web business because e-commerce sites can turn into black holes.
But that was way back in June. Shortly after writing the post, I spent several days immersed in the brave new world wide web at the Internet Retailer Conference in Chicago. And with another couple of months to process, I have come to a different conclusion. Maybe I am in the e-commerce business — but there are different degrees of commitment, and I still need to allocate resources intelligently.
Whether you are the captain of an aircraft carrier or you take a small sailboat into the ocean, you are a sailor and you need to understand some basic things about the sea. In one case, you have tremendous resources and thousands of staff at your command to accomplish a big mission; in the other, you are far more hands-on, and you might just drown along the way.
At last year’s Internet Retailer Conference, I got seasick. There was way too much information and jargon, and there were way too many sales representatives who were unable to communicate with a non-tech entrepreneur who started his business before the personal computer was invented. This year, I went with a little more experience and a different mindset. I realized I needed to play e-commerce director, whether I liked it or not. This year, I left the show with the feeling that I had sat through enough presentations and talked to enough vendors to get a handle on what my company needs to do.
What I found interesting is that quite a few speakers and attendees had come from similar backgrounds, from old family businesses that their parents or grandparents started — and now a new generation was taking the businesses online. Still, the conference didn’t really speak to me directly. There were lots of presentations about lots of topics, but I kept looking for one called “The 10 Things You Need to Know Now If You Are Building a Business Online.” I never found it.
So, based on my own reporting and analysis, I have made my own list. Now, I must remind everyone: I am not a technology entrepreneur or reporter. I am just an entrepreneur who is doing a fair amount of business on the web, but not enough to justify having an e-commerce director, a large staff or venture capital. This is my attempt to cut through the jargon.
Mobile: It is growing like crazy, and if you are serious about competing, you have to have a website that will work well on mobile devices. You have to know about “responsive design,” which allows sites to adapt to whatever device someone is using. Of course, as always, it is more complicated that that.
Soumen Das, chief executive of a company called UniteU, told me about a study that said responsive sites on average can take 18 seconds to load on smartphones. “That kind of performance is the kiss of death,” he said. His company, he said, has developed a hybrid approach that can cut this time to as few as four seconds.
Mobile apps: Building your own e-commerce app is for the big guys. Apps cost a lot to create, and then you have to figure out a way to get them on people’s devices. Fuhgedaboudit.
Personalization: I had an interesting talk with T.J. Gentle, who is the president of SmartFurniture, a site that specializes in what he calls prescriptive personalization. It analyzes data to figure out what the customer likes and then presents them with options. He says it is working, and the company is starting to make money. That might not sound like a big deal, but if you do a little research, you will see that a lot of online furniture sites lose money.
Abandoned shopping cart e-mails. There is money to be made by e-mailing customers after they have left your site and trying to lure them back, frequently with a discount — the web equivalent of a shopkeeper chasing someone down the street to try to close a deal. Personally, I think offering a discount wreaks havoc with whatever price integrity a retailer may have, which trains customers to wait for the discount. And that’s one of the ways you can lose a lot of money in e-commerce. Maybe red is the new black?
Pay-per-click. I know a lot of business owners who have stopped using pay-per-click advertising to find new customers. According to an article in Internet Retailer, small retailers spend nearly 20 percent of web revenue on marketing — nearly twice what large retailers spend. Keyword costs have gone up dramatically, because there always seems to be a big company that bids up the price to a point that makes no sense for a small company. I’m sure pay-per-click still works in less competitive situations.
Live chat. It is becoming more and more popular, but it requires a real commitment, which means a big, well-trained staff. This seems to be one of the things that fall under the category of do it right or don’t do it at all.
Brand advocate. I’m thinking I might need one of these. Brand advocates manage your social media and promote your business. Perhaps this person already works for you and is in charge of marketing. Or maybe this is a whole new position. And this is where it gets complicated: An additional salary could be a problem for me (I’m the profit advocate). Might the position pay for itself? That is a question that many people are asking. This concern has to be balanced with what I call social media guilt: Am I doing enough with social media? Is anything ever enough?
Video. Online video is growing increasingly popular to generate sales, and it seems to work — both on websites and on YouTube.
Retargeting. If you shop online, you know it can sometimes feel as if you are being stalked. That’s because you are. Once customers look for a particular product, its ads will track them from site to site, like gum stuck on a shoe. As a customer, I hate them. As a seller, I can’t ignore their potential. At the moment, they are reasonably priced. The little voices in my head are still arguing.
Company reviews. I met with J.P. Barnych of Trustpilot, which provides a platform for businesses to encourage their customers to write reviews and share their experiences. This approach helps generate real reviews from authentic customers, and Mr. Barnych said his clients report at least a 10 percent improvement in conversion rates.
That’s my list, and I emphasize it is my list. It is not meant to be all-inclusive, and it includes both fact and opinion (I’m not entirely sure I know which is which). Let’s discuss!
Jay Goltz owns five small businesses in Chicago.