What I love about the E-Commerce industry is that it provides opportunity for everyone. It’s a great business leveller.
The continual innovation of technology and product can provide infinite scalability for an Online Retailer. Plus there’s an industry wide openness and willingness to share what they have already learnt with those new to selling online.
Personally, Entrepreneurs fascinate me…. I love being around their enthusiasm, optimism and tenacity. I love hearing the stories behind their business.
It’s never been easier and there’s a lot of information available to start an Online Business. The learning curve for a new business owner is huge. You have to become the resident expert of all things business and you need to work to sustain profitable growth of your E-Commerce business.
Unfortunately, every week we read about a start-up, with a fantastic idea, who despite having amazing initial take-up, makes the heart wrenching decision to shuts it’s doors. So let’s talk about growth and longevity of selling online. Specifically, let’s talk Profit and what can be done to maximise it in the short term.To do this, I sought out E-Commerce industry leaders to share their top tips on selling online - Profitably.
So what can you implement quickly to increase profit
Tip 1: Invest in Conferences to Stay Current and Make Valuable Connections.
Phil Leahy, CEO Retail Global is passionate about making connections and has founded 2 major annual conferences for digital retailers. The Retail Global conferences were launched to cater for new businesses who will potentially become the large E-Commerce businesses of the future. Targeting entrepreneurs who are at the “Start-up to Scale-up” sector.
The conference content is information rich, without the pitch. Offering 7 streams designed to cater for businesses at every level. If you are considering selling online, this is a great event to get you started.
Phil is adamant that the most profitable information and connections are made from the people you meet over a drink. He refers to an Online Retailer who recently sold his $20million business, telling Phil that he wouldn’t have been able to scale and grow profitably, if he hadn’t invested in attending conferences and making connections.
Phil says “In the E-Commerce industry, innovation is key. Profitability relies on keeping staff low and sales high, so being up to date with the tools available to cut workload will help online businesses be competitive. These days Online Retail businesses need to be multi channelled, so stay up to date with selling opportunities provided by eBay and Amazon, as well as the other sales channels like Marketplacer, Catch and Facebook.”
Tip 2: Build your Business with Authenticity.
Irene Falcone has had mega success following her passion for health and wellness and living a toxin free life. Her business grew out of her personal journey, which she turned into a blog, which then evolved into a hugely successful online retail business Nourished Life, now set to turn over $20 million in it’s 5th year.
Her tip is to “Keep it Real”. Everything she does is with authenticity, from how she communicates to her market, to how she manages her staff. Her other tip, regularly portion money away to cover costs and taxes AND make sure you don’t spend more than you make. 5 Stars Irene!
Irene Falcone - CEO Nourished Life
Tip 3: Choose Proven Products - Learn the Process of Analysing Data.
Neil Waterhouse, founder and host of multiple Aussie eBay and E-Commerce Sellers Meetup Groups, advises start-ups to focus on proven products with a track record. He teaches methodology on how to pull data and look at the numbers. “Everything should be about the numbers, taking out the guesswork”.
A common mistake for new eBay sellers is focussing on small cheap items with small margins. Others think they need a large cash investment to import inventory, however you don’t need that, you can run a cash flow positive business using other strategies, like drop shipping. The other common mistake is that they use a best guess marketing strategy. So it’s important for them to choose a strategy based on data - there is no need for guess work.
Neil suggests you look at products with a minimum 90 day history, analysing 2 Key product data areas when choosing E-Commerce products to sell: Profit (sell price - cost price - fees) and Velocity - how many times does that item sell per month.
He says, “The difference between a small eBay business and large business is how many of those items you have, that regularly turn over. Neil’s Blog is a rich source of industry specific information, full of ‘how to’ blogs and videos.
Neil Waterhouse - eBay Multi Million Dollar Seller | Author | Speaker and eBay Coach
Tip 4: Get Real About Expenditure and What your Product Actually Costs.
Row Murray recommends asking yourself, what costs are really going into getting my product to my customer? “Online Retailers have a dream vision of how they want their product to look when arriving on the customer's doorstep, however often the fancy packaging and presentation can double the actual cost of the product, blowing away any margin”.
Another common mistake is that they fail to factor in their time. As a business owner, you need to be really honest with yourself. She told me of a well-known clothes designer, who did this exercise only to discover he was working for $2.80 an hour. Why would you do that? Row Murray - Founder, and Digital and UX Director of Kenobi and Board Member on Vic ICT4.Women
Tip 5: Always Look to Automation Tools to Improve Productivity and Profitability.
Nathan Huppatz, an online retail trailblazer, has learnt a lot since he began back in 1999. He recommend, “small online retailers need to find ways to be more efficient to optimise their time. Time is often the thing that limits their growth. They spend too much time doing operational stuff and not enough growing their business. Look at software to automate the business, software to manage inventory etc. All those tools to really make their business hum along”. Throughout his online career, he has always looked to technology to optimise and problem solve.
He also adds that medium to larger businesses, should look at increasing their average sales $ amount. Look at ways to offer the buyer more perceived value to get a higher order value. Over the course of a year this can make a massive difference to overall margin. The process of buying from you needs to be easy and streamlined.
Tip 6: Make Sure you and your Product can be Found Easily Online.
Tim’s first tip - use well researched Product Key Wording. “Having good product data sitting behind the product is like the foundation of a house. You need to understand your customer and ask yourself what will a buyer call this product?” Cosmetics are a classic example of missed opportunity due to improper Product Key Wording.
He also recommends supporting your sales channel(s) with a web site, even if it doesn’t have its own sales funnel, it will increase credibility and perceived value. Tim believes customers are increasingly placing a value on the buying experience, which if it’s good creates trust. Trust equals repeat sales, but you must ensure your Multichannels have consistency of price and product.
Tim advocates getting an independent critique of your site. Ask someone you trust to give an honest opinion. Have them look at your site with fresh eyes, focussing on your site’s credibility and missed sales opportunities of related products.
Tip 7: Consider Selling Internationally.
Edward Wiley of OFX - a global money transfer company, believes that if you’ve established your business in Australia, it’s not a huge step to enter the international market, which opens up a whole new customer base of 100’s of millions. Of course, look at saving on foreign transaction fees by using money transfer services designed specifically for Online Sellers.
He also adds “The trick to optimising online sales is to grow a brand around your central product. Optimise affiliate sales if you can’t afford to import other products yourself.”
Edward Wiley - Alliance Manager | OFX
Tip 8: Treat your Business as an Investment.
Neil Asher’s tip is to start thinking of the business’ expense lines, such as people, marketing, sales and branding as business assets. Look at reinvesting in these areas to get a return. His suggestion, start with marketing, specifically focused toward your ideal customer.
He also points out that it’s essential that your shopping cart is an easy experience for your customer. His motto - test, test and test your shopping cart. Similarly make sure your shipping policy is straightforward and easy to understand. Having too many options will confuse your customer.
Tip 9: Become the Boss of your Cash Flow.
My best advice, seek help early for the money management side of your business to form good money habits which will carry you and your business through start-up to scale-up and make sure you pay yourself.
Entrepreneurs are people with great ideas, can spot an opportunity a mile off, they are big on action and run their business on energy and enthusiasm. Let’s be realistic, sitting down to do the accounts, read a Profit and Loss, is a drain on that energy. Very rarely is the financial side of operating an E-Commerce businesses the most favourite task for online entrepreneurs. In fact it’s the most procrastinated task of them all. Yet “Cash Flow issues” are nearly always the reason Online Retail businesses struggle.
“Our problem wasn’t convincing business owners that it is important to manage the financial side - it was finding a way they can manage the cash, which is in tune with human behaviour and their unique personality traits”.
Tanja Woods - Owner of Thinking Cloud
Article written by Tanja Woods
Tanja Woods and her husband Alex, own Thinking Cloud. As Profit First Professionals, they are on a mission to support Online Entrepreneurs by providing Profit and Growth Expertise. They want business owners to experience positive outcomes, like a sense of control, gains in confidence and reduction of stress, which all come from proactive decisions. They implement and teach a proven strategy that ensures Online Entrepreneurs are actually paid by their own business. It's a proven system for money management based on human behaviour, called Profit First. Contact them here.