Entrepreneurs’ Top Tips for Running Online Businesses

Written by Tom Barry Tuesday, January 12 2010

By all rights, Jackie Schwitter's web-based store should be taking a big hit in the ongoing recession. Texas Treats sells Texas-themed gourmet gifts ‒ from tortilla chips shaped liked the Lone Star state to pecans and pralines, coffee mugs and aprons.

It's not as if she sells the necessities of life.

Instead of tanking, though, her five-employee e-business (www.texastreats.com) is growing at a healthy clip, thanks largely to savvy marketing that's making increasing use of blogs and other social media.

"Creating a website is the simple part," she says. "Figuring out how to market it is more [complicated]. Google 'Texas gift baskets,' and thousands of companies will come up. If you don't market yourself, nobody will know you're out there."

Schwitter, who started the business as a hobby, has some advice for aspiring online retailers: "Research it all very carefully, do everything you can to market your site, and keep looking ahead. What looks really great today may not grow with you."

Those are words to the wise because launching an online store is a tricky and exacting business. Each year, hordes of ambitious retailers take to cyberspace. Some succeed but many fail, the legacy of starry-eyed thinking and poor planning. An online store is just like any other business, except when it's not.

Maria Kalamas, assistant professor of marketing at Kennesaw State University near Atlanta, Ga., says new internet entrepreneurs need to identify the market segment(s) they're targeting and develop an online image geared toward that audience.

The groundwork also should determine the "bundle of benefits" the customer stands to gain by doing business with the online store, differentiate the fledgling site from both online and offline competitors, and develop "a sustainable competitive advantage," Kalamas says.

Mistakes Common
Sad to say, e-entrepreneurs tend to make the same mistakes in the early going.

"They often underestimate how challenging it is to gain consumers' trust, especially for a new business with no brick-and-mortar presence," Kalamas says. "They underestimate how difficult it is to build brand awareness, how difficult it is to drive traffic to their website and convert browsers to shoppers, how costly pay-per-click advertising can get, especially when trying to reach a wider audience, and how time-consuming and labor-intensive it is to maintain a current and relevant site."

Each new store is its own entity, of course, and even basic questions can defy cookie-cutter answers. For instance, how much does it cost to build a website? Kalamas says the cost depends on the type of site, whether it's built in-house or by outside consultants, and whether ongoing maintenance is handled internally or outsourced.

Various services, other e-experts note, are available to launch a website at a relatively low cost. But if you itch to sell online, know what you're getting into. Your site should have an appropriate domain name; be search-engine friendly; boast a clean, professional design that's easy to navigate; offer payment options; and feature copy capable of converting browsers to buyers. It's not how many folks browse your site, it's how many end up buying.

Over time, the experts add, it's a good idea to forge virtual partnerships with other sites that sell related products. Customers attracted to their site are directed to yours and vice versa.

As for inventory, whether it's kept in-house or products are drop-shipped from suppliers depends on the items in question, the storage space available, and the entrepreneur's desires. As a cost-containment measure ‒ and frugality is a common thread among successful e-retailers ‒ in-house inventories should be kept at manageable levels. Why tie up money and precious space with inventory that simply gathers dust?

Shopping Cart Looms Large
Schwitter runs her niche business out of a 1,200-square-foot space in a Richardson, Texas, office building (near Dallas). Her operation includes a virtual bookkeeper/office manager, two admen who job-share, a full-time assembler, and various part-time help.

In her decade in cyberspace, Schwitter laughs that she's "done everything you're not supposed to do." These days she pays for SEO, uses Google and Yahoo ad words, and trades links with appropriate websites, taking care not to clutter up her site with links "to stuff that doesn't match our stuff."

Schwitter places a high premium on good customer service and notes that a well-designed shopping cart is a key factor in a successful online enterprise.

"People want to know when their gift was shipped, and they want a tracking number," she says. "I'd advise [new online retailers] to watch their shopping cart and make sure every bit of it works very, very well. They also need to make sure shipping and handling costs are accurate and that their products are kept up to date."

Beware the discontinued item, she says. "If you've left one on your website, you'll be up a creek if someone places an order for it. We sell so many different products, and they typically come from small vendors. If they can't produce something, I need to get it off our website real quick."

Schwitter credits new marketing strategies for her company's recent growth.

"We should be the first guys 'off the food chain' in this economy, but our sales are up about 10 percent over last year," she says.

Retooled strategies include getting various bloggers to review company products. "I met a marketing gal who twice found us five different bloggers who would do product reviews. And boy, our newsletter sign-ups have increased dramatically," she says.

It doesn't hurt that Texas Treats boasts a good name, one that's simple and memorable. An effective domain name can carry a company a long way.

But sometimes "Texas Treats" carries Schwitter a bit too far.

"Once in a while we'll get a flaky email from someone who thinks we're a bunch of hookers," she says with a laugh. "You think, 'Oh my gosh, they read our name the wrong way.' "

Harder Than it Looks
Arvey Krise's online store, SpoiledGrandKids.com, likewise centers on a name that resonates with consumers. Her Fort Myers, Fla., operation offers grandparents an array of toys, baby gear, gift baskets, and other items to speed the spoiling process.

Krise, a grandmother herself who launched her one-woman e-store a year and a half ago, describes herself as "an entrepreneur from Day One, even as a kid."

"When everyone had a lemonade stand, I had mine on a wagon going door to door," she says.

But Krise says launching a web business is much harder than it looks and has challenged her business prowess from the get-go. Illusions died fast.

"When I told my first web designer to flip the switch, I was sitting there practically with pen in hand, waiting for the orders to start flowing in," she says. "Well, nothing happened."

Trouble was, the designer was a friend who had cut her a good deal, and the new site didn't rank high with search engines. Early problems with the shopping cart didn't help either.

"You get what you pay for," says Krise, who's now on her third web developer. (No. 2 was a "long-distance" one. "I should have stayed local," she says.)

Given these and other mid-course adjustments, Krise believes her site will be well-positioned when the economy rebounds. Long-range plans include creating other "spoiled" web sites targeting different relatives.

Krise's advice to new e-entrepreneurs? "Do a lot of research first, get your ducks in a row, and have some cash to back things up. Creating a website is like opening a store, but your store is open to everybody in the world. You have many decisions to make, such as: Will you ship just in the United States or to other countries, and if so, which ones?"

Krise considers the money she's spent so far as a form of tuition. Considering the long hours she's put in, she's been a diligent student.

"It's been quite an education," she says. "I've learned a lot of things the hard way. I've had to learn how to use Photoshop and how to create email blasts. But I absolutely love my site, and I love doing this."

Be True to Your Niche
Tamara Carlisle urges new online retailers to stay true to their product line, maintain strict quality control, and resist the temptation to be all things to all people. Straying too far from the niche can be dangerous.

"It's like when you go out to a restaurant," says Carlisle, founder and owner of Austin, Texas-based Big Kids Productions Inc., which since 1999 has operated an online store (www.bigkids.com) that sells children's videos and other products.

"You want consistency in both the food and the service," she says. "We sell live-action educational but entertaining children's videos and don't try to do a whole lot of other things. Stay true to what you want to sell."

But not stagnant, she quickly adds. Carlisle describes the ideal online entrepreneur as creative and tenacious.

"Keep putting different items on the front page of your website and offer discounts on certain items," she says. "People will constantly check your site out, so you need to keep it fresh. Also, watch your shipping costs. Charging too much is a big mistake because people will go find a site with better costs. We offer free shipping on four or more items, and that works for us."

Needed: Passion
Peggy Ann Carrillo believes online retailers must have a passion for their products, given the often long hours involved in online merchandising.

"If you don't have a real interest in your products, I don't think your business is going to work," she says.

Carrillo owns Lace-Parasols (www.lace-parasols.com), a website that sells Victorian-style parasols, fans, gloves, and other items. Her products are seen in weddings, theatrical productions, parades, and Civil War re-enactments, and they are put to everyday use.

She began the operation as a hobby in 2002, after moving back to her native El Paso, Texas.

"My husband and I had been living in Arlington, Va., where it rains a lot, and we had a lot of umbrellas [on hand]," she says. "What were we going to do with them? At the time I was teaching computer classes, one of which was on how to get onto the internet and build a website. So I started selling them. And I thought it would be nice to sell parasols for [protection from] the sun. Then we started getting requests from people who wanted them in certain colors. It all kind of fell into place."

Carrillo urges online rookies to learn at least basic HTML (the markup language for web pages).

"You constantly have to revise your site," she says. "Even if somebody else does most of that work for you, you'll want to have some knowledge, so that you can do the minor things yourself."

Nancy Saltz says there's really no magic to achieving online success. The fundamental rules still apply.

"The best advice I could give is to treat your internet business just like any other business," says Saltz, whose Garden-Flags.com site sells an array of garden products out of Williamsburg, Va. "Join the Chamber, pay your taxes, get an attorney, get a CPA, incorporate. Do things properly and your internet business will work as well as an offline business."

Mine the Data
No matter the online venture, once the store is up and running, data becomes critical. How many visitors is your site getting? How did they find it? What promotions are proving to be the most effective?

Kennesaw State's Kalamas says, "It's imperative" for e-businesses to use web analytics to track traffic and audience behavior on their site.

As for marketing efforts, given the social nature of today's web, online retailers should "engage in the conversation taking place in online communities" as well as "harness the power of various forms of social media, including but not limited to Facebook, Twitter, and YouTube," she says.

Above all, e-entrepreneurs need to constantly put themselves in the shopper's shoes. What should be overhauled? What needs mere tweaking?

"The consumer's online shopping experience [should be] as convenient as possible, and safe and secure," Kalamas says.

Good service wins out. Just like in the old days, back before the turn of the century.

---

Tom Barry is a freelance writer based in Decatur, Ga. He's a former newspaper and magazine editor whose articles have appeared in many business publications.