jclewell3d
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Hey folks,
I have been experimenting with E-commerce for a good few months now, and here is the story of my first venture, or more specifically how it went wrong.
I've tried to make it as transparent as possible, and a few people have said it is well worth a read.
Please let me know what you think! If I get a good response I will definitely be documenting my next venture. It's quite a read, as I did put a few hours into writing this.
(The below is taken from my blog, but as I'm not a premium member I won't be linking it - maybe later.)
--
I’ve been kind of dreading posting this. After all, nobody really wants to admit defeat – especially in the public blogosphere. Regardless, I thought it was a good idea to detail why my first venture into the world of e-commerce failed.. and what we can learn from it.
What is Dropshipping?
Let’s first start by explaining the business model of dropshipping. It’s pretty simple: You don’t hold any stock and whatever you sell, your supplier sends directly to the customer. You make money in the margin between the retail price you sell the product at, and what you pay your supplier. Here’s a cute infographic.
Why I Chose Dropshipping
Looking at the business model, you can easily see why I was enticed by dropshipping.
I started by looking for a niche at a high enough retail price point to make a decent margin. Most e-commerce dropshippers recommend going for a product between the $100 and $200 price range. I chose gaming chairs. Being a bit of an analyst geek, I was pleasantly surprised to see a large volume of UK based searches and relatively low PPC bids. In the below pic you can see the sheer range of juicy gaming chair related keywords I was impressed by.
Notice how there are a bunch of generics and brand keywords? Perfect. I definitely wasn’t going to be starved on traffic, that was for sure.
In terms of competition, I used SEMRUSH to see who else was bidding on these keywords. I identified one main competitor and also the ‘regulars’ (Amazon, Game.co.uk). The main competitor sold gaming chairs, but also a wide-range of other ‘boys toys’. I thought that if I focused on the gaming chairs, I could provide far greater value than an e-commerce website spread too thin. With regards to Amazon, I also did not wish to compete on price, but instead on things like customer service, better on-site information, a ‘cooler’ and more gaming chair focused ‘brand’.
Creating the Site
This bit was particularly tricky. I definitely over-did perfecting the website’s design, to the point that it costed well over $1000. How did I manage this? Well, to give you a bit of context, I previously was thinking of setting up a Wallet dropshipping website. I hired several web designers to modify a Shopify theme to copyan already successful e-commerce website that sold umbrellas ($500).
During this time I decided to switch niche to Gaming Chairs. Gaming Chairs, as a product, were more expensive, would see higher margins, and, let’s face it, were much cooler. Easily enough, I just transferred my wallet theme to the new domain and changed the banners / colour scheme. Here’s the problem: My wallet theme was suitable for lots of products (say in the hundreds). I did not realise it at this point, but the theme simply wasn’t suited to a website selling only 10-15 different chairs (this will stab me in the back later).
The second part of the creating the site was generating content. Before I approached suppliers, I realised I had to generate enough ‘respect’ for them to strike a deal with me. To do this, I populated the store with a bunch of gaming-related products I found on Amazon, using my referral links. Bear in mind that the onlypurpose these products had were to impress the supplier and show them that we had a functioning, established website. Another road block – I had to get another web developer to enable my Shopify theme to offer Amazon products. Currently in Shopify, you cannot change your ‘add to cart’ button to integrate with Amazon. This costed another $200.
I ended up adding gaming chairs, gaming keyboards, mice and other peripherals to the website. At the end of it I had around 40 products, all with sales descriptions. Writing the descriptions was a massive time-sink. Since I worked full-time, I tasked an article writer (who I found on oDesk, again) with writing 20 of these. This costed around $100 (at $5 a pop for 200 words). I wanted to make sure that these were quality articles, so I screened for native English speakers who were proficient at writing technical subjects with a bit of flare.
Approaching Suppliers
The next part was finding gaming chair suppliers. At this point, I was around a month into starting the business, and had already spent around $800.
Finding a supplier was a manic process. To my surprise, many suppliers did not respond to my e-mails. Many of those who did subsequently told me that they didn’t ship to the UK. Shit. If I didn’t get a supplier on board I was sunk, without anything to show for the money I had already invested into the venture.
Luckily, I got a response from the UK’s biggest distributor of gaming chairs. Thankfully, they stocked the X-Rocker range of chairs – the most popular gaming chairs on the market. The supplier sent me a PDF of their range, including prices, and I agreed. No contracts were signed.
NOTE: The prices initially looked great. I would be making a good a fair margin of around 30% on any chair sold. At around $200 each, I would be making around $25 per sale. No sweat!
After failing to acquire any other suppliers, I decided to push forward. After all, the supplier I DID have was the UK’s largest distributor of X-Rocker gaming chairs. Since my site was primarily selling gaming chairs, this was a good fit.
Redesigning the Site
Earlier in the post, I mentioned how the current website design was built to showcase a large range of products. I had multiple navigation menus (one at the top and a sidebar) and even silhouette icons on the homepage for the various types of gear we stocked (headphones, keyboards, chairs etc). While this was good for a large range of products, my supplier only sold 8 gaming chairs. I had to make one of two decisions:
Driving Traffic
My traffic building plan was pretty simple (and probably incredibly naive). PPC and Social Media. I had planned for PPC to account for the majority of traffic, with social media acting as a brand-building tool and point of contact to my most devout fans. Regarding PPC, I figured that at $0.50 per click and 5% conversion rate, I would be spending $10 in ads per sale, resulting in a $15 profit. My social media game-plan was to build a fanbase of gamers on Facebook via Facebook ads, and the to market to them gaming chairs.
Generating a tonne of Facebook fans was easy. I ran a few ad campaigns with pictures of gaming chairs and funny description lines, and ended up with over 1000 fans. These were engaged fans who responded very well to my Facebook posts (we’re looking at 20%+ engagement rates per post). This was down to targeting I used in the ads; ensuring that my ads appeared only to 20-45 year old males who had liked other gaming Facebook pages. Note: I did not promote my products to my Facebook fanbase at this point.
All bout them likes baby.
In conjunction with growing my Facebook page, I also started running some Adwords PPC campaigns. I had interned as an analyst at my previous year at L’Oreal, so I had a bit of experience overseeing Adwords campaigns. It should be mentioned, however, that L’Oreal’s PPC focus was not on ROI but engagement, since our websites were not yet setup for e-commerce. Therefore we would judge the success of each campaign based on how ‘engaged’ the users were on the site (Avg. length of visit / avg. pages per visit / bounce rate).
Initially, I plugged in a list of 50-ish exact match queries that I wanted to target. These were divided between generics, such as ‘Gaming chairs UK’, and also brand searches like ‘X-Rocker gaming chairs’. I ensured that each ad was paired with a logical, user-friendly destination:
The results after one week were not impressive. I had generated a few clicks, but not nearly enough. As well as this, I hadn’t generated any sales. I realised I had to change my Adwords strategy, so I decided to adopt the Alpha / Beta methodology as outlined here. In a nutshell, you bid on modified broad match keywords in your Beta campaigns, and move any successful keywords into your Alpha campaigns as exact match. This allows you to capture traffic from queries you wouldn’t have discovered yourself, but also pulls in a lot of unwanted traffic by casting the net so wide.
After running my Alpha / Beta campaign for a about 2 weeks, I still saw no conversions. So why was this? At this point, it is fair to say that I lost a lot of motivation and the venture went downhill from here. So let’s explore a few reasons why I didn’t secure any sales:
The Takeaway
Climbing out of the cold, dark depths of defeat is difficult, but not impossible. I, like others, am ditching the drop-shipping model and opting to venture down the ‘product creation’ route. I learned a great many lessons from my first e-commerce expedition, and I definitely feel that the experience was worth the investment.
I still believe that e-commerce is where I will find success. Right now, I am designing a physical product that I am hoping to crowdfund in October. More details about this coming very soon. Who said the road was easy?
I have been experimenting with E-commerce for a good few months now, and here is the story of my first venture, or more specifically how it went wrong.
I've tried to make it as transparent as possible, and a few people have said it is well worth a read.
Please let me know what you think! If I get a good response I will definitely be documenting my next venture. It's quite a read, as I did put a few hours into writing this.
(The below is taken from my blog, but as I'm not a premium member I won't be linking it - maybe later.)
--
I’ve been kind of dreading posting this. After all, nobody really wants to admit defeat – especially in the public blogosphere. Regardless, I thought it was a good idea to detail why my first venture into the world of e-commerce failed.. and what we can learn from it.
What is Dropshipping?
Let’s first start by explaining the business model of dropshipping. It’s pretty simple: You don’t hold any stock and whatever you sell, your supplier sends directly to the customer. You make money in the margin between the retail price you sell the product at, and what you pay your supplier. Here’s a cute infographic.
Why I Chose Dropshipping
Looking at the business model, you can easily see why I was enticed by dropshipping.
- You don’t have to hold any stock – save $$
- You don’t have to manufacture anything – save $$
- You can manage it anywhere – ideal for the e-commerce ‘nomad’ lifestyle I’ve always desired.
I started by looking for a niche at a high enough retail price point to make a decent margin. Most e-commerce dropshippers recommend going for a product between the $100 and $200 price range. I chose gaming chairs. Being a bit of an analyst geek, I was pleasantly surprised to see a large volume of UK based searches and relatively low PPC bids. In the below pic you can see the sheer range of juicy gaming chair related keywords I was impressed by.
Notice how there are a bunch of generics and brand keywords? Perfect. I definitely wasn’t going to be starved on traffic, that was for sure.
In terms of competition, I used SEMRUSH to see who else was bidding on these keywords. I identified one main competitor and also the ‘regulars’ (Amazon, Game.co.uk). The main competitor sold gaming chairs, but also a wide-range of other ‘boys toys’. I thought that if I focused on the gaming chairs, I could provide far greater value than an e-commerce website spread too thin. With regards to Amazon, I also did not wish to compete on price, but instead on things like customer service, better on-site information, a ‘cooler’ and more gaming chair focused ‘brand’.
Creating the Site
This bit was particularly tricky. I definitely over-did perfecting the website’s design, to the point that it costed well over $1000. How did I manage this? Well, to give you a bit of context, I previously was thinking of setting up a Wallet dropshipping website. I hired several web designers to modify a Shopify theme to copyan already successful e-commerce website that sold umbrellas ($500).
During this time I decided to switch niche to Gaming Chairs. Gaming Chairs, as a product, were more expensive, would see higher margins, and, let’s face it, were much cooler. Easily enough, I just transferred my wallet theme to the new domain and changed the banners / colour scheme. Here’s the problem: My wallet theme was suitable for lots of products (say in the hundreds). I did not realise it at this point, but the theme simply wasn’t suited to a website selling only 10-15 different chairs (this will stab me in the back later).
The second part of the creating the site was generating content. Before I approached suppliers, I realised I had to generate enough ‘respect’ for them to strike a deal with me. To do this, I populated the store with a bunch of gaming-related products I found on Amazon, using my referral links. Bear in mind that the onlypurpose these products had were to impress the supplier and show them that we had a functioning, established website. Another road block – I had to get another web developer to enable my Shopify theme to offer Amazon products. Currently in Shopify, you cannot change your ‘add to cart’ button to integrate with Amazon. This costed another $200.
I ended up adding gaming chairs, gaming keyboards, mice and other peripherals to the website. At the end of it I had around 40 products, all with sales descriptions. Writing the descriptions was a massive time-sink. Since I worked full-time, I tasked an article writer (who I found on oDesk, again) with writing 20 of these. This costed around $100 (at $5 a pop for 200 words). I wanted to make sure that these were quality articles, so I screened for native English speakers who were proficient at writing technical subjects with a bit of flare.
Approaching Suppliers
The next part was finding gaming chair suppliers. At this point, I was around a month into starting the business, and had already spent around $800.
Finding a supplier was a manic process. To my surprise, many suppliers did not respond to my e-mails. Many of those who did subsequently told me that they didn’t ship to the UK. Shit. If I didn’t get a supplier on board I was sunk, without anything to show for the money I had already invested into the venture.
Luckily, I got a response from the UK’s biggest distributor of gaming chairs. Thankfully, they stocked the X-Rocker range of chairs – the most popular gaming chairs on the market. The supplier sent me a PDF of their range, including prices, and I agreed. No contracts were signed.
NOTE: The prices initially looked great. I would be making a good a fair margin of around 30% on any chair sold. At around $200 each, I would be making around $25 per sale. No sweat!
After failing to acquire any other suppliers, I decided to push forward. After all, the supplier I DID have was the UK’s largest distributor of X-Rocker gaming chairs. Since my site was primarily selling gaming chairs, this was a good fit.
Redesigning the Site
Earlier in the post, I mentioned how the current website design was built to showcase a large range of products. I had multiple navigation menus (one at the top and a sidebar) and even silhouette icons on the homepage for the various types of gear we stocked (headphones, keyboards, chairs etc). While this was good for a large range of products, my supplier only sold 8 gaming chairs. I had to make one of two decisions:
- Keep my existing Amazon products, even if they only made a small 4% commission per sale.
- Delete all of my existing Amazon products and focus solely on the gaming chairs.
Driving Traffic
My traffic building plan was pretty simple (and probably incredibly naive). PPC and Social Media. I had planned for PPC to account for the majority of traffic, with social media acting as a brand-building tool and point of contact to my most devout fans. Regarding PPC, I figured that at $0.50 per click and 5% conversion rate, I would be spending $10 in ads per sale, resulting in a $15 profit. My social media game-plan was to build a fanbase of gamers on Facebook via Facebook ads, and the to market to them gaming chairs.
Generating a tonne of Facebook fans was easy. I ran a few ad campaigns with pictures of gaming chairs and funny description lines, and ended up with over 1000 fans. These were engaged fans who responded very well to my Facebook posts (we’re looking at 20%+ engagement rates per post). This was down to targeting I used in the ads; ensuring that my ads appeared only to 20-45 year old males who had liked other gaming Facebook pages. Note: I did not promote my products to my Facebook fanbase at this point.
All bout them likes baby.
In conjunction with growing my Facebook page, I also started running some Adwords PPC campaigns. I had interned as an analyst at my previous year at L’Oreal, so I had a bit of experience overseeing Adwords campaigns. It should be mentioned, however, that L’Oreal’s PPC focus was not on ROI but engagement, since our websites were not yet setup for e-commerce. Therefore we would judge the success of each campaign based on how ‘engaged’ the users were on the site (Avg. length of visit / avg. pages per visit / bounce rate).
Initially, I plugged in a list of 50-ish exact match queries that I wanted to target. These were divided between generics, such as ‘Gaming chairs UK’, and also brand searches like ‘X-Rocker gaming chairs’. I ensured that each ad was paired with a logical, user-friendly destination:
- Ads targeting brand keywords directed the user to the brand category page OR specific product (i.e. ‘X-Rocker gaming chairs’ directed the user to the X-Rocker gaming chairs category page).
- Ads targeting generic keywords directed the user to the relevant category page (i.e. ‘PC Gaming chairs’ went to a category page of PC gaming chairs)
The results after one week were not impressive. I had generated a few clicks, but not nearly enough. As well as this, I hadn’t generated any sales. I realised I had to change my Adwords strategy, so I decided to adopt the Alpha / Beta methodology as outlined here. In a nutshell, you bid on modified broad match keywords in your Beta campaigns, and move any successful keywords into your Alpha campaigns as exact match. This allows you to capture traffic from queries you wouldn’t have discovered yourself, but also pulls in a lot of unwanted traffic by casting the net so wide.
After running my Alpha / Beta campaign for a about 2 weeks, I still saw no conversions. So why was this? At this point, it is fair to say that I lost a lot of motivation and the venture went downhill from here. So let’s explore a few reasons why I didn’t secure any sales:
- You could find the chairs at a lower price on my competitors’ websites – I was inclined to believe that my main competitor was buying the chairs wholesale, and was thus able to retail the chairs at a much lower price than I could afford. I didn’t have this kind of money to invest, so I was at an immediate disadvantage, especially considering my tech-savvy market would definitely search around to compare prices.
- Not enough trust – My experience running sales threads selling internet marketing services taught me that you need reviews to be deemed trustworthy. Since this was a new website, I didn’t have any quality reviews. If I had sent out a few chairs to bloggers, perhaps I would have made the site seem more credible. This, of course, would have costed quite a bit at $200 per chair. I did, however, optimize the website’s layout with prominent contact details, trust badges, and all of that jazz.
- The content wasn’t good enough – Similar to the prior point, I feel like I could have done more to communicate the awesomeness of the chairs. Better photos definitely would have helped, however I had used only the stock photos provided by the supplier. Again, visiting the warehouse and bringing a professional photographer would have been quite expensive.
The Takeaway
Climbing out of the cold, dark depths of defeat is difficult, but not impossible. I, like others, am ditching the drop-shipping model and opting to venture down the ‘product creation’ route. I learned a great many lessons from my first e-commerce expedition, and I definitely feel that the experience was worth the investment.
I still believe that e-commerce is where I will find success. Right now, I am designing a physical product that I am hoping to crowdfund in October. More details about this coming very soon. Who said the road was easy?
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