Tuesday, June 23, 2009

Taking the eCommerce Plunge

Phase 1: Affiliate Links
For almost 10 years now, I've been trying to earn a living online, enough so that I could work for myself and own my time. I've been very successful earning extra money, but I never made enough, and with enough consistency (the most important thing), to quit my 'real' job.

The most I ever made was almost $10,000 net in one month (December 2005). Up to that point, my revenue had been growing every month for the better part of a year. I was giddy.

In March 2005, just three months later, after a big affiliate link 'crack down' by the search engine, I made just under $400. I was no longer giddy. Good thing I hadn't quit my job!

Phase 2: Pay-per-sale and Lead Gen
I started tinkered with other affiliate marketing, pay-per-sale, and lead gen programs, this time looking for offers I could market through PPC, and thus have control over my fate: Pay the mony, show up in the results, thus elminating the organic component. I had success there as well, but once again learned that in such a system, my fate was not in my own hands. Driving the traffic was, but the offer itself.....

I would research the offers, register a domain, build a mini site, do keyword research, and drive traffic through PPC on Google, Yahoo and MSN. Some offers were successful, but most weren't. The ones that were I ran with, for the ones that weren't I simply stopped spening money on marketing.

The successful ones almost always ended up being retail offers for strongly branded products (think late night TV commercials). Time and again I would build the site and get the ads out only to be contacted after a month or two and be told that the terms had changed and I was no longer allowed to bid on trademark terms (usually the product name). Down came the ads, and away went the traffic.

As an example, I used to run an offer for Nutrisystem. My revenue was around $8,000 a month on $3,000 in spend for a profit of around $5k. I did this for three months and was then told to pull my ads. Bye-bye to $5K.

This scenario played out repeatedly and I finally gave up. Term changes (no more PPC!) or the offers being pulled unexpectedly, leaving me with a worthless site, finally wore me down. I pretty much stopped trying.

Most of my sites still sit out there since. I was hosting them myself on my own server and they don't cost anything. They'll stay until the domain names expire. Recently, some of the sites started picking up some significant organic traffic, mainly from Yahoo and Bing. I've since reworked these, found some good fitting offers, and currently make between $1,000 to $1,500 a month. Not much, but I'll take it. It gave me enough moeny to try....

Phase 3: Drop shipping
All this frustration ultimately led me to deciding I needed to have my own ecommerce site. No more depending on selling other people stuff. I'd sell it myself! I wanted to be as efficient and cost-effective as possible, so drop ship looked like the perfect solution.

After a bunch of boring research, I choose a niche, found a supplier, and went with a hosted cart solution. The niche I chose only had two drop shippers in it. I spoke to them both and did my due diligence. One was hopelessly disorganized and the other seemed to have their ducks in a row, so I went with them.

Alas, appearances can be deceiving. After getting the site configured and the inventory loaded, I went out slow, slow, slow with the marketing to test the waters. The orders started coming in. Not much, maybe an average of 1 a day. But it was a enough to rapidly figure out that the supplier took anywhere from 2-6 weeks to fulfill an order.

Tip: when people order something, 2 weeks is about the longest they'll wait before they start asking you where it is.

Added to this was the manul process of passing the order to the supplier. No automated solution there; I had to send email(s) for every order, send email(s) to ask if they got the orders, then send follow-up email(s) for them to notify me when the order shipped, then send the tracking number to the customer. Not smooth, not easy, not efficient.

Turns out their primary business is manufacturing for retail stores, so drop ship items got tacked when ever they had to fulfill a wholesale bulk order, hence the wait. Order a blue widget? Have to wait until a retail store ordered 50, then they would make 51 and send yours out.

So after 4 months of operation, I shut it down. I ended up breaking even for the effort, but it was a lot of effort and a lot of emails.

Phase 4: Do It All Yourself
Still searching for some way to escape my corporate overlords, I once again forged into ecommerce.

My dealing with the supplier mentioned above led me to believe that although they hadn't worked as a drop shipper, they would as a wholesaler. I already had a decent relationship with them. It was OK to wait 4-6 weeks to get your stuff when you had stock on hand to do your own fulfillment, all you had to do was order ahead to keep your inventory level up.

The drawback here was the cash outlay for inventory. The benefit was you were in charge of getting the item to the customer and you got another 20% off pricing for wholeslae orders over a certain amount. That gave me a larger margin to work with for profit.

So I re-engaged with them and am currently getting things lined up for yet another effort to break free of my corporate bonds....

Wish me luck!

No comments: