Running a profitable business with 1 product, 1 site
Editor’s note: This story appears in our July 2009 issue.
By Patrick Raymond
“I’m deep into the forest (that’s really what it feels like) of getting my new product online as a single-product Web site,” read the plaintive e-mail from a reader of this magazine. “There are so many questions, starting with the most basic: Can it even work?”
Yes, it can.
Your goal is to start small, work out the kinks and establish a track record. Real customers will pay real money to try your product in the real world.
Units must ship within 48 hours after you receive an order. If not, you have just committed fraud.
But many things can go wrong. And that’s a good thing. Find out early, while you are working on a small scale. Your immediate goal is not to get rich… it is to get a track record.
First, a few assumptions:
1) Your product is fully developed. You have adequate intellectual property protections. Your packaging is robust, easy to understand, with clear instructions for assembly and use. You have tested your product extensively and you have product liability insurance. Each unit is acceptable in terms of quality, performance and safety. You comply with all necessary regulations. Don’t sell a product for children, or an item with health/hygienic claims, unless you’ve been cleared by the relevant government agency.
2) You have basic skills and time to setup an e-commerce Web site. Don’t reinvent the wheel. Use the simple services by any of the big players such as Google, GoDaddy, PayPal, Yahoo! or eBay. You are becoming a merchant, so pick a solution that fits your needs and budget. If you lack these skills, hire a Web designer. Your product must be clearly visible with great imagery. A video is recommended. Within five seconds, your site visitor must understand five key things: What is for sale? How does it work? Why do I need it? How much does it cost? How can I buy it?
3) You have inventory. Units must be ready to ship – even a few hundred units in your basement is OK. Don’t even think of charging people’s credit cards via your Web site otherwise. Units must ship within 48 hours after you receive an order. If not, you have just committed fraud according to the Federal Trade Commission.
If all these assumptions are true, then you’re ready to start wooing and wowing your customers.
To woo, you need to drive Web traffic to your site. This is not easy or cheap, but it’s feasible.
Get your Web site well ranked in Google, Yahoo and MSN. Such “search engine optimization” happens naturally based on the words and content within your site. You needn’t pay for it.
Get other sites to link to yours. Offer free samples to bloggers and product testers. Pray for a good review. Never pay for one. Also, get media coverage. Start small with local outlets. Shamelessly repeat your Web site address. Use social networking sites (Facebook, MySpace or LinkedIn) to create awareness and generate traffic to your site.
Ideally, your network of friends, family, colleagues and product testers will start a natural “buzz.”
Finally, consider the Google “AdWords” service. This can get expensive, but it can pay off. Monitor your daily site traffic. Expect between 1 percent and 10 percent of your site visitors to “convert” into customers. Make a note of this “conversion rate.”
To wow your customers, pamper them. Say “thank you.” Offer good service. Include an e-mail (or even a phone number) for customer care. Offer a 30-day money back guarantee.
After a while, ask them to complete a product-evaluation survey. Post compliments on your Web site as testimonials. Allow them to complain, too. (Don’t post the complaints – duh!)
Accept to replace defective parts at your expense. Accept product returns. Pay for return shipping cost. Issue refunds promptly and without question. Offer an apology. Expect up to 10 percent product returns. Lose money on this e-commerce effort, if necessary.
Your product is not king. Your customer is king.
Make any necessary changes to your product design, packaging or instructions. Keep working until your return rate falls below 2 percent. Track your sales rate (units sold per week).
All together, your conversion rate, return rate and sales rate constitute a track record. If it’s good, talk to a retail sales representative or licensing agent. You’re ready for the big time!
If your track record is bad, keep adjusting until a) you get it right or b) you run out of money. That’s inventor-entrepreneurship.