Powerful Lessons Learned in Starting an Online Store (Part 2)

This is the 2nd part of the two-part interview with Grayson Bell of Debt Roundup. If you you missed part 1, please see below:

The first part of the interview discusses important issues you should know about before starting an online store. Without making this a huge intro to an already lengthy (but very interesting) post, here’s part two:

 7. When you talk about the extra effort you put into customer service to keep your customers happy, can you give any examples?

Shipping Hassles

The one thing that I learned is that if you use a third party service to help you with your website, may it be shipping (UPS/Fedex), site search, email marketing, etc., you are responsible for how they perform.  Customers do not care that UPS lost a package.  Hey purchased from you and you shipped via UPS.  They still want their package.  There were many cases where I would have to ship out another product to a customer while I was still battling the shipping carrier to find the lost package.  That was money out of my pocket, but as long as the customer got their order, then it all worked out in the end.

Customers do not care that UPS lost a package.

There was one instance that I will always remember.  I had a customer who was handicapped and required the shipping company to bring the package indoors.  This customer had been ordering from my website for quite some time, so I knew the circumstances of the orders.

There was one instance when this customer purchased something from another website that ended up not shipping the product.  The customer battled with them for quite some time, so then decided to just order it from me.  My price was a little more, like $1, but I had it shipped and delivered the next day due to the customers proximity to my shipping warehouse.  The other order also arrived the same day out of no where.

Not all customers will cause you headaches, but the ones that do will really put you through the ringer.

The customer called me and wanted to return the product, but would require that I setup a pickup.  My shipper wouldn’t do it because of the cost of the item ($15), so I told the customer that I would take care of it and I refunded their order, while leaving them the product.  While I took a hit for $15, I had won a customer that ended up purchasing a lot more from me.

8. What was the most difficult part of running an eCommerce store, that most people don’t realize?

Jack of All Trades

The most difficult part is that you are running the whole show.  You are the owner, operator, CEO, CFO, COO, marketing, customer service, lost prevention, orders and delivery.  Everything.  There are so many more facets to running an e-commerce store than just setting up a website and then adding products.  You are competing with some of the best online stores and they are there to take your customers away from you.  You have to constantly fight and make sure you win or you will not survive.  It is a cut-throat business.

Another very difficult thing is dealing with customers.  While customers are the one that pay you, they are also a very difficult aspect.  Not all customers will cause you headaches, but the ones that do will really put you through the ringer.  Running a business is the best way to learn about people.  You will find out that some are not very bright, some know how to get what they want, and others just go with the flow.  Since your reputation is on the line, you have to please each and every customer.

There will be times where you cannot please a customer, but you have to do what you think it right.  We are all trying to make money, but make sure you treat the customers with respect and deal with their situation in the same way as you would want a store to deal with you.

You will always make mistakes, just try not to make costly ones.

Running a store is not easy and I would never tell anyone that it is.  There are many websites out there that sell the “dream” of being your own boss and making money running an e-commerce store, but those don’t even tell you half the picture about how hard it is. Now that I work full time in e-commerce marketing, I know how much these retailers pay to get customers.  I would never have been able to keep up with them.

9. Were there any mistakes you made, or did things that you now know should have been done different?

Contractor HeadachesYes, Yes, Yes!  I made so many mistakes that it was not even funny. There is no way that you can run an e-commerce store and not make a mistake. You just have to make sure that you don’t make the costly ones.

Mistake #1: Not Researching an Advertising Opportunity

The most costly mistakes I made were when I wouldn’t fully vet or research an advertising opportunity. I rarely made my money back when I went all in on a “great” advertising opportunity. I learned a lot about those and realized that they didn’t fit my website. I should have always remembered that “if it’s too good to be true, then it probably is”. You can get caught up in the thought of making a lot of money by advertising here and there, but sometimes the customers just don’t convert. You have to be smart with your money.

Just remember that if it’s not in your marketing budget, then don’t do it.

Mistake #2: Dealing with Contractors

The other mistakes I made were dealing with contractors for my website. There were many times when I needed to change or add something to my website and the coding change was beyond my skill level. I would contract the work out. Instead of getting all of my projects together in one, I would usually do them one at a time.  This was costly, not only with paying for each contractor, but also dealing with down times to deploy the code.

Your passion is what drives your business.

You have to go into this thinking that you will make mistakes. Just learn from them and don’t make them again. Once you start getting larger, people will come at you from all angles with sponsorship advertising opportunities, and many other things that will make your head spin. Just remember that if it’s not in your marketing budget, then don’t do it!

10.  If you could give three tips to help others establish their own store, what would they be?

Tip #1: Take the time to properly setup a business before you start selling online.

It is important to protect yourself from any issues that may come about from your company. I learned that if you sell a product and that product hurts someone, then the manufacturer along with anyone part of the supply chain can be sued. This means you, since you were the last part of the supply chain. Protect yourself and your business by setting up the proper business type.

Tip #2:  Get into a niche that you enjoy and are passionate about.

Do not try to sell products just because they have a high-profit margin. Your passion is what drives your business. If you sell products that you know nothing about and don’t really care about, then how can you properly sell them to your customers? Many people go into business with the dream of making money. I say go into business to fuel your passion and the money will come later.

I also really enjoyed making customers happy.

Tip #3: Research and start out small.

When I first started, I pushed a few products online via eBay. I wanted to know how well my products would sell at the price point I needed. After testing and researching which products sold, I expanded to a larger product set and put them all on my website.  I sold on my website, on eBay, on Amazon, and on Buy.com. There were other places that I sold too, but I started out small and wanted to make sure that I could succeed. No matter what product you want to sell, you are going to face competition. Test yourself against your competition.

11. Was there anything you really enjoyed at the time of selling products online?

Your Business is Your Baby

Yes, every sale! When you build an e-commerce store from scratch, you have a lot of pride in it. You get excited with every order that comes in. You love the milestones of the first order, first $100, first $1000, first $100,000, and so on. This is your baby and you cherish it.  As your sales pickup, so will your passion to continue.  I also really enjoyed making customers happy.  There are many online stores that don’t really care about customer service. This is not my philosophy and I worked very hard to make my customers happy. When I could put their mind at ease and help them out, it was all worth it to me. I lost money helping some customers, but their positive reviews made it all better in the end.

12. Why did you close up shop?

This was a tough decision for me. I had gotten to a point where I was making good money, but the time commitment was increasing. I had also hit the point where I no longer enjoyed what I was doing. The customers were slowly destroying my excitement level and the work load was getting extreme. I also was making enough money to support myself and my family, but in order to grow more, I needed help. This help would have cost me money, which I didn’t have at the moment. I would have had to take a pay cut in order to hire someone and that wasn’t in the cards for me.

You will not make money overnight, you have to stick with it.

The final straw was when my work began to consume my life. I was newly married and the online store was taking a toll on that. My health had started to deteriorate because I wasn’t eating properly and not exercising.

These factors pushed me to take back control of my life and shut down the business. As I stated before, I still own the website and it runs today. It just runs on auto-pilot while making affiliate commissions. I figured I would let it run on the 4 years of work that I put into it.

13. Would you recommend others try starting their own e-commerce business? Why or why not?

I am an entrepreneur at heart. I think everyone should try to run a business if they are passionate about running one. E-commerce might sound easy, but it is not. You work just as hard with an online store as you would starting a brick-and-mortar store. Don’t let anyone tell you otherwise. If you have the passion and think you can succeed, then I say go for it.

Differentiate yourself from your competition.

Please just make sure you understand that time commitment involved. Also, understand that it will cost a pretty penny to setup and get it to a point where it is bringing in income.  You will not make money overnight and you might not make much in the first few months.  If you have a problem sticking with something for the long haul, then an e-commerce business might not be for you.

14.   Any last thoughts?

It's Hard Work

Don’t believe the hype out there that shows you how easy running an e-commerce store is. I have never met any retailer that was able to get their shop up and running and start making sales as easily as advertised by some. It is very hard work that takes a lot of time, money, and resources. If you don’t know how to code websites, deal with databases, and many other things, then you should take the time to learn the basics. It will save you time and money in the long run.

 It is very hard work that takes a lot of time, money, and resources.

If you have a dream of running an online store, then pursue it. Just make sure that you research all the appropriate avenues and test your theory before deploying it. I wish I had someone to talk to before I started my online store. It would have saved me hundreds of hours and thousands of dollars.

Never get too excited that you forget to research every aspect of your decision. Starting a business is not a decision that should be taken lightly. You can succeed in business if you have passion and motivation.

You also need a good product or service. The next step is to differentiate yourself from your competition. You will not be successful if you cannot show your customers how you will be different than your competitors.  It is a fact of business.

I hope this interview was helpful to you in some way or another. If you have any questions for Grayson, please leave them in the comments. Brought to you by Blue Pelican via Veronica.

31 Comments

  1. Great point on you running the entire show. Many know that, but they don’t realize all that it entails. You are on the line for everything and I mean everything. That can make the dream of being your own boss a sour reality very quickly. I would also agree with having passion. If you don’t like what you’re doing it can get old very quickly.
    John S @ Frugal Rules recently posted..Saving Money with Comparison ShoppingMy Profile

  2. As someone who wants to eventually run some sort of online business, it was difficult reading how the business took a toll on your relationships and health. I am newly-married and have been running my blog plus doing some side work…plus working on our new somewhat-fixer-upper house..plus working full-time. I am worried that if I did have a full-time online biz it would consume my life.
    DC @ Young Adult Money recently posted..Online Strategies for Holiday Shopping BargainsMy Profile

    • Thanks! I’ve done a great deal of looking around for information on the web because I’ve contemplated starting my own online store, and there’s just no quality information out there, the kind that Grayson gives out for free. Typically it’s loaded with affiliate products which makes me question the intentions of that person. Really quality information here, I wish I could say priceless – but the amount of money you can save by reading some tips here and learning from his mistakes / experiences most likely has a very real dollar figure on top of it.

    • It really is. Just don’t get discouraged :) I think a more focused product line that is really simple in beginnings is probably a better route than doing what Grayson did with electronics. He entered a tough market and it’s amazing how well he did, but for us newbies we probably have to start out small, focused and something very unique. I’ve heard of one individual who invented his own product and does REALLY well with an online store. Now… if only I can figure out what to invent :)

  3. Excellent post! I believe testing the waters is crucial to see what you are up against and if the people are going to buy your product. I found it interesting near the end talking about closing up shop because it was not as interesting as it once was. I also found it interesting that the business grew to a level that became to be too much and to hire contractors would be a cut in pay. I wonder if many think about this when they start an online store. What will you do if you grow to the point that you no longer can handle it? Will there potentially be money there to pay for the help? Can you afford the cut in pay? I really enjoyed this, thanks! Mr.CBB
    Canadianbudgetbinder recently posted..The Grocery Game Challenge Dec 17-23,2012 Hot Stuff That Tabasco!My Profile

  4. Pingback: An Online Business is NOT a Passive Income Source | Debt RoundUp

  5. These are some awesome points about running an online store, some I hadn’t really considered. I was impressed with how you handled some of those situations with great integrity, I’m sure those always paid off well in the end!

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