February 19, 2007
E-commerce for Beginners
By now, you’ve probably heard radio commercials announcing that there is big money to be made in online ventures requiring no investment on your part; no need to maintain stock or ship it. Essentially, the spot goes, call this toll-free number and soon you’ll be raking in big bucks with really no effort on your part.
Well, much in those commercials are true with the possible exception of the “getting rich quick” element.
Today, as The Star-Ledger points out, consumers can create online businesses in less than a minute with websites such as CafePress.com, Zazzle.com, and Raw Tees (printfection.com/rawtees).
The
basic principle for all these sites is essentially the same. Pre-made templates
are established and the owner stocks the store with items personalized for
sale. These can include apparel, prints, greeting cards, mugs, home décor, pet
items and more.
CafePress’ pitch is simple: “Zero upfront costs and zero inventory investment.”
Of course, if you’re looking for a more sophisticated operation and, presumably, a better chance at the “get rich” part of all this dot.com selling, CafePress will let you upgrade to a premium shop for $6.95 a month.
Discussion Questions: What are the implications for online commerce from websites such as CafePress.com and others? Do more advanced versions of websites such as CafePress.com hold the potential in the future to transform selling in a fashion similar to eBay? What could it mean for storefronts on sites such as Amazon, Yahoo, etc.?
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In some of our online businesses, we encounter victims of CafePress, GoDaddy, and others on a daily basis. “May we represent your products?,” they inquire. Our response is always the following: “How much targeted traffic can you deliver and what level of product/sales support are you prepared to provide?” We never get a reply, because these dupes are unfamiliar with the concept of “work/reward.” Instead, they’re very much invested in the concept of “show up/reward.”
I looked over at CafePress.com and found they claim to have had 2 million members that last year and launched 1 million shops. They stock 35 million “original” products including apparel (they had an infinite selection of t-shirts), housewares, stickers, posters, books and CDs. I found that they had signed deals with United Media, Electronic Arts, and MP3.com. They had an affiliate plan designed for bloggers and other shopkeepers. I guess the deal is they become the fulfillment resource. And their top searches when I visited were: 1. Anti-Bush, 2. Army Wife, 3. Autism, 4. Nerd.
The t-shirt business is a market in its own right that is being brought together by the internet. Ebay energized the yard sale market, CafePress is going after the ironic crafting and art market. CafePress looks to grow its base and take share from eBay, Amazon or Yahoo.
The free (or very cheap) template-based virtual store has been an option for private citizens since pioneer vstore.com launched in 1997, followed two years later by Amazon.com’s z-shops. Services like Yahoo! Merchant, Cafe Press and others persist today, with thousands of participants. Add to that the millions of auctions on eBay and affiliate programs like Amazon’s. The Web in this way resembles a giant swap meet.
Amid all that clutter however, the chances that an individual shopper will find an individual’s virtual store are vanishingly slim. Unless one employs a method to sweep surfers to the front door (email campaigns, search advertising, telling your mother’s bridge club), the traffic is likely to be pretty small. The overwhelming majority of individual e-merchants make only a few dollars a year.
The online shop hosts, on the other hand, make plenty, since they aggregate thousands of shops. Amazon, Cafe Press and eBay are pretty much agnostic about which e-tenant makes the sale, since they receive a slice of every transaction. Once the platform is built, the incremental cost of adding each new virtual shop is essentially zero, so even a merchant who grosses less than $100 a year may contribute a few dollars in profit.
Here’s the main catch for individual merchants, as I see it: The more online shops open, the greater the competition. If you open a new virtual store today on one of these services, expect no traffic whatsoever. Your customer base is likely to be limited to friends and family because nobody will find the store through search. If you have a Web site with substantial traffic already, you may pick up some side income, but take my advice–don’t quit your day job.
Ideas are always easy to come up with but making things work is what is difficult. Anybody can buy some apples and try to sell them on a street corner and a hundred years ago this is how a lot of small business got started. Most of the apple sellers went out of business, some became small businesses and even a few turned into major operations. All that the web has done is created a new way to sell apples…or anything else.
The beauty of the Internet is that it has opened up the globe to commerce so that anyone can market almost anything very easily and economically. It levels the playing field in that small home-based businesses can compete with larger, more established, brick & mortar companies. But the small operator still needs to have a product for sale that satisfies a consumer need, a readily available supply of that product and the ability to price it so that it sells and still makes a profit. The only thing that these web sites solve is the way to market products at a very low cost, but all other aspects of business are still there and must be solved to be successful. I expect the failure rates of these enterprises is extremely high.
It’s easy to build a web site. It costs almost nothing and takes only a few hours. The hard part: driving traffic to the site and getting people to actually buy something. It’s just like bricks and mortar retailing: you can rent a very large store for very little rent in the middle of noplace, but if you have no traffic, will you sell anything? And if your merchandise is easily available at low prices in more convenient spots, why should anyone go out of their way?
The companies providing instant e-commerce to beginner wannabe retailers haven’t got a sustainable business model for themselves, let alone the amateurs they attract. The amateurs won’t make money, so how can they sustain significant payments to the site providers?
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In some of our online businesses, we encounter victims of CafePress, GoDaddy, and others on a daily basis. “May we represent your products?,” they inquire. Our response is always the following: “How much targeted traffic can you deliver and what level of product/sales support are you prepared to provide?” We never get a reply, because these dupes are unfamiliar with the concept of “work/reward.” Instead, they’re very much invested in the concept of “show up/reward.”
I looked over at CafePress.com and found they claim to have had 2 million members that last year and launched 1 million shops. They stock 35 million “original” products including apparel (they had an infinite selection of t-shirts), housewares, stickers, posters, books and CDs. I found that they had signed deals with United Media, Electronic Arts, and MP3.com. They had an affiliate plan designed for bloggers and other shopkeepers. I guess the deal is they become the fulfillment resource. And their top searches when I visited were: 1. Anti-Bush, 2. Army Wife, 3. Autism, 4. Nerd.
The t-shirt business is a market in its own right that is being brought together by the internet. Ebay energized the yard sale market, CafePress is going after the ironic crafting and art market. CafePress looks to grow its base and take share from eBay, Amazon or Yahoo.
The free (or very cheap) template-based virtual store has been an option for private citizens since pioneer vstore.com launched in 1997, followed two years later by Amazon.com’s z-shops. Services like Yahoo! Merchant, Cafe Press and others persist today, with thousands of participants. Add to that the millions of auctions on eBay and affiliate programs like Amazon’s. The Web in this way resembles a giant swap meet.
Amid all that clutter however, the chances that an individual shopper will find an individual’s virtual store are vanishingly slim. Unless one employs a method to sweep surfers to the front door (email campaigns, search advertising, telling your mother’s bridge club), the traffic is likely to be pretty small. The overwhelming majority of individual e-merchants make only a few dollars a year.
The online shop hosts, on the other hand, make plenty, since they aggregate thousands of shops. Amazon, Cafe Press and eBay are pretty much agnostic about which e-tenant makes the sale, since they receive a slice of every transaction. Once the platform is built, the incremental cost of adding each new virtual shop is essentially zero, so even a merchant who grosses less than $100 a year may contribute a few dollars in profit.
Here’s the main catch for individual merchants, as I see it: The more online shops open, the greater the competition. If you open a new virtual store today on one of these services, expect no traffic whatsoever. Your customer base is likely to be limited to friends and family because nobody will find the store through search. If you have a Web site with substantial traffic already, you may pick up some side income, but take my advice–don’t quit your day job.
Ideas are always easy to come up with but making things work is what is difficult. Anybody can buy some apples and try to sell them on a street corner and a hundred years ago this is how a lot of small business got started. Most of the apple sellers went out of business, some became small businesses and even a few turned into major operations. All that the web has done is created a new way to sell apples…or anything else.
The beauty of the Internet is that it has opened up the globe to commerce so that anyone can market almost anything very easily and economically. It levels the playing field in that small home-based businesses can compete with larger, more established, brick & mortar companies. But the small operator still needs to have a product for sale that satisfies a consumer need, a readily available supply of that product and the ability to price it so that it sells and still makes a profit. The only thing that these web sites solve is the way to market products at a very low cost, but all other aspects of business are still there and must be solved to be successful. I expect the failure rates of these enterprises is extremely high.
It’s easy to build a web site. It costs almost nothing and takes only a few hours. The hard part: driving traffic to the site and getting people to actually buy something. It’s just like bricks and mortar retailing: you can rent a very large store for very little rent in the middle of noplace, but if you have no traffic, will you sell anything? And if your merchandise is easily available at low prices in more convenient spots, why should anyone go out of their way?
The companies providing instant e-commerce to beginner wannabe retailers haven’t got a sustainable business model for themselves, let alone the amateurs they attract. The amateurs won’t make money, so how can they sustain significant payments to the site providers?