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Universal Laws of E-commerce
Can you name some?
jsinger




msg:651449
 3:21 pm on Jul 12, 2005 (gmt 0)

I can think of two:

1) With our commerce sites sales plummet for a few days around and especially on every holiday. Christmas is the worst... 70% traffic and sales drop. Thanksgiving and New Years are bad. I'm pretty sure this effect applies to nearly all online shopping.

2) All orders from "certain" African countries are fraudulent.

Can you name some other laws of e-commerce?

 

jsinger




msg:651479
 2:05 pm on Jul 17, 2005 (gmt 0)

One actually told me he would buy one item if the shipping was $1.00. I don't want people like this as my customer base
Agree: We charge flat shipping to reward large orders and discourage small ones.

Free shipping as a reactivation tool. Certainly worth a try. I have nothing against the spot test of any gimmick. (I tested it and wasn't impressed).

However by 2000, many small commerce sites were offering free shipping all the time because they figured the big boys who employed that device knew what they were doing. By 2001, we all understood how little the big public Dot Coms knew about SELLING on the web (as opposed to dumping shares)

hannamyluv




msg:651480
 4:14 pm on Jul 17, 2005 (gmt 0)

However by 2000, many small commerce sites were offering free shipping all the time because they figured the big boys who employed that device knew what they were doing.

Any merchant who assumes that what one merchant is doing will absolutly work for another is making a mistake. It may very well be that some of those "big" merchants did know what they were doing. While many went bust, some did survive. That's really a normal way in business. It was the spectacular way they crashed and burned that brought it to the forefront.

Walmart's (offline) way of business works really well for them and Target's way of business works really well for them, but when Kmart tried to emulate both at the same time, it failed disterously and alienated their already dwindeling customer base.

It doesn't matter if you are online or offline, if you assume that what works for one company will work for you, you are asking for trouble. Unfortunatly, the fact that everyone thought somehow the internet would change the laws of business, many companies, both big and small, ignored everyday principles of business.

Look at Amazon, they are finally profitable and they have stuck by their free shipping guns. I have also personally seen free shipping work well for some companies and not so well for others.

I do certainly agree that a varied promotion schedual would probably benifit a merchant more than a constant one, though, again, Amazon has shown to have beaten that one as well.

Also, many people forget that large companies pay far less in shipping than small ones due to volume. I know most catalog companies pay as little as $1 for shipping a package while charging $6+. So when they give away free shipping they are loseing far less money than a small guy.

Universal Laws of E-commerce should really be more Food for Thought Laws of E-commerce. ;)

HRoth




msg:651481
 12:40 pm on Jul 18, 2005 (gmt 0)

In order to test free shipping, I would have to modify the prices on 400 products, with more in the pipeline. I'm not willing to do that for a type of promotion that I myself am not enticed by as a customer. My shipping prices are already less than those of my competitors who do charge shipping because I use usps instead of ups.

I don't sneer at people who go after any customer base. As far as I am concerned, the wonderfulness of small retail is that you get to do things your own way. But neither do I have to do things someone else's way. There are some folks I don't want for customers because they are a PIA. That includes people who are primarily looking for a deal. I want customers who are looking for quality and for something different.

If people want the usual widget for cheap, jillions of my competitors who buy from the same couple of distributors are out there already to serve them. I thought about doing that when I started five years ago, and although it would greatly simplify my life in terms of ordering supplies, I decided against it, and I am really glad I did. People who supply their shops from these companies are forced to compete in a completely different way with each other than I do with them. The best they can hope for is to attract enough customers so that their volume purchasing of supplies allows them to undercut their competitors pricewise. They could distinguish themselves from others who buy from the same suppliers by having different text promoting the items, but almost all of them use the identical text provided by the suppliers. To me, this represents an unimaginative and outmoded way of going about retail, a strategy that puts you in the middle of a cut-throat market. It makes me get anxious just thinking about it. And it also just sounds boring to me.

In contrast, I compete against them by creating new products that they don't have. I know I spend more time working than they do, but I'll bet I have more fun at it. And I don't have to worry about someone undercutting me pricewise, because no one else has what I have.

I did used to let people know that I would give them free samples if they bought over X amount. I found that what happened was that instead of buying that extra item, people either hoped to get it as a freebie or even asked for it outright. So now they get the freebie but without knowing it beforehand, and it is something I choose for them that I hope will guide them into buying something they wouldn't consider otherwise. They usually are pleasantly surprised, although I do get some very honest people who call and say I sent them something extra by accident (even though it has "freebie" written on it).

I agree with you that maybe there aren't any universal rules of ecommerce, hannamyluv. But I like the idea. Reminds me of the Rules of Acquisition.

meg8




msg:651482
 1:48 pm on Jul 18, 2005 (gmt 0)

Interesting how quickly the laws of ecommerce come down to a conversation about shipping. It is the worst thing.

I think that a good law will be

Shipping is never as simple as you think it will be.

Shipping will always be slightly more expensive than you need it to be.

When shipping goes wrong - it goes really, really wrong.

Some companies may have found that free shipping works for them but I do think they are the exception rather than the rule and I would advise any newbie to charge the shipping price on until they have done a cost analysis. This is because you are paying out for packaging materials and time packing as well as actual shipping, so even if you just charge the shipping you are making a loss.

lgn1




msg:651483
 3:20 pm on Jul 18, 2005 (gmt 0)

The lowest price theory is interesting.

In our industry, the leading player is selling at
120% markup (ie you can buy it cheaper in stores).
They have been around for 5 years, and they advertise everywhere.

The number two player sells at a 70% markup, and they advertise everywhere also, and they have been around for a long time also.

I imagine that the higher price site is getting less sales but more profit, and that the lower price site is getting the volume.

It appears that both business models are working.

I have seen sites selling for as low as 40% markup, but they never last more than 6 months.

fiu88




msg:651484
 4:31 am on Jul 21, 2005 (gmt 0)

LGN1

"The smaller the order, the more the customer will complain if anything goes wrong."

I dont know how many times I've gone through this!
We have people order $50 items call 7 times to nmake sure, check status, complain, complain etc... We have customers who buy $800 items always ask pertinent questions, nver complain if an item is a day or 2 late...

I guess people with less money are more upset they've spent it ..or maybe they're just more miserable because they have less money?

Bottom Line.... Sell to people who have or want to spend more

RailMan




msg:651485
 1:21 pm on Jul 21, 2005 (gmt 0)


We have people order $50 items call 7 times to nmake sure, check status, complain, complain etc... We have customers who buy $800 items always ask pertinent questions, nver complain if an item is a day or 2 late...

probably first timers - scared of buying online so keep order to low value and make big fuss
more experienced online shoppers are less wary and more aware of possible problems etc etc

hannamyluv




msg:651486
 1:35 pm on Jul 21, 2005 (gmt 0)

Bottom Line.... Sell to people who have or want to spend more

That one may backfire, a bit, if you look at it in another perspective.

While the $50 order may be a pain in tha a$$ to serve, you may be creating the covoted loyal customer.

So you have the guy who orders $800 worth of product one time. Since nothing happened to make them call you (or worse yet, something did happen but they just didn't call you), they use you once and never again. You never got the chance to shine. They never tell anyone about your site.

The $50 order recieved extra care and if they are happy, they order from you at least a dozen more times, they tell everyone else about you.

I'm not just making this up, I have read studies that said that it appears that high maintence customers are probably your most profitable customers.

moose606




msg:651487
 2:28 pm on Jul 21, 2005 (gmt 0)

Place your 800 number on your website "Questions? Call 1-800-000-000" We get 20-25% of our orders via telephone. There are still people who are afraid to use the shopping cart.

RailMan




msg:651488
 10:17 pm on Jul 21, 2005 (gmt 0)


Place your 800 number on your website "Questions? Call 1-800-000-000" We get 20-25% of our orders via telephone. There are still people who are afraid to use the shopping cart.

99% of people that call to place an order instead of buying online are not wary / afraid of buying online, they are just too lazy to read the website or below average intelligence

put a phone number on your site and you'll spend all day on the phone making 20% of your sales - get rid of the phone and most of that 20% will come in via the web instead. you might lose a few sales, but you'll get your freedom, sanity, peace and quiet .........

HRoth




msg:651489
 1:13 am on Jul 22, 2005 (gmt 0)

I don't believe that people who call in an order are stupid or lazy. I believe what most of them actually tell me - that they don't feel comfortable ordering online. That might be because they are worried about their credit card number, but I think it's also because they just want to be sure a person is at the other end of the email, that they can actually reach someone if there is a problem with their order. Also, many of them have questions. I like to gab with my customers.

I don't get anywhere near 20% of my orders by phone, though. More like 10%. I have also noticed that people who order by phone often order again.

As for small orders and pests, generally I agree that the pestiest ones are often also the ones who have a $5.00 order. But the worst customer I ever had spent thousands of dollars with me, often at $1500 a shot. She was totally nuts. I still have a file dedicated just to her.

fiu88




msg:651490
 4:35 am on Jul 22, 2005 (gmt 0)

We do about 40% in tel. sales...Most will have researched Extensively before placing the order...and will have called for info. once or twice before ordering...It's a necessity to offer toll-free "chat" for our business...
We don't mind it at all as it generates a good portion of our sales...

FYI..We have several much larger " competitors" who rarely answer the phone or an e-mail question...They dont even do half the 'net sales we do....
Contact!--= Should be Law # 1..always be accessible to paying customers...even if you have to BS them..they want contact!

TonyMc




msg:651491
 5:14 am on Jul 22, 2005 (gmt 0)

We're pretty small but we find that free shipping works pretty well. We offer free First Class shipping but give a couple other paid, expedited shipping options. Some people step up and pay for the quicker shipping, some opt for the free option. We're catering to both types of buyers and it's worked well.

As for the telephone number. I've gotten a lot of positive feedback on having our 800 number posted on the site. We do maybe 10% over the phone. The important part for us is that we have an opportunity to create a relationship with our customers. We want that opportunity because we believe it is key to our long term success. I saw Brett post a while back (can't find it just now) that the "one piece of advice" that he would give to a new guy is to treat your ecommerce store like a restaurant where you give good customer service and create relationships that will keep customers coming back. I couldn't agree more.

--Tony

jweighell




msg:651492
 9:03 am on Jul 22, 2005 (gmt 0)

Even for the people that order through your website, it is a boost in confidence that you're a credible company when you show your phone number, and now doubt increases your conversion rate. Credibility means a lot!

I must admit, I hate talking to people on the phone and I have considered removing it. But I don't think that my company would have grown as much as it has without allowing people to contact us by phone. I have had very useful feedback by talking to people. I also find the people that phone with a problem are always a lot more reasonable than the people that email!

Hardwood Guy




msg:651493
 2:28 pm on Jul 22, 2005 (gmt 0)

"I imagine that the higher price site is getting less sales but more profit, and that the lower price site is getting the volume."

Yep, we have some of those lower priced sites in our industry. We've thought about trying to compete, but realistically the bottom line would probably be the same after hiring more help etc. Not to mention those that are looking for the best deal. They are typically the hardest to deal with and if everything doesn't run without a hitch, they're the first to complain. Too many problems associated with being the cheapest in my opinion.

I remember talking to one competitor before we launched our online business(he didn't know our plan at the time)and asked him why his prices were so low. The reply was.."XYZ has free shipping, ZYX has price matching and ZYW has the lowest prices out there" Geeez, now he's trying to compete with all that. We pay the same price for the products he sells, yet he can't be making more than 2-4% after shipping and credit card costs. Simply amaizing--on top of that he has poor search positions and must be paying through the nose with PPC.

shigamoto




msg:651494
 6:15 pm on Jul 25, 2005 (gmt 0)

Very interesting thread. I must agree with some who stated that contact is the a number one ingridient for E-Commerce. People love to hear that their parcels are on their way, showing that you care is essential.

One post stated that stores keeping low prices were newbies. I've done this for three years now and I keep much lower prices than my competitors. It's a couple of reasons for that:

1) Why should customers pay more for an item than they need to? For example showing up as the most expensive alternative in services like Froogle isn't that good. But I do agree, customers are willing to pay more for quality . ->

2) However high prices doesn't always mean high quality, sort of like some luxury cars.

3) The reason for me keeping lower prices than my comeptitors is that I have been able to get hold of and get to know suppliers. I've worked with the suppliers a long time and developed a personal relationship with some of them. So I would say that keeping your suppliers happy but squeezing them in the process is an essential part of the business.

Anyways a nice thread this one, lots of food for thought. Keep it up!

bcc1234




msg:651495
 6:20 pm on Jul 25, 2005 (gmt 0)

Why should customers pay more for an item than they need to?

ROFL, so I can make more money?

jsinger




msg:651496
 6:37 pm on Jul 25, 2005 (gmt 0)

3) The reason for me keeping lower prices than my competitors is that I have been able to get hold of and get to know suppliers. I've worked with the suppliers a long time and developed a personal relationship with some of them.

Prices that are too low will prevent you from getting good wholesale suppliers and may get you cut off from existing ones. We buy great closeouts from our suppliers, but we always let them know we won't embarrass them with low-ball pricing.

Last thing a supplier wants is an angry call from BigWidgets International (a blue chip brick/mortar and catalog retailer) asking how TinyWidgets.Com is selling so cheaply.

lgn1




msg:651497
 11:25 pm on Jul 25, 2005 (gmt 0)

Suppliers can't cut you off, or stop selling to you because your prices are two low. Its called price fixing and is illegal in both Canada and the USA.

julesn




msg:651498
 12:20 am on Jul 26, 2005 (gmt 0)

Its called price fixing and is illegal in both Canada and the USA.

It's illegal in the UK too, but that doesn't mean it doesnt happen, or that there aren't other ways of manufacturers ensuring they keep their full price retailers happier than regular discounters, e.g. when stocks are low and need allocating between retailers etc..

Buiding good relationships with suppliers is really the key to success in many industries, and that's less likely to happen if you retail their products for less than they want!

jules.

lgn1




msg:651499
 3:08 am on Jul 26, 2005 (gmt 0)

Buiding good relationships with suppliers is really the key to success in many industries, and that's less likely to happen if you retail their products for less than they want!

The key to make suppliers happy, is to do volume with the supplier. If you become a major account, they will not want to p*ss you off, by poking their nose in your buisness.

I deal with some manufactuers directly, and my line is:

'I don't tell you how to make your product, don't tell me how to sell it'

I also mention that only 2% of the people buy tangible goods online, regardless of price. So their retailers should be happy with 98% of the market.

hfwd




msg:651500
 5:29 am on Jul 26, 2005 (gmt 0)

So far no one has mentioned overhead. In E-Commerce, as in any business, overhead can mean the difference b/w profitability & bankruptcy. Since no one can see your furniture in an online business, pick the cheapest (I'd splurge on a real nice monitor though, you'll be staring at it long enough).

A close second is advertising - it's easy to get ahead of yourself, and spend money on advertising thinking that "if only 1% of the readers/viewers buy, it'll work". Make sure that your business will survive financially if zero - yes, ZERO sale is the result, before you place that ads.

In regards to shipping - automate & simply. Don't offer the customer 5 different ways to ship the product - it's confusing to them & a pain for you.

How about return policy? This is important for your customer's peace of mind and may well nudge them into a sale.

And lastly, IMHO, the most important rule of e-commerce is to think of ways to get repeat business from existing your customers.

spikey




msg:651501
 5:55 pm on Jul 26, 2005 (gmt 0)

1 - do usability tests - even if it's watching your friends surf your site
2 - know where your traffic comes from, know how it converts
3 - loyalty is key
4 - keep things simple; flat rate shipping is better than "real time", etc.
5 - if you're going to do something, do it right; don't leave some half-empty review system
6 - know when impressions are more important than words (a professionally designed site doesn't need a "hacker safe" logo).
7 - know when something needs to be stated up front (shipping costs).
8 - there is almost always a way to use data to find the answer to a question (learn how to do a/b tests on everything). don't assume you know the answer, don't waste time debating, just test it and trust the answer.

etechsupport




msg:651502
 10:23 am on Jul 29, 2005 (gmt 0)

I think there is no any such universal law of E-commerce that protect both the clients and the company.

ka0tik




msg:651503
 12:28 am on Jul 31, 2005 (gmt 0)

Hello to all here. New kid on the block! 8)

Very nice topic! I do agree that a phone number usuallly serves as a "this-is-a-clean-deal" and if you provide enought info about your product, shipping, etc, you'll get that costumer back, even that your prices are higher.

Remember that, in e-commerce, as well in standard business, people prefer longer-lasting and higher price-tags than the usual buy-it-here-for-almost-free-with-free-shipping business.

tolachi




msg:651504
 10:48 pm on Aug 2, 2005 (gmt 0)

This may be a bit odd, but i think that rural areas are great places to start an e-commerce business. This is primarily because it keeps overhead low. Rent is extremely cheap and average wage and expected benefits are much lower than in a big city. The cost of expanding is also much lower. Plus you get to be a big or at least medium fish in a small pond with your local ups/fedex/etc.. rep.

And, as I am sure everybody knows, there are no universal laws of e-commerce. But thanks for sharing the tips anyway.

philbish




msg:651505
 6:46 am on Aug 3, 2005 (gmt 0)

In regard to costs, rural areas are certainly best. Rent and labor are cheaper. BUT... transit costs can be more, especially if UPS tacks on the $1.20 I think it is for a rural route. And it costs more to get the products to your location. Shipping supplies will cost a ton to ship there.

I've got a problem because, I want to live in California. The Bay Area is super expensive. And living and running my business here doesn't make me any more money. The guy in a rural area can do the same thing with super low rent costs.

I guess I'll have to pay the rent here and deal with not being as profitable. Someday I will open a shipping center in the center of the country and keep corporate offices wherever I want to live.

luckychucky




msg:651506
 3:34 pm on Aug 4, 2005 (gmt 0)

a professionally designed site doesn't need a "hacker safe" logo
Amen, brother...same for that BBB logo. Eueeyuch!

Great advice a bookkeeper once gave me: be very wary of anything offered by anyone who calls you first to propose it (as opposed to investigations you initiate yourself). View all sales pitches with a deeply jaundiced eye, esp. SEO-related, e.g.: "We can make your page pop up automatically whenever anyone searches for mauve widgets". I've gotten into the habit of hanging up on and/or verbally decapitating any incoming calls whose first sentence is: 'Can I speak to the person in charge of your...' The more Internet presence you have, the more these annoying creatures will come a-courtin', wasting your time and trying your patience.

Regarding free shipping-
We are wholesalers, US$100 minimum order. We added free UPS Ground service conditionally for $300 orders, with automated prompts upon refresh -- "Order only $43.62 more for FREE SHIPPING!". UPS costs us only $6-7ish to most addresses. Profit markup is decent, so the added incentive for customers to push orders higher is definitely paying off for us. Rational sense doesn't factor in; some people will do anything to get a token freebie, and can't stand leaving it behind on the table unused.

Stores




msg:651507
 4:33 am on Aug 8, 2005 (gmt 0)

One of our sites selling specialized pet widgets recently broke a 3 year tradition of free shipping. In conjunction, we lowered our prices down (still realistic, but a lot cheaper without the shipping charge included).

Our results: Sales tripled instantly and have maintained and grown over the last 3 months of the test.

HRoth




msg:651508
 1:10 pm on Aug 8, 2005 (gmt 0)

I agree with the bit about moving to a rural area. I chose to do this a few years ago, and it has been great. For less than what I was paying for a tiny apartment in the small city where I lived before, I now have a house with an acre of land and a barn I can expand to if I want. I haven't noticed any change in shipping - either way, I am on the east coast, so the UPS rates are the same. I live two miles outside of a town of 9000 people, and there is no surcharge. I think the surcharge is if you live up a dirt road. Shipping supplies are the same cost - free - because I use the postal service. In the small city where I used to live, it was not unusual to have to wait in line at the post office for 20 minutes. Here it is rare that I have to wait in line at all. The only really bad thing I have found is that because I do live 2 miles outside of town, there is no cable or DSL. If I lived in the small town, I would have my choice of both of these. I remember when I was planning to move up here, someone asked me if there were any banks. Yes, and we even have movie theatres and there is an area mall in the next town over.

Rural areas are pretty much tailor-made for Internet businesses, as far as I am concerned.

hannamyluv




msg:651509
 6:11 pm on Aug 8, 2005 (gmt 0)

Rural areas are pretty much tailor-made for Internet businesses, as far as I am concerned.

I think that is true for most mail order businesses, and for more than just a rent issue. If you have employees, chances are a rural area will be much better. YOur employees will be more loyal (less options for jobs) and will cost less (their rent and COL is less too so they will take less in pay).

I know of a rather large catalog company that hand selects a new small town everytime they want to open a new warehouse. They try to find towns that are very rural and have high unemployment. The warehouse will bring a few hundred jobs to the town, people have few options as to where else to work and the town many times gives them concessions on taxes and ordinances. It may seem a bit unfair, but nobody feels taken advantage of. The towns people are able to stay in the town they grew up in plus there is new taxes coming in (even with tax breaks you get an influx of personal income tax) and the business saves money.

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