As you may remember from the first part of our interview with Drew Friedman, an experienced e-commerce merchant and president of White Mountain Trading Company, in the more than 15 years Friedman has been running the business, he's seen many changes and has had to adapt to keep his company going.
From clicks to bricks and then back to clicks, the merchant has found his path.
After the financial crash of 2008/2009, we saw far fewer customers for our specialty line of $3,000 fountain pens
Here he shares his thoughts on marketing and the markets he uses, as well as advice for merchants who are just starting out.
The twists and turns of selling
Schepp: What are your thoughts about the big marketplaces where you market your items?
Friedman: We are still on eBay and have been for nearly 16 years. Briefly, after our move across the country, our eBay effort was scaled back considerably as we reconfigured our business. We also saw a tremendous downturn in the upscale product categories, where we had built our earlier reputation.
After the financial crash of 2008/2009, we saw far fewer customers for our specialty line of $3,000 fountain pens, for instance. Additionally, some of our newer merchandise became easier to list, and sell, on Amazon where a more robust marketplace held more promise.
eBay has been an interesting ride over the years. The early days favored sellers who could capitalize on a brand new sales channel. eBay's evolution seemed to become "buyer-centric," and sellers like us felt alienated with the deck being stacked against us. However, our basic business principles supported us throughout eBay's many changes.
We understood that buyers wanted exactly what was advertised, with no fine print, they wanted it as fast as possible, they wanted "value" for the price and they wanted to have a positive experience. We've stuck to a formula that supports all of those buyer expectations. Since day one, for us, we saw the big marketplaces as a way to drive direct business to our company.
Solving the marketing puzzle
Schepp: Tell us more about how you market your e-commerce business these days.
Some of the most successful e-commerce businesses are run by people who had prior experience in retail, wholesale, manufacturing and/or distribution
Friedman: In many ways, we've "stuck to our knitting," and have remained on eBay and Amazon as our driving sales channels. We experimented with pay-per-click advertising but found that to be a total waste of money.
We send hard copy promotions out with all packages, we encourage customers to opt in to communications with us and we offer incentives to customers to conduct repeat business with us directly. That works well for some categories of products, but not most. Regrettably, to this day, many purchases from us are one unit, one-time only purchases.
For fiscal year 2014, 25 percent of our sales were through eBay, 50 percent through Amazon and 25 percent were direct. So we do see a fair amount of success with our direct marketing efforts, considering the low cost of implementation.
Regrettably, we have not solved the social commerce puzzle. Since our inventory can change so rapidly, it is a challenge to properly target our customers where they are and/or what social media they use. We've experimented with some Facebook advertising components but have found no evidence that they drive sales. I guess we should say, "Stay tuned!"
What new merchants need
Schepp: What do you now know about e-commerce that you wish you knew when you first started?
Friedman: I can't really say there is anything I wished I knew when starting the business. I was already in the business world for nearly 20 years before starting an e-commerce company, primarily in sales. I would have never attempted to start an online retail business without a solid foundation in transactional selling beforehand.
I am self taught as to how the big online marketplaces function, how the e-commerce industry works, in general, and what tools (technical, financial, or otherwise) I need to be in this business. Fortunately, I had plenty of professional training in other areas of business that proved useful when searching for merchandise, negotiating acquisitions and marketing my products.
Pay close attention to cash flow at all times. There is no greater burden to a merchant than not being able to take advantage of market opportunities for lack of financing
My observation is that some newcomers think starting an e-commerce business is easy, even with no prior business skills or background. I also see that some of the most successful e-commerce businesses are run by people who had prior experience in retail, wholesale, manufacturing and/or distribution. They seem to understand the big picture of transactional selling, marketing, shipping and customer service.
Tips for newcomers
Schepp: If a friend wanted to open an e-commerce businesses, what would you tell them?
Friedman: First, I would tell them that they must respect my time as a business person. Over the years, many people have expressed to me a desire to start an e-commerce business, then proceeded to ask me a million questions about what, where, why, how and when they should do it.
I respectfully remind them that although available to make suggestions about overall strategy, finance and sales/marketing techniques, I am unavailable to answer their specific questions about what, where, and how to buy and sell merchandise. Sometimes I further suggest that they consider actually paying me for my expertise in those areas!
Next, I would be sure to tell them to be well financed and to pay close attention to cash flow at all times. There is no greater burden to a merchant than not being able to take advantage of market opportunities for lack of financing.
Further, I would tell them to be prepared to put the hours in at the start. Better plans today make for fewer headaches in the future. I sometimes relate my "easy decision, hard living, hard decision, easy living" rule.
Lastly, I would tell them to avoid drugs, stay in school and get into another line of business!
Our thanks to Drew for sharing his experience and insights. We look forward to watching him grow his business over the next 10 years.