20 Things I've Learned About E-Commerce That Can Help You Be Successful Online
The original post featured way more detailed financial/sales information, one day I'll release it in a book.
This will still be very helpful.
E-Commerce.
Let's define the term -
Basically - when you have a virtual store on the Internet that sells something.
I have several 'e-commerce' websites but we are going to mainly focus on Happy Hippo since you've probably heard of it.
Born in early 2013, Happy Hippo is just over 3 years old.
Puddles, the mascot, officially celebrates his 3rd birthday on March 31.
Happy Hippo sells a variety of products, but Kratom (soap ingredient) is the main one.
You can learn about the 2 most popular products here -
- "Thoughts and Reflections From Following a Kratom Lifestyle For 5+ Years"
- "Phenibut - A Dietary Supplement That Actually Works For Social Anxiety"
I have learned a ton about online business from all of my websites and I will share some of these insights.
Most of these insights are not specific to any industry, if you are selling a product or service online these will help.
fun facts: Puddles Hippo is actually baby blue. On his birthday, you will see him in his normal color. He turns pink when we give him a bath with Happy Hippo soap. He still has trouble pronouncing and writing his name and calls himself "Poddles". His penguin friend, who first appeared on the website in December 2015, doesn't yet have a name and is not verbal.
If you have a name for the penguin, leave it in the comments below. Whoever has the best name for him will win $250 credit.
#1 You NEED To Do 1 of 2 Things When You Start (How to Break Into An Industry)
The key to breaking into an industry (without extensive pre-marketing) is meeting a demand by -
- Selling something better than everything else.
- Selling something 'good enough' and cheaper than everything else.
Ideally both, but that's usually not possible when you start.
Happy Hippo carries an EXCELLENT product.
I am very proud of it.
That was how I entered the industry so quickly.
After a while, I was able to place larger orders and negotiate better deals with our suppliers so our product is now less expensive (or competitive) with the cheaper brands.
Finding the GREAT or GOOD ENOUGH (AND LESS INEXPENSIVE) product can be the hardest part.
It can take time and money.
Trial and error.
Personally, I suggest you prioritize finding a GREAT PRODUCT instead of a 'good enough but cheaper' product because you'll get a ton of free word-of-mouth marketing if you really impress people.
More on this later. (see #15)
After you find it - it's just a matter of telling people about it.
#2 Small Websites Can Make Big Money (Do the Math)
Happy Hippo has exceeded 2.5 million dollars in sales almost 3 years.
While you shouldn't consider this to be a lot of money (mainstream soap vendors make this in less than 3 months), it is a good amount for a little website created by a 30-something year old kid (me).
The lesson is -
A small website with a happy customer base can do quite well.
newbies: $3 Million is not "profit", it is revenue. Revenue - Expenses = Income (Profit, then subject to taxes)
DO THE MATH
Let's run some basic super realistic hypothetical revenue numbers that will boost your confidence.
- Suppose you open up a little part-time webstore and sell a t-shirt for $20.
- Suppose your very little website gets 100 views a day.
- Suppose 4% of people buy your product. (4)
You will make $80 a day.
That's an extra $29,000 a year from your part-time project.
After a year -
- You still sell your t-shirt for $20 and haven't added any other products for some reason.
- Suppose you get your traffic up to 200 people a day.
- Suppose 5% of people buy your product since you now have better images of your shirt and have some people on Instagram posing in it. (10)
You now make $200 a day.
That's an extra $73,000 a year.
After 2 years -
- You get smart and add another $20 t-shirt.
- Suppose your traffic stays at 200 people a day.
- Suppose your first $20 t-shirt continues to be bought by 5% of customers. (10)
- Suppose your second $20 t-shirt isn't as popular and only 3% of customers buy it. (6)
You now make $320 a day.
That's $116,800 a year from selling 2 t-shirts.
Most people will never make that much money in a year and might not even believe that you make that much from your "little" t-shirt store.
But just do the math.
- Do you think you can get a couple hundred people to visit your website each day?
-- Do you think you can get a small amount (3-5%) of them to buy your product?
Of course you can.
While $80, $200 or $320 dollars a day isn't a lot for a multinational corporation with a huge infrastructure to support, for a part-time business with very few expenses - it's quite good.
If your product is really good, word-of-mouth alone will put your traffic in the thousands and will convert at greater than 5%.
How to Start A Website That Makes Money
#3 Web-Based Startups Are Just As Good If Not Better Than Storefront Businesses
One of the most awesome parts of having an online presence is that I've gotten to meet a lot of business owners (veteran and startup) in a lot of different industries.
Some are doing great, some are not.
- Most of the startup business that are doing well are largely web-based.
- Most of the startup business that aren't - largely rely on storefront sales.
There is no reason in 2016 that you need a traditional brick and mortar storefront.
Having a storefront is not "bad". But it usually requires a significantly larger initial investment.
Don't think for a second that you need a physical store.
When you are on the Internet, you have access to the international marketplace.
If you aren't - you are putting a ceiling on your business.
#4 You Don't Need Investors, Bank Loans or a Credit Line
A lot of 40+ adults tell millennials that they "need" venture capital, bank loans or credit line if they want to create a profitable business.
While that might be true if you are seeking large amounts of capital, it is absolutely not true if you run a basic e-commerce store.
You don't need ANY of these things for your first business and I HIGHLY discourage it.
If you can create a profitable business from scratch, you can do anything.
Save the venture capital search or loan/credit line for another project.
Figure out how to make money on your own first.
My initial contribution to Happy Hippo was $5000 and I just worked from there.
- $1000 for the website
- $2500 for a few products
- $100 for office supplies
- $500 to get them bagged and labeled
My initial contribution to Good Looking Loser was $200 for a year of webhosting.
"Only Morons Start a Business on a Loan" (Mark Cuban)
#5 You Don't Need Any Sort of Written Business Plan
When people speak to me about their startup, almost everyone explains their [usually incomplete] ridiculously complex, largely pointless business plan.
While you'll need a business plan to attract angel/venture capital and extensive credit lines, you ABSOLUTELY DO NOT NEED a business plan to start a multimillion dollar business.
In fact, writing a "business plan" kills as many startups than it helps.
I know several people that spent over 6 months writing a detailed business plan - only to talk themselves out of it and never launch.
It's a good idea to have some idea of how you are going to sell your product but you don't need anything official. Ideally, you know the industry from a consumer standpoint.
You will figure out EVERYTHING ELSE along the way.
I did.
Here was my business plan when I started -
Have Good Product + Tell People About It
In that order.
That business plan never changed.
#6 Make Customers. Not Sales.
This is my biggest piece of "sales" advice.
Good businesses make sales.
Great businesses make customers.
FOCUS ON MAKING HAPPY CUSTOMERS - NOT MAKING A SALE.
There is a reason that over 50% of first-time customers reorder from us within 90 days.
We are able to retain almost 80% of first-time customers (Kratom won't work well for 5-10% people) for two main reasons -
We Have an Extremely High Quality Product
This is key.
I have used Kratom for 6+ years and I know good from bad.
I also know GREAT.
As a consumer, I had some idea of how the industry worked and what made me a repeat customer at certain vendors.
I tracked down the exact origin of my favorite strains and knew that most people would love the product.
Happy Hippo carries REALLY good quality plain-leaf Kratom.
We Over-Deliver to Our Customers
Most businesses focus on "making sales" and making the most money for the least amount of money/effort possible.
We have always focused on actually making people happy so they come back.
Reaching first-time customers is obviously important but earning happy repeat customers who place frequent and larger orders is more important.
When you order from Happy Hippo, you get free sample(s), a handwritten note and some other sort of fun prize -
"Unboxing Our Happy Hippo Order & Review" by KratomPedia
Thank you for the wonderful video Ben!
"Kratom Wisdom: My Review of Happy Hippo"
(Pictures of What Comes in Every Order!)
In the past 6 months, we put these cute magnets in all of our orders -
Puddles Happy Hippo Magnet
Puddles Happy Magician Magnet
Puddles Happy Knight Magnet (Limited Edition!)
Handwritten Note (original thank you note)
Since May 2015, I asked Happy Hippo Helper to forward me good review emails when someone takes the time to write in -
Wow!
Dating back to 2013, there are literally HUNDREDS AND HUNDREDS AND HUNDREDS of happy customer emails.
This is particularly significant because most people don't take the time to write in to tell you how happy they are.
We genuinely love our customers and a lot of them feel the same way.
Make happy customers, not individual "sales".
#7 Customers Can Become Your Best Affiliates
Happy Hippo Affiliate signup is now closed.
If you have an existing website or audience and you are interested in recommending Hippo soap products, please contact Happy Hippo.
I don't do too much advertising.
The majority of our "marketing" is done by our Happy customers.
Unlike banners, advertisements and low-yield pushy sales pages - customers who have tried our products will provide the most powerful "marketing" (testimonials and 'how to' guides).
A lot of Happy Hippo enthusiasts don't know how affiliate marketing works and would have no idea where to begin. I published a blog post that tells them EXACTLY how to do it.
1 out of 3.5 sales is made by an affiliate and we pay out commissions on $60,000 to $80,000 of sales every single month.
Some of our affiliates who had no previous Internet marketing experience are making $500/month in passive income.
I suggest having an affiliate program and offering a very handsome commission. Even if it means forfeiting your entire margin.
It is more important to make return customers than first-time sales.
August 2015 Affiliate Commissions
#8 Selling a Product (or Service) Online Is Generally More Profitable Than Affiliate Marketing
As well as Good Looking Loser has done, I have not yet made the $3+ million in sales that my e-commerce sites have.
Although I probably could have if Scotty and I were still single and did pickup workshops - that's not the point.
The point is -
Happy Hippo is a website that has about ~20 pages in all. The original website cost me $1000 to build.
Good Looking Loser (and Lifestyle by Good Looking Loser, this website) probably has 700+ pages and has taken 1000's of hours to build.
That isn't to discourage you kids from making your own blogs.
As passionate as I am about introducing people to Kratom (it is life-changing for many), Good Looking Loser is the more expressive, creative experience. Good Looking Loser also allowed me to make Happy Hippo immediately profitable.
Still, you will almost always make more money from selling your own product rather than selling other people's products on commission.
I don't necessarily think you should chase money with your first online business however.
Start a little blog or store to learn.
You can do it big later.
If you can create a successful blog, you can sell your own products anyway.
Drop shipping is also a great way to make money online, I don't have experience with it, but our friend Brian does -
#9 Your Email List is SO Important
If you sell a product or service online, it is super important to build an email list from the start.
If you don't publish regular content, you absolutely need a line of communication to remind customers that you exist and to tell them about new products or sales.
I wish I prioritized the email list when I started Happy Hippo (and Good Looking Loser).
Every time we send our weekly email, sales will double for the day.
Most signups are via a single non-intrusive popup.
We send out our email every Monday, can you guess which days are Mondays?
Orders (Light Blue)
New Customers (Dark Blue)
#10 Customer Service Earns Lifetime Customers and Free Marketing
If you've sent an email to Happy Hippo, Happy Hippo Helper usually responds within 24 hours with the answer to your question in English.
Although we promise a reasonably fast response, this still surprises a lot of people and many become lifetime customers and tell their friends.
These days, people just don't expect a fast, thoughtful response to their email. Or any response.
You have to know your customers and draw from your experience as a consumer.
The Kratom enthusiasts are not ordinary customers.
For a lot of people, their Kratom is VERY VERY VERY IMPORTANT to them.
Many customers suffer from addiction, depression, anxiety, PTSD and are impatient and counting on us to make them happy.
It's as high pressure as any industry.
We want every customer to feel like he or she will be taken care of.
I'm not just saying that either -
I could hire an offshore customer service/administrative staff for cheap but I pay Happy Hippo Helper over $100,000 because she is great at this.
There's about 100 more of these, but you get the point -
#11 Overpay Your Employees (But Require Them to Do the Work Of 3 People)
We only have 3 full-time employees, but they do the work of about 10 employees.
7 days a week.
Each of them is on-call 24 hours a day.
We get over 100 emails a day and routinely fulfill over 100 orders a day.
Each one of them is paid VERY VERY VERY well, is included in our profit-sharing 401(k), get big surprise bonuses and plane tickets.
Working for me is like playing for the Dallas Cowboys.
Besides, "overpaying" a few great employees is ultimately cheaper than hiring a bunch of average employees.
Never "try to make money" by cheating (underpaying) your employees.
Make money by negotiating good deals with your suppliers and focus on making happy return customers.
Your employees need to feel like they are working for someone that cares about them and is not trying to make money at their expense.
When you start your very first business, I don't suggest hiring any more than 1 employee. Only hire more when it is absolutely impossible for them to keep up with the work.
I encourage you to hire family (or trusted friends) when you start.
There's no reason to hire an outsider if you have a good bond with someone else who is equally as capable (or can be trained to be). It is very rewarding to build a business with people you are already close to.
Loyalty, not smarts, should be the main criteria for an employee.
Train your employees to replace themselves and move them up when you hire.
Even our part-time employees get bonuses.
For a lot of them, it's a matter of Christmas vs. No Christmas.
fun fact: 95% of the employees at Happy Hippo are female (age 18-27).
#12 Don't Waste Your Time or Money on Social Media Advertisements (Yet)
This advice is for guys who don't have an extensive budget and don't need to make a lot of buzz/sales right away.
Forget about the social media advertisements and just build your email list.
You can send people emails for free. (with one small monthly fee)
People that take the time to signup to your newsletter (and existing customers) almost always are far better "targeted traffic" than someone than that happens to see your advertisement.
Think about it -
When was the last time you bought something you never heard of because a Facebook or Twitter advertisement crossed your feed?
Almost never.
The reason that social media advertisement aren't "worth it" is because you get charged for 'impressions' (when someone sees your ad, regardless if they even click on it). You get charged again when people click on it, even if they don't buy anything.
Don't believe me?
I'll show you some numbers.
I played around with 2 Facebook advertisements toward the end of last year.
There were 2 campaigns.
#1 Keep Kratom Legal - General Audience (2 Weeks)
This was an advertisement that linked to a post about Kratom legality and offered the customer a special coupon to try Happy Hippo. The traffic targeted anyone on Facebook that had "Kratom" or "Mitragyna Specisoa" (the botanical name) as an interest. 19,359 saw this advertisement, 4,392 clicked it and I paid $1,159.36 or $0.26 per click - which is actually good since our average first-time (median) sale is $37.
#2 Happy Hippo Custom Audience Facebook Group Sign Up (1-2 Weeks)
This advertisement encouraged the customer to [JOIN] our Facebook Group. The traffic targeted anyone who was already signed up to our newsletter (highly targeted traffic). 5,164 saw it, 651 clicked it, 67 liked it (but only about 200 people followed though and joined the Facebook group). This cost me $646.68 or $0.99 per click.
So how many sales did I make?
One.
Only one that I know of for sure.
Adding insult to injury, it was for $21.60 from an existing customer who buys from us every few weeks anyway.
What a waste of money.
Almost $1,800 to make 1 sale and have 200 existing customers sign up for the Facebook group.
While our Facebook group makes sales (look for specials on Sunday-Monday), almost all ~700 current followers are already signed up for the Hippo newsletter.
This is not to say that social media advertising is "bad" or is a "scam".
It does work.
I own a Boston media company that uses Facebook to sell expensive Crossfit memberships so I know social media "works".
But it is mainly beneficial to companies in certain industries who have a high average sale (customer acquisition value) with the capital to endure largely inefficient marketing.
It is only "worth it" if you have a considerable marketing budget and are willing to accept that it may not be profitable for a while.
Remember -
Most people need to see a Facebook advertisement 7+ times before they even click on it.
You will still be charged every step of the way. Regardless, if they buy anything.
I have seen way too many "entrepreneurs" blow their entire initial contribution on social media ads.
Despite the enthusiastic 'likes', this advertisement earned ~200 followers and cost over $600.
#13 Use Shipstation For Order Fulfillment
I'll save you a lot of time and heartache.
Sign up for Shipstation and get this label printer (once you have the money and process over 20 orders a day).
We tried a lot of different shipping platforms and Shipstation is by far the best.
Coupled with the Zebra printer, you can print out 100 USPS, UPS or Fedex stamps in 200 seconds.
Until then, just use USPS.com or Stamps.com - but those are still a pain because you have to manually paste the names and addresses.
People wonder why we ship with the United States Postal Service (USPS) and not UPS or Fedex.
USPS is just like any business and you can negotiate deals with them, they were willing to match UPS high-volume rates and have been more reliable than people give them credit for.
We even have a special black mail truck that comes everyday.
For new businesses, USPS is usually the cheapest until you do major volume (3000 orders a month) and will give you huge amounts of free supplies.
#14 You Need to Do an Adequate Job - In An Inadequate Amount of Time
This is the secret to winning at life.
There will be no perfect time to start your business.
There will be no perfect time to expand your business.
You need to do an adequate job in an inadequate amount of time.
Welcome to the life of highly successful people.
I have some friends that have been waiting for the "right time" to start a business for over a decade.
0% will ever follow through. (0% margin of error)
The perfect time is now.
Even when you have a profitable business, there will never be 'enough time' to perfect everything.
You always be forced to do an adequate job in an inadequate amount of time.
Once you get the "perfect time" daydream of your head, you will be able to take real, consistent action.
#15 You Don't Need a Great Website
You don't need a great website, you just need one that has a shopping cart that works.
When Happy Hippo started, the site looked like this.
Nothing fancy.
I paid a developer in India $1000 to make it.
Happy Hippo uses the "Opencart" platform.
It is not a high-tech system, but it gets the job done.
The website really hasn't changed all that much through the years.
Puddles has gotten some new clothing and accessories and he now has a little penguin friend that follows him around.
#16 International Business-to-Business Websites Are Your Friend
There's a lot much to this. I'll keep it basic.
Although Kratom is found elsewhere, Alibaba and MadeInChina.com is the place to start to find wholesale suppliers of virtually anything. There are some private B2B "tycoon" platforms that you might be invited to once you are established.
A lot of people say -
Alibaba is all scammers.
That is a complete generalization.
There are hundreds of thousands of suppliers on Alibaba, some of them are billion dollar Chinese and Japanese businesses.
Huge multinational corporations such as Ford, Apple, Sears, Nordstrom, Target, Lowes and Walmart actually use Alibaba.
I have used the site for some of my other projects.
The key is to find a legitimate multiyear 'gold star' vendor. They should also have a website, responsive email contact and pictures of the EXACT product that you are going to receive.
When you initiate contact, ask them for a sample of the product and whatever documentation/images that verifies its authenticity. Request a tracking number when it ships.
Most gold star vendors will only make you pay the shipping on the sample.
Payment via wire, Escrow, PayPal and even Western Union is standard.
If the sample meets your expectations, put in another small order of a larger quantity.
To this day, I hold my breath when I send money abroad, but I have never once been ripped off. I have found most Chinese, Malaysian, Indonesian and Islander suppliers to be incredibly hardworking, professional, trustworthy, organized and gracious. Much more than many Americans who focus on "making sales" and not loyal customers.
Many international vendors regard Americans with great esteem and want to be your friend.
Engage them in friendly dialogue and talk about your countries. (don't talk about politics or foreign governments!)
Trust your instincts, do your research and don't send any money that you aren't willing to lose.
Unless you are buying huge amounts of product ($25,000+) at a time, you don't need to have a customs broker or specialist attorney.
#17 Don't Be Afraid to Negotiate With Suppliers (After You Have Some Leverage)
After you have built up some good will and leverage with your suppliers, don't be afraid to negotiate better deals with them.
They are used to it and if they are good supplier - they will negotiate if you are a good customer.
I have never had a supplier turn their back on me or get offended.
Show them screenshots of your other options and kindly ask them to meet or beat the price.
Don't be afraid to talk on the phone if they speak English. Project STRENGTH in a respectful matter.
If you don't urgently need inventory (try to find deals BEFORE you need inventory), don't be afraid to temporarily walk away from a deal. Sometimes silence really is the best strategy.
The worst they can say is -
No.
Negotiating can be fun and you'll be very proud of yourself when you make a good deal.
You're no longer an "entrepreneur", you're a BUSINESSMAN!
Sometimes it's this easy -
#18 99.9% of Your Customers Are Amazing, .1% Are Impossible
If you truly have a great product and customer service, you'll find that 99.9% of your customers are totally wonderful and reasonable people. They want you to succeed and will brighten your day.
But .1% of customers you just cannot and will not win with - no matter how gracious you are.
Customer service still needs to treat them with respect.
As much as you need to value all your customers, you need to stand up for good employees when time comes (see #8). Do not let customers abuse or stalk them.
If this happens, immediately step in and DEAL WITH IT.
If you are really trying your best to run a business that prioritizes and treats every customer with respect - you have nothing to apologize for.
If someone steals from you, however, that requires ABSOLUTELY NO negotiation or sympathy.
If you are just starting out, you can write or have a lawyer send the thieves a demand letter.
Ultimately, you will want have a collections service to recover the stolen money and punish delinquent accounts.
These services are fairly inexpensive and easily found on Google.
Do not let people steal from you because many of them will do it again.
Go get them.
#19 Keep the Big Picture In Mind and Don't Be Afraid to Cut Short-Term Losses
One of the hardest things about expanding your business is - quality control.
Back in the old days, I could sample literally EVERY batch of product that went out the door.
But when you import 907.18474 kilograms (1 ton) at a time, it's not as easy.
This is why you need to fully trust your suppliers and constantly test your products.
Do not sell anything until you have found your golden supplier(s).
If you get a bad product, immediately tell your supplier and ask them what they can do to resolve it.
If they are honorable, they will make things right and your business relationship will grow.
If not, DO NOT do business with them again. Ever.
If they have integrity, they will eventually contact you to resolve the matter.
It should be obvious - do not sell a product that is bunk.
If you want to salvage the sub-par product (if it is still usable) - give it away for free or for super cheap (but tell people what to expect).
DO NOT KNOWINGLY SELL A QUESTIONABLE PRODUCT.
It is not worth "making sales" if you lose customers.
#20 Have Good Products, Not More Products (When You Start)
Ultimately, most startups will want to expand their product line.
That shouldn't be the initial focus however.
You can make a ton of money from selling 1 excellent signature product.
If you have ONE product that is a hit, customers will be willing to try anything else you have to offer.
The most popular products on Happy Hippo are Hippo Phenibut and Hyper Hippo.
Both of them have been available since the beginning.
Pour Conclure
This was a free inside look at a developing but established business.
Stuff you will absolutely not see elsewhere.
One day I'll write a book on how to start and grow a business that explains everything.
I have 5 separate businesses and multiple websites now.
I want to leave you with one final thought -
YOU ARE THE BUSINESS LEADERS OF TOMORROW.
YOU WHO FOUND THIS WEBSITE ON THE CREEPY FRINGES OF THE WEB.
YOU.
I am no smarter and no harder working than you.
I just "get it".
The only reason I "get it" is because I tried.
I am obsessed with everything I do and will stop at nothing until I "get it".
Listen -
Stuff is tough out there for you guys.
Our generation doesn't have it easy.
Especially you Millennials who are younger than I am.
Everything is so damn expensive and inflation supposedly isn't that high.
We are in an awful economy, the United States is no longer too friendly to small business and many are drowning in debt from buying worthless college degrees that don't even get you crappy jobs.
Only a small percentage even know what the hell they want to do with their life.
Many of us are guilty of 1 or more financial death sentences.
While there's only a small few guys who really want to be multimillionaires in their 20's or 30's (aka ACTUALLY willing to put in work/stress), almost every one of you guys wants to start a side project that makes you a little bit of passive income.
It's very possible.
DO NOT LET THE 'RED PILL' DISCOURAGE YOU.
You aren't condemned to slavery like "realists" always tell you.
Although it's nearly impossible for most to get a 'job' that pays hundreds of thousands of dollars in your 20's, OPPORTUNITY HAS NEVER BEEN GREATER FOR ANY GENERATION.
I created Good Looking Loser and Happy Hippo (they aren't even that big) for an international audience with a fuzzy 12" laptop I got free from Law School.
I never could have done anything like this in the 80's or 90's.
Just keep your head up, trust your instincts and keep trying.
Your first, second or even third project might not be super successful - but eventually you will "get it" too.
