Nail It! Then Scale It

Forget about the minimal viable product.
You’re into Commerce. Your product has been made by a manufacturer.
Something physical. Nothing SAAS (Software As A Service).

You only have to ask yourself one question:
What’s the fastest & best way to validate potential?

Let me ask you this:

Are you sure

  • Your product will get sold online?
  • Your not investing too much €|$ cash upfront?
  • You can handle everything that comes with this business opportunity?

I’ll give you the answers (tested & approved) to make it work.

First of all,
let me show some R.E.S.P.E.C.T.
to all you guys out there starting E-commerce sites.
It takes balls to start from scratch & build out an online business.

Only one thing: don’t invest to much in the beginning, unless you already selling products offline.

There is a difference between pure e-commerce & retail

This is an article for online starters.
Not the average retailer. The retailer has build up the luxury of a vast amount of customers, which they can give another extra service by serving up their products online. So.. they’re already past this stage of validating their potential.

If you’re already selling products offline, online is the extra channel that needs almost to none validation. You’ve already got your audience.

Actually, investing in an extra online channel, is very smart for the retail sector. It can gain you a lot of extra customers. Don’t be afraid of the shift from offline to online. Try to add value with a omni-channel message & strategy. Make channels work together.

Pure e-commerce players start from scratch. No shop offline. No customers yet.
The good old “I’ve got an idea of selling this product, let’s go for it!“-mentality.
Love it! And this article is written to help you guys.

3 questions:

  1. Will your product get sold online?
  2. Are you not investing too much €|$cash upfront?
  3. Can you handle everything that comes with this business opportunity?

3 answers:

  1. Get a minimum viable transaction first
  2. Wait for it. Wait for it.
  3. Nail it, then Scale it.

With a tight budget of €250, you can validate the beginning of something beautiful.
If you have a bigger budget, good for you! Keep it to invest in the nailing part.

Follow the steps below.

Minimum Viable Transaction First!

Before you’re building out this business, test it first.
Will your product find some market online? The tech side isn’t the problem. You’ll always will find some dude to write that code you need. Finding the market is way harder. That’s why you need confirmation: a first (minimum viable) transaction.

A Minimum Viable Transaction is the simplest possible exchange of goods, services, or cash that allows an online-to-offline entrepreneur to extract maximum learning –  Jason Shen

The idea is very simple.
Get your product out there.
If it gets sold, just even once, via your online channel, there’s your confirmation.
If someone buys it online, there will be probably more people that will buy your product as well.

You might want to read Jasons article as well.

Practical step 1: set up a landing page or website

One of the myths out there is that you need a full working website before selling products.
Wrong! You don’t need a full loaded (more cowbell) big ass website first. You need to confirm the product-market potential. Not the product-market fit. That’s something else. In this stage, you need to focus on finding the market for a product you know that already gets sold by others, offline. If people are buying it offline, there’s always a potential that people will buy it online.

Follow these steps. You can do this in one day.
You can get a lot of value out of €100

  1. Get hosting + a domain name (prox. €30 – €50 / year)
  2. Download & Install WordPress (free)
  3. Get a nice full or one-page theme (max. €20)
  4. Download & Install Woocommerce (free – paypal gateway included)
  5. Set up your paypal account (free)
  6. Sort out shipping (no contract yet)
  7. Sort out pricing (tax, shipping, paypal fee, …)
  8. Add your product(s)
  9. Write excellent copy & pay for a review (max: €10 – find some who’s brutally honest – me for example.)
  10. Use detailed & close-up photography (prox. €20 – €40 for a few pics)
  11. Test your order process (use sandbox mode for paypal)
  12. Install Google Analytics (free)

If you find a friend to do this,
you can always buy him/her a couple of beers or a good bottle of wine ;)
Make it count!

Practical step 2: Buy some traffic

You’re not able to invest in SEO just yet.
That would be really stupid for several reasons:

  • You’re not sure you’ll even sell one product
  • You don’t have the cash (yet)
  • SEO can take a while (you’ll pay for this with time)

So.. get another €50 out of your pocket.
Buy some traffic.

In order to decide what channel you want to use,
do some research first.

Planning on using Google Adwords? Good idea.
Check the competition first to get an estimation of the keywords being used,
and the ones not being used. You have to pick the right keywords. That’s essential!

Here’s why:

cheap-google-adwords-traffic

Focus on the long-tail. The keywords that really matter.
Not the big traffic. The little but very focussed traffic.
It will take longer, but will be very effective & cheap(er).

Set yourself a goal as well, for instance: “I want to get my first transaction within one month”.
If you have a goal, you’ll have a better focus to get traction faster: more budget or using more mid-tail or short-tail keywords.

Don’t forget to link your Adwords account to your Google Analytics profile.

If you’re using Facebook as a channel (which is harder),
don’t forget to add UTM tagging to your links in your ads.

Note: if you’re familiar with SEO, you can try to add some landing pages without using Google Adwords & focus on keywords that have very low competition and yet a fairly amount of volume. Hard to find these days, though they still exist. It will take you longer & you’ll probably have more waste, but you can do it with this tactic as well.

For example: my brother and I started off in november 2012 with +90 products (too much to start with actually) and set our goal to get a first transaction by the end of january. It failed. We added some extra landing pages to get more traffic & by the end of february we got our first transaction.

minimal-viable-transaction

Honestly? We should have used Google Adwords to get results faster.
We didn’t. Why? We wanted to learn about the market while we tried to get our first transaction by writing copy & finding topics that are essential for that specific audience.

Not using Google Adwords will take you longer to get a transaction.
You’ll learn faster about your audience though, by researching & writing landing pages.

Wait for it. Be patient

Before you get all excited, just wait for the first transaction.
Setting a goal is a very good thing. If you didn’t get a transaction by the date you set up, you might want to think some things over.

For this step, you’ll need at least €50.

Not enough traffic (yet)

Invest another €50 in Adwords.
You still got options:

  • Try to use other keywords (synonyms, typical in-crowd used terms, …)
  • Try a short period of time going after the short- or mid-tail keywords
  • Bid higher if you’re bidding to low
  • Try Google Display Network – you never know

No one converted (yet)

You’ll probably need no cash for this.
You’ll pay with time.

  • Sure you’re funnel isn’t to complicated? (a contact form or even a phone number can be very effective too – reduce friction)
  • Is your copy clear on what you sell? (talk to someone that might want to buy the product)
  • Is your photography not good enough? (for example: 10 different products, but the package looks the same for all of them)
  • Are you ads clear & conversion driven? (check the CTR vs bounce rate)

Tons of things that can impact that first conversion.

Think impact first: from big & easy changes to details that matter.

Competition changed during my test run

If the competition changed their pricing, you should change your pricing as well.
You don’t have to be cheaper, although it’s easier to convince people. You can use the same price as well.
Only thing you need to think about is how you can keep your margin as big as possible & keeping flexibility to change things: pricing, shipping, free gift wrapping, …

  • If you set your price to low, it’s hard to raise it – price sensitive audiences are tricky
  • If you give away shipping for free, you can’t go back to paid shipping.

Don’t forget that.

When all goes as planned

If you do get your first transaction within the timeframe you had in mind, don’t go bzerk just yet.
Be patient & think things through. Nail it first. Scale it later.

Nail It Before You Scale It

Your first transaction was a success. Great job! Well done!
Now. Think about the next step.

Scaling it, in this article, means selling across countries & over sea.
Just to be clear.

Actually, it does not matter what your budget is.
You’ll need to focus on what matters, your profit.
The budget you have will determine your resources (people + time) & tools (website, crm, …).

It’s very important to build up a version of your site you’re comfortable with.
It’s very tempting to scale because you know you got a transaction and there will follow more eventually.
You got confirmation.

Nailing it to get a bigger budget first

You started of with a small budget. I don’t know how big your wallet is, but to get in a comfortable position, you should invest in conversion optimization & lead generation first. The money you’ll earn will fund the next steps to scale.

Yes, you will need to scale first, in terms of traffic.
Eventually, you need to focus on getting comfortable first.

It’s very hard to decide when you want to scale to other countries or languages if you use metrics like traffic & conversion rate. You can do it easier with other metrics. You can do this after measuring a quarter of data.

  1. Calculate the rough costs to expand your reach to another country or language (all costs)
  2. Define your budget you want to invest in order to help you get to that budget needed
  3. Add those two together
  4. Divide that number through the average order value per day (be realistic, not optimistic)

formula-days-to-scale-business

Now you’ll get a good idea how long it could take to nail it before you scale it.
Use the average order value per day to exclude the impact of trends, weather, …

It’s a very simple and straightforward way of calculating that pivot point.
How fast you’ll get there is mainly dependable on three factors:

  1. Amount of visitors
  2. Conversion rate
  3. Average order value

That’s where you need to learn how to use your budget.
The logical order to invest in, is this one:

  1. Average order value (hardcore outcome!) – Harder / Hardest
  2. Conversion rate (more transactions, outcome depends on average order value) – Hard
  3. Amount of visitors (fairly easy to get, no guarantee for sales) – Realistic

You’ll need all three of course.
It starts with traffic. Converting traffic to get you the data you need.
The knowledge (also time & patience) to increase the order value.

Take your time but don’t loose track of your competitors too.
The biggest learning curve will be customer service & fulfillment in general. The human side of things ;)
Take your time. Answer A LOT of e-mails. Every one of them. Personal. To understand your audience, improve customer service to get at that comfortable level.

Nailing it to get a bigger customer base first

If you got unlimited funding, you can scale it before you nail it.
In that case, acquisition will get you a head-start in terms of competition, in the short till middle long run.
Keeping those customers will be an extra assignment over time, the hardest part of them all.

It’s risky, but if your base is good enough, you could pull it of.

TL;DR – Get Proof First, Nail it, Then Scale It

  • Set up a website on low budget first
  • Buy some traffic
  • Set a date to get that first transaction
  • Adapt if needed to get there faster
  • Nail it first by investing into traffic & conversion optimization
  • Scale it afterwards to acquire more customers & grow fast with something that already works really well