You know MythBusters – the guys who debunk or prove common “myths” like “does my car get better gas mileage if I draft behind an 18-wheeler? (yes – but don’t)…” – well, I think we need to have them come and bust some myths about the online world – in particular the myth of “if you build it, they will come.”
It used to be back in the early days of the web that if you put up a site about a particular interest (say, selling shoes) you could count on instant traffic and interest. The web was a small village back then and you were the first and only shoe store. Well, all that has changed. As of 2012 there were 650 million websites up, and in time that will be billions. Some of these websites are monsters – Zappos.com for instance pretty much has the online shoe sales thing locked up.
At Studio Two we work with many Brick-and-Mortar clients. We use the web as a tool to connect potential customers to those retailers and convert them into physical and online customers. In recent years, we have worked with several of our clients on creating successful online e-commerce presences. We have also, unfortunately, worked with clients who were not successful. Looking back, I am afraid that we should have been much more agressive about our “myth-busting” then we were. Namely – if you intend to build a successful online business, you should be prepared to spend the same amount of time, energy and money on creating your online location as you did on your offline one. For instance, lets say you are a single-location clothing retail store in a town of 10,000 people. You pay $4,000 month in rent, you spent $25,000 on building out the space, fixtures, lighting, etc., and you carry $100,000 of inventory. You have a full time staff of 3 (so payroll around $120,000 say…) and you spend about $15,000/year on marketing and advertising in your region. All told, you have a tidy little business that costs about $300,000 a year to run and makes about $400,000 for a $100,000 profit (I know these numbers are a little off but this is just to illustrate my point…).
If this business wants to expand online – to have a robust ecommerce website with an attractive and current display of available inventory, secure checkout and cart functions, shipping and tax calculators, a nice design, a blog, good visual drivers to product, lifestyle and story – how much should they spend?
They should consider spending as much as they would on developing, staffing and running a new bricks-and-mortar location.
It used to be that the construction of the website itself was the expensive part. This is no longer the case – robust ecommerce tools like woocommerce and others have really streamlined the development of a solid online store. So lets say it takes $10,000 – $15,000 to design, build and populate a nice site. What you have when you are done though is a very nice store in the middle of nowhere. You might as well have built it in the center of the Sahara desert. Consider, if you will, that in the physical world you would choose “where” to locate your new retail store carefully – on the corner of 5th Avenue and 57th st in NYC? Nice – but pricey… Down a dark alley in a burned out section of Detroit? Cheap! But you will obviously fail to build a viable business.
Mere presence on the web is essentially irrelevant. Getting found is what matters. And unlike the promises of the SEO spammers who promise you “first page ranking on google for $29/month” getting found is not cheap, easy or quick. It’s expensive, complicated and needs to be constantly sustained. If we built the nice $15,000 ecommerce website above, according to my model, that leaves us with about $285,000 to spend in the next 12 months running, promoting and marketing our business. If we want it to even come close to matching the performance of our Bricks-and-Mortar location.
So far, we’re all still stuck in the myth of the web circa 2001 – put up a web store, turn it on, ship products. That time is over. Today it takes significant, strategic investments into online advertising – facebook, google, bing, yahoo – as well as agressive brand building via social media, blogging, youtube and other tools. There is no free lunch but unlike your corner store, you have the POTENTIAL to reach a national if not global market for your products and your brand. If you are willing to make the investment that you have to.