By Paul Lang, Editor, Sell It!
November 7th, 1998
Working with Web stores and their owners on a daily basis, I have absolutely no doubts that Web based commerce represents a significant incremental revenue opportunity for many existing bricks-and-mortar stores.
So why does much of the traditional media still echo the old saw “No one is making money on the ‘Net”?
Yes, it is true that many high profile, high-tech Internet ventures are yet to generate even the merest hint of a return on their investments.
So who is making money on the ‘Net? Web stores built as an extension to existing businesses are one successful model.
Let’s take Coastal Tool and Supply for an example. They’ve been selling their range of power tools to the public from their store in Hartford, CT since 1981. In 1995 they built their first Web store and in just three years they’ve grown their annual on-line sales of tools from nothing to a healthy $1.5 million.
How did they do it? Coastaltool.com’s Todd Mogren explains.
Lang: First up, tell me something about coastaltool.com’s history
Mogren: The coastaltool.com site went up in October of 1995. We used a local ISP called Micro-Net which is still in business and we are still hosted on their servers. The official launch of the store was March of 1996 and we received our first order in April of 96.
Our initial thought was we could sell $100,000 the first year which may seem like a high estimate, however it is only around 800 tools which is not a very large number. We did just over $187,000 that first year and our investment in the site at that point was less than $2,000 and that included hosting for a year, Internet access and a $250.00 start-up kit (which included a book on HTML, a really bad image editor and a HTML editor).
We felt this investment was well worth the risk and at that time very few sites were in the business of selling over the web. Most sites were electronic brochures that showed a few items with prices and a pitch to receive a printed catalogue.
Lang: What were your initial goals?
Mogren: From the beginning, we felt that the site should sell the tools and be more informative than our mail order catalogue. This simple point has been one of the keys to our success. We went for a full presentation and when we added the shopping cart, sales skyrocketed.
1997 was the breakout year as sales jumped from $187,000 to $887,000 and most of that increase from a design standpoint can be traced to the shopping cart we installed in early 1997. We use SoftCart from Mercantec and the easy answer as to why we use that product is that was the only one available then. Mercantec was one of the first companies to market shopping cart software that was easily configured and affordable.
Sales in 1998 are estimated between $1,200,000 and $1,500,000.
Lang: What do you plan spending on advertising in order to achieve these figures?
Mogren: Up until May of 1998, we had done little in the way of paid advertising or promotion. The site grew on its own using search engine listings, reciprocal links and word of mouth.
We identified a trend in the 2nd quarter of 98 that daily visits were levelling out so decided to move our entire advertising budget from off line to on line. In the second half of 1998, we will spend close to $75,000 in advertising and promotion on search engines, shopping malls, email newsletter sponsorship ads and ad banners at high traffic sites dealing with woodworking, home improvement and contractors.
Lang: How has your Web store developed through the years?
Mogren: As the sales grew and we learned more about how to both market and present our web site, we added additional content. We reorganised the presentation into logical sub sections so that from any point on the site, the shopping cart was within three clicks.
This is the second biggest reason for our success, we allow users to find what they are looking for quickly and get it added to the cart. Nothing fancy (Java, Shockwave, video, large images or slow loading pages) comes between the main navigation page and the add to cart. All of the multimedia is presented on the same page as the add to cart and then only as a link so if you do not need to view it you do not have to.
At this point we also removed the search function and replaced it with text links that are divided into two distinct sections. The first is a listing by Manufacturer. The second is a listing by tool category.
The reason for this is after a long process of deciding what information a typical user had before they even reached our site, we decided on these two paths to get at the item level detail and the cart. A user knew who made the tool or they knew they wanted a type or category of tool.
Lang: Which aspects of your Web store are you particularly proud of?
Mogren: One of our most successful ideas has been the Tool Doctor. The Tool Doctor answers questions and makes recommendations. We were committed from the beginning to answering email in a timely manner. Timely manner means next day for questions submitted overnight and on weekends and the same day during business hours. If you asked the Tool Doctor a question at 10: 00 am EST US, you will have a reply back within 5 hours. It has been a struggle to keep this pace but it has paid off very well. We are known and recognised for this feature and have many running dialogs during the day via email.
Lang: What are your plans for the future?
Mogren: We are planning many enhancements to the site over the next few months. Most deal with fleshing out the content portion of the site and others deal with the back end processing of orders.
We are also developing a woodworkers shareware program library that will work with Windows 95. These applications tentatively called “Measure-It”, will calculate metric/English conversions, offer a sheet cutting layout calculator, a materials list calculator, a chart of nominal vs. actual wood sizes, tool crib contents page and a materials checklist and, most importantly, two links to us: one to our main page and a direct email link to the Tool Doctor. We think this will significantly enhance our repeat business and overall brand awareness.
And we will be expanding our Gift Registry section. A user will fill his/her shopping basket with the items they wish to receive as a gift. Instead of checking out, they will create a gift registry (not unlike a bridal registry). They will be sent a unique URL via email that they can then forward to potential gift givers. When that URL is accessed, a page is returned that includes a message from the originator and a list of all the items they want with a small image, description and price. A few clicks and the order is completed.
Lang: What else is on your “wish list”?
Mogren: The site lacks two functions that would greatly enhance it’s presentation. The first is the ability to calculate freight anywhere in the world. We have collected the data to achieve this however the programming that will actually do the calculation is not yet completed. Our target date for the launch of this feature is Feb. 1 1999.
The second function is a tie in to our back end POS system. This would allow any web user to access our stock position in real time. This is a mammoth project that will cost close to $100,000 and encompasses changing not only the web site but every business function for our store and other operations. We have just begun planning this and we do not think this will be completed until 3rd quarter of 1999.
This has become our single biggest problem that could restrict our growth. Since we had never considered in 1995 that the web site would become our major marketing focus and the engine that actually fuels our companies growth, we did not plan for such a tight integration. Our web site is actually cobbled together. Looking at it from the back end which I do every day, it is comprised of a series of products that do not tie in particularly well. To the user everything works in a smooth process but on the back end things do not flow the way they should.
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