Scruplestore.com – Mark Annett – Store Review

by Bill H.

By Paul Lang, Editor, Sell It!
October 25th, 2000

I guess the key learning from this latest “My Store” article has to be that there is always “more than one way to skin a cat”. I’ve long recommended that the best way to build a successful e-business is to choose a niche and exploit it ruthlessly. Mark Annett, however, has taken a different approach: he has created an exclusive product with mass-appeal and is marketing it to as wide an audience as possible.

Not only is Mark’s product line unique, but also the way he has gone about building his Scruplestore.com Web store is unique too. If you are thinking about turning a hobby in to a money making e-business, then Mark has some wonderful tips and hints to help you.

Lang: Why did you decide to open a Web store? Why did you choose your particular product line?

Annett: This question is kind of like, which came first the chicken or the egg. The truth is that I fell into about $6000. This in my opinion was found money and I didn’t mind potentially losing all of it. I had decided that I wanted to have some fun with this money and I had seriously considered blowing it all on a Disney Cruise for my family. Then I thought about it some more and, although a Disney Cruise would be a lot of fun for a week, opening up a Web store would keep me busy for at least a year. Additionally, I rationalized the decision to myself that if my business was successful then there would be lots of opportunities for cruises in the future.

Having this amount of money, and only this amount of money to spend, limited my business options. Also, given the fact that I wanted this to be a hobby, it had to be something that I could do in the evenings, preferably after my daughter went to bed. I had several product ideas that I had been fantasizing about for years. They ranged from a unique twist on a hot dog to a sleep apnea monitor. (I’m a biomedical engineer by profession.) The problem with hot dogs was that you couldn’t taste them over the Internet. The problem with the sleep apnea monitor was that it was going to cost more money than I had to spend.

Of all the product ideas that I had, selling SCRUPLES was the least practical. People will always eat hot dogs and people will always need sleep apnea monitors but people don’t necessarily need my product. In order to sell my product I have to convince people to part with their money for something that they never had any intention of buying in the first place. However, in spite of those challenges, SCRUPLES is a lot more fun then any of my other product ideas and it puts a smile on peoples’ faces, even if they don’t buy them.

Additionally, selling SCRUPLES had some very definite advantages over my other product ideas:

  • The entry costs were very low. Assuming that I did all the work myself and I relied on free advertising, I calculated that I could be in the black within my first year, even with marginal sales volumes.
  • I had somebody who was going to do the manufacturing for me. This was very important. If I had to develop the manufacturing, I never would have been able to develop my Web site. I’m pretty sure that David Sabot of Cheaphumidors.com would say the same thing. If you want to be successful then you need to out source as many functions as possible. This is something that I have made a conscious effort to do.
  • It is a product that is ideally suited for the Internet. Selling a novelty product, like SCRUPLES, is simply a numbers game. There is no better place to get huge numbers than on the Internet.
  • Finally, and this is the most important advantage, was that selling SCRUPLES offered exclusivity. I have trademarked “SCRUPLES” through the US Patent and Trademark Office. Now, no one else can legally put “SCRUPLES” on a coin or commemorative medallion.

Although I strongly agree with you, Paul, that one of the best ways to insure success is to find a niche and exploit it ruthlessly. A theoretically better option is to gain exclusivity and market it to as broad an audience as possible. This second option was the reason I chose to open up a Web store and to sell SCRUPLES.

Lang: What e-commerce experience did you have before starting your store?

Annett: Believe it or not my very first e-commerce transaction was to file for my trademark on-line. Up to that point, I had only utilized the Internet to perform searches. Anyway, after I filed for my trademark, I then sat down with my next-door neighbor, who is “in the business”, for about an hour or so to get an overview. During this meeting he had talked to me about something he had called HTML. I patiently listened but I was sure I was never going to need it. I was confident that I could buy one of those business in a box programs and be up and running in no time. You can guess just how right I was.

Lang: What server and shopping cart software are you using and why?

Annett: I did try one of those “business in a box” programs. I can’t even remember the name of it, which tells you just how impressed I was with it. I returned it after a couple of days because it didn’t even do what it said on the box. I went back to the notes I had taken, when I had sat down with my neighbor, and then I was off to the local library. Luckily the local library had 12 books on that thing called HTML; I borrowed them all.

As luck would have it, one of the books had a free trial version of Homesite. It automated the process of writing HTML code and the fact that I could instantly see the impact of any changes that I made was very powerful. If somebody is planning on developing their own Web site then I would suggest that they consider making a minor investment (under $100) in a HTML editor like Homesite.

During my Web site development, I made a very important decision that I feel was critical to my company’s success: I decided to enter into a retail partnership with CCNOW who I found out about through your article, “How to Accept Credit Cards without a Merchant Account” . Quite simply CCNOW acts as the back end of your store. They process the retail credit card transaction and they handle any associated customer service, with live operators. When an order is placed they send you an email confirmation and then you drop ship the product for them. Then, at the end of the month, they mail you a personal check including any interest.

For your customers a retail partnership with CCNOW has many advantages:

  • CCNOW.COM is located in Delaware so there is never any state sales tax.
  • In the unlikely event of a charge dispute, your customers are dealing with a retailer who is far more interested in protecting its credit rating then your Web store. Therefore, your customers can order with confidence! Additionally, CCNOW is registered with the Better Business Bureau online reliability program (BBBOnline), which adds even greater confidence.
  • CCNOW offers toll free customer service for billing inquires and other questions.

I have tried to make sure that my customers are aware of all of these advantages before they place an order. I even got approval from the BBBonline and CCNOW so that I could place the BBBonline symbol on my Web site. Basically, CCNOW can display the BBBOnline symbol anywhere that they advertise. I was the first person to ever make such a request from the BBBOnline and they were initially a little hesitant. I actually wanted to put some additional language on my site so that the customers would know that the BBBOnline symbol only applied to CCNOW, but the folks at BBBOnline would not allow it. If you are interested in doing this than you should check out how I implemented it on the order page of my Web site and you should also verify any specific usage with the BBBOnline.

For me, a retail partnership with CCNOW has the following advantages:

  • It gives my customers confidence and increases my sales.
  • It allowed me to out source a major function of my business, with live customer service.
  • I do not have to deal with any sales tax because I am a wholesaler.
  • I did not have to open up any special business bank accounts or even register my business, if I didn’t want to. There were no start-up costs and it is very easy to use.

In addition, it actually costs less on a per month basis to use CCNOW then it would to open a merchant account. CCNOW takes 9% of each sale (8% during the Christmas Season). This may seem like a lot when you can get a merchant account that only charges 2 ½ %. However, when you add up all the bank statement fees ($35 per month), the per transaction fee ($.30), and the increased hosting cost (anywhere from $10 -100) CCNOW can be significantly cheaper. My break-even point was actually 27 sales a month, not even counting the $175 startup costs for a merchant account. Under 27 sales a month, it is cheaper to utilize CCNOW. Over 27 sales a month, the value added by CCNOW certainly outweighs any minor financial gain for my company.

[Please note that the break-even point will be different for every company and product. Everyone should do the math for themselves. However, once they have done the math they also need to add in the additional value (and potential increased sales) an association with someone like CCNOW brings.]

As I mentioned earlier, one of the advantages of utilizing CCNOW is the reduction in Web hosting requirements. Since you are not processing any credit card transactions, you don’t even need a SSL. All you need is a basic Web hosting package, which is a considerable cost savings.

For hosting, I selected One World Hosting and I am very happy with them. They have no set-up fees and even their basic package ($11.95 a month, with a one year pre-pay) includes a Web based control panel. From this one interface, users can access, update and configure their entire account, including setting up a database, change passwords, customize email, send and receive email, and analyze your Web traffic, and this is just a partial list. This Web based control panel was critical because it meant that I could manage my entire store while I was at work during breaks and lunchtime, if I needed to.

One important reason that I would recommend One World Hosting is that they only host Web sites and they do not provide Internet access. I have heard horror stories about people who were looking for inexpensive hosts and selected ones that also provide Internet access. The words “slow” and “down time” are a major part of their vocabulary.

Lang: How much did the store cost to build? How much to maintain and promote?

Annett: With the exception of registering my domain name, my Web site cost me absolutely nothing to build and it only costs me $11.95 a month (plus $1.99 a month for beeper service) to maintain my site.

By the way, I thought I was particularly clever with the beeper service. My auto response to all customer service requests tells my customers that I will respond to their requests with in 24 hours, but if they need immediate assistance then I give them the option to beep me. This does a lot of things. From my customers perspective it provides an unprecedented level of customer service and it gives them the opportunity to get an immediate response. From my perspective, it allowed me to provide great customer service, while I still maintained my day job, and it also saved me $25 dollars a month by not having to install a second phone line for my business.

Lang: What were the major challenges you faced?

Annett: The major challenge that I faced was how I was going to run my business and still maintain my day job. Customer service is very important to me and I know it is to my customers. Partnering with CCNOW really made a difference for me and doing things like giving my customers beeper access has really meant a difference to them. The other challenge that I faced was how to communicate the value of my product. Although I did not spend a lot of money creating my Web site, I did spend a considerable amount creating my product. The design itself was commissioned from world-renowned medallic artist Alex Shagin and the medals are made of pure investor grade silver. Therefore, in addition to the coins being collectors’ items, they also have an intrinsic value.

Lang: Which methods have you used to try and promote your store? Which were most / least effective?

Annett: I tried a banner exchange program for two days and then I took them off. The banner ads placed on my site had much more eye candy then my site did. I decided it was better to take them off then it was to compete for attention. Therefore, I really didn’t give it much of a chance to work

I have had very good results by advertising off the Web, namely at trade shows. Trade shows are an excellent place to get exposure for a new product, find out whom your target audience is and try out your marketing campaign. They give you an opportunity to talk directly with your customers and they can be fairly profitable. I would highly recommend that any new business consider doing one for the reasons I mentioned above.

I have had limited success with search engine registration. I was very excited when I got listed with Yahoo! But it barely made a blip in my sales. Part of this was my fault. I tried to follow your excellent advice in your free report “How to Get Listed on Yahoo!” . The problem was that Yahoo! edited my description. As a result, if I go into Yahoo! and do a search on the keyword “gifts” my product will never come up. I have gone back to them and asked them if I could modify my title to include my key words but I have yet to hear a response. This is in spite of the fact that I used their paid ($199) business express service to register, initially.

Bar none, the most effective advertising I have done is to solicit press releases. Besides the fact that press releases are free, they carry far more weight than any advertising that I could do. They are a third independent party and it gives your product credibility. Also being press worthy carries a certain amount of prestige and that will transfer to your product. Up to now I have done targeted press releases to coin magazines that have been more than happy to give me free press because of the novelty of my product. My next step is to do mass press releases to the general public. Some excellent resources on writing and creating press releases can be found at press-release-writing.com and eRelease.

Lang: Looking at your store now, what aspects are you especially pleased with and what do you feel could have been one better?

Annett: The thing I am most pleased about is the content of my Web site. People seem to truly enjoy visiting my Web site. Whether it is the fact that they learn a little history about Martin Luther and the practice of selling “indulgences” or that they get a chuckle out of my gift advice, I tried to put something in there for everybody and it seems to be working. When I created my Web site I focused on making it interesting and enjoyable to my customer. I wanted them to feel like they got something of value from my Web site and hopefully they would transfer those feelings to my product. If they did that was great. If they didn’t then they might still be inclined to tell somebody that they knew about my Web site. (Note: I actually give them the opportunity to easily make this referral on my Web site.)

As I said earlier, I have to convince somebody to part with their money for something that they had no intention of buying in the first place. The content of my Web site is the only vehicle that I have to do it. I have to create an emotional value to my product and the advantage of a Web site is that, if my content is interesting enough, people will read it for far longer than they will be willing to listen to me present the same information in person. The longer they stay at my Web site the more likely they are to buy.

The thing that I know I could have done better was given my site more eye appeal. This is the one place where I think you can tell that I am a small company. Ironically though, this lack of polish may be to my benefit. I have done a couple of trade shows to promote my product. After awhile I started getting so good at my presentation that it was actually coming off as being too slick and my sales dropped. Eye candy is great for getting people’s attention but it is the content that sells the product.

Lang: What are your plans to develop the store over the coming 6-24 months?

Annett: After the holiday season I plan on implementing an affiliate program in order to drive people to my site. I am also toying with the idea of making an email reminder service and/or a weekly newsletter about “Stories of the unscrupulous”.

I also have a couple of product line extensions planned. One is a 24K gold plated medallion and the other is a hologram of SCRUPLES. The latter will be for those people who just want to create the illusion of having scruples but don’t actually want to get them themselves. This should complete my product line.

As far as plans for the next 24 months, by that time, I plan on being a fad whose time has come and gone. Hopefully, “SCRUPLES” will end up in the annals of history along with the pet rock.

Lang: Finally, what are your top tips for anyone considering opening their own Web store?

Annett:

  • Focus on your back end.
  • Don’t forget to include packaging costs in your product because they can be substantial.
  • Out source as much as possible.
  • Don’t quit your day job too soon.
  • Make sure your Web site has content. Price alone doesn’t cut it.
  • Have Fun!!!!!!

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