By Paul Lang, Editor, Sell It!
July 3rd, 1999

See Also   Terrence Sherry and 1 World Sarongs   Andrew Bridgeman and eART-originals   Mark Annett and Scruplestore.com   David Sabot and Cheaphumidors.com   William Waite and Nemmelgeb Murr   Mary Lu Wason and LampLink   Michael Campbell and Cellwest   Bob Rankin and Flowers Fast   Louis Jay and Health4Her.com   Jeff Swearingen and TheGift.com   Bill Broadbent the T-Shirt King   Jim Goodbody and PlanetLearn   Todd Mogren and coastaltool.com   John D. Einhorn and CapShack.com   Beverley Wood and the Gift Ship   Sgt. David Hack and US Wings   Brenda Do and MindFood Media.com   Rory O'Connor and Shopirish.com

I must have said it a hundred times or more in other articles on this site, but I make no apology for repeating it here: In my opinion, the best way for a small company to build a successful, online business is for them to carefully choose a niche market.

Here's a great example. Louis Jay's first Web store attempted to address too broad a market - vitamins - that already had a number of big players in it. Fortunately, Louis quickly realised that this was not going to work and re-launched, as a niche store addressing woman's health needs.

The store has been a resounding success. Launched in November 1998, Louis's initial sales target was $100,000 for the first year. However, the store is now selling that much each month!

What's the secret of Louis's success? Read on and find out…

Lang: Why did you decide to open a Web store? Why did you choose Women's health products?

Jay: I was initially going to open up a mail order/Internet/retail vitamin company. I started online because "they" told me it was most cost effective. I started out with an all vitamins for all people site – a BIG mistake. I spent thousands and thousands of dollars failing!

Finally, I realized that to succeed I needed a niche and healthy women were it! I actually changed my domain name from healthfactor.com to health4her.com and added women specific content, products and more.

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

Jay: I chose Virtualis as my host, but I want to switch to Exodus. I'm currently using the Cart32 shopping cart but I anticipate I will buy ablecommerce.com and take it in-house.

I initially shopped for the most cost effective items, which was a mistake. In the game of e-commerce it pays off to invest in systems that can do it all.

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

Jay: I spent $6000 to create the site and I am currently spending $750 on a redesign that will be launched in about two months time.

Last month I spent $1 in marketing for every $10 in revenues! Other major costs are Web site hosting ($175/month), shopping cart rental ($25/month) and merchant account fees (2.25% plus $0.20 per transaction for real time processing). I also pay a content provider $7 per article to pick and choose amongst fresh current info.

I started with a staff of zero, but because I am looking to raise a HUGE amount of money I just took on an operations person, a customer service person, a marketing person and a part time shipping person. Keep in mind though that I could run my company with one part time person if I really needed to.

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

Jay: Carving out a "niche" is smartest thing I could have done. As far as improvements go, I could have been better automated from the start. I have also recently redesigned my site, which will be live in two months. It's a much more consistent and simple theme. I am going to diversify and add many more products as well as additional community type content exclusive to women.

Lang: What are your plans to develop the store?

Jay: In the next few months we will seek approx $10m of financing to become a major player. We will add about 1000 products for women and develop our community/content.

Lang: Why did you decide to launch an affiliate program? Why did you choose Commission Junction?

Jay: I have a friend that has been online for 6 months and has 2000 affiliates and $300k per month in sales - need I say more?

I originally wanted to use Linkshare but I didn't want to pay the 5k upfront. Commission Junction was only $500 at the time, but in retrospect it would have been worth it to pay the 5k for the traffic Linkshare would have generated.

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

Jay: The toughest thing to do online is to get a decent Return on Investment (ROI). It's very important to define what ROI you are trying to achieve. Some people have to make money on the first sale because they have no repeat business whereas others expect to lose money on the initial sale because they are counting on the lifetime value of the customer.

In my opinion it's next to impossible to make money by paying market CPM Prices of $30+ - this is only for big boys playing with other people's money. E-zines are the most effective hands down, banners are the least.

The cheapest method is good PR such as television, press releases etc. Search engines, of course, are the best "free" method if one can find a way to be in top 5 listings. We have an angle where we have gotten into top 5 listings on major engines almost every time.

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

Jay:

• Pick a niche.

• Don't try and market your whole site – start first with a few unique winner products.

• Follow the path of the media, if possible. For example, there is cellulite reduction product we sell that has been plastered all over television. We are taking advantage of all the publicity by pushing this product while the exposure is at its greatest.