Think back to your Economics 101 class. Do you remember the four factors of production: Land, Labor Capital and Enterprise? When starting a business, an entrepreneur must be willing to sweat it out and take risks.
The land, labor and enterprise were not problems in wanting to be a proprietor, for most, the hurdle was always capital. Without capital, one cannot build an empire of factories and mills. One can, however, build a very successful online business. That’s what I did.
The keys to my success can be boiled down succinctly to simple points that I shall narrate with stories of businesses with humble beginnings that became great overtime.
The story of the treadmill – returning customer value
I had a treadmill. I bought it in a fit of passion, when I believed that I would start every morning with a rousing workout session, running on my treadmill. I bought one that was top of the line and planted it in my living room with a firm conviction that my lifestyle will incorporate running at least once if not twice a day.
My zeal lasted less than a week and over time, my treadmill became first, an eye sore and then, an eye sore draped with washed and unwashed laundry. Not only did I feel guilty every time I looked at it, I also found myself making up stories when guests came over, severely exaggerating the usage I got from it.
I recount this anecdote to explain why eBay was a blessing. Since it was my first time selling online, I perused the how to sell page and followed their instructions. In less than half an hour, my treadmill was on the market. In less than a week, I had found a buyer and had shipped it off, becoming a firm fan of eBay.
Founded in Pierre Omidyar’s San Jose living room in 1995, eBay is the modern version of the traditional garage sales, collectible shows and flea markets. A notable success story of the dot-com-bubble, eBay’s business model incorporates returning customer value, by offering seamless services for buyers and sellers. They have made buying and selling fun by making the process painless and easy.
A great example of returning customer value, eBay understands what their customers desire and what they perceive as good value, and so, eBay helps their sellers achieve it. In a business, any business, be it online or physical, returning customer value is the key to maintaining customer satisfaction and building a clientele that comes back for more.
From humble beginnings to a global household name – the power of unique products
Peggy Short and Jane Saunders made naturally scented soaps and lotions which they sold out of a car repairs garage. Eventually, Anita Roddick bought them out and went on to launch a brand known for its social and environmental campaigns.
In an industry of stereotypically slim women, it worked to raise self-esteem in females and highlighted issues of bulimia and anorexia, all the while selling their products. Starting as a small outfit selling only 25 products, today, it has more than 2500 stores worldwide.
The name of the store is The Body Shop, famous for its stance against animal testing and being environment friendly. It was one of the first cosmetic brands to prohibit testing on animals and the first company to introduce Fair Trade to the business industry. It made its name by caring for the planet and for people, in the superficial industry of beauty.
As per Roddick “whatever you do, be different … if you’re different, you will stand out”. And that is just what The Body Shop did to become popular.
Ironically, The Body Shop was bought by L’Oréal in 2006 for £652m and L’Oréal makes no promises of being environment and animal friendly. Yet, due to the unique positioning of The Body Shop as a brand that cares, it is still considered a symbol of “Enriching, Not Exploiting,” as its tagline states.
The Body Shop’s history is a wonderful example of setting your product apart from the market and reaping benefits from it. The moral of the story is that a product does not truly need to be unique, it just needs to be perceived as such.
The biggest river in the world leading to the biggest online marketplace
Jeff Bezos looked through the dictionary and learnt that the Amazon River, a place that was “exotic and different” was also the biggest river in the world. He felt that these attributes described the brand he wanted to build. Starting out as an online book store, Amazon became the largest internet-based retailer in the world.
Talking about Amazon, Bezos has said, “There’s nothing about our model that can’t be copied over time. But you know, McDonald’s got copied. And it still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world”.
The great thing about Amazon is that it’s a marketplace, so it does not even need to own products to stay on top. They simply market products of other companies (though they also have their own line of low-end products, such as USB cables, under their in-house brand Amazon Basic and consumer electronics, of which the Amazon Kindle is the most widely known) and get a cut from its profits.
The completely customer centric approach of Amazon is the reason why the company is the largest giant in the industry. Their value statement starts with the words “Customer Obsession”, underlining the importance of catering to their clientele.
Along with innovation, bias for action, ownership, a high hiring bar, and frugality, their company value statement lists out the principles that any e-commerce store needs to follow to achieve wide-scale popularity.
Ali Baba and its unique pricing
Jack Ma, a man who flunked his college entrance exams and at one point could not get a job in KFC, was sitting in a coffee shop in Malaysia. Interestingly, he was thinking about Ali Baba and the 40 thieves. He asked the waitress what she thought of Ali Baba, and she said “Open Sesame”.
A light bulb went off in Ma’s head. He asked other people on the street what they thought of Ali Baba and got similar answers. Realizing the story’s universal appeal, he named his company Ali Baba in 1999.
Its IPO raised $21.8 billion in 2014. The world’s largest online B2B platform, Ali Baba’s unique pricing strategy was to offer small buyers small quantities of goods at wholesale prices.
Offering competitive pricing online is just one example of a pricing strategy that works. Starbucks identifies as a premium brand and up-sells its products through price hikes. Wells Fargo, USA’s third largest bank, is a master of cross-selling, which means offering existing customers multiple products. Then there is the age-old pricing technique of quoting products at $3.99 instead of $4.00 to psychologically convince your shoppers they are buying a product worth $3-something rather than $4.
Another unique strategy is pay-what-you-want in which customers decide what they want to pay. Not very popular for online retailers, it is still used to generate a lot of free marketing as in the case of Humble Bundle, a music and game store employing this tactic.
The point is, identify a pricing strategy that works for you and your target market, and master it to the point that you become known for it.
Story of the apple and its product value
An apple is a humble fruit. It fell on Newton and gave him the epiphany of theory of gravity. Fast forward to many decades later, apples inspired the industry giant Steve Jobs. While on a fruitarian diet, Jobs visited an apple farm and thought the name “Apple” was “fun, spirited and not intimidating”.
The name aside, what gives Apple a product value so amazing that its fandom can be compared with Harry Potter mania? Its brand loyalty is so strong that Apple Store openings can draw crowds of thousands with many waiting in line as much as a day before the opening. The opening of New York’s Fifth Avenue “Cube” store had a line half a mile long. The line for the Ginza opening in Tokyo was estimated to include thousands of people and exceeded eight city blocks.
So why does the Apply fandom exist? The answer lies in Apple’s unsurpassed product value. Tech companies tend to create technologies first, regardless of whether people want to use them or not. But Apple’s engineers who make its products actually do so for themselves.
The most well-known user of Apple products was Steve Jobs himself. All of Apple’s products are based on the fact that Jobs was a real customer and hence could truly understand, appreciate and thus market the product value of Apple’s gadgets.
Jobs was a stickler for ensuring that Apple products were easy to use. Simplicity is and always has been Apple’s mantra. For example, Apple does not have ten different iPhone types to choose from, it has one. Not only does this significantly reduce the process of choosing a tech product, it also creates huge hype for when the next model of the iPhone is introduced.
By staying ahead of its competitors in reinvention, for example, Apple did not invent the MP3 player, it reinvented it as iPod and made it better, and offering great customer service and in-store experience, Apple provides a product value that has made the masses die-hard fans of its products.
A nice looking website does not a good SEO make
So we know the basics of what makes good companies great. Returning customer value, making your product unique, maximizing potential from the available marketplace, pricing strategies and providing product value are principles which apply to any and all businesses. E-commerce businesses however require an additional step and that is search engine optimization (SEO).
All your efforts are meaningless, if your customers cannot find your product. SEO enables your product to pop up when your potential customers do an online search. For example, type “how to sell a treadmill online” or type “best smartphone to buy” on Google, and eBay and Apple will at the very top. That is the power of SEO.
SEO is fairly simple and you can understand the basics by looking them up online. However, I cannot emphasize enough on the power and importance of strong SEO in making your online business successful.
Regardless of the strength of your offering, if your brand is buried on page 20 of Google’s search results, you may as well give it up right now. If you think your home grown SEO skills are enough, think again. You need an expert to make your business rank on top.
To recap, my story of ecommerce businesses of products perceived as unique, with right pricing strategies that return consumer value, have memorable names and strong SEO skills are the stories of success. Get out of your 9 to 5 rut, identify a niche, bring it online, and become the next Mark Zuckerberg. Others have done it, so can you.
Audrey Throne
Audrey Throne is a mother of a 2-year old and a professional blogger by choice. Throne is passionate about health, technology and management and blogs frequently on these topics. Find her on Twitter: @audrey_throne.