How to Sell Online

The Shopify Ecommerce Blog has over many articles about selling products online. From learning how to sell online to advanced tips and tricks, we cover everything you need to know to run a successful online business. Here are some recent posts that talk about selling online:

How to Engineer Increased Sales & Happy Customers With Behavioral Psychology

When it comes to acquiring and keeping satisfied customers, smart entrepreneurs must understand what's going on inside their customers…

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When it comes to acquiring and keeping satisfied customers, smart entrepreneurs must understand what's going on inside their customers mind's. Just as we saw how neuroeconomics can be used for smarter pricing tactics, small business owners can benefit from insightful research in behavioral psychology to increase sales and provide exceptional customer service.

Today, you're going to see some research that reveals how marketers and ecommerce entrepreneurs can use implicit egotism, social constructs, and appeals to social inclusion to create stronger brand engagement, keep customers happy, and increase their bottom line. 

Increase Customer Happiness By Slowing Down Service

Too many businesses focus on improving only a single customer service metric: speed. Recently though, numerous forms of behavioral and consumer research have shown that customers value quality time with service providers more so than "quick" service. Comprehensive studies by the Gallup group and RightNow have shown that customers look for competent, "complete" service when deciding to stick with or abandon a certain brand:
Customer perceptions of the [service provider's] courtesy and their apparent willingness to help were far more important than speed of service in generating customer engagement.

Here are two case-studies that prove in most cases, people value slow (but courteous, thoughtful, and thorough) customer service to speed and quality of service. 

Evidence 1: Doctors Malpractice


In his popular book Blink, Malcom Gladwell reveals some startling research that shows "customers" of all types take time-spent with service providers VERY seriously. Gladwell reveals some interesting data to start things off: despite how most people view malpractice lawsuits, statistically, the majority of people who suffer an injury due to a faulty medical procedure do not sue their doctors. 

Surprising in itself, but things get weirder. The #1 common factor among people who did sue their doctor was the belief that the didn't get enough time with their doctor, and that they felt their treatment was "rushed, ignored, and poorly diagnosed." 

Evidence 2: Fairness of Jail Sentence 


In similarly shocking research, the Brafman brothers analyzed feedback on how "fair" convicted felons had felt their jail sentences had been, in order to find any recurring factors. The most common factor they found wasn't all that surprising: time served (length of sentence) played the biggest role in the felons rating their punishment. 

What was surprising though, was the second most common factor. According to the data, face-to-face time with their lawyers played a pivotal role in determining how each felon viewed the "fairness" of their sentencing: the more time they spent with their lawyer, the fairer they viewed their sentence. This was true across cases with similar sentence lengths as well. The Brafman brothers noted that:
...Although the outcome might be exactly the same [in length of sentence], when we don't get to voice our concerns, we perceive the overall fairness of the experience quite differently.

How To Slow Down Your Customer Service

Spending more time with customers is critical in creating a lasting relationship with them. Rushing them out the door with "fast" service can backfire, big time. One success story of implementing the mindset of spending more time with customers can be found in how Derek Sivers ran CDBaby, before selling the company for over $20 million:
I used to request all my employees to intentionally take a little longer on customers calls. I would ask them to pull up customers albums and catalogues; have a look at their pictures and gears - to learn a bit about them. Imagine how powerful it is for a customer to know that he is listening to somebody who is a musician that gets him, than something like, 'Thank you customer 4325. How may I quickly handle your problem?
While this strategy worked for CDBaby, there are some businesses and situations where the "more time with customers" approach won't work.

Some services rely on solving problems immediately. Ecommerce merchants need to figure out when they can spend time with customers and when to act quick. If a customer is calling with a complaint about service or product, you need to gauge their disposition and act accordingly. But if a potential customer is inquiring about product features, shipping rates, or something of that nature, you have a great chance to give them their answer and also build a positive relationship with that person. Like the case study above proves, service should never be "rushed, ignored, and poorly diagnosed."

Increase Sales By Appealing To Customer's Implicit Egotism


Despite the fact that most people desire to be viewed as humble, science shows us that, in general, people love themselves. So much so that they are biased towards characteristics that relate to them. It's a construct called Implicit Egotism, and it's been used to explain a lot of oddities in the human mind in relation to personal preference, such as why we are susceptible to ownership bias

Just how far does this effect go? Absurdly far. Consider these three examples: 

  1. Academic research has revealed that people's names are likely to affect their life choices, for instance, there are more people (statistically) named Louis in the city of St. Louis, and people named Dennis or Denise are dentists more often than other names. 
  2. People who shared the same birthday with the "mad monk" Grigori Rasputin were revealed to be far more favorable of him and his acts throughout history thanks to a Journal of Personality and Social Psychology study
Here's how to apply these findings to your ecommerce marketing to better engage potential customers.

Construct Your USP Around Your Ideal Customer


Would you use Betty White to advertise your product? You should construct your unique selling position (USP) around your ideal customer. Identify which customers are right for YOUR product, and craft your brand, testimonials, and marketing efforts to play on those traits favorable to this customer. 

For example, a flashy "explainer" video on your homepage might work well for a tech startup, but it will throw people off if you're selling hearing aids. Similarly, is it any wonder why Gillette would grab celebrities like Adrien Brody & Andre 3000, while the AARP reaches out to people like Betty White?

AARP knows their demographic. They're well known to use celebrities in their 60's and up, because nobody would want to listen to a young person discussing the difficulties of preparing for retirement. 

You can also take a page from political campaigns. Have you ever noticed that no matter how rich a candidate is, they run as an average Joe? Despite having wealth and business experience, many politicians choose to showcase the traits that appeal and relate to the most amount of voters. 

As an online store owner, it's vitally important to define who your best audience is, and market to them.

Conclusion

I hope you found this article useful. More and more these days fields like Behavioral Psychology are producing research that can be used to help ecommerce store owners build a successful online business. Lets talk in the comments. 


This is a guest post by Gregory Ciotti. He's the content strategist for Help Scout, the nifty invisible help desk software that makes email support a breeze for you and your customers. Get more from Greg on the Help Scout blog.

5 Quick Tips to Get Your Ecommerce Store Holiday Ready

The holiday season is swiftly approaching, and online store owners should start planning and executing their marketing campaigns…

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The holiday season is swiftly approaching, and online store owners should start planning and executing their marketing campaigns now. Black Friday and Cyber Monday mark the start of the holiday shopping season for millions of  shoppers - and they're just around the corner.

Here are 5 quick tips to get you started: 

1. Create a Gift Guide

The holiday season is all about purchasing and giving gifts. We're all expected to purchase items for loved-ones, friends, and even co-workers, but how do we know what to buy? Not everyone makes a wish-list anymore, so many online shoppers are starving for gift giving advice. Take a look at Amazon's Gift Central below - this is a smart way to suggest items to purchase for every type of person.


This is called a holiday gift guide, and they can take the form of lookbooks, blog posts, or even magazine-like articles. Amazon does a great job at suggesting gift ideas, but also check out RedEnvelope's Christmas Gift section, or the holiday gift guide I published last year on the Shopify blog.

2. Offer a Shipping Calendar

Not only are consumers rushing to buy presents for everyone on their shopping lists, but they also have to manage the logistics of getting those presents to their destinations on a deadline.

If a shopper orders a pair of slim fit organic denim jeans from the Hiut Denim Company (awesome Shopify store), when will the jeans arrive in San Diego, California? Will the order arrive before Christmas? 

Include a holiday shipping chart somewhere prominent in your ecommerce store. Let your visitors know exactly what type of shipping is required to ensure that an order will arrive on time. Take a look at Net-A-Porter's holiday shipping cut-off chart:


It's well designed, clear, and has all the information a hesitant shopper needs to know. Also check out this Holiday Shipping 2012 Infographic from ShipStation will help you put together a shipping calendar for your online store.

3. Offer Black Friday & Cyber Monday Discounts

Shoppers expect to see sale prices during the holidays, and this is especially true on Black Friday and Cyber Monday. Not offering a discount on either of these days is the retail equivalent of Santa dropping a lump of coal in someone's stocking. You don't need to discount every product, but make sure you run some type of promotion. 

Also, it's a good idea to start early. Tell customers on your mailing list about your sales early on to get people excited early. Amazon already has a live countdown to Christmas and Black Friday and Cyber Monday: 

It's all about anticipation. If you're going to send an email blast before Black Friday and Cyber Monday- don't reveal all your discounts. Give them details on a few of your juiciest deals, and encourage them to visit your store to find out the rest. That way, they'll be more inclined to actually visit your site, rather than deleting the email after digesting all of the information. 

4. Add Live Chat

In 2012, holiday shoppers have lots of choices, and ecommerce retailers need to standout, particularly in the areas of customer service and responsiveness.

Offering live chat, gives online store owners an opportunity to connect with interested site visitors as they are making buying decisions. Live chat can significantly boost conversion rates and help to identify bottle necks in a site's sales funnel.

Check out how Shopify store Vielle & Frances has a "contact us" live-chat tab on every page: 


The Shopify App Store has several live chat integration options, including Olark, LiveChat, and UserPulse. Remember, you don't have to offer live chat year-round, it's okay to simply offer it during the busiest shopping season.

5. Collect Emails For Year-Round Customers

November and December are usually the best months for selling products, but they're also a great time to acquire long-term customers. With the influx in traffic to your online store, it's the perfect opportunity to start collecting emails so you can market to them all year-round. 

Shopify store HOLSTEE collects emails with a stylish field in their footer: 


Include a signup field on your home page. You might want to offer visitors an incentive by way of a free ebook, downloadable report, or a discount on goods purchased. If you integrate with Mailchimp, it's super easy to cut and paste the liquid code into your theme. For more tips on email marketing, check out MailChimp's awesome "Email Marketing Field Guide" - a comprehensive guide that will teach you all the basics.


How Small Companies Can Compete With Amazon

Few companies can strike fear into the hearts of ecommerce merchants like Amazon. Its massive scale and focus…

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This is a guest post by Andrew Youderian of eCommerceFuel.com

Few companies can strike fear into the hearts of ecommerce merchants like Amazon. Its massive scale and focus on growth over profits allows Amazon to offer pricing that many smaller merchants simply can't compete with.

As an ecommerce entrepreneur myself, I would have an easier time hating on Amazon if it wasn't such an outstanding company. But unlike many huge organizations, it does a great job of providing quality customer service. And if you're an Amazon Prime member – like I am, full disclosure – you get free, fast shipping on just about anything you'd ever want.

So how can small merchants like us compete with such an appealing giant? 

Brand Yourself as a Specialist

Amazon's massive size allows it to benefit from economies of scale, but such a wide scope can also be a weakness. With so many products for sale, it's impossible for Amazon to offer specialized, expert guidance.  

SonicsOnline founder Dave Huckabay has taken the opposite approach, choosing instead to become laser-focused with his ecommerce catalog. He focuses exclusively on ultrasonic cleaners for jewelry and industrial use, a niche most people probably don't even know exists.

Take a product found on both his site and Amazon: the GemOro Ultrasonic Jewelry Cleaner. The item costs $120 on SonicsOnline, almost double the $67.95 it's listed for on Amazon. Yet it still manages to sell well on Dave's site. 

Amazon


SonicsOnline


So how does SonicsOnline compete with Amazon? Though not professionally designed, the SonicsOnline page is chock full of information, including videos, manuals and detailed specs. Perhaps most important is that customers know they're buying from a company with highly focused niche expertise. They can get specialized help for specific questions or problems. 

The combination of quality information and industry expertise is powerful and has helped SonicsOnline grow to approximately $300,000 in annual revenues. When asked about successfully competing with Amazon, Huckabay said:

When done properly, real expertise comes across in a website. You can't fake it, and reviews by your customers are not a substitute.

By becoming a true niche expert – and successfully conveying that through your ecommerce store – you'll be much better equipped to compete against Amazon without having to rely on razor-thin pricing.

Create Your Own Products

Creating your own product is undeniably the hardest (and most expensive) way to get started with eCommerce. But if you have a great idea and the resources to pull it off, it's probably the best way to build a highly profitable business and successfully compete against Amazon.

Just ask Dan Andrews of ModernCatDesigns.com. He and his business partner, Ian Schoen, were surprised at how expensive – and ugly – cat furniture was. So they decided to create their own line that would blend in with modern homes. Here's their popular 'modern kitty litter box' as an example: 


One of the biggest advantages of manufacturing their own product was drastically better margins, which led to increased profits and growth opportunities. While many small resellers don't have enough margin to profitably advertise, pay-per-click has been an integral part of helping Modern Cat Designs grow to approximately $120,000 in annual revenues, despite having a catalog of only eight products.

Perhaps best of all, manufacturing allows you to control product distribution and set pricing guidelines to protect your margin. On competing with Amazon and pricing issues, Andrews said:

People buy from us because our products are unique. You just can't find them on Amazon. We also make sure that the dealers we do sell through follow strict pricing guidelines to prevent pricing wars.

Creating your own product isn't for everyone, but it's a great way to successfully compete against Amazon. 

Sell With a Deeper Purpose

By connecting with the core values of your customers, you can build a loyal and passionate customer base that isn't shopping based on price alone. A quick Amazon search reveals more than 330,000 different shoes for sale. Yet Tom's Shoes has built a successful business based on the premise of donating a pair of shoes for each pair sold.

Hipcycle.com is another site with a deeper purpose: to reduce waste by selling products made from previously discarded material. The concept, called “upcycling,” is used to turn bike sprockets into bowls and computer waste into light fixtures. Here is one of their most popular products, Grey Goose Vodka rocks glasses:


Founded barely a year ago by Andrew Sell, the company already has two full-time employees and a sizable presence on Facebook. 

When asked how Hipcycle positions itself to compete against Amazon, Sell replied:

We are passionate about diverting materials from landfills, and our customers want to support that. And we're definitely in the business of building the company one customer at a time and turning them into evangelists for our brand and for waste diversion.

Notice that he didn't mention fast shipping or insanely low prices. Instead, Hipcycle connects with customers over a deeper purpose – one that can't be found on Amazon.

Opportunities Still Exist for Small Merchants


Amazon's rapid growth, scale and pricing power make it a force to be reckoned with online. But despite its sizable influence, it's still very possible to succeed as a small merchant. You just have to be smart about how you position yourself in the market.  

So how do you plan to compete against Amazon? Let us know in the comments. 


Written by Andrew Youderian. For more on successfully competing with Amazon, download  Andrew's popular free eBook on growing a successful ecommerce business. You can also follow him on his blog, eCommerceFuel.com

9 Elements You Need to Conversion Test

Operating an ecommerce store without conversion testing is like running blind.  In this article we're going to cover…

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Operating an ecommerce store without conversion testing is like running blind. 

In this article we're going to cover what conversion testing is, why it’s important for online store owners, and give you nine popular tests you can start running on your store today.

What Is Conversion Testing?

Simply put, conversion testing is the process of testing various elements on your website to ensure maximum conversion rates. 

Why Is Conversion Testing Important for Online Stores? 

Without conversion testing you're making important decisions based on intuition, instead of fact. There are countless case studies that show how a minor change resulted in x% increase in sales. Conversion testing is all about optimization. You make small changes, measure the results, rinse and repeat. Monetate put together a diagram that shows the most popular tests: 



Since all these various website elements can direct a visitor to the checkout page, it’s imperative that you test again and again to ensure the highest posible conversion rate. 

9 Elements You Need to Conversion Test

One of the biggest challenges with conversion testing is figuring out what to test. Here's a list of nine elements every ecommerce store owner should conversion test. Use this list as a starting point, and remember there are plenty of other elements to test - this list is just a good place to start. 

1. Front Page 

Begin by looking at your front page. Most potential customers land on your front page first, so it's vitally important to optimize the heck out of it. What is the first thing a visitor sees? Which product (s) do you feature? How strong are your call-to-actions? Should you feature seasonal sales? Showcase free shipping? There is no right or wrong answer to these questions - the point is to make changes, measure the results, and optimize. 

2. Color Scheme 

This element might not seem like an important consideration at first glance, but you might be surprised how colors affect an action online. KISSmetrics ran a study on how people reacted to the various colors of call-to-action buttons. Color made a huge difference.



The winning color in this particular study was orange, but others have found blue to be the strongest call-to-action. So although the color of a button may seem trivial, it plays a role in the overall scheme of things. But as with all these various website elements, there’s no one size fits all. It varies by niche, that’s why it’s important to test.

3. Navigation 

What is at the top of your ecommerce site should naturally field a visitor to the basic actions they will likely want to make. You should know what customers in your specific vertical are looking for. Shopify store Good As Gold has chosen to put a heavy emphasis on mens and womens clothing, brand search, and their blog. You'll notice they put less emphasis on their Lookbook, shipping policy, about page, and contact form.



Play around with your main navigation bar. For Good As Gold, it obviously makes sense to immediately segment customers by gender, but perhaps your vertical requires a different type of segmentation. 

4. Wishlists 

One thing I personally get peeved about is the lack of a wishlist or save for later feature. If I happen to come across a product I'm interested in, but really just want to save the item for later because maybe it’s a high ticket item or because I am intending to buy it as a birthday gift in a few weeks, then the “save for later” feature is a must. 



Shopify merchants can choose from a few different wishlist / save-for-later apps, including: Wishery, and WANT Button.

5. Available Payment Methods

Not every online store accepts all forms of payment, so it's generally good practice to display the methods of payment you accept. Most ecommerce store owners know that it's a good idea to put credit card icons on their product page, but where else should they go? How big should they be? Which ones should you include? Shopify store Gatorade UK chose to put five payment icons on their homepage, not just their product pages: 



Try a few different payment method display options and see what works best. If you need some credit card icons, check these out.

6. Phone Number 

In a recent article here on the Shopify Blog, an author made a case for merchants to stop offering telephone support. He stopped advertising his 1-800 number and reduced his workload by 50%. He took the savings, both in terms of time and money, and put it to improving his site. 

Try measuring the impact removing your phone number has on conversions. Also, try moving the location of your phone number around a bit. Instead of displaying it on your homepage, try putting it on your "Contact Us" page, or in the shopping cart, where only qualified prospects will see it. 

7. Security 

It wasn’t that long ago when online shopping was considered an unsafe activity and many consumers shied away from it. However trust and reliability has gained foothold and now online shopping is no longer consider an unsafe activity. Or is it? Fact is, some segments of the population still consider placing a web order something to be quite cautious about, and will think twice before entering sensitive information on an unknown website. 

Alleviate these concerns and fears by making sure your security policy, badges and other details are well displayed. Remember, you don't need to put a giant ugly logo on your site. Check out how Shopify store DODOcase keeps things stylish with a subtle security badge in their footer. 


8. Return Policy

It goes without saying that you should have a return policy, but how exactly should it be drafted? Furthermore, where and how should it be displayed on your ecommerce store? Try displaying your warranty or money-back guarantee in various locations and see what works best for you. If you need help creating a return policy, check this out

9. Social Media 

A lot of online stores let their customers share their purchases via social media. Test social media buttons on your site and see how it works, what it does, where it directs a visitor and what a potential visitor sees. Does it flow well, does it lead the visitor where you want them led, and do they increase awareness and sales? Here is an example from Shopify store Violent Lips.



Most Shopify Themes are optimized for social media. Shopify also has plenty of social media apps that merchants can plug into their store. 

Conclusion

Hopefully this article has given you a good understanding of what conversion testing is, along with a few good starting points for ecommerce store owners. We're going to be digging deeper into conversion testing on the Shopify blog soon. In the meantime, to learn more, I recommend Crazy Egg's blog The Daily Egg which posts great articles on conversion optimization. 


By Missy Diaz, G34 Media.

Manage Your Google AdWords Campaigns More Efficiently With Dynamic Search Ads

This is Part 4 of our Google AdWords series by ex-Googler Anton McCarthy.  Part 1: Five Ecommerce Google…

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This is Part 4 of our Google AdWords series by ex-Googler Anton McCarthy. 

Are you an online store owner who has to manage a site with dozens, hundreds or perhaps even thousands of products? Managing your ads and keywords to reflect the availability of your products in stock takes a lot of time. Do you wish there were a quicker, easier way to manage your campaigns, freeing you up to spend less time on AdWords - and more time on your business?

Well, Google has a solution for you. Introducing: Dynamic Search Ads.

What Are Google Dynamic Search Ads?

Simply put, Dynamic Search Ads are ads that are automatically generated for you by Google. Unlike traditional Google AdWords ads which rely on you inputting lists of keywords, Dynamic Search Ads allow you to target users using the content on various pages of your website. This means that you don’t need to choose keywords that a user might use to find your product. Instead, Google automatically scans your website to determine which searches are a good match for the products on your website.

When a customer’s search is relevant to one of your products, Google dynamically generates an ad headline that includes words from the customer’s search and the content of the landing page on your website. The result is a dynamic search ad. Here's an example:


Why Use Dynamic Search Ads?

Dynamic Search Ads are a great time-saver for busy ecommerce merchants. Let’s say that you have a large variety of products to advertise, and are finding it difficult to find the time to manage all of your AdWords campaigns. Instead of having to invest lots of time matching keywords to landing pages and creating corresponding ad text, you can let Google generate relevant ads which match the searches users are performing to find the products you sell.

You also have full control in that you choose which pages on your website are to be used to generate ads. You can limit these pages to specific categories, e.g. your ‘Blue Widgets’ landing page, or you can choose all pages on your website. In addition, you can prevent ads from showing for products that are out of stock, reducing the need to monitor and then update your ads in such a manual fashion as before.

How Dynamic Search Ads Work

As mentioned, instead of using keywords to target your ads to searches, Dynamic Search Ads use content from your website to target ads to searches. You begin by letting Google know whether you wish to target ads to your entire website, or to specific sections:

  • Pages belonging to specific categories
  • Pages with titles containing certain words
  • Pages with URLs containing certain strings
  • Pages containing certain words

Once you have chosen your ad targets, Google then determines which searches might be relevant to the products listed on your website. When their technology locates searches that are a good fit for your dynamic ad targets, a headline is generated for your ad.

This headline includes text from the search phrase, and content from the landing page chosen for your ad. The remainder of the ad (i.e. the two description lines) is a template that you write when you first set up the campaign.

Dynamic Search Ads and Your Account

How do Dynamic Search Ads work relative to your regular keyword-targeted AdWords ads? 

Here are 5 important things to note:

1. Same Ranking As Normal Ads

The position or ranking of Dynamic Search Ads is determined in the same way as regular keyword-based ads. Dynamic Search Ads enter the auction as equals to keyword-based ads, with the position of your ads ultimately decided by the usual factors - the maximum cost-per-click bid you have selected for the dynamic ad target, and the dynamic search ad’s Quality Score.

2. Interactions With Keyword-Based Ads

If a customer’s search term is an exact match for one of your keywords, your dynamic search ad won’t show. An example is: [red shoes]. If a customer searches using this exact term, your text-based ad will display instead of a dynamic search ad. However, Google may show your dynamic search ad if there is a broad or phrase match with one of your keywords, and when your dynamic search ad has a higher Quality Score than your text-based ad.

3. Full Control and Flexibility

One of the big advantages of Dynamic Search Ads is the time-saving and efficiency they permit. For example, you ideally don't want ads to show which will lead the user to a ‘sold-out’ or ‘out of stock’ page. With keyword-based ads, it can be time-consuming and difficult to track each ad that might lead to such a page, especially if your site contains hundreds or even thousands of products. With Dynamic Search Ads, however, you can prevent your ads from showing when you add dynamic ad targets that exclude landing pages which contain these words.

4. Reporting and Statistics

You still get a full set of statistics and reports for your Dynamic Search Ads as with regular keyword-based ads, e.g. conversion rate data, click-through rates, cost-per-click averages, and so on. This means you can run analyses and compare how your Dynamic Search Ads are performing alongside your keyword-based ads - helping you to increase the performance of your AdWords campaigns and gain additional insight into your overall ROI.

5. Don't Forget Negative Keywords

If you're going to use Google Dynamic Search Ads, it's important to understand negative keywords. Further information on negative keywords can be found here. Best results will be generated when they're used with extensive negative keyword lists, otherwise, Google could match your site to anything.
 

Conclusion

I hope that this post provides you with a good overview of the benefits of Dynamic Search Ads, and how they could work for your ecommerce store. For more on the specifics of how to set up Dynamic Search Ads in your campaigns, please refer to Google’s useful Help Centre material for further information, and as always, feel free to ask a question in the comments!


Have you used Dynamic Search Ads? How have you found them? Do you have any useful hints or tips to share?


This is a guest post by ex-Googler Anton McCarthy. Currently, Anton is an online marketing specialist and entrepreneur who loves all things digital. You can find him blogging at antonmccarthy.com and Tweak Your Biz. Also follow Anton on Twitter.

Stop Obsessing Over Revenue: 3 Proven Strategies for Increasing Profitability

People LOVE to talk about revenues. The numbers are big, impressive and easy to fixate on. But when…

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This is a guest post by Andrew Youderian of eCommerceFuel.com 

People LOVE to talk about revenues. The numbers are big, impressive and easy to fixate on. But when was the last time you heard someone bragging about growing their margins or improving business efficiency?

These metrics aren't nearly as sexy, but they're immensely important. As the saying goes, “It doesn't matter how much you make. It matters how much you keep.” With that mantra in mind, here are three highly-effective and unintuitive strategies to improve your business's bottom line.

Raise Your Prices

Raising prices is a terrifying prospect. As entrepreneurs, we assume that customers will abandon us, sales will dry up and our business will collapse into the dust-heap of failure. But like most fears, we tend to grossly overexaggerate the consequences and underestimate the benefits. Especially if you're reselling an existing product in your ecommerce store, a small increase in price can do miracles for your bottom line. 

Imagine the following scenario for a popular item in your online store: 

  • Item Retail Cost:  $100
  • Wholesale Cost:   $80
  • Profit:                   $20
  • Profit Margin:      25% ($20 profit / $80 cost)

Now image that, after being inspired by an article on the Shopify blog, you re-priced this item at $110:

  • Item Retail Cost:  $110
  • Wholesale Cost:   $80
  • Profit:                   $30
  • Profit Margin:      37.5% ($30 profit / $80 cost)

Our minor 10% increase in prices resulted in a massive 50% increase in profits and gross margin!

Under the best-case circumstances – assuming you have a strong unique selling proposition and aren't competing on price – your conversion rates won't dive and you'll have achieved an instant 50% increase in your overall profits. Even with a significant 30% drop in conversions, you'd still be making more money than under your old pricing model, but with fewer customer servicing costs to consider. 

I successfully used this approach with my own ecommerce store to instantly increase my bottom line by 25%. It was, bar none, the most effective technique I've ever used to increase profitability. 

When implementing this strategy, keep the following in mind: Make sure you test different pricing levels. While raising prices is often very effective, you'll need to confirm it for your market/business.

If you have a large catalog, testing pricing on thousands of products can be a tall task. Start out testing pricing on only your best-selling products instead.

This strategy relies on having a unique selling proposition and offering value to your customers. The more price-sensitive your customers, the less effective this will be. If you don't have a unique selling proposition, you need to get one.  

Don't Obsess About Per-Order Profits


Many businesses are unwilling to lose money on an order, even if that means ending the relationship with an unhappy or dissatisfied customer. You may have had a similar experience, which often goes something like this:

“I'm sorry, sir. We only made $X on your purchase, so if we (fill in your reasonable request here), we'd lose money on your business. I hope you understand.”

This is a penny-wise but pound-foolish approach, and a terrible way to do business in today's highly social and connected world. If you're not consistently losing money on orders to quickly and pro-actively resolve customer problems, you're missing out on the chance to improve your bottom line.

Customers are so accustomed to mediocre service that when a business goes out of its way to proactively resolve a problem – without charging them – they're blown away. Apart from the life-long value of that customer, you'll receive valuable referral marketing and recommendations that are impossible to purchase.

If you're running an ecommerce store, here are four ways you can invest in the future of your business and, ultimately, your long-term bottom line:

  1. Did something inexpensive break? Ship customers a free replacement immediately without requiring them to hassle with the return.
  2. If an expensive item needs to be returned, ship them a replacement as soon as they submit tracking confirmation of the return, instead of waiting until it hits your warehouse.
  3. If a long-time customer needs something ASAP, overnight it to them at no charge.
  4. If a customer wasn’t happy with a purchase, proactively issue a partial refund to help compensate him for the disappointment.

Serving customers like this will cost a bit more in the short term, but will pay incredible dividends as you build a loyal and highly vocal fan base that results in a very healthy bottom line.

Reconsider Offering Phone Support


Would you be willing to reduce your workload by 50% if it meant only giving up 15% of your business? I would, and did, when I stopped advertising my toll-free sales number on one of my sites.  

We were able to take the savings – both in terms of time and money – and pour them into better serving our online customers and improving our site. While phone support is a rarity among many online businesses, it seems that a disproportionate number of ecommerce merchants still feel it's necessary. 

After the previous section, which championed outstanding customer support, this may seem like a major contradiction. But great customer service doesn't mean being all things to all people. It simply means taking outstanding care of the customers you've chosen to do business with. Based on your product and market – especially if your price point is lower - offering phone sales support may or may not be a wise use of your time.

Try measuring the impact removing your phone number has on conversions. You'll likely be surprised that the vast majority of people simply order online. If you do decide to offer a sales line, try to place it in strategic places such on the “Contact Us” page or in the shopping cart, where only qualified prospects will see it. If you serve both individuals and businesses, you can also experiment with a business-only phone line.

If you decide to scale back your phone support, make sure to:

  1. Be honest with customers and let them know WHY you don't list a telephone number. Tell them you prefer to invest in a quality website and outstanding customer service for your existing clients.
  2. Ensure you have a highly detailed, informative website to answer customers' questions.
  3. Have fantastic email support if customers can't reach you easily via phone. Using a help desk like Desk.com, HelpjuiceZendesk, or Kayako will ensure that your email correspondence is top-notch, and that requests don't go unanswered.

Also, don't write off the phone entirely. If a customer requests a call back, or if you need to resolve issues that require personal attention, make sure to pick up the phone.

The Biggest Danger Is Inaction

Change is always scary, and you may be reluctant to implement these suggestions for fear of what might happen to your business. But experimenting with these ideas will likely go unnoticed by most of your customers, especially those new to your business. If the changes aren't beneficial, you can always revert back to your old policies and pricing.

Without taking action, you'll never know how much money could be added to your bottom line. 


By Andrew Youderian, an ecommerce entrepreneur and the owner of numerous online stores. You can learn how to create a profitable online store with his free 55-page eBook. Also check out his blog, eCommercefuel.com.


Ecommerce Pro Tips: Learn From Shopify's Experts

We've asked our team of Shopify Experts for their best advice to help you build and grow your…

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We've asked our team of Shopify Experts for their best advice to help you build and grow your online business. The response we got was fantastic, so we'll be sharing their advice in this ongoing series.

If you're not familiar with Shopify Experts, it's our directory of ecommerce pro's who know Shopify inside and out. You can browse and hire designers, developers, marketers, and photographers to help you build or maintain your Shopify store. 

Here are five valuable tips, provided by five of our Shopify Experts:  

Product Photography is REALLY Important 

"Your online store sells products and your photographs ARE your products - do not skimp on product photography, your own snaps won't always cut it! It's crucial to think about how they will appear in advance, try and visualise how they might be laid out and how this could effect the look and feel of your site. 

Will your collection thumbnails be portrait, landscape, or square? Will they be on a white or transparent background, on a model, or in situation? There is no right or wrong answer but before starting down the design path it is important to think about these things as they will determine to a large part what the site ultimately looks and feels like. 

Shopify store Official features all of their caps on a black mirrored background and they look sick, but this was certainly no spur of the moment decision. It looks amazing.


Another of my favourite client sites is Elizabeth Bower's. She uses a carefully curated mixture of shots to display her jewelry, including some on a model and some close-cropped shots. Again, this was planned in advance and is also accounted for in the code - you will not see a model shot as the primary product page detail shot even if it is a featured Collection thumbnail. 


Finally, Blu Kicks have a beautiful site that I built out from designs by Fernando Munoz. He was also the product photographer on the project and was super careful (really!) about being consistent with the product shots' exposures, angles and overall dimensions. I really think it shows in the site.


In all three cases, every single image was planned, shot and then pre-edited to a consistently sized and dimensioned canvas prior to being uploaded, which has resulted in uniform, consistent, and great looking product displays." 

By: Rick Davies, Tricky3

Size Your Images Correctly

"There is nothing worse than looking at stretched out images. The trick to resizing photography is to hold the shift button down while sizing. Never forget that trick! It will become your best friend. And besides retaining the correct aspect ratio, make a decision about what size you want to make your product images and stick to it. Choose a square for example, and pick a size (let's say 800 x 800). Now be sure to center your product inside that square each time.

  
Also, If you have a slideshow or special sized banners, ask your designer to provide you with original, layered Photoshop files that you can update. These files will already be sized exactly as needed, and it will be as easy as retyping a message using the same font and design layout. Make sure you are familiar with and have the font that is used. If you have enough Photoshop knowledge to open a file and find the different layers to work with, this will be easy. And if this all sounds like a foreign language, then by all means hire a designer to do it for you. It's a small price to pay for the headache and lost time trying to figure it out." 

By: Rachel Farabaugh, designRACY

The 5 Second Rule: Quickly Get To The Point

"No, we're not talking about that Oreo you dropped on the floor in the lunch room. We're talking about the amount of time it should take your customers to figure out what they're supposed to do next or where they need to be going on your site.

If most of your consumers can't figure that out inside of 5 seconds, you're losing sales. On a home page, most customers want to know where to find the product they're looking for. Or they want to know why they should buy from you and not from a competitor. Get that message across in 5 seconds or else!

As site owners, a lot of times you'll cheat and navigate based on your familiarity with the site. Try and pretend like its the first time you're visiting. What are you supposed to do? Where do I go to find Products X, Y, and Z? If you can't figure it out in 5 seconds, you need to simplify and amplify. Make your products more accessible, and make your desired action more prominent.

But don't just stop there, keep going! Each page needs to have a clear desired action or goal. Keep communicating it. Even after a customer has checked out, think about what your next steps should be, encourage them to share your product, bookmark your website, or sign up for your newsletter. There is never a time when there isn't some kind of objective for a customer to follow,even if its heading back to the home page to buy again."

By: Hiren Patel, Coalition Technologies

Write Unique Product Descriptions 

If your ecommerce store is going to be selling products from a manufacturer or other provider, chances are you are planning on just copying and pasting the product description from the manufacturers website onto yours. Bad idea.

Here is why: All of your competitors selling the same products from the manufacturer are doing the same thing on their ecommerce websites. Therefore you are all competing for the same keywords with the same copy. Also, when was the last time you were moved to buy a product from the boring and dry description on a manufacturers website. 

Your description is unique not only because it isn’t a copy of everyone else’s, it is unique in that it has your company’s flair for selling the product behind it. It has your unique selling proposition (USP) in it. It has the power to motivate someone who sees your site in the search results decide to click your product page to see more. Then its power continues as it sells your product to the user using the power of persuasion.

It may take quite a bit of extra time to write unique product descriptions for all of your products, especially if you have hundreds or thousands of them, but it is worth it.

By: Joshua Gill, New Epic Media

Focus On Quality Content 

No matter how impressive your site design, and your product, you cannot ignore the importance of well-written content. This includes product descriptions, informational pages (such as your "About Us Page"), blog posts and of course marketing copy (short and sweet is my number one tip there). Don't lose customers because they "don't get" what your product does, or because they equate poorly written copy with a poorly designed product.

By: Eric Miller, Eric Miller Design

Using Behavioral Economics, Psychology, and Neuroeconomics to Maximize Sales

When it comes to developing a smart ecommerce pricing strategy, there are very important lessons to be learned…

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When it comes to developing a smart ecommerce pricing strategy, there are very important lessons to be learned from behavioral economics, psychology, and neuroeconomics. 

Researchers in these fields have rigorously tested consumer behavior and have learned how we react to different forms of pricing. These learnings will give you insights into your customer's minds on a large scale, and will show you similar patterns and habits that you can leverage to your benefit. Some people may find these disciplines intimidating, but applying their principles to your ecommerce store is easy. 

Here we go:  

1. Price Anchoring & Premium Options

What if there was a way to increase your ecommerce sales without changing the fundamentals of the products you offer in your online store? That would be awesome, right? The thing is, you can use price anchoring to accomplish this without the hassle of changing your product. 

According to research by cognitive and mathematical psychologist Amos Tversky and Psychologist Daniel Kahneman, when we have any uncertainty about the price of a product, we often look for information from surrounding offerings. With this in mind, their research (and more recent studies) have revealed one important thing about this process: we are willing to pay higher prices when they are "anchored" by an even higher price. 

Take a look at the packages offered by Basecamp:



That $150/month package sure makes the $50 and $20/month packages look like a good deal. 

Restaurants use price anchoring to subconsciously encourage diners to buy more expensive items. Take a look at the menu below and notice the $145 seafood plate. William Poundstone claims "By putting high-profit items next to the extremely expensive anchor, they seem cheap by comparison. So, the triple-figure price here is probably to induce customers to go for the {$95} Le Grand plate to the left of it, or the more modest seafood orders below it." 




Here's another example. It's from one of my favorite books, Priceless, where the author reveals a study on the pricing of beer. In the first test, only two beers were offered, one for $1.80 and another premium beer for $2.50. Around 80% of people bought the premium beer at this price. In the next example, a super-cheap beer was introduced for $1.60 and included in the mix. When these 3 options were available, 80% of people chose the middle option instead, and only 20% bought the $2.50 beer (nobody bought the cheapest option). In the last test, a super-premium beer was introduced for $3.40 and the super-cheap beer was removed. With these 3 beers in place, most people chose the $2.50 beer again, and although a few people chose the cheapest option, now 10% of people were choosing the most expensive option.

There are always people who want a premium option (in a huge majority of industries), and offering an expensive option will not only allow for those interested in spending more the ability to do so, but it's also a lot safer than introducing a cheaper option. 

2. How to Sell to "Tightwads"

In nearly every industry that you can sell in (minus ultra-luxury goods), you're going to have to deal with customers that neuroscientists have labeled as "tightwads". Don't worry, it's not an insulting term. It has to deal with how much "buying pain" these people receive versus the average consumer. Considering the fact that neuroscientists have labeled our spending habits as, literally, "spend 'til it hurts," it's important to understand what makes these customers respond the way they do. According to research, there are 3 customer types that ecommerce merchants should be aware of:

  1. Tightwads (24%): These customers spend less on average before they hit their pain limits.
  2. Unconflicted (60%): These are your average spenders.
  3. Spendthrifts (15%): These customers spend more on average before they hit their pain limits.
With nearly a quarter of your typical customers falling into the "tightwad" category, it pays to know how to sell to these people in a manner that doesn't effect your other buyers. Fortunately, research in this area has revealed 3 fool-proof tactics:

A) Changing 1 Word Can Make a HUGE Difference 

When it comes to selling to tightwads, it seems that you should "sweat" the small stuff: it could have a huge impact. In a study from Carnegie Mellon University, researchers tested the difference that a single word might play in response rates. In this case, they tested the copy used to describe the fee associated with joining an otherwise free DVD trial offer. The two versions they tested were:

  • "a $5 fee"
  • "a small $5 fee"
Seems somewhat silly, right? As it turns out, the impact was deadly serious: by using the second option ("a small $5 fee"), the researchers saw response rates improve by 20%! That's a monumental improvement as a result of a single added word. Try playing with the language on your ecommerce website and track the results. Sometimes the smallest change will help you convince those on the edge into making a purchase. 

B) Re-frame the Value: It's Not $1,000/year, It's $84/month

When it comes to larger purchases, we all struggle in evaluating value. With some awesome neuroimaging studies that tested price perceptions, ecommerce merchants have a way to entice buyers into purchasing more expensive options.

One easy way to do this is to re-frame the product's value. This strategy eases the buying pain for everybody, but especially for tightwad customers. If, for instance, I tried to sell you on my product that costs $1,000 a year, you'd be a bit hesitant right? That's because $1,000 isn't peanuts, and it's a large enough number that it makes you hesitant to buy, even if the offering is very valuable to you.

Now what if I offered a service for $84/month? It's a lot easier to gauge how much value you'd get out of that. If you can justify 30 days worth of value for $84, the purchase seems like a no-brainer. The thing is, $84 a month is $1,000 a year! 

You can see this in practice on all sorts of SAAS (software as a service) pricing pages. Most services are offered for a yearly fee, but almost all companies prefer to showcase the lower monthly price. Here's an example from GitHub:



The research has shown that when prices are broken down into smaller, "bite-sized" increments, our brains are just better at processesing the potential value, rather than having to deal with larger numbers (even if they are the same overall price). If your product is a large purchase that will be used over an extended period of time, be sure to remind customers of the daily/monthly value that they will be getting out of the product, it makes it much easier to rationalize a purchase. 

C) Reduce Multiple Pain Points with Bundling 

When it comes to the pain of buying, the less it has to happen, the better. This is why neuroeconomic experts like George Loewenstein have conducted research that shows ALL customers favor bundling if it allows them to avoid multiple purchases. He's asserted that his findings show we prefer to pay MORE for bundled items if it helps us reduce the amount of individual purchases, showing how averse we are to those multiple pain points. 

One of the most well known examples of bundling is how car dealerships offer various upgrade packages. Below you'll see the packages available on a Mercedes-Benz C-Class Coupe:



We can justify getting an upgrade package, but it would be harder to justify individual upgrades of leather seats... and navigation... and 18" AMG 7-Double Spoke Wheels. Ecommerce store owners should bundle products with often purchased accessories. You'll be preventing multiple pain points and allow people to solve their problems in one efficient buy. Sales will rise.

3. Selling Time Over Money

This is one of the more interesting pricing studies out there, because it shows that chest-thumping about having the lowest prices isn't always optimal for many brands. According to research from Stanford University, there is definitely a reason that big brands like Miller Brewing Company have slogans like, "It's Miller Time!" rather than focusing on the low prices of their bargain beers. 



In research conducted by Jennifer Aaker and her colleagues, a lemonade stand was set up with multiple signs (and actual kids to seem legitimate) in order to test the effectiveness of each sign's message. The 3 different signs used in the study were as follows:

  1. “Spend a little time and enjoy C&D’s lemonade” (focus on time)
  2. “Spend a little money and enjoy C&D’s lemonade” (focus on money)
  3. “Enjoy C&D’s lemonade” (neutral sign)
With such subtle changes, you wouldn't expect huge a difference, but there was. The first sign not only attracted twice the amount of customers, but they were willing to pay twice as much for lemonade as well. 

There's a theory that says money will always be thought of in a negative way, because consumers are reminded of the cost of acquiring a product rather than the pleasure of consuming it. Aaker and her fellow researchers conducted a follow-up study where they took a poll at a concert. Although the concert was free, people had to wait in long lineups to get good seats. 

Aaker asked the individuals one of two questions: "How much time will you have spent to see the concert today?" or "How much money will you have spent to see the concert today?" In most cases, asking specifically about time increased participants' favorable attitudes toward the concert. In fact, those who had incurred the most "cost" (standing in line the longest) rated the concert best of all. 



So what are the implications of this research? According to Aaker:
One explanation is that our relationship with time is much more personal than our relationship with money. Ultimately, time is a more scarce resource—once it’s gone, it’s gone—and therefore more meaningful to us. How we spend our time says so much more about who we are than does how we spend our money.
Specifically discussing the concert study Aaker noted:
Even though waiting is presumably a bad thing, it somehow made people concentrate on the overall experience.
So how do you apply the findings of their study to your ecommerce store? When a product is already a bargain, placing an emphasis on the time you'll enjoy with it (or the time it will save you) is likely more effective than parading the fact that your product is inexpensive.

Will this strategy ever not work? As noted by the research, there is one area where this method could fall flat: luxury purchases. According to professor Mogilner:
With such ‘prestige’ purchases, consumers feel that possessing the products reflect important aspects of themselves, and get more satisfaction from merely owning the product rather than spending time with it.
Premium goods with premium prices should emphasize their quality. On the other hand, if you're selling goods in a bargain oriented area, you should try to get your customers to imagine the great times they've had (or will have) with your products, rather than putting all the focus on the price. 


This is a guest post by Gregory Ciotti. He's the marketing guy at Help Scout - a handy invisible help desk. You can learn more about using customer data from the Help Scout blog and also from their free e-book.

6 Tips to Develop an Ecommerce Pricing Strategy

Do you know how much your products are worth? How low are you willing to price an item…

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Do you know how much your products are worth? How low are you willing to price an item to compete with another ecommerce retailer? 

With the advent of highly competitive pricing tools, winning the online pricing war can be a lose-lose for ecommerce retailers. Large online retailers like Amazon have an advantage in competitive pricing, as they can set the price low enough to run smaller retailers out of business. But there are other ways to compete - and it all starts with developing (or at least thinking about) an ecommerce pricing strategy.

Here are 6 tips that will help you develop an ecommerce pricing strategy:

1. Know your Margins

The reality of online retail pricing is that the lowest price doesn’t always win. In fact, pricing battles usually end with you pricing your products too low. Even with enough customers, you still may not make a profit. If you are lowering your prices to a point where you are losing money, you should consider finding a better source, or adjust your product offerings to include more profitable items.

Getting your online store into a pricing battle can hurt you in the long term as well. When you consistently price too low, your customers will always expect the lower price, even when it is unsustainable to your business. As a result, you could lose those customers over time.

2. Know your USP (Unique Selling Proposition)

What makes us different? Every company has to tackle this question to determine their value proposition and target market. For online retailers, a unique factor could be excellent customer service (i.e. Zappos), free or timely S&H (i.e. Amazon Prime), or product you can't find anywhere else (DODOcase). Of course, there are many more.


With pricing competition at an all-time high, retailers have to think outside of the box when crafting a marketing or promotional strategy for their online store. Some retailers have found success by appealing to a sense of charity, especially around the holidays. For example, Shopify store owner, Ricky Padilla (pictured above) donates $1.00 to fund clean water projects every time someone purchases coffee from his ecommerce shop Brown Water Coffee. He also offeres free shipping on orders over $20 - which is a great pricing strategy that encourages people to buy more than 1lbs of coffee. 

3. Lose-Leader (Selling Below Market Value)

Highly discounted pricing can be advantageous if paired with the appropriate merchandising strategy. The Lose-Leader Strategy assumes that an item sold below market value will encourage customers to buy more overall. Using this strategy, online store owners have the opportunity to upsell, cross sell and increase the total shopping cart value (average revenue per user).

Even if the profit is not impressive, this strategy stimulates client acquisition, opening the door for further marketing efforts. The value of customer acquisition outweighs the value of the transaction. A corollary strategy is to choose products that have a low CPA (cost per acquisition), to minimize loss. The end goal is to sacrifice losing money on one item in order to make a profit on the rest of the products sold (i.e. cereal cheap, milk expensive).
 

4. Offer Incentives

Once you know your margins, and price accordingly, then you can offer incentives to motivate your customers to buy. Even if you can’t sustain an ultra-low price in the long term, you can always offer limited time pricing to reach these customers. For example, “Purchase in the next hour and receive 20% off!”

Semantics are also important here, as the language you use can attract customers and minimally affect your bottom line. If you have a surplus of products, you can profitably offer a ‘twofer’ (2 for 1). Additionally, people perceive large percentages as big savings. For example, “Buy one, get one 50% off!” The customer sees the 50% off, but really they are only getting a 25% discount. Shopify App Product Discount will let you run sales in your ecommerce store based on a variety of conditions: by product brand, type, collection, and more - so "buy one get one free" , "buy 3 get one 75% off" and similar sale situations are easy.

Being savvy with your incentives allows you the ability to garner attention to your products, and build a reputation for having good deals, without breaking the bank.

5. Diversify Product Offerings

To offer a diverse product offering that will sell, ecommerce store owners must first understand their market demand. Make sure that you are up to date with current trends by reading ecommerce news. Use products like “Google Trends” or “Google Insight” to check the popularity of a SKU and try to attend local Meetups with fellow online retailers.

Having a better idea of what your customers want gives you the opportunity to sell and generate profit from diversified products. When in doubt, give your customers multiple options to help them figure out what they want. In the lecture, "Are We In Control of Our Decisions"
 Dan Ariely recounts an MIT experiment he conducted to test the effects of product and pricing diversification. The entire video is worth a watch, but skip to 12:30 for the most applicable example.

 

Dan Ariely found that giving a customer more options influences their choice and their perception of a ‘good deal.’ Specifically, one unattractive option can emphasize the utility of other options, helping the consumer decide on an option that best suits them. The end result of proper diversification is that online retailers will offer bad options to emphasize the good, driving customers to act based on perceived value.

6. Test your Ecommerce Pricing Strategy

As with many things in ecommerce, one size does not fit all, so it is important to measure and test the success of changes you make to your online store's pricing strategy. Ideally, every change should be tested and validated with an analytics tool (i.e. Mixpanel, Google Analytics, Shopify Sales Dashboard).

For example, find out if your ‘Summer Sale’ (where you implemented one of these strategies) increased your conversion as you expected, or if the new, trendy products in the store are generating more profit than older products.

With Black Friday and Cyber Monday right around the corner, transcend futile pricing wars... equip your online store with appropriate strategies to help you sell more and stay ahead of the competition. 

This is a Guest Post by Melissa Eisenberg, who is the Marketing Director at  WisePricer, an automated pricing engine to monitor, analyze, and reprice online retail products in real-time.

Drop Shipping: The Easiest Way to Sell Online

Many people shy away from starting an online store because of the startup costs and fulfillment hassles. But…

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By Andrew Youderian, ecommerce store owner, eCommercefuel.com

Many people shy away from starting an online store because of the startup costs and fulfillment hassles. But imagine if someone offered to pay your up-front inventory costs on thousands of items and manage your fulfillment operations. It'd be much easier to get started, and you could run your business from anywhere in the world. Sound too good to be true? It's not, if you know about drop shipping. 

In this article, I'm going to teach you all about drop shipping. I'll go over a simple definition, list the benefits, show you how to find drop shipping wholesalers, and give solutions to some common problems associated with drop shipping. 

What Is Drop Shipping? 

Drop shipping is a retail method in which you don't keep products in stock. Instead, you partner with a wholesale supplier that stocks its own inventory - you transfer customer orders and shipment details to them, and they ship the goods directly to the customer. The biggest benefit of drop shipping is you don't have to worry about fulfillment or inventory issues. 

Also, most customers don't know you're drop shipping, since "private label shipping" lets you ship from the wholesaler with a return address and invoice customized to your ecommerce store.

The Benefits of Drop Shipping 

There are a number of reasons you should consider drop shipping:

1. You Don't Need Buckets of Money: Drop shipping makes it amazingly easy to get started selling online. You don't need to invest heavily in inventory, yet you can still offer thousands of items to your customers. 

2. Convenience & Efficiency: Successfully launching and growing an ecommerce business takes a lot of work, especially if you have limited resources. Not having to worry about fulfillment is incredibly convenient and frees up your time to concentrate on marketing, customer service, and operations 

3. Mobility: With all the physical fulfillment issues handled, you're free to operate your business anywhere you can get an internet connection.

4. It's a Trusted Model: You might be thinking that this sounds like some sketchy, fly-by-night model – but it's not. Plenty of Shopify online stores, even major retailers like Sears, use drop shipping to offer a wider selection of products to their customers without having to deal with increased inventory hassles.

How Do I Find Drop Shipping Wholesalers? 

Before contacting suppliers, you'll want to make sure your legal ducks are in a row. In the United States, most suppliers will ask for your business EIN number and a copy of your state sales tax and/or resale certificate. Once you're properly established, you can start contacting drop shipping suppliers. 


There are various ways to find drop shipping wholesalers, and the video below outlines your options:

If you already know what products you'd like to drop ship, contacting the original manufacturer is the easiest way to find qualified distributors. Not all distributors will be willing to drop ship, but it will give you a list to follow up with. Unfortunately, the market is littered with scams and low-quality information. If you do decide to invest in a directory, I can recommend the paid directory World Wide Brands as a reputable source of drop shipping wholesalers - but it's still very important to exercise caution.

Google can also be an effective tool for finding drop shippers, but you need to keep a few things in mind. 

3 Ways to Use Google to Find Wholesalers 

1. Search Extensively: Wholesalers and drop shippers are notoriously bad at SEO and marketing, and usually aren't going to pop up on the first page of Google for a term like “handbag wholesaler.” Instead, you'll need to dig deep into the search results, often going through 10 or 20 pages of listings.

2. Don't Judge by the Cover: Suppliers also tend to have outdated, late ‘90s-era websites. So don't be scared away by abysmal design and layout. While a sleek, modern site could signal a great supplier, a low-quality one doesn't necessarily indicate a bad one.

3. Use Lots of Modifiers: As you hunt for suppliers, don’t stop with a search for “wholesale” - make sure to use other modifier terms, including “distributor” , “reseller” , “bulk” , “warehouse” and “supplier.”

4 Common Problems With Drop Shipping 

Despite my glowing recommendation, drop shipping isn't ecommerce nirvana. Like all models, it has its weaknesses and downsides. With some planning and awareness, these issues can be managed and need not prevent you from running a successful drop shipping business.

 

1. There will be loads of competition and awful margins.

Solution: It's true. Products that can be drop shipped will spawn a lot of competition. Usually this will lead to cutthroat pricing and diminishing profit margins, making it hard to build a viable business. 

To be successful, you typically can't compete on price. Instead, you'll need to offer value in a different way, usually through top-notch product education, service or selection. For more information on how to pick a profitable niche and add value, see these posts on finding a product to sell andthe anatomy of a profitable niche

2. Syncing inventory is difficult & leads to out-of-stock items.

Solution: The best way to mitigate this problem is to work with multiple suppliers with overlapping product lines. It's inherently dangerous to rely on a single supplier. Having two suppliers doubles the likelihood that an item will be in stock and available for shipment.

Many sophisticated suppliers offer a real-time product feed, and you can use a service like eCommHub to easily sync your Shopify website with the warehouse.

Eventually, you’ll sell a customer an out-of-stock item. Instead of canceling the order, give the customer an upgraded product for free! You might not make much – if any – money on the order, but you'll likely build a loyal brand advocate.

3. It's hard to sell products that you never see.

Solution: In today's world, it's possible to become an expert in just about everything through information online. Selling products from manufacturers with detailed websites will allow you to become intimately familiar with a product line without ever having touched a physical item. And when you do need to answer specific question about a product, a quick call to your supplier or manufacturer will give you the answer you need. 

You can also buy your most popular items to get acquainted with them, and then resell them as “used” or “refurbished,” often recouping most of your investment.

4. Involving a third party will result in more fulfillment errors, mistakes, and logistical problems.  

Solution: Even the best drop shippers make occasional mistakes, and mediocre ones make a lot of them. Suppliers are fairly good about paying to remedy problems, but when they're not, you need to be willing to spend what's necessary to resolve the issue for your customer. 

If you try to blame your supplier for a fulfillment problem, you're going to come off as amateurish and unprofessional. Similarly, if you're unwilling to ship out a cheap replacement part to a customer because your supplier won't cover the cost, your reputation is going to suffer.

One of the costs of drop shipping convenience is the expense of remedying logistical problems. If you accept it as cost of doing business – and always make sure to put your customer first – it shouldn't be a long-term issue.

The Final Word on Drop Shipping 

Is drop shipping the path to overnight ecommerce success? Of course not. As with any successful online store, you'll need to invest over time in a quality website, marketing, and customer service.

But drop shipping does provide an easy way to get started and the ability to leverage other people's capital without having to invest thousands of your own. When managed correctly, it can form the foundation of your own successful online store.

Further Learning

Looking to learn more about drop shipping? Check out our "Ultimate Guide to Dropshipping" - a free comprehensive guide that covers everything you need to know about building and running a successful dropshipping business. 


By Andrew Youderian, an ecommerce entrepreneur and the owner of numerous online stores. You can learn how to create a profitable online store with his free 55-page eBook or find out more about drop shipping on his blog, eCommercefuel.com.



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