Archive for category E-Commerce
While in Alabama last weekend, I did a quick in-hospital run. We are trying a new approach to the direct marketing. We are dropping off “Scrubs Magazine” with coupons for our site and a few other advertisements within, at various hospitals (if you work at a hospital and want us to send you a magazine let me know!). Our attempts at in-hospital promotions in the past have not worked very well.
The goal with the magazines is to provide something aside from just a discount, the magazine itself has had some great reviews/response to this point (it is a new magazine). It will be interesting to see if any of our discount codes/advertising in the magazine are redeemed. Not only will it tell us if the effort of distributing these magazines is worth it, but it will also give us a small window into the value of targeted print advertising. You never know, if it works we may start looking into other similar options.
The tough part is making sure they are distributed at the hospitals. I have only visited two places so far. At the first I walked around and left mag’s all around hoping people will pick them up. At the other hospital I visited the HR department and left them a stack of the magazines for distribution.
We will see what happens. Hopefully it drives some business!
We here at scrubadoo have really started to lay the ground work for a strong brand that is based on customer service. As a part of this we offer a great return policy. I do think that this policy has made a difference in our conversion rates, and I know that a lot of our customers appreciate it. The hope is that it is part of the entire package we offer, that provides enough of a “wow” factor to keep customers not only loyal to us, but also telling their friends about us. Needless to say our return policy on our scrubs, shoes, etc is not changing anytime soon.
All that being said we are starting to get to the point where we have people starting to take advantage of the policy. They will send items back with out tags on, or shoes that have been worn. While it is still a small percentage it is happening. What is also tough is dealing with the clients that continually buy products from us and continually send everything back. We have a few (very few) clients that have made 5-6 large purchases with us over the last several months and have literally sent everything back for a refund, every time. Now this wouldnt be a big deal if we carried inventory in all the scrubs we offer, but we don’t which makes it really hard to find a use for the returns. Right now the returned items go into storage boxes and pretty much sit in storage. I have yet to figure out a good use/way to sell the returned items. Right now it is just inventory that is eating up our cash flow.
The question then becomes do we fire these clients? If so how do we do it? Right now I am sticking with my guns and servicing the heck out of everyone in the hopes that it will pay off in the long run. But at some point it may not, how do I know when we have reached that point? Is there a good way to cut ties with a client? These are all questions I am thinking about as scrubadoo continues to grow.
Ah the joys of running a retail shop.
When we laid the original groundwork and design for scrubadoo.com we paid a whopping $1,500. That’s it. At the time it felt like a ton of money. As it turns out, I think we got an amazing deal. The general layout and design of the site has changed very little from the beginning.
Since that time we have spent what currently seems like a ridiculous amount of money on back end development to automate and make the site more user friendly. My largest headache continues to be my inability to find a developer, or development team, that is reasonably priced and knocks things out in a reasonable time-frame. Since our initial development, my experience with programmers has been a series of short-lived free-lancers that work on the site for a month or two and then flake out. I recently upgraded to a larger, much more expensive, company with the hopes that our development needs would be taken care of by them into the foreseeable future. While we still are very much in bootstrapping mode I thought if we could establish a real partnership here it would be very valuable into the future, even if it was more expensive than other options I could have found.
Before I go any further let me say one thing:
1. I trust this new company fully. I truly believe they will do good work and are very honest. This was true before I hired them and holds true today.
While the work they have done actually works (which is more than I can say for some of the previous people I have worked with) I think they are used to working with companies much larger than us that are far less worried about budget. We signed on for two back-end projects which we were quoted at 35-40 hours for. Two weeks later we have 9/10′s of one project done and the other yet to be started and we have been billed for 37 hours of work (keep in mind these hours cost about twice as much as what I am used to paying). (On another note the work they have completed was an update of a system that cost me $500 to build originally…).
That really sucks.
Unfortunately we are not yet printing money here at scrubadoo (although I did take a $1,000 paycheck for the first time ever in January so I could afford to pay my student loans) so it is really difficult to deal with an overage of twice what I have paid myself in the entire first two years of scrubadoo’s existence.
Here are the decisions I need to make/think about:
1. Do I stay with this company and slow down my development process (due to capitol restraints) or do I continue to try the free-lance route.
2. Will we ever get out of the bootstrap mode? This was truly my first foray into what I would consider a solution for an established company. It is expensive. It saves me the headache of worrying about the job being done properly, however now I have a new headache of how am I going to pay them.
3. Should we ever get out of the bootstrap mode? Or is this state of mind something that will always be beneficial to the company.
Anyhow, I received the invoice for the first 37 hours of work at about 5:30 today….what a shitty start to the weekend.
It is difficult to drive traffic to a website.
I realize that this probably isn’t an incredible revelation to anyone out there. However, it is really hard. Especially with what adds up Marketing budget that could be exhausted with one big night on the twon. There are really only so many free avenues to market your product.
We have tried, gift cards, flyers, direct mailing, emailing lists, promotions, addwords, approached nursing groups on Facebook, and more. Turns out that none of these are a magic bullet. I have come to realize that there probably isn’t one.
As you can probably tell, when I started advertising the site I decided to take the approach that I would throw a bunch of cheap darts at the board and see what works. So far we have had very mediocre results. They have gotton us to about 150 unique visitors a day, which isn’t terrible, but it isn’t going to make us.
We are actively trying to come up with new ways to market the company. I am looking for any media outlets that will give me 5-10 minutes, the chance to write a blog post, or a quick write up in a magazine or newspaper (let me know if you have any for us!). It doesn’t matter how big or small. I have also started approaching prominent bloggers in my industry to see if they will help us spread the word about our win free scrubs for life promotion. I hope that some of them will help me out (we need it), I figure we are just asking them to spread the word about a contest that is beneficial to their user base. It’s not like I’m selling crack.
We have also attempted to set up partnerships with hospitals and nursing schools to help market our site. Basically we give them a discount for their students/employees and they spread the word about it, a win win right?
Finally we have approached other web sites that target the same market. The goal is to try and set up partnerships with them such as this one (where our link will be shortly).
Hopefully all of these things will slowly build our base. If any of you have any ideas for me it would be great to hear them as we are always looking for fresh new ideas. There is no bad idea. We are thinking about chalking sidewalks and shoveling our site name into the snow along the major highway…..seriously, so let me know what you think!
So I recently told you how difficult it was to sign with manufacturers so I would actually have product to sell.
Despite this I am almost to the point where I am going to discontinue our relationship with one of our manufacturers. This company has been nothing but difficult to deal with since day 1.
When we first started I wanted to sign them up as our lead supplier for our “scrubraisers” brand. However we needed a price point that was lower than their standard wholesale pricing. I figured since we would be buying in bulk we may be able to get preferential pricing. I knew for their involvement to be feasible we needed to get our pant cost to $9.00 a pair, which was roughly a 25% discount to what they currently offered me. I spoke on the phone with our account rep and he said he had to check with the higher ups. He gave me a call back and said as long as we were hitting certain minimum order sizes they would work with us.
A few weeks later I emailed in our first order and I received an email back from a name I didn’t recognize stating that my rep had left the company. They then told me that they didn’t offer pricing as low as what I had mentioned in my email. I called in to explain the deal we had agreed to between our companies. At this point I started looking for an email chain, which I didn’t have….in fact I didn’t have anything in writing (lesson learned there). Eventually after many phone conversations, it became my word about a conversation I had on the phone with an account rep that was no longer with the company which didn’t end up being enough (mind you Mer, my partner, had actually visited this company personally, met our account rep, and the CEO). After going back and forth I actually got on the phone with the CEO about all of this and he basically questioned my integrity. Which really pissed me off.
Unfortunately, I couldn’t afford to drop them as a supplier as they were pretty much my only option at the time. They also have a fairly unique product that we have since done fairly well selling.
The problems didn’t stop there. The supplier specializes in “collegiate logo” scrub apparel, has 16 base colors and really only 4 cuts that they sell. Which is VERY minimal compared to the large companies. When adding their scrubs to our site we needed some info from them, such as what colors come in what sizes and what schools do they offer. Turns out that no one in the company has an exhaustive list of either of these things. I asked for this list over 6 months ago and still haven’t received anything that is even close to what we need (I have been promised it many times, most recently I have been told we will get it in February….we will see). It has turned selling these products into a trial and error game.
Unfortunately it doesn’t end there.
A few weeks ago we sold a set of “Army, Black Knights” scrubs and when I sent the order in I was told they had just terminated carrying that product (we weren’t told).
One of our first customers from OCTOBER, just recently reached out to me and said they never received the Stanford scrubs they ordered. I contacted my new account rep and sure enough the package had been returned to them because it was lacking an Apt #….It was returned over 4 Months ago and they failed to contact me so I could alleviate the problem and reach out to my customer to let them know about the issue.
Two weeks ago we had a client order a UGa scrubs and wanted the rush delivered. I called my rep and asked if we could do it (we paid the rush shipping charges etc) he said no problem. 5 Days later I get a call from the client and they have yet to arrive. I called my rep and he found the scrubs sitting in a “ready to ship” pile that they had been in for 5 days. They promised to rush them out that day. 4 days later I get another call from the client, and the scrubs he received didn’t have the logo on them, they were just blank scrubs.
The list goes on. I would guess that 1/2 of the orders I have taken for this company have been mis-managed in some way. This makes us look really bad.
I don’t know where my breaking point is with them, but I think I am close. It is a lot of trouble to sign a manufacturer and then get their scrubs available for sale on scrubadoo.com. Which makes it very difficult for me to cut the ties.
I haven’t done anything yet, but we may be close.
It has almost been a full year since we first ventured out to start scrubadoo.com. Looking back on how we have gotten this far, one step that stands out as perhaps the most important was initiating our relationships with major manufacturers.
We originally planned on carrying only Softscrubs brand scrubs but quickly realized that this would significantly limit our target market. In order to be a major player in our industry we need to sign up the big boys, Cherokee, Landau, and Dickies. Early on I thought that this would be one of the easiest tasks, looking back on it, it was one of the most pivotal. The first time I contacted Cherokee I was pretty much laughed at. Dickies and Landau were not much better. It was your classic Catch 22, I couldn’t get any uniform suppliers to sign with me until I had other uniform companies to use as a reference. Once you broke into the circle it seemed like it would be easy to sign everyone up, but breaking into the circle as an online provider is extremely difficult.
I was finally able to sign up Gelscrubs, a much smaller company in the uniform universe. My references: a screen printing shop in Charlottesville that I had done about $200 worth of business with, a buddy of mine who had done some pro-bono legal work for me, and my friend Frank who I was starting Conrohl.com with (another one of my ventures). They were willing to give us a chance early on, but we weren’t really doing any business with them, making it difficult to use Gelscrubs as a reference.
As we improved our site and a few sales I again decided to attempt to contact the big boys. However, if it wasn’t for a bit of luck I don’t know if we would have a signed anyone up. That luck? In the next entry I’ll let you know how we signed our first big one.
We have been live for just about a month now and have been working on the execution and improvement of our marketing plan along the way. Like many other entrepreneurial ventures we have a very limited marketing budget so we built our plan around the assets that we do have; man hours (both mine and interns), a decent understanding of social networking, and a relatively decent network.
For this post I will give a brief update/rundown on our online advertising plan.
We advertise online through Google and Facebook. At the beginning we used FB only because we were able to find an offer giving a free $100 trial (you can get it here). Unfortunately we flew through the $100 with very few conversions. We ran about 15 different adds and there did not seem to be a lot of rhyme or reason behind which of our adds received impressions. We targeted the same people and bid the same amount for each add and 1 or 2 would get 100,000 impressions while the others would get around 100.
FB was not a total waste and we still do advertise with them. It is very good at targeting specific demographics and we did get some good early visibility for scrubadoo.com. Additionally, people seemed very willing to sign up for our scrubaclub. These new scrubaclub members provide us with email addresses and have displayed obvious interest in our product (both good signs). This has also expanded our marketing list. Overall, I would say the verdict is still out on advertising on FB. Before they become a legitimate advertising option I think that they need to add more transparency to how their advertising system works and tracking systems for the results your advertising dollars provide.
We also launched a rather large Google Adwords campaign (and a small Adsense campaign with this blog, feel free to click a link to the right!). As you would expect words like “scrubs,” “nursing scrubs,” etc are all extremely expensive to advertise on.
Which brings me to an important point that I think a lot of companies ignore. It is extremely important for every company to pay attention to the financial portion of advertising on Google, no one can stay in business losing money. Sure you can get millions of impressions and clicks by being the top bidder, but you need to calculate what the value of a click is for your company. What is your conversion rate? Of those conversions how many will come back and purchase from you again? Will they tell friends? A “B-School” term for the answer to these questions is what is the “life-time value” of each of your customers. No matter what you call it, these are all questions you should ask yourself when determining how much you should bid for words (or spend on any type of marketing). What is great about Google is that you can track all of these things and drill down much further than you can with more traditional marketing options. Moral of this story: use the free information and don’t overspend for your advertising.
Our campaign is still very young so we don’t have enough information to draw any statistically significant conclusions. There are a few things I am sure of though. First, it is much cheaper to get impressions on related websites (through other peoples Adsense accounts) then it is through search terms. Unfortunately, to this point those adds have been less effective for us. It does make sense though, people who click Adsense adds do it more on a whim, while if they search for a term they are closer to a purchase decision.
The second thing that I am sure of is that conversion rate is key. We are far below where I think we should be and we need to get better at it. How do we do this? Great question. I don’t believe our pricing is an issue. We are working on ease of navigation, product selection, and a few other areas that may be the problem. We will see how these changes effect our conversion rate.
Google is a proven advertising entity and every company should leverage the tools that they offer. Even if you just use there free analytics program. It will provide you data that can really help you improve your business. Just one last quick tip. If you are paying for a hosting service they will more than likely offer a coupon for a free $50 or $25 dollars of advertising on Google. We use Blue Host and they offer the free add money and every penny counts!
Until the next installment,
I know this has been a little while coming but I think I am finally at the point where I have a little time to write more frequent posts. Before, I start part 2 of merchant services, I would like to mention that we have added some add’s to the blog so if you see anything you like please feel free to click through and help support the us.
OK, on to merchant services. In my last post on this topic I spoke about the steps it takes to set up an account and what the value chain of the industry looks like. This post is specifically about fees. Everyone who accepts credit cards hast to pay something (even Target and Walmart) but you can do several things to help minimize your costs, even as a start-up. How do I know this? I know because A) I used to sell merchant services and B) I just went through the process of setting them up. Here are a few steps to take to minimize your costs:
- First understand your busienss. Specifially, what will your typical ticket size be Vs. how many tickets a day will you process. This element is key because every merchant processor is going to charge you in two ways; 1st a per swipe transaction and 2nd a % of the total bill. They dont advertise this, but merchant processors are willing to negotiate prices on both of these cost elements (i.e. charge a smaller per swipe for a higher % and vice versa). This is why it is important to know your business. If you do very few swipes but have large ticket sizes you are better off with a low percentage and a higher per swipe charge. If your company does a lot of volume with small ticket sizes then you would want a little higher percentage with a lower per swipe (scrubadoo.com for example). The better the idea of what your transaction size and volume will be the more optimal your fee structure can be.
- Ignoring their publicly advertised pricing, look for a few processors that you are comfortable working with. Research the company, how they do business, even ask for client references (people you can actually call). Just like every other part of your business do your due dillagence on your merchant provider.
- Once you have identified your top two or three choices for providers contact them and ask them for a quote. Make sure you tell them what you are looking for in pricing (remember you know your business better than they do and they can taylor thier quotes to what you specify i.e. small per item and high %). It is also important to take into account the equipment you will need. If you are an e-commerce site you will need none. But if you have a brick and mortar shop you will need processing equipment. The newest wireless technology can be close to $1,000 for one machine. It is important not to ignore this aspect of pricing. Once you have the quotes in hand you hold the power in the relationship. You have choices and all of the processors want your business.
- Again, ignoring pricing, decide which processor is your top choice. If your top choice also has the best pricing you are done (although it never hurts to tell them you are looking at other companies to see if they will throw in free equipment etc). If they are not the lowest, tell them. They will likely ask for any lower quote in writing. Give it to them. Most companies will at the very least match competing offers, more than likely they will actually beat competing offers.
- Now you have your preferred vendor at the best pricing you could have hoped for.
- Re-visit your account at the very least annually, see if your pricing is still ideal for your company. As you grow don’t be afraid to renegotiate. The bigger you are the more valuable you are to your processor.
That is my breakdown on merchant services pricing. We are currently using Authorize.net as our gateway and BB&T for our processing. If you are in a region where you can use BB&T give them a shot. They are very good at both service and pricing.
OK everyone, Just a quick message to let everyone know that scrubadoo.com is officially live! Like always I have been crazy busy getting everything correct and finished. I will start writing regularly again as soon as we get things more stable.
In the meantime tell your friends about the site. You can give anyone the discount code Family&Friends (no spaces) and they will get 10% off their first purchase.
Check the site out and send messages giving me feedback!
I know I haven’t finished the merchant services piece yet, but we have been extremely busy with another aspect of the business that I think is good to talk about (besides we have yet to finish setting up the merchant account).
I want to share a little insight in the online retail cart system, what you use to load your products into and have people check out of etc…, that we are using, X-Cart (XC). XC is a very complex system that has taken us several weeks to begin understanding. We are finally at the point where we are starting to get the hang of it.
On top of the standard XC implementation we are having an outside developer make specific modifications that we think will help differentiate us. I have learned a ton from the process of getting the cart up and running.
First, it is extremely time and labor intensive to load products into the system correctly. We were doing it manually one by one to start and we then figured out a way to upload directly from a csv file. Even with our new bulk upload capability it is still takes a tremendous amount of time filling out the csv to get the initial products onto the site (this is probably the most monotonous job we have yet to encounter).
Second, what makes this even more difficult is the importance of the upload. Everything needs to be perfect or else it will come back to haunt us. If we mislabel products or make any other mistakes we will be hit with returns that can have a huge impact on our bottom line.
Finally, like everything else web based expect it to cost at least twice as much and take twice as long as expected. There are always error messages that the programmers will run into. It is extremely frustrating and a huge pain.
All in all I think XC is a powerful system that will treat us well once we have it figured out. On the flip side they are expensive, have terrible customer service, and are impossible to get a hold of.
On a side note we are only few days away from the official launch which is extremely exciting. Once we launch the site in Alpha I will post it here and ask everyone that reads to go to the site to provide feedback and run through everything to help look for bugs.