The Perfect Online Product

The Perfect Online Product

 
Okay, so there’s no such thing as perfect online product. But considering what would be perfect might spark ideas of what products are close to perfect. Here, then, is the perfect online product:

■ It’s valuable, with high margins. You’re not making a dollar or two per sale; you’re making dozens, perhaps hundreds of dollars. 

■ It’s in demand. It’s a product people want and are willing to pay for.

■ It’s not widely available. Buying online may be the only way to find the product, or the particular variety of the product.

■ It’s a “research” product. People are looking online for this product right now. Mostproducts are not research products. At this very moment, out of hundreds of millions of Internet users, probably only one or two are trying to find out how to buy sugar online.

■ It’s light and non-fragile, so it’s cheap and easy to ship.

■ There’s little or no competition online.

■ People love the product so much they’re going to tell their friends about you.

■ There’s no smell or texture, or anything else that makes the product one that “just has to be seen.

■ You are intimately connected to the product in some way. The product is related to your hobby or passion.

■ Oh, and it’s legal! While a number of illegal substances match the perfect-product criteria, we’re assuming the risk outweighs the benefits.

What Makes a Good Online Product

What Makes a Good Online Product?

 
Just about any product can be sold online. But let’s be quite clear; some products sell much better than others. Let’s think about some product characteristics that both help and hurt products when selling online:

■ Price:weight ratio The price:weight ratio needs to be high; that is the price, incomparison to the weight, needs to be high. Books have a very high price:weight ratio—a book might be worth, say, $30/lb. Sugar might be around 35 cents/lb. The price:weight ratio issue is why it’s hard to sell sugar, cement, and charcoal online.

■ Availability Less available is good. Available everywhere is bad. That’s why it’s hard to sell candy bars online. 

■ Information products Products that are essentially information sell well online.Books, reports, reference materials . . . even music is an information product, really.Why do they do well online? Because online technology provides a very efficient way to deliver information. It’s fast and it’s cheap. It’s no wonder that books were the first major product category online and remain one of the primary categories.

■ Complicated products requiring research The Internet is the perfect research tool, of course. Products that require careful selection—products with many different features—often do well online.

■ Wide selection of specialty products An example is one of the earliest small-biz successes, HotHotHot.com, an online success for over a decade. Sure, you can find hot sauce in any grocery store. But can you find Jamaican Hell Fire, Rigor Mortis Hot Sauce, 99%, or 3:00 AM? (The company provides 100 different brands.) Have you even heard of these? Another example is RedWagons.com. Certainly you can find two or three different Radio Flyer wagons in most toy stores, but where else can you find every Radio Flyer product made—steel wagons, plastic wagons, trikes, scooters, retro rockets, roadsters, and everything else?

■ Deals There’s a class of goods that crosses all classes, and even covers products that you might think of as Not Good Internet Products. If you can sell a particular product at a very low price, you may have a good Internet product. Hey, if you can get the price of sugar down low enough, you might be able to sell that online.
■ “Cool” products that sell themselves through word of mouth There are some products that are just so cool, people tell their friends. One company that gets fantastic word of mouth is ThinkGeek.com, which sells tons of really cool stuff  Another example of a great word-of-mouth site is Despair.com. This company sells products that people put on their office walls and laugh about with their friends.

■ No need to touch, smell, or even see clearly. Products that really require a close view generally don’t sell well online. That’s why it’s hard to sell furniture online and difficult to sell unique works of art or perfume. And that’s why well-known brands can sell online . . . because people know what they’re getting. In other words, although it’s hard to sell perfume that your potential buyers have never smelled, it’s not hard to sell perfume from Christian Dior.

■ High value products are good. You may do better selling a $500 product than a $5 product. You’ll have less competition—making it easier to compete using Pay Per Click  and in natural search—and will make much higher “margins” (grossprofit). Low-price products can be very difficult to deal with online. Think very seriously before selling anything below, say, $50, unless you’re pretty sure you can really pump out high volumes.

■ Junk is hard to sell. This may sound obvious, but it’s amazing how many merchants just post any kind of junk online and hope to make a business out of it. Mass produced statuettes of kittens from China, junk jewelry, handicrafts from the wilds of Wisconsin . come on, you can do better!

■ Products you understand and love. These are easier to sell. If you have a passion for skydiving, there’s a natural business for you selling skydiving products. Having said all that, it’s important to realize that every rule can be broken. Groceries can be sold online, for instance. Diamonds, products that most jewelers would say need to be looked at carefully before purchase, are selling very well online. And though Furniture.com crashed and the big grocery-store sites (PeaPod.com and WebVan.com) went down with it, some companies are selling furniture online and some companies are selling groceries online. (PeaPod, for instance,
was bought up by a grocery chain.) So, you can break the rules. But you’d better have a good reason to believe that it will work.

Building an eBay Business

How Your Business Fits Online

Launching a business online can be exciting and profitable. It’s a great way to supplement an existing income stream or even to become one’s sole occupation. Many individuals and small businesses have met with tremendous success, some making literally millions of dollars a year, even after starting at ground zero, with no knowledge of the Internet beyond the very basics, if that. There are no guarantees, but it can be done. It does require patience and a willingness to go through the steps to get it right, though. That’s what we’re going to teach you here.

Why Three Services?

 
In this  explain how to use three different “channels” to build your business online:

■ Selling products through eBay auctions

■ Setting up an online store using Yahoo! Merchant Solutions

■ Promoting your business through Google, other search engines, and various other online marketing
mechanisms.

Why three channels? There are a number of reasons:

■ Few businesses are simple enough to survive with a single method for finding business.If you sell hot dogs to people who eat hot dogs, you may need only to place your hot-dog stand on a busy street. But if you sell hot dogs to businesses that sell hot dogs to people,you would use many different ways to reach those businesses.

■ What works well for one business may not work so well for another. Using multiple channels to sell and to reach people increases the likelihood that you find the best one. 

■ Multiple channels provide multiple opportunities. If you can find people to buy your products more than one way, why leave money on the table by only using one method?

■ You’ll find some of the things we suggest in this book can be implemented very quickly, in some cases in just a few hours. Having a range of different options helps you get your

toes wet and work your way in slowly. For instance, an already established business could begin selling online with eBay over a weekend, gradually build the online business, then investigate other sales channels later.While it’s true that some businesses have done very well by finding something simple that works and doing it over and over again for decades, most businesses are not so fortunate. Thanks to competitive pressures—other people want your customers too; remember—most businesses have to do many things in order to survive and thrive. What works today may not work tomorrow. Some method you try for finding more business may not work, or may not work well as something you haven’t yet tried. Business is an evolutionary process, with the notion of natural selection replaced by the degree of initiative of the business owners and managers. A business gradually evolves as the people running the business try new things, discard things that don’t work or that no longer work, and adopt techniques that show promise. The three-channel method outlined in this book provides a great way to get started with an online business, showing you a number of essential techniques for surviving—and thriving—online. In particular, companies succeeding online often use a number of strategies to do so. These are the sort of things you may one day find yourself doing:

■ Selling through online auctions

■ Selling through discount channels, such as Overstock.com

■ Selling through merchant sites such as Amazon.com

■ Selling through a web store

■ . . . or, in some cases, several web stores, for different audiences or perhaps different
pricing strategies

■ Buying Pay Per Click ads to bring buyers from the search engines to your store

■ Using Search Engine Optimization to bring buyers from the search engines without paying a click fee

■ If you own an offline business, using various techniques to integrate online and offline operations, pushing business from the offline business to the online, and vice versa

■ Using an affiliate program, paying other web sites commissions for purchases made by buyers arriving at your store through affiliate sites

■ Publishing an e-mail newsletter to keep in touch with customers and promote your products to their friends

■ Marketing through PR campaigns targeting e-mail newsletter editors

■ Promoting your products through discussion groups

■ And many other things 

One thing you can say about doing business online is that however successful you become, there’s always more to learn!

Promoting Through Newsletters

Promoting Through Newsletters

 
Whatever you are selling, there’s an e-mail newsletter read by your customers. Some newsletters have tens, even hundreds of thousands of subscribers. Promoting through e-mail newsletters can be incredibly effective; it’s a very cheap way to reach large numbers of people very quickly. First, you need to find e-mail newsletters read by your prospects. Here are a few places to find them:

■ New List (http://new-list.com)

■ E-Zine List (http://www.e-zine-list.com)

■ Newsletter Access (http://www.newsletteraccess.com/)

■ NewJour (http://gort.ucsd.edu/newjour/)

■ Remember the search engines!

 
We recommend that you create a directory of useful newsletters; you’ll want to reach these people a number of times. You should then contact these people, with a number of suggestions:

■ Let them know you exist, using a simple, informal PR piece. Remember that anyone who is publishing a newsletter needs content! They need information. If you hit them at the right time with the right story, you may get picked up.

■ Later, announce a special offer or discount.

■ Suggest a giveaway, a contest of some kind. You might promote a single drawing for a product to a single newsletter if it’s very large, or perhaps promote the drawing to several newsletters at once.

■ Announce new products.

■ Approach the newsletter and suggest a revenue-sharing proposition of some kind, in which the newsletter earns commissions on sales. If you have an affiliate program, the newsletter editor can sign up through that; if you are using Yahoo! Merchant Solutions, you can create a trackable link A word of warning about promoting to newsletters. You’d better do it right. If you don’t have a story that is of interest to the newsletter’s readers, you are not a useful information source to
the editor; you are merely a nuisance.

Discount Sites

Using Coupon and Discount Sites

 
There are thousands of coupon and discount web sites. Just search one of the major search engines for coupons discounts, for instance, and you’ll see. Some merchants have used these systems very successfully. The jeweler Mondera.com, for instance, has made a concerted effort to target these systems, and consequently has links to its site on thousands of pages across the Internet.

Many of the coupon and discount sites are affiliates; they sign up with the merchants as affiliates, provide discounts to people who enter their site, and still get a commission when a sale is made. Some businesses will provide special discounts on a few specific products in order to work through these sites, rather than site-wide discounts, so they don’t see too much of a reduction in revenues. Remember, do the sums right; make sure you can afford both the reduced income due to any discount offered, and the affiliate fee that a coupon/discount site might require.

Using Affiliate Programs and Other Marketing Techniques

 Using Affiliate Programs and Other Marketing Techniques

As we’ve discussed in the first chapter, successful businesses try different strategies to reach customers.Sofar you’ve learned, in Chapter 21, about using the Yahoo! Shopping directory, and you’ve also learned about search-engine Pay Per Click campaigns. And in Chapter 26, you learned about using “natural” search-engine results.But is that enough? You may not be able to make money using PPC, and search-engine optimization can be incredibly difficult in some cases, so you can’t stop there. In any case, if you don’t understand your other options you may be missing a huge opportunity. There are many ways to reach customers online—as with offline businesses, “one size does not fit all.” It’s important to keep learning and exploring, and to experiment with different ways to market your store. You don’t know what will work until you try it, so you have to try many things. Who knows, you may hit a gold mine and take a small “hobby” business and turn it into something really big.

Using Affiliate Programs

Affiliate programs are a proven method for making money online (although that doesn’t necessarily mean it’s easy money). Most of the Internet’s large online businesses use affiliate programs as one of their promotional tools.An affiliate program is a system through which you pay other web sites for channeling buyers to your site. Affiliates may be paid for

■ Each sale made at your web site (this is the most common form of commission).

■ Each time they send a visitor to your site.

■ Each time they send a lead to your site.

NOTE Yahoo! has integrated the Commission Junction affiliate system into the Merchant Solutions e-commerce product. Click the Affiliate Link in the Promote column of the Store Manager page. Traffic from one site to another is generally tracked through one of two methods:

■ The affiliate is given a special link with a code in it identifying the affiliate; when someone clicks on that link, special tracking software places a “cookie” on the visitor’s computer and can follow the visitor through the site; if they buy, credit is assigned to the affiliate.

■ The affiliate places a small piece of code onto their web pages; when someone opens the page, a “cookie” is placed onto the person’s computer; if that person then visits your site, they can be identified as “belonging” to the affiliate. All affiliate systems use “cookies”—there’s really no way around it.How do you create an affiliate program? Somehow, you need software to track visitors to your site and to manage the process of recording sales and assigning payments to the appropriate affiliate. You can either use an affiliate service, which runs all necessary software for you, or you can install software on your own server.

■ The quickest way is to sign up with one of the major affiliate services, primarily LinkShare (www.LinkShare.com) and Commission Junction (www.CommissionJunction.com). These companies have come to dominate the business.

■ You can use one of the smaller affiliate systems, such as FusionQuest (www.fusionquest.com) or Affiliate Tracking Network (http://www.affiliatetracking.net/).

■ You can install affiliate-tracking software on your own server. There are many different packages available.
As usual, there are advantages and disadvantage to all these methods: 

Using one of the major services is a good way to get started, but can be very expensive. For instance, if you want to work through Commission Junction, you can expect the following expenses:

■ $2,500 setup fee

■ $250 per year

■ $3,000 deposit toward commissions

■ 30% commission (for every $1 paid to an affiliate, a 30-cent fee is paid to Commission
Junction)

■ $500 monthly minimum—even if you don’t pay a single affiliate, you’ll pay Commission
Junction a $500 monthly fee

■ No maximum monthly commission

Consider that $500 minimum. If you pay affiliates a 10% commission, you have to make almost $17,000 in sales before you reach the Commission Junction’s commission minimum. The smaller systems let you get started at a much lower cost (but they don’t have the large networks of affiliates that Commission Junction and LinkShare can provide). For instance, here’s what you’ll pay for the basic FusionQuest (www.fusionquest.com) service

■ $195 setup fee

■ $19.95 per month

In addition, if you want access to their network of affiliates (around 40,000), and if you want them to process payments to affiliates for you, you’ll pay this:

■ 10% commission (that is, for every $1 paid to an affiliate, a 10-cent fee is paid to
FusionQuest)

■ $0 monthly minimum

■ Maximum monthly commission of $650

Don’t think that an affiliate program is a quick fix, though. It can take considerable work tomake it worthwhile. The main problem is recruiting affiliates to your program. Here are a few ideas

■ Commission Junction and LinkShare, and some of the smaller affiliate systems, have networks of affiliates to which you can promote your program (Commission Junction has hundreds of thousands—they reported 350,000 in 2002, so it’s probably considerably bigger now; FusionQuest, a much smaller system, has around 40,000). Investigate the different ways you can promote to them, and make sure you are listed in the system’s merchant directory.

■ List your program with the various affiliate directories (there are around 50 of them). There are services, such as AffiliateFirst (www.affiliatefirst.com), that will register your program in these directories for you very affordably.

■ Seek out sites that attract the sort of people you want to attract, and invite them to join your affiliate program.

■ Consider using a service such as LinkProfits.com to help you track down and sign up good affiliates.

■ Make sure you have a page on your site, with relevant keywords in combination with the words affiliate and associate, so that people searching for affiliate programs and selling products like yours can find you.

Should you use an affiliate network? Perhaps, if you are willing to invest not just money buttime in making it work.

Managing Your PPC Campaigns

Managing Your PPC Campaigns and Measuring Results

Once you set your PPC campaign running, you’ll probably be tempted to look at it every few minutes. In fact, large PPC campaigns have to be monitored almost continually. If you are paying half a million or a million dollars a month on PPC ads, you’ll probably want to ensure that things are running smoothly. The average small-business owner doesn’t have time to do this, of course. But you can’t just walk away either, and then come back a month later. PPC campaigns take work; you need to see where your ads are sitting—if they drop too low you won’t get any clicks. Keep an eye of the click cost, and, most importantly, figure out your Return on Investment. Viewing PPC Results The first thing you’ll want to do is view the results of your PPC campaign. Begin by logging into your AdWords account. The very first screen you see will show you a quick summary of each of your campaigns

Clicks- The total number of clicks on all the ads included in the campaign, for all the keyword
matches.

Impr.- The total number of impressions—that is, the total number of times that the campaign’s
ads were displayed on a web page.

CTR- The click-through rate—the percent of ads that were clicked on. If the CTR is
0.5 percent, your ads were clicked on once for every 200 times they were displayed.
(Not an uncommon rate.)

Avg. CPC- The average price you paid for a click.

Cost- The total amount of money you spent for this campaign.

Conv. Rate & Cost/Conv.- These columns are not enabled initially; rather, you’ll see a promotional blurb for the tracking service. We’ll look at this under the section “Entering Conversion Values” later in this chapter. These are Conversion Rate and Cost Per Conversion, showing you how many clicks turned into sales. A campaign summary is useful, but you can’t use it to carefully manage a PPC campaign. You also need to see how each keyword and each ad performs. Click the name of the campaign, and you’ll now see a similar table, this time showing summaries for each ad group in the campaign 

Keyword  The statistics for a particular keyword—that is, the cost of the click through when the ad was displayed after being matched with that keyword, and so on

Status There are four possibilities: Normal: Your ads are being matched with this keyword. In trial: Your ads are still being matched with this keyword, but may not be soon (see the section titled “Managing Bad CTRs” later in this chapter). On hold: Your ads are not being matched with this keyword any longer, though they may be if Google runs out of ads that perform better.Disabled: Your ads will no longer be matched with this keyword.

Max. CPC Your maximum bid for this keyword

Clicks The total number of clicks your ads receive after being matched with this keyword 

Impr. The total number of impressions—that is, the total number of times that the ads were displayed—after being matched with this keyword

Ctr The click-through rate—the percent of ads that were clicked after being matched with this keyword. Very low click-through rates will lead to this keyword being disabled.

Avg. CPC The average price you paid for a click after the ad is matched with this keyword Cost The total amount of money you spent for ads matched with this keyword

Avg. Pos The average position your ad occupied once matched with this keyword

Conv. Rate & Cost/Conv. See the section “Entering Conversion Values” later in this chapter for information on Conversion Rate and Cost Per Conversion.
 

What Is PPC?

Google AdWords and Other Pay Per Click Programs

Pay Per Click (PPC) is big business. In fact, it’s the primary manner in which Google makes money—almost all its income, 98 percent, comes from PPC—and is very important to Yahoo! as well. Pay Per Click has brought mass-media advertising to small businesses. Businesses that would never have spent money on radio, TV, or newspapers, are now spending it on PPC . . . and sometimes even making a profit! Sometimes? Well, the fact is that PPC doesn’t work for everyone, as you’ll learn in this . You need the right combination of gross profit per sale, Pay Per Click price, and website conversion ratio. If you don’t have the right combination—and many businesses simply don’t—PPC will lose you money. Get everything lined up just right, though, and PPC can provide a regular, predictable flow of profitable business to your web site.

What Is PPC?

Pay Per Click refers to an advertising mechanism in which advertisers pay each time someone clicks their ad. More specifically, though, these days it refers to ads displayed on search-engine results pages.You can see an example in Figure 22-1. At the top of the search results are two small ads—shown on a light blue background in this instance. In the top-right corner, notice the words Sponsored Links. More ads appear down the side of the page—again with the words Sponsored Links, but this time above the ads. Each time someone clicks one of these links, the company that placed the ad is charged. How much? Somewhere from 5 cents (on Google) or 10 cents (on Yahoo!) to many dollars! Some Because large PPC systems generally “feed” a variety of sites, when you buy ads through a system such as Google or Yahoo! Search Marketing Solutions, your ads may end up on many different search sites. But you may also have your ads distributed elsewhere, like on the pages of thousands of different web sites, thanks to the Google AdSense distribution program.

PPC advertising has a number of advantages:

■ It’s very quick. You can start getting results from the search engines in a day or two (intheory, a few hours, but in most cases it takes a little longer to get everything sorted out).

■ It’s reliable. Using PPC to get traffic to your site is very reliable. You can generate a lot of traffic, and always appear for appropriate searches in the major search engines . . . if you’re willing to pay enough.

■ It’s easy to measure. You can see just how much traffic you’re getting, and even figure

out how much of the traffic turns into business.

How to Make Money Online

   Have you ever thought about setting up a business online? If not…where have you been for the last five or ten years? It’s the new American dream, encompassing all the usual ideas of independence, freedom, and wealth. And sometimes, you know, Internet-based businesses really do bring all these things to their owners.
Not always, though, which is why you need this book. It’s easy to stumble around on the Internet for months or years, and never quite get anywhere. What’s the difference between those who stumble and those who leap into online success? Knowledge. You can’t succeed unless you do the right things, and while some very successful online businesses have been built by people who serendipitously stumbled onto the right formula, why leave such an important factor to chance?

This  describes the basic principles, ideas, and tools that you’ll need to succeed online. In addition, it lays out a roadmap; the book focuses on certain tools that many other successful businesses have employed:

■ eBay This, the world’s most important online marketplace, has been used by tens of thousands of people to launch new careers and businesses.

■ Yahoo! You’ve heard of Yahoo!’s search system, of course, but did you know that tens of thousands of businesses use Yahoo!’s e-commerce tools to manage their online sales?

■ Google A business needs traffic, whether it’s “foot traffic” to a brick-and-mortar store or web traffic to an e-commerce store. Google—and the other “Pay Per Click”

advertising systems—can help you generate that traffic. We’ve split this book into three main parts. In Part I, you’ll learn how to begin working through eBay, selling your wares through auctions, Buy It Now sales, and the eBay store. In Part II, you’ll find out how to set up a Web store using Yahoo!’s low-cost Merchant Solutions software. And in Part III, you’ll find out how to generate traffic through Google’s AdWords Pay Per Click system…as well as how to get traffic from Yahoo!’s Search Marketing Pay Per Click system through free search-engine traffic, from the price-comparison sites, and via a variety of other online marketing techniques. So let’s not waste time… find out how to get started.