Jumping All 12 Hurdles:
Store Elements You Must Have Right

I like to watch some sports, but playing with intensity, playing to win -- I really admire that. One of my favorite photos is of a track runner, taking each hurdle in stride, with her eyes already looking ahead to the next hurdle. I see the concentration and determination in her eyes as she measures and then clears each obstacle. It won't do to knock one over or go around. She must clear each of them and continue on.

Over the past four years I've talked to thousands of small businesspeople who are seeking to build successful websites. I've personally been involved in building 18 online retail stores. In that time some of those stores have succeeded admirably. Others have folded their tents and left cyberspace with a whimper.

During the process I've identified 12 hurdles on the track. There are no shortcuts. You must clear each of these hurdles to finish the race and have a chance of winning. Let me discuss them one by one, and I hope this will stimulate your mind to find ways to strengthen your own online sales. You'll find more detail about each hurdle in back issues of Web Commerce Today.

Hurdle 1. Compelling USP

The first hurdle is to develop a compelling Unique Sales Proposition (USP), an adequate raison d'être. Online stores often make no money on first time buyers. There are customer acquisition costs to pay -- advertising, shopping agents, affiliate programs, etc. It's the second, third, and fourth sales bring the profit. That means getting customers to return, and to do that, your store must be memorable.

Your USP is best stated in a sentence or two. It defines what makes your business unique from every other competitor in your field. It spells out the precise niche you seek to fill, and how you aim to fill it. If you can't tell who you are in two sentences, then your USP is too fuzzy to succeed. Work on it until you can state your USP in just a sentence or two.

For example, JustBalls.com (http://www.justballs.com) saw an unfilled niche in the sports equipment sector. Instead of trying to bite off more than they could chew selling the whole range of sports equipment, they looked for a single slice -- balls -- and set up "The Biggest Ball Store on the Net." They sell sports balls, fitness balls, toy balls, and ball stuff. You'll find baseballs, softballs, footballs, volleyballs. If it's a ball they have it. When you think "balls," they want you to remember them, "JustBalls.com" and come to their site. They also own the URLs for Justbaseball, Justfootball, Justbasketball, Justlacrosse -- 27 different sports in all -- in case they want to expand their marketing by sport by sport.

I haven't talked personally to Jim Medalia, the owner of JustBalls.com, but their USP is probably something like this: "Justballs is committed to being the absolute best and most comprehensive source for balls on the Web. We provide excellent customer service by purchasing, warehousing, and shipping the products ourselves, rather than relying on a distributor to drop-ship for us." (You can read more about Medalia's well-thought-out concept in an excellent interview in eMarketer, November 23, 1998, http://www.emarketer.com/enews/enews_medalia.html)

The first hurdle for your store is to overcome your identity crisis, figure out who you really are, and state it in a sentence or two. Now you're off and running.

Hurdle 2. Attractive Price/Quality Ratio

Some stores pride themselves on lowest price. "If you can find it at a lower price, I'll eat my hat." Now on the Internet you may be eating a lot of hats. One store, Buy.com (http://www.buy.com), claims to sell their products at cost, and hopes to make their money on an advertising model. While I don't think this will really work for too long, it puts great price pressure on competitors. How can you match zero gross profit per sale? You can't. Nor do you have the money to pretend for very long. Shopping agents that encourage price comparisons make it tough to compete, too.

Another price depressant are auctions such as eBay (http://www.ebay.com). If you find you can purchase a new, or nearly new item, on eBay, you aren't willing to pay as much for it elsewhere.

For a while, perhaps, you may be able to charge full price for a product, but before long I predict that many sectors will have to offer discounts online to compete for customers. While you probably can't match the lowest price out there, your price will need to be discounted to be attractive to savvy buyers. However, once you get the price down some, you're probably much better to compete on friendliness, convenience, customer service, store ambience, etc. This is a balancing act. The real hurdle is coming up with an attractive price/quality ratio that makes your customers feel they've received good value and still allows you to make an reasonable profit.

Hurdle 3. Adequate Cash Flow

The third hurdle is obtain an adequate cash flow in the early months of your store. Some online stores are profitable from Day 1, but not many. Part of the cash will be to pay for a marketing campaign build up your visitor flow. It takes a while to bring in enough traffic to cover your fixed costs plus your cost of goods. In the meantime you'll need to have some source of funds to draw on to make up the difference. Have you set aside enough cash to sustain you through those early months or years? This is where many stores bite the dust; they can't hang on long enough to become profitable and fold before they've given it an honest attempt.

Hurdle 4. Professional Look and Feel

The fourth hurdle is appearance. You'll never be able to compete with the best on the Web unless you invest in a professional look and feel. Few entrepreneurs have this kind of expertise in-house. Yes, you may have graphic artists at your beck and call. That'll help (if they know the differences between Web and print graphics). But you also need someone who understands databases, who can manage what can be a complex project. You need someone who can tell you which of the thousand or more shopping cart programs will be best for your particular project. And someone who can make customers want to buy from you, who can build trust by drawing on experience. I strongly recommend that you outsource your company's first real attempt to sell products online. Later on, when you've developed experience in-house, by all means do the next redesign yourselves.

Hurdle 5. Regular Site Maintenance

But while I feel strongly about outsourcing your company's online set up, I feel just as strongly about the fifth hurdle, developing in-house expertise to do the routine site maintenance that any retail operation requires: adding new products, changing prices, deleting products, putting items on sale, etc. The turn-around time to have a developer make those changes will keep you from being really competitive. Successful online stores need to be swift on their feet. Make sure that the store building software your developer selects really allows the merchant to make changes quickly and easily. Test out the demo to see how hard it really is.

The most difficult part of routine maintenance will be handling the new product photos. There are two approaches. First, you might want to purchase an inexpensive scanner. A color scanner for under $100 that will do just fine. The second approach is to take your own photos with a digital camera. If you have a lot of new products this may be quicker -- you don't have to wait for the photos to be developed -- but digital cameras that will meet your need probably cost $500 to $900 at present. Whichever approach you choose, you'll need to crop and size the photo using graphics software such as Adobe Photoshop (http://www.adobe.com), JASC PaintShop Pro (http://www.jasc.com), or Microsoft Image Composer.

You'll also have to keep down the file size of your photos so they don't take too long to download. But the benefit of learning these skills makes the merchant independent, able to do all the routine store maintenance necessary.

Hurdle 6. Easy Site Navigation

Another hurdle is easy site navigation -- helping the shopper to get quickly to what she is looking for. We tend to take site navigation for granted -- until we come to a really BAD site. Last night, while shopping for a train ticket, I happened on the Amtrak site (http://www.amtrak.com). It was extremely frustrating. Instead of being intuitive and transparent, I really had to work at getting the information I needed about a train station address and the price of the fare.

The best navigation systems are designed by putting yourself in the shopper's shoes. What is she looking for? What does he want to find? Your site developer should have some experience along this line -- that's what you're paying for. But before your store goes live, take a couple of your Internet newbie friends, give them your store URL, and let them try to shop. See where they stumble, listen to the questions they are asking, and take careful notes. Then fix what you need to and try again.

Redundant systems are much better than just a single path to the information. On larger sites I'll use a site search engine, a left-side menu, links from the front page, and drop-down product selectors to get people quickly to their destination. Shoppers think differently and process information differently. Make it easy. This will pay off in customer delight and trust, and will result in higher sales.

Hurdle 7. Compelling In-Store Promotion

The next hurdle is getting the shopper to the checkout stand. Most brick-and-mortar stores are built so you can't leave the store without going past the cash registers. Not so on the Web. Half-filled shopping carts are regularly left deserted in the "aisles."

The percentage of shoppers who actually make a purchase is called the "conversion rate." This often ranges from 0.5% to 5%. As you develop some steady return customers the rate will rise higher than that. Can you imagine your delight if you were to double your conversion rate from 1% to 2%, or from 3% to 6%? Putting products on the shelves is only part of the task. Have you ever wondered why retailers spend time preparing endcaps with their specials, or rearrange their shelves? There's a whole science of retail store layout to maximize sales.

We're just learning how to do this on the Web. Here are some tips to try. Make your order buttons prominent, and animate them slightly. Not enough to be annoying, but enough to motivate action. Currently I am testing two banners on my site that simulate a dropdown menu with a Submit button. The only difference between the two banners is that one has a regular static Submit button, while the other has a small yellow dot that appears for less than a second on the Submit button and then disappears. Subliminal? Yes, almost. The banner with the slightly animated Submit button is pulling a 12.5% higher click-through rate.

Provide multiple reminders to checkout. If you can lower the percentage of deserted carts just a little, you can greatly increase your sales. I've been to sites recently that use JavaScript to pops up a window if you leave their site without taking an action. I haven't tried it yet, but I expect that would increase your conversion rate some.

What colors sell best on packages? Which shelf has the highest sales rate? Why do retailers place racks of impulse-buy products next to the check-out line? If you make a study of these things and do some experimenting, you can significantly raise the conversion rate on your site. Don't expect major increases from just one or two changes. Expect increases from a dozen or two minor but well-thought-out changes in your site design.

Hurdle 8. Easy secure ordering system

Nearly every successful store owner knows to offer an SSL secure ordering system. But not so many make it easy to check out. To jump the easy order hurdle you need to streamline the checkout system. Last year I reviewed a shopping cart ordering system that required the customer to click through five different screens to make an order. Count them: F-I-V-E. Those who have studied online behavior know that the more clicks it takes to achieve something, the lower the number of remaining shoppers left to click again.

Amazon.com went to a one-click shopping system for repeat customers. Once you've entered basic information, and with your permission, a one-click system is activated. Purchasing a book is as simple as clicking on the one-click button. That's it. It's ordered and will be on its way.

The simpler it is for your shoppers to check out and complete their order, the more they will enjoy shopping with you, and the more they'll buy.

Hurdle 9. Customer Trust

No one will click on the order button, however, if they don't trust the store to deliver the product they've ordered. National brand stores, The Gap, Wal-Mart, BarnesAndNoble.com, have spent many millions of dollars carefully building a brand image. This gives them an immediate trust advantage.

Smaller businesses must work harder to jump the trust hurdle. This can be done with photos of the owners and staff, the "story" behind the business, a witty presentation, a comfortable ambience, a professional appearance, an efficient navigation system, an intuitive ordering system. All these combine to produce a sense of trust. More overt methods might be subscribing to BBBOnline (http://www.bbbonline.com) or TRUSTe (http://www.truste.com) or another industry watchdog organization.

If you can jump this hurdle without bruising your toes on the way over, your chances of making sales goes way up.

Hurdle 10. Convincing Customer Service

Closely related to customer trust is providing convincing customer service. Clear shipping policies, return policies, and guarantees you will go a long way. So will an extensive online product support and troubleshooting section. But you will also need to deal with the inevitable goof-ups that happen. Can customer trust survive returning the product?

Once I ordered two books from Amazon.com: a commentary on the Book of Genesis and a tiny Collins German-English Dictionary. When my package arrived, the commentary was there, but instead of the dictionary was a book entitled, "How to Make Love All Night (and Drive a Woman Wild)." I showed the book to my wife (who looked it over thoroughly). Then I called the Amazon.com customer service number. The man at the other end was most apologetic, though he didn't seem to crack a smile at a pastor getting a book on making love all night and driving his woman wild. He offered to upgrade shipping to get the dictionary to me immediately, and sent a label to return the wrong book without paying for any shipping. I was impressed, and continue to buy too much from Amazon.com. ("I'm a book-a-holic, and my name is Ralph.")

Since the real profit in your store will come from repeat customers, honing your customer service to a fine point is vital.

Hurdle 11. Efficient Product Fulfillment

We're nearly home, but we've got two more hurdles to go. The next is efficient product fulfillment. Product fulfillment includes picking, pulling, packing, and shipping the product. If you only do a little business each week, you can afford some inefficiency, but if you're aiming at hundreds of orders per week, this has to work like a finely oiled machine. To achieve this you'll require real-time credit card authorization to save rekeying later, and set up your order taking system so it will import directly into your order tracking or product fulfillment software. Small businesses may want to consider Mail Order Manager by Dydacomp (http://www.dydacomp.com/mainmom.asp). Larger companies have a wider range to select from. You need to bypass any rekeying of the order. Cut the necessary steps to the absolute minimum.

If you've been a brick-and-mortar retailer prior to setting up a webstore, you're aware that you have a lot to learn. Traditional retail has a MUCH different fulfillment and distribution system from mail order, which is closer to the online sales model.

You'll want to evaluate your business model, too. Do you drop-ship products to save inventory and warehousing costs? If so, does the higher price your distributor or manufacturer charges for this service allow you to be profitable and provide excellent customer service? Would you be better off building your own warehousing and shipping system? Analysts believe that the battle between booksellers Amazon.com and BarnesAndNoble.com may be won or lost on who has the most efficient product delivery system.

Whatever model you ultimately select, make sure it provides the greatest efficiency and profit margin you can squeeze out of it. Futures are made or lost in the shipping room.

Hurdle 12. Effective Site Promotion

The last hurdle, but perhaps the most important, is effective site promotion. All too many businesses are begun without a realistic marketing plan; they are automatically doomed to failure.

But each online store will develop a slightly different marketing mix that works effectively for it. We cover this subject in great detail in Web Marketing Today (http://www.wilsonweb.com/wmt/). A typical marketing mix for an online store will probably include some banner advertising, an affiliate program with carefully selected affiliates, search engine positioning, and perhaps some pay-per-click advertising such as GoTo.com (http://www.goto.com) or ValueClick (http://valueclick.com). Along with these you may want to sponsor an occasional contest or special event to get publicity in the online and traditional media.

Keep experimenting. You can't be afraid of spending some money here to learn -- there's no other way. But it would be wise to find a Web savvy marketing agency to help you plan your strategy.

Developing effective site promotion is a hurdle that you must jump in order to win the race to a successful store. But so is each of the other hurdles we've mentioned. To be a successful storeowner you need to do a number of things right simultaneously. On your mark. Get set. Go!.