Practical Ecommerce

Lessons Learned: Online Stores Inc. Co-founder Kevin Hickey

“Lessons Learned” is a series where we ask ecommerce business owners to share their experiences and advice. For this installment, we interviewed Kevin Hickey, vice president and co-founder of Online Stores Inc., headquartered in New Stanton, Pa.

Online Stores currently includes eight specialty websites (see list and links, below), with gross revenue of $21 million in 2008, and a projected increase to $25 million in 2009. The company has become a dynamic force in the ecommerce market, and its sales volume landed it on the Internet Retailer top 500 list in 2008.

Kevin Hickey

Kevin Hickey

Beginnings

“We began selling and manufacturing American flags in our basement in January 2001. After September 11th [World Trade Center terrorist attack], consumer demand for flags increased greatly. We exploded onto the scene and haven’t looked back.”

Shopping Cart Software, Web Hosting

“We use the Yahoo! store platform for the front-end and Rackspace for web hosting. We built the first store on Yahoo! and expanded by adding additional properties. Yahoo! is very robust and reliable and is user-friendly, with helpful reports and statistics. We like the reliability and the search engine friendliness. The statistics that are built in are helpful. We have periodically looked at other solutions that might allow us to maintain multiple stores from an easier interface, but none have been a good fit.”

Employees

On average we have 90-100 employees. We ship about 2,000 packages a day from the warehouse. We have in-house teams for information systems, graphic design, search engine marketing, customer service, and fulfillment.

“We use temporary employees for a period of time before offering full-time or permanent status so we can ensure we hire employees that fit with our team and values.

“Our people know that they’re expected to work hard when they’re here, but we also expect people to have a life outside of work. We discourage situations where people are spending 60 hours a week on the job. We’re a family business and people need and deserve to have a life outside of these walls. If you make sure your employees are well motivated, you’ll have low staff turnover and low training expenses. Happy employees mean happy customers. Our company focuses on both.”

Internet Marketing

“SEO [search engine optimization] takes a long time, but it’s definitely worth doing. You can do PPC [pay-per-click advertising] very well, but it takes time and training to set it up correctly. We choose to do things in-house and have invested the resources to do so. Our goal is to generate 50 percent of our traffic from natural search. We spend a lot of time on link building and following the guidelines that the search engines provide to optimize your site. We have also really focused on minor keywords to pick up better-qualified traffic, rather than always focusing on the major keywords.”

Social Networking

“We’ve been using Facebook and Twitter to generate buzz and drive traffic. We use Twitter to do promotions like providing giveaways or coupons, announcing new products, etc. We’re at an early stage with each of these and a lot of our customers haven’t jumped on the social networking bandwagon. For those that have, they almost expect you to do it – and it gives you some ‘cutting edge’ look. We’re still experimenting to see what is and what isn’t going to work.”

Email Marketing

“We use email to bring customers back to the site with promotions. We do send follow-up messages to customers about six months after they’ve ordered to remind them we’re here. What we are working on now is a segmentation process. For those starting out, a lesson we learned was that we needed to have our customer management system in place early on. Now, we have lots of email addresses, but not a ton of information. We are filling in the gaps and starting to really do segmented marketing now.”

Expense Control

“A dollar saved is a dollar earned. We try and control all our costs. We’ve also put a lot of effort into our operational systems to ensure we have a good control over the business so we can track what’s making us money and what’s not.

“We efficiently leverage our employees’ skills, too. Our diverse offering (among the eight niche stores) allows us to move people between departments as needed. Each store has its own cycle of peaks and slow times. We’re pretty good at predicting the cycle, which helps with staffing and ensuring inventory is available. Our employees’ knowledge of the varied offerings of our stores allows them to move around as needed without missing a beat.”

Accounting Software

“We’ve used QuickBooks from day one, and got up to the full-blown enterprise version pretty quickly. It’s a $1,000 package and it runs a $25 million business. We haven’t really found anything that it can’t do.”

Order Management

“In 2002, as the need for expansion presented itself, we moved our operations into an 85,000 square-foot building, which currently houses our corporate office and warehouse. We use Stone Edge Order Manager software and are a big fan of the product because it allows us to have real-time access to where an order is in the system [from the moment] it’s placed to when it ships.”

Credit Card Payments

“We use Yahoo! store’s payment processing system and Stone Edge, using our bank merchant account.”

Web Design and Usability

“With 6,000 products, ease of finding what you’re looking for is a challenge. We don’t want to have too many levels, but want to ensure things are categorized well. We use our employees to gather feedback to improve the design and aesthetics. We also follow the lead of some larger retailers so that customers are navigating the way they’ve gotten used to on other stores.”

Blogs

“We run a different blog for each store to help generate traffic and increase our search engine appearance. We also use them to provide more extensive content than we can do on the website and allow comments and discussion to allow customers to provide feedback.”

Customer Service

“We have an in-house call center and have put a lot of effort into finding the right people and training them. When we first started, that was a part that we had problems in. We’ve since put a lot of effort into making improvements, like providing the tools to handle calls and inquiries and providing ways to ensure a great customer service experience for all. Our whole system is designed to ensure customer satisfaction. After all, you need to think of your customers first [and] how you can do a better job for them.”

General Business Attitude

“We try and balance all aspects of our business. We don’t think that it’s good business to be really strong at one thing while weak at another. We try to ensure all aspects are strong. We try and make sure that every department is as efficient and harmonious. We work together and resolve any internal issues in an efficient and fair manner.

“We’ve worked hard to build an efficient organization with strong values. We’re here to do a good job for our customers and to serve them. They’re the ones who are paying our wages after all.”

Online Stores Inc.’s eCommerce Sites

John W. Dawe

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Comments ( 2 )

  1. yourtherapysource June 30, 2009 Reply

    This was a really informative article. I also use Yahoo and find it very simple to use with good customer service if you do have a question. This article helped me to realize that I have a lot to do but have done a lot already for a one man show. Thank you.

  2. Mireya Pizarro June 30, 2009 Reply

    great article. I just began using twitter and now have some direction.