“Lessons Learned” is an occasional series where we ask seasoned ecommerce professionals about their mistakes and successes. For this installment, we’ve asked Allan Regenbaum, owner of Keylan, Inc., a company that sells cookware, coffee machines and fitness products online. Keylan, Inc. is 12 years old and based in Atlanta. It has two employees, Regenbaum and his wife Robyn, with an annual revenue approaching $1 million. It offers about 200 products. Here we give you Regenbaum’s experiences and suggestions.
On general advice for ecommerce merchants
People like to speak to other people. Customers yearn to speak to someone with good product knowledge. They are tired of minimum wage, gum-chewing salespeople who have zero product knowledge. Compete in areas where Amazon.com cannot, for example where just being there to explain the product to the client is a unique differentiator. For high-ticket items, I think the web is going to be used more and more to push customers to call human salespeople. The rate of cart abandonment is too high.
On shopping carts
I use Zen Cart and/or Joomla! plus VirtueMart. Our Zen Cart has a lot of customizations for payment methods and shipping. We have added all that we need in the back end to automate our flow of work. We have minimal involvement in handing orders off to vendors. In this regard, being a software engineer has helped tremendously.
I use a virtual server at MediaCatch. The hosting company uses virtualization software that creates a somewhat protected environment where much of the behavior of neighbors on the server does not affect our operations. This is what I use, as it allows me to create as many hosting accounts as I like at a reasonable price, in a relatively safe, reliable environment. The downside is that virtualization does not always work well, and often our sites slow down due to neighbors’ behavior.
On marketing strategies
It’s all web-based and targeted mail shots. Thirty percent of business is from organic search listing, 30 percent is from advertising using Google AdWords, 30 percent is from email shot responses and 10 percent is return business. We have worked closely with MagneticOne to develop an AJAX-based coupon system that offers coupons based on multiple aspects of user behavior. I use blogs within the online store. This makes use of an evolved version of WordPress that exists within Zen Cart. We use blogs outside of the site as well as link-building tools.
On search engine optimization
We use SEO Elite to see what’s getting our competitors ranked, and then we try to do likewise. The reality is that despite all SEO work, the only thing that really gets results is by showing good product knowledge and having a lot of meaningful product information on the site. Keep it simple. There are so many SEO ‘experts.’ We have tried a few over the years, but few truly know what influences Google.
On product information
We try to create enough information for the customer to seemingly be able to touch the product. We show where it was made and how it was made. The client gets to know as much about the product as we do. Then they sell it to themselves.
On pay-per-click advertising
Google AdWords, Yahoo! and Microsoft. The latter two are almost trivial compared to Google. Many keyword strategies generate traffic, but it’s traffic from users that do not want what you are selling. I’d say focus on fewer items of higher quality. The goals is not to get traffic, it’s to get converting traffic.
On expense control
Keep cost of order processing as close to zero as possible.
On order management and back-end automation
Zen Cart customization enables single click purchase orders and ship notifications. Use the standard Zen Cart/QuickBooks module to dump order data to QuickBooks. There are some ‘gotchas’ though, so be careful. For example, if you export orders that contain products that QuickBooks does not know about, QuickBoooks creates the products as service items. This wrecks ‘profit and loss,’ as service items are not counted to ‘sales.’
All orders are drop shipped. We handle no inventory whatsoever. From time to time we get returns in our home office that are then sold via the website using a clearance rac
On accounting software
QuickBooks. We eventually splashed out and purchased a multi-user version. This software is very, very frustrating. Multi-user – hah! We use it because accountants use it. It claims to be multi-user, but to open a file you have to hunt down the other person that has the file open and ask them to switch to multi-user mode, and even then there are many reconciliation operations you have to do to switch out of this mode. You have to find the person that has the file open so they can close it, so you can open it exclusively. Given QuickBooks’ resources, one would expect better.
On credit card payments
We use Costco card processing through NOVA. Cheapest around. We use the NOVA viaKLIX application. I modified the Zen Cart viaKLIX application to allow non-real time processing of cards. We found that, once placed, so many orders needed changes that eventually we found it faster to check the order in the backend, then press a button to charge it when correct.
On the competition
It’s been interesting to see the catalog cookware vendors migrate off the printed catalog to the web and also to see how we can compete with these gorillas. The web is a great leveler. I think it’s important to notice that many of our competitors (such as Amazon.com) are broad-based with millions of products and nobody to speak to. We are vertically aligned product specialists. The importance of this cannot be emphasized enough. Customers search broad-based keywords such as ‘cookware’ to get an education. They search ‘Scanpan’ to purchase products. It’s very difficult to take customers who search for ‘cookware’ and get them to purchase ‘Scanpan.’ In each vertical that we operate in, 98 percent of our business comes from the one search term. The biggest issue for me today is the fact that the single largest threat to the small web businessperson is Amazon.com.
On growth and mistakes
It’s hard to say we have made mistakes. Rather than add complexity, we have tried to add more products exactly like the products that work. I wish I had more courage and resources to purchase other companies just like ours.
On general business attitude
It’s a unique privilege to be able to say that we have made money from the web. I’d prefer to keep the business simple and automated and enjoy the lifestyle benefits that come with that.