Practical Ecommerce

Lessons Learned: Lori Karmel of We Take The Cake

Lessons Learned” is a series where we ask ecommerce business owners to share their experiences and advice. For this installment, we interviewed Lori Karmel, owner of We Take The Cake, a bakery located in Ft. Lauderdale, Fla. We Take The Cake’s gourmet creations have been featured on Food Network and The Oprah Show. The company expects to gross around $1.2 million in 2009, with around 25 to 30 percent coming from online sales.

Lori Karmel

Lori Karmel

In 2002, Karmel purchased a then-floundering bakery. “We struggled for two years before the company began turning a profit,” said Karmel. “But, I was persistent in getting samples out to the public, and in November 2004 my company experienced a bump of huge proportions when our Key Lime Bundt Cake was chosen as one of Oprah Winfrey’s ‘favorite things.’ The show sparked a tsunami of online orders that knocked out our website’s server, causing us to upgrade our online operations and expand its scope.”

Karmel has learned many valuable lessons bringing her company to its current financial success, and she offers the benefit of her experiences in ecommerce below.

Web Hosting

“Back in 2004, we had a shared server when the Oprah thing happened. Now, we own our own server and have it located at TRACI Network Solutions in Ft. Lauderdale. In the five years we have had our server at TRACI, we have not experienced any outages. The advantage of hosting at a smaller data center is we are able to get immediate support.”

Shopping Cart Software

“In the past year we revamped our site and migrated to the Magento platform. Prior to our migration to Magento, we were using an osCommerce shopping cart.

“We researched a number of shopping carts and chose Magento because it offered flexibility that other shopping carts didn’t have. One of the biggest improvements is the ability for customers to ship orders to multiple addresses. In our previous cart, customers who ordered cakes shipped to multiple addresses had to enter them one at a time, check out, and come back again. Magento allows us to custom-program the shopping cart to suit the needs of the bakery.

“Improvements to the base shopping cart have included the ability for customers to select the arrival date up to 90 days in advance, and that is very important for us because of the requirements of the credit card companies. You can only store credit card information for 30 days, and now we’ve been able to get past that. We also had improvements to the back-end function for FedEx shipments.

“We have seen an improvement to our order conversion rate since switching to Magento.”

Credit Card Payments

“Currently we accept Visa, MasterCard and American Express, and we process our online payments with Authorize.Net. Over the years we have found them to be very reliable, except during the July 2009 outage which left us unable to accept orders for almost an entire day.”

Order Management

“Our order management is set up in Magento. We are able to track orders by the day, by the time–we can sort it any manner–by the product, flavor… We rely on what’s called a bakery report to see what has to be baked each day, depending on the flavors and products ordered.”

Employees

“We have twelve employees. We have decorators and bakers, customer service people, and someone who just works on making the batters and creating new recipes. We also have an IT consultant who has been with us since the beginning.”

Search Engine Optimization

“When we redesigned the site this year, we kept search engine optimization in mind. On the front page and when we write our product descriptions, we keep our keywords in mind as well as our page breaks.”

Social Media

“We are on Facebook, Twitter and YouTube. We are using a mobile texting campaign that we are marketing through Facebook and Twitter. Additionally, we just created a video campaign and we’re going to post those on YouTube, Facebook, and our own site.

“We have connected with many of the Mom Bloggers. They do product reviews and giveaways, and every time we get a review from a Mom Blogger, I have one of my employees post it on Facebook. We grew from 200 Facebook fans to more than 650 in a matter of a couple of months, and we currently have 1,500 Twitter followers.”

Pay-Per-Click

“We’re currently involved with a Yahoo! program called paid inclusion, and it’s a flat rate of 28 cents per click. We just started a couple of weeks ago, but, we found out it is going to be cancelled on December 31. Right now we’re profitable on that, but we’ll see how that pays off through the course of the holiday season.

“But, because I paid a start up fee for paid inclusion, and it’s going to be cancelled, the company that I’m working with, Beyond ROI, is going to see if I can apply that towards starting up a PPC program.

“We’re also going to be working with Amazon.com for the first time this holiday season. We currently have pretty good ranking on Google organically, so we’re just trying to boost some of our other keywords up.”

Shipping

“We’ve always been with FedEx. They offer us very good rates. It wasn’t easy to integrate FedEx into our shopping cart, but once we did that, we committed to them because it’s not so easy to switch.

“We have a production facility that is just around the corner from our retail store, and we do all our baking and shipping out of there. We download the FedEx labels from our shopping cart software, and then FedEx picks up the orders at the facility.

“The cakes have a seven-day shelf life, so we ship second-business-day-air or overnight. It’s more expensive, but we would prefer that people have more time with the cake in case of shipping [delays]. We do not offer delivery insurance, but if a [delivery problem] is our fault or FedEx’s fault, we offer a full replacement cake and credit back the charge.”

Packaging

“We have all our packaging designed by a local designer and manufactured in China at Zhengzhou Huachen Color Printing and Paper Product Company. The plant agreed to produce samples for us and we were able to see the finished product before we made a commitment. It was a risk for us [to work with a vendor in China], but it’s worked out well for us and it’s economical.”

Expense Control

“We keep our expenses down by only being open from 9:00 a.m. to 4:00 p.m. When our employees are done they go home. The only people that are working set hours are the customer service people.

“Also, we don’t have a traditional bakery where you come in and have products you can pick from. We bake to order only, so we don’t have any waste in terms of our product inventory.

“And, as soon as our lease is up on our retail location, we are going to move everything into a 4,500 square foot building we purchased, so we are eliminating our rent.”

Accounting Software

“My husband is an accountant, so he does all our accounting. He pulls the sales off Magento and then he enters it into QuickBooks.”

Customer Service

“Customer service is number one. Everything we do is custom. When we send our gourmet bundt cake, we hand-write the sender’s personal message for a personal touch. We like our customer service people to give that personal touch on the phone as well.

“Our physical location is small and boutique-like, so I think we should appear that way on the phone and on our website. The customers need to discuss designs and colors and flavors, and our goal is to give you what you want and to make you happy. We do not have 24-hour customer service, however, because our store is not open 24 hours.”

Biggest Mistake

“We’ve had a couple. The first was when we didn’t prepare for The Oprah Show. The minute our cake was on the show, our phones were ringing off the hook. Our server went down after 800 orders. Everyone had to call in and we only had three phone lines. That was very costly because we could have taken so many more orders had we remained online. We should have been on our own server instead of a shared server. That was a huge mistake.

“Our second mistake was switching to a company (my lawyers won’t allow me to mention its name) to re-do our shopping cart last year. They outsourced it without telling us, and they waited about six months before they started working on it. It took us into our holiday season and the cart wasn’t functioning, so we lost sales. I think we made a very big mistake in not being on top of the company we hired. We should have pulled the plug on them when they weren’t performing.”

Biggest Success

“Sending a sample cake to The Oprah Show. It put us on the map.”

Best Advice

“My advice for anyone who is starting out with ecommerce is to be sure that the front of your site represents your brand. Your home page is your face to the public online. The minute someone enters your site, they want to be impressed or ‘wowed’ by the presentation.

“Also, the back-end has to run very smoothly. It has to be intuitive and friendly. You can save some money with off-the-shelf software, but make sure it is a friendly and easy to use shopping cart.”



Ankush Agarwal
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