Lessons Learned: 3tailer Co-Founder Jon West

“Lessons Learned” is an occasional series where we ask experienced ecommerce merchants about their mistakes and successes. For this installment, we asked Jon West, co-founder of 3tailer, a niche firm based in Charlotte, N.C. with over 50,000 individual products sold on 17 websites. West and Chad Ledford, the other co-founder, started 3tailer in 2005 while studying at Appalachian State University. Since then, 3tailer has grown enough to garner over $1 million in annual revenue, relying on inventory suppliers to drop-ship all of the sales. Here we give you West’s experience and suggestions.

Jon West of 3tailer

On General Business Strategy

“Create systems that scale for each facet of your business. How will you handle support? How will you handle returns? How will you handle an influx of traffic? Architect your business in such a way that processes are automated and protocols are defined. Work hard. Play hard. Be patient. Be hungry.”

On Third Party Business Resources

“Third parties can be a valuable asset to a young business that may not have the resources available to have everything in-house. We try to have as many costs outsourced and variable as possible, such as our accounting and payroll. Outsource distractions that aren’t really your core competencies so you can focus on what you’re good at.”

On Shopping Carts

“There are a ton of options out there. Your choice will vary depending upon your budget and how tech savvy you are. For some people, Yahoo! makes sense, while for others a self-hosted solution works best. Fortunately for us we’re familiar with Internet technologies, so we chose to go with an open source foundation and then add custom code on top of it. Our platform has proven to be pretty flexible and scalable, which is essential to any niche online retailer with multiple sites.”

On Hosting

“In the beginning of your business you can usually get away with cheaper shared hosting solutions. Make sure you have a plan to switch to dedicated or managed hosting once it becomes necessary. It’s hard to win business with a website that’s slow. It’s also hard to utilize social media sites and grow your traffic when you’re worried about your hosting stability.”

On Employees

“Take your time and look for red flags. Slow to hire, quick to fire.”

On Marketing

“We currently market just online, so it’s key to get everything working in harmony: search engine optimization, pay-per-click advertising, multiple channels, affiliates, email marketing and branding.”

On Pay-Per-Click Advertising

“Google is king, Yahoo! is not really worth it, MSN converts well, but because it’s so easy to rank organically it’s usually not worth the effort. Get PayPal and Google badges if your site qualifies. There are a lot of little tricks you can do to boost your click-through rate and conversion.”

On Search Engine Optimization

“This is our bread and butter. Design your website with both customers and search engines in mind, and you’ll usually come out a winner. Avoid the temptation to trick search engines. Have a long-term strategy. Build good links. A lot of people will just do something to trick a search engine. Have good content, unique title tags, have descriptive URLs with dashes, and it’s good to be in some relevant directories.”

On Expense Control

“Make your business as lean as possible. Negotiate your merchant rates down, use less electricity and save everywhere you can. A hands-on accountant is useful as well.”

On Order Management Software

“We don’t carry inventory and we rely on our suppliers to ship products directly to our customers. We currently just use what’s built into our websites, an automated backend. It just seemed to make more sense because we don’t have a warehouse and don’t manage inventory.”

On Shipping and Order Fulfillment

“We utilize strategic suppliers who handle this for us. Suppliers who send out automatic tracking numbers and have a transparent order fulfillment system are key. Build strong relationships with your suppliers.”

On Credit Card Payments

“Accept as many forms of payment as you possibly can. We currently accept Visa, MasterCard, Amex, Discover, PayPal, Google Checkout, wire transfer, checks and cool T-shirts. Also, be very wary of your credit card processor. Searching around online for the lowest rate can get you into trouble. Make sure your processor is offering you split rates (credit and debit), and ask what your mid-qualified and non-qualified rates are as well as your qualified. Concentrate on getting the former two as low as possible because most online orders will be mid-qualified. Depending upon your volume, you have lots of wiggle room. Do not do any large international orders by credit card; just wire transfer or certified check. Chargeback fraud is extremely scary.”

On Social Media

“Utilize it as best you can. It seems obvious, but a lot of people miss the point—be social. Make friends and help them out, and they’ll return the favor. Our favorite sites are Digg, Reddit, StumbleUpon, Mixx, Propeller and Sphinn. Each of our ecommerce sites has a blog on it, so we see what kind of whacky story you can put on a blog. Digg has really cracked down on commercial sites, so it’s better regulated the others. We have a hookah website, so we did a blog post on smoking tricks. Social media for us is more about links than anything. We have a couple different Facebook pages and groups. Each page took only an hour. Once the initial set up is done, it’s just there, and it just keeps going.”

Brendan Gibbons
Brendan Gibbons
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