Management & Finance

Lessons Learned: Candle Retailer Regrets Custom Shopping Cart

“Lessons Learned” is a series where we ask ecommerce business owners to share their experiences. For this installment, we visited with Logan Suttman, CEO of Black & Light Co., which sells candles that glow from top to bottom when lit.

Black & Light home page.

Black & Light home page.

Suttman’s mother started the business in 2007, having retired early from a long teaching career. The business is small and Suttman is its principal employee. Gross sales in 2008, the first full year, were $30,000. Sales grew to $45,000 in 2009 and, according to Suttman, 2010 sales are on track to double 2009 levels. Black & Light’s headquarters are in Northern Michigan. It maintains an inventory of roughly 100 SKUs.

Logan Suttman

Logan Suttman

“If Black & Light Co. were ever profitable enough to become a primary income for me, I would have no problem accepting it as a full time job,” says Suttman. “I love the ecommerce business, and I hope that the future finds a space for me to continue evolving with it.”

The company sells almost exclusively through its website, which is custom-built and Flash-based. A small portion of the company’s sales come from wholesaling its products to brick-and-mortar retailers. The custom-built site (and cart) is a source of much frustration for Suttman, and he elaborates at length about it, below.

Suttman holds a degree in Anthropology-Zoology from the University of Michigan. But he calls the ecommerce business, “the greatest learning experience of my life.” His lessons from that experience are below.

Shopping Carts

“A lot of our ‘mistakes’ can be traced to the tech company we used to launch our website, which is now defunct. Go figure. We were referred to them because they were supposedly the best in our area and after quite a bit of research, including input from my dad’s friend who has started two Fortune 500 companies, they passed the inspection.

“They pitched us a Flash-based website based on the language called Flex. We did not initially realize that none of the programmers working for this company actually knew the language and in the end found out we were paying them to learn this complex code, and paying them a lot.

“Since we are an online retail company, garnering roughly 90 percent of our business through our own retail website (the other 10 percent wholesale) we required that our focus be on creating a searchable, sustainable, efficient platform that would essentially allow us to run the business from the sideline.

“Also, after paying them an exorbitant amount of money we were left with a backend that was completely custom and in no way hooked up to the fulfillment center which is what we actually wanted. A family friend came up with a band-aid approach that gave us a working shopping cart and back end.

“Were we to build the website all over again we would certainly go with something different. With all of the great shopping cart services out there, there is no need to reinvent the wheel.”

Credit Card Payments

“We use Authorize.Net to secure all of our credit card payments. We’ve never had an issue processing cards, nor setting up our SSL certificates on the checkout page. For wholesale orders that were not rung in on our website, but taken over the phone, we were able to manually process credit card numbers using Authorize.Net at little-to-no hassle. The only problem with Authorize.Net is that they require you to change your password every quarter or so, and we’ve forgotten to pass along the new login a few times, which can be tricky if you’ve disabled it by trying the wrong name more than three times.”

Order Management

“Before our family friend completed work on our back-end, we were processing orders ourselves. Later we outsourced our fulfillment to the most wonderful place in the world, Grand Traverse Industries, which employs mentally and physically challenged adults. I can’t say enough good things about the people we work with over there.

“Through hard work we were able to set up a fulfillment station at their warehouse and have been processing all orders through GTI since last summer.

“Ideally we would like our packing slips and UPS labels to print automatically when an order is placed. But for now, printing manually has been working just fine.
We looked into machines that will do the ‘all in one thing’ for you. But at this point it is an unnecessary expense.”

Hosting

“We bought two servers when we started Black & Light Co., because the tech company told us to expect a ton of traffic and we’d need them. Boy, were they wrong. We let them use our servers to store all of our information and handle the web traffic, but if we ever had a problem with the website, they were never around to fix it in a timely fashion, and their attitudes were terrible. The situation was ridiculous considering the amount of money we paid these guys over the course of two years.

“Our servers are now hosted by two great guys out of Traverse City and things have gone smoothly with them. If we had to do it all over again I am sure we would use one of the big boys, like Amazon.com, to host all of our stuff and save the $40,000 it cost us for two personal servers.”

Employees

“We started out with 4 employees. My dad, having started several businesses before, found it necessary to have this many people around because our tech company promised us that the traffic our site would generate would be enormous. Not the case.

“We quickly realized we were overstaffed. We would have loved to keep everyone but there just wasn’t enough for him or her to do. My dad quickly realized that starting up an online business was totally different than a brick-and-mortar business.

“If I were starting over again I wouldn’t hire anyone until we absolutely had a position that needed to be filled. We are able to run our company with essentially 1.5 people, plus the wonderful folks at GTI who fulfill our candles. My personal opinion is that outsourcing (locally if you can) is the best way to start your business. In our case, it actually ended up being cheaper than running our own office with our own employees and I think that many others in the online retail sector would agree.”

Search Engine Optimization

“What a joke. Our website looks phenomenal and is, for the most part, user friendly. But is the most poorly optimized online retail site for search engines I’ve ever come across. This, of course, is based on one fact: We use Flash.

“Our tech dudes told us that Flash was the wave of the future and that Google and Yahoo! would be able to index it better than HTML and PHP by the end of 2008. They were wrong.

“Google still can’t see a darn thing behind the front page of our website: no product landing pages, no company info, nothing. Getting our ranking on Google was priority number one when I started with Black & Light Co. I was taught that garnering a significant number of links was the best way to improve ranking, along with optimizing the website. We quickly found out that we couldn’t optimize the website because it had been coded in Flex, so inbound links were our best option.

“Over 50 bloggers, a dozen newspapers, several magazines, and others have linked to our website. These are numbers others, including our sister company, can’t even touch. However, our sister company routinely ranks higher on Google because their site is HTML/PHP based, and we have a Flash site.

“If I were to rebuild the site I’d choose HTML in a heartbeat. Although our website looks nice it is almost impossible to change anything on it and we are dead in the water because Google can’t index it properly.

“I this a major factor in our business failing to take flight like we thought it would. Horrible mistake.”

Marketing

“We’ve done pay-per-click advertising in the past, using Google AdWords, Facebook ads, and several other local sites that don’t exist anymore, with little to no success. We probably didn’t do enough research into correct keywords. We spent several thousand dollars on Google AdWords that got us two sales total.

“Email marketing has been our best tool with over a 3 percent conversion rate. In the holiday season it jumps to almost 7 percent. Our lists are confidential, but consist mostly of past customers and others who have visited our site. We use Constant Contact and we love it. I design and execute all of our email campaigns so I get to see all of the stats and I am a firm believer that this is the best way to market by far.

“Social media marketing has also done very well. We’ve been using Facebook and Twitter for over a year now and have seen a surprising number of sales from various pitches we’ve done on those sites. I’ve run spur of the moment sales on Facebook and Twitter that garnered sales and took less than five minutes to create. I wish I had more time to devote to both of these sites, because I truly believe they hold more power than any other advertising source out there. As you can get followers, it significantly decreases your need to advertise online.

“We also are connected with a fantastic network of bloggers who have received our candles and written reviews.”

Shipping

“One of the great successes we’ve had is offering free shipping on quantity purchases. This change, in November 2008, immediately spiked our sales. Shipping a single candle costs roughly $8.00 to $10.00; offering free shipping on orders of 3 or more candles significantly increased sales.

“Besides, it seems like everyone is doing it. And in the online world if everyone is doing it, it probably is a good thing.

“Getting a bit philosophical, while I’m on that point, here’s something I’ve learned. With brick and mortar retail you absolutely want to set yourself apart visually. In the online world being different is almost never a good thing, in my opinion. People expect certain things online. They want to be assured that their credit card or email information isn’t being stolen so they like to see things like Google Checkout and secure site links – and preferably the same ones everyone else has.

“Likewise the shopping experience should similar to larger sites. Small online stores can set themselves apart through their product delivery and customer service. When we sell someone a candle, the first impression they get of us is when they open our shipper boxes.

“We proudly created one-of-a-kind packaging that is a gift in-and-of itself and we consistently get rave reviews based on that factor alone. We focus immensely on customer service, handling each call and email with the utmost care and concern. I feel confident that, although sales aren’t what we expected them to be, our customer service and ‘the little things’ are certainly not the cause of that.”

Inventory Management

“We are still going through inventory of several years ago, from the initial runs of our ‘Polka Dot’ candles, based on the promises our tech guys made about the massive amount of traffic we were supposed to see on our site.

“Luckily candles don’t go bad. Our most popular candles, the ‘Inspirational “Collection,’ are ordered on a case-by-case basis.

“If I could start all over again I would wait to see our traffic first–unless our parent company required a bulk order. Our lead-time for candles is less than a week. So even if someone placed an order for a candle that was out of stock, we’d still be able to get it to them by the end of the second week following their order.”

Accounting Software

“QuickBooks is not hooked to our platform so it can’t automatically update inventory. Linking your accounting software to your backend is essential. My dad has spent too many pointless hours adding and subtracting inventory when it all could have been done automatically had we shopped for the right software.”

Expense Control

“Expense control has been a very large problem for us, historically. Many of our ‘start-up’ costs could have been avoided.

“We didn’t need a big office with several employees (although it sure was nice and convenient). We didn’t need a cleaning service for the office; we didn’t need to order several thousand candles for our first order; and we didn’t need to have fancy office gadgets such as plasma TVs, super printers, and a dozen other gizmos that we don’t use today.

“The largest cash flow mistake we made was hiring the wrong tech guys, buying our own servers, and building a completely custom retail platform. We could have saved over $100,000 just buy buying existing software to see how well our products would sell.

“Now our expense control is phenomenal. We outsource almost everything, which saves us big time. Instead of paying employees, we indirectly employ the fine folks at Grand Traverse Industries (our fulfillment center) and Bullfrog Light Co. (where our candles are hand-made).

Customer Service

“When you’re small, and especially a startup, customer service can make world of difference. This is something I believe we could not have done a better job at over the past three years.

“We have a 99 percent positive review based on our response cards sent with every candle. Ratings come from areas like timely delivery, package presentation, and, of course, the candles themselves.

Biggest Mistakes

“Our biggest mistake and our most regrettable expense has to do with the design and handling of our website. We hired the wrong company to do the job and spent so much money only to have a website that did three-fourths of the stuff it was supposed to do. In addition, we hired several companies to help us ‘fix’ the website by rebuilding it in HTML but none of these ventures ever worked out, and we only ended up losing more money. In retrospect, we should have rebuilt it from scratch. We could have had a halfway decent HTML/PHP website built within two weeks and have it attached to our custom back-end. We just ran out of money.

“We also didn’t need to purchase two giant servers to host our site. There are dozens of other companies available that will host your site for beans. We’ll never recover the cost of those servers.

Biggest Successes

“We’ve had a lot of challenges but we’ve had a lot of successes, too.

“In 2007 we partnered with U.C. Davis and its ‘Save the Honeybees’ program. We currently donate a portion of the proceeds from our ‘bees’ candle directly to U.C. Davis and will soon have a plaque in its new bee sanctuary this summer.

“In November 2008, after the creation of our “Inspirational” line, our most popular line, we donated several hundred candles to the Airline Ambassadors International (AAI) global compassion ball. We donate a portion of proceeds from the inspirational candle collection to AAI and their efforts to help fight child and family poverty across the globe. The partnership has helped fuel the popularity of the Inspirational line of candles.

“Over 50 blogs have reviewed our candles and continue to do so. I’ll have at least five more blog reviews by the end of this week. We’ve been published in Midwest Home, Traverse magazine, The Dallas Post, Houston Chronicle, Palm Beach Post, Atlanta Journal, San Francisco Chronicle, and many others.”

Practical Ecommerce

Practical Ecommerce

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