Revenue Research Premium Content Preview: E-commerce

In this episode, I discuss e-commerce. I go over the different types of e-commerce, revenue generation, revenue ideas, problems, how e-commerce is different from art, expenses, revenue reducers, and my opinion.

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Transcript

Building an indie business, in the center of venture capital. I am Alex Edmonds, people on the internet, they call me supremerumham. And this is the building an indie business podcast, recorded in the indie business studio. Okay, so today I'm gonna be talking about e commerce. I'm gonna go over the types of E commerce, how ecommerce is different from art revenue generation, and an e commerce Store. Revenue ideas I have a lot this time, expenses, revenue reducers problems, my opinion. And yeah, that's it. So, let's get into it. The types of ecommerce, there's big brand. And so, big brand is like Target. Um, the consumers might think that big brand ecommerce stores or more, more reliable than the others. There's hosted. And so, hosted is. It's like if Target. Let a human Schuman, a person, create their own e commerce Store. Within target.com, and let them sell their own products, Right. And in this case, the person running the e commerce Store does not have to worry about coming traffic. Fun fact, and then they're self hosted and this is like Shopify or Gumroad or a stripe. What do you know. Um, so yeah, you're gonna be getting less sales, but more money per sale because there are less fees, versus a hosted store, right, because they'll get you the traffic but they'll take the fees for doing that, you know what I mean, you know what I'm saying over here. Okay, sorry about that. How ecommerce is different from Mark, I wanted to bring this up because I did, like, two episodes on digital art, and some people might be saying like, dude, isn't digital art, and E commerce, the same thing. No, it's different. You hear me. Sorry. Um, so, e commerce can be selling anything, PDFs, videos, physical products, and the products they have a price ceiling for our people will pay anything for. So, for example, Let's say I sell. I don't know, let's, let's say I sell a book right not that's a bad idea. Let's say I sell a t shirt. Right. So I have a T shirt, and T shirts are in the store right T shirts in the store for like $20 So, like the max, the price ceiling of my T shirt is like $30 because it asked me around the market level. My get my get price, right, or else people won't pay for it, art doesn't have a market price. People will pay anywhere from $50 to. Apparently, $69 million. You know, so, yeah. Okay, revenue generation. So there are several different methods that a ecommerce store will use to generate some revenue, get that traffic in have those people spend some money. And there you get your revenue. Okay, so the first way is SEO, they optimize their, their store content to be searchable on Google, and people find that stuff, And then they click on it and they buy it, you know what I mean. Okay, um, the next revenue generation method is email. So, they click on the store from Google. And then they buy it. They then you ask them to save their email, and then you take that email and you send them, discounts, and other things, or information about the store, right. And so then they come back and they buy more things. Right. And then also, you might just offer them a discount right away. And then they use that discount and they buy something then you keep their email. Right. And so the third revenue generation method is coupons, you're, you're given the you're taking their email, and then you send them coupons, because let's say you're selling something for $10, and that costs you $1 to make it to give someone a discount at $2, you're still making $6 and $6 is better than no sale, right. So, you offer them a discount. Okay. Um there's social media, too. Right. You, you take your, your links, your content and you post it on the internet. And some people click on that social media post, they go to the link. They might buy, and then you get their email, and you send them discounts. That's how you do it adds. So, here you have someone else, you can have someone else and influencer is the word I'm looking for posts about your products, and then they try to get their followers to click on that ad and buy something, then you get their email and you send them coupons through the email, the email. I don't have the email I don't do the email. It's not that email it's just email. Okay, sorry. I'm, I'm fully jokes today. Um, yes. Then there's also pay per click ads where you pay to have a banner on some website, and every time someone clicks on it, that's when you pay. And so they click on it, and then they go to the website, and then you offer them a discount to buy something or they just buy something off the bat, you know, it happens, it could happen to you. You know what I'm saying. Question You know what I'm saying. Actually, you might not, I'm being ridiculous episode. Um, yeah. So, pay for pay per click, you buy an ad on Google. And then what happens is every time someone clicks on it, you pay and it's per $1,000, and the minimum price I've seen for a series of 1000 ads is $5 Because it's five cents an adder right and then you pay for every 1000 Right, so let's do the math right now. Point 05 times $1,050 Sorry, I should know that this podcast is basically me just doing like basic math, that I should know off the top of my head. That's what I feel like, okay, revenue idea is generated. Okay, so I had a talk with Ross right, you listen to that talk, and I always talk to him I talk to him every day. And we talked about we talk about e commerce a lot. And so talking to him. I got some of these ideas. The first idea is a service to help optimize your store for sales, SEO, sign in other improvements, just like you pay these people, they come in and improve your store for like organic traffic. You know, making sure that your layout is optimized so that people don't leave the store because of the way you optimize, or the way you design it yourself. You just pay them, and they help you get sales right, and so that way you're not stuck with, I don't know a bunch of inventory or something like that, you're just using your store, the best way possible. Yeah, I would totally do this because, right, if they know how to optimize my store for SEO, bringing in free traffic, and I'm doing all those other things. That's great. Right. Yeah. And then also, um, how do I put this. So, I, I read in an article, and let's say, let's say 2015 That Legos have appreciated in value more than gold, or know that their price holds better than gold. Right. So of course, me. This is 19 year old Alex not not 25 year old Alex just to be clear, he went out and he spent $100 on forces solos 25 each. Right. But then there's some there's, there's a problem, right. I hate having to deal with shipping and handling. I hate going to the post Sophos I put in a stamp on it or whatever. I just hate packaging it up. And so these Legos, they have appreciated in value. One of them is like $70 Right, and the others are like 5045, so they've all increased in value right to the point where I'm okay to sell them all. Just as a bulk order. But that wouldn't require me to go to the store, go to the post office, package it up. And that's all thing. So, This idea that this, this issue, gave me the idea to like pay someone to handle all my shipping and handling, and someone can do that for E commerce too like you send them. Or no, they come pick it up. Right, you send them all the information, and they come pick up your Legos, and then they package it up they put the label on it they print it out. They do all that for you and you pay them for it. That's, That's something I would pay for, right. Come pick up my Legos, is what I'm saying. Okay. And then I thought of this idea too. So I'm, I buy things from random websites sometimes. And I'm also like, like, you can design your store for trust. Right. So Airbnb, they they built their website around trust, because they knew that staying in people's houses is very intimate and you need to build that trust. So, they, they design the store for trust, right, or their website for trust. And so some of these stores that I buy stuff from, they don't do that. So I don't trust their, their website, I'm like, Is my identity gets stolen, am I gonna get scammed. Right, so I thought of an idea to have a product that verifies if an e commerce Store is real. Just like not give it the the stamp of approval because that's like that, that doesn't matter. If you remember from the evil design book episode I said that, you can just put like any. Oh, this, this website is okay and people will believe it. I want real verification I want someone to like maybe a company buys a product from them and verifies like okay, this product is real, it works. Yeah, so it'd be okay if you bought something from there. And this is different from like reviews because reviews can be posted, no reviews can be faked. We've learned that from the Big A, write the big A, they let people fake reviews. So reviews on a website doesn't matter. Okay. Another thing I another IDI add was that you never know where your package actually is right. It just says, yeah, it's, it's in Sacramento, it's in Napa, and then it shows up to your house, like, two hours later, so there's there's room for improvement with the tracking of the packages, right. Yeah, I think so. And then there's also lost packet recovery. So, the, these, these postal services, they lose 1000s of packages. The same every month. Right. And some of that package content is very valuable. And I'm willing to bet that either the e commerce Store or the consumer is willing to pay to help recover that expensive package. So, there's a service right there. I don't know how that would work though because it's the last package and the tracking sucks. You know, I don't know. But I have ideas I don't actually pursue them in this case, and the revenue ideas category, let's say, Okay. And another thing was shipping I have a lot of problems with shipping, as you can see. Um, So, shipping, you know, they use roads, right, and people drive on those roads they go to work, they come from work, and I was at a company, let's say, I was at a company I was working at a company, and right by these companies. Companies Office. I'm coming home, or not know it, if you, if you were at that office on the way to the office at a certain time, you would see a bunch of trucks delivery trucks, you know, like, starting out their day. Right. And so that made me think, like, how much traffic is caused by people needing their Oreos, delivered in less than 24 hours. Right. And how much traffic and road space. Do those Oreos. Those overnighted Oreos, cause, Right. So, maybe someone should create a way to prevent these Oreos, from, you know, causing traffic taking up space on the road. And so the two ideas I had for this, were maybe using some like some sort of zip line. Because I know that these huge companies, these huge ecommerce companies, they, they use planes right. If I order something that's in New York, and I'm in California. That's 3000 miles. And they mean to get it here in three to five days, they're going to use a plane right. So what if they someone creates some sort of zip line. And instead of having it out on the road they use as a plant and they supplying it to my house or something. No, just like, you know, I don't I don't know what is it called, like those things. Oh no, it's exactly like this I can't remember the name of it, but they have it in Seattle, or in Spokane, and you go up on this little like cart ride, and you're on a wire. Oh cable car, a cable car. Yeah, so like, that's the same idea like as a cable car above, just above like my head. Stop taking up traffic stop causing me to be 10 minutes. I have to do, like, I don't want to plan out 10 minutes. Like I have to plan out 10 minutes before like instead of leaving at 730 I have to leave at 720 Because someone wants their Oreos in less than 24 hours Dude I don't that so I don't, I don't like dealing with that, right. Just give me my time back. I can't get the time back, right. So just give me my time. Let me, let me, let me do something for those 10 minutes right, let me, let me write, you know, writings productive. So instead of me having to get ready to leave my house for 10 minutes early, like, Stop causing traffic, and let me write that. That's my platform. For this, you know, let me write Oh, but I'm off the rails today. Okay. Um, yeah. So there's the zip line idea I had the zip line cablecar idea, you know from the airport to people's houses. But then you'd have to have a network that, like maybe, maybe have a hub for, you know, each, each neighborhood like you drop off the packages to one spot, and everyone goes and collects it from that one spot. And this is all, you're like, Dude, this is to prevent and traffic like your commute is now shorter, and it's all just because you don't have packages actually delivered to your house this hub is not on the road and you're saving the planet. Okay, and then also another idea I had was, like, to use public transit, right, so we have in the Bay Area we have Bart, and we have VT a light rail and they're like, like Bart is a train, it's Bay Area Rapid Transit. Yeah and it's a train, but VGA, it's like a light rail, so maybe like, you have an extra compartment that's locked, and you use that. Not like a car, right, like, like the cable car. Yeah, let's just call it a compartment, you have another compartment of people, but it's not people it's um, it's packages from the airport, or you know you. You put it on the top, somehow and like just you put it on the top and it rides, but then how do you drop that one off. I don't know their ideas, someone can pursue them. I hope someone Sue's this one, okay. Yeah. So then, another idea I had is because, um, now, let's just talk about the ad. So, people are always gonna want to feel and see something like something that they want to buy online, Like, maybe that's shoes or clothes or furniture. So maybe there's a service that's like a showroom for online items. I don't know, like, get to see a couch online, and you can't feel it or see it right so maybe you want to go to like some, some store and just like sit on it and see how it feels. Before you buy it, and then you get that item delivered to the house see them person get it delivered. Right. Yeah. Okay. And so my last idea. So there, I have all this packaging, right, like, I get books delivered and it's this horrible packaging, where I have to like struggle to open it up and it's plastic and it sucks. So I was thinking like what if there was an eco friendly packaging, and I'm going to talk about this a little more. But that's my last idea eco friendly packaging. Right. Okay. So, expenses, Jesus dude, it's 23 minutes and I'm. Wow, okay. Um, there's the platform fees. So, if you use Shopify or stripe or Gumroad, you have to pay for every transaction, not every transaction, but like to be on the platform, right. And then for Shopify, you can add plugins you have to pay for those, or they're built in to the feed that you pay them in or strange action fees. I always talk about transaction fees I hate him. I hate him 3% For every credit card, you know, those are super lame. So yeah, there's that. And then there's marketing. So, if you do need to pay for email, wherever you are wherever you're hosted, you might have a blog for your website, you got to pay for that. The ads, you got to pay for that. So marketing, basic marketing, right. Um, okay. Revenue ideas are revenue reducers, sorry. There's a shipping, so someone buys something, then you got to pay to package it up, you got to go to the post office, you got to go pay them. And that cuts on your revenue. Right. Okay. So I'm on Gumroad specifically, I know that if you, what's the word I'm looking for. If you. Oh, if you, if you don't charge for product, and it's a certain amount of megabytes, I think. So, if you try, if you don't charge for a product you make it like your lead magnet free, and it's under 25 megabytes, that's okay, but if it's 26 megabytes. They make you pay for, like, it's not free anymore they make you pay the monthly fee. Right, so that makes me think that other ecommerce platforms they have like they charge for file storage, some way or another. Right. Like, if I were to pay that, like that would reduce my revenue, if I had if I paid for that free thing, or for my lead magnet be, You know 20 If I add a paid Gumroad to have the lead magnet for free that would reduce my revenue right so that's a revenue reducer. Yes, okay. Those were the words I was looking for my final revenue reducers competition right and so when you. Let's say you do a hosted ecommerce store, you're competing with other people, right, so you're selling T shirts, and someone looks up, supreme rum ham on Amazon and five different people, five different options pop up, you're competing for that right. So, yeah, and then when you're doing a self hosted store, you're competing with the big guys, Right. So, when someone Google's supremerumham t shirt, you know, the big stores gonna pop up, and then your storage and a pop up like maybe at the end of the page if you're lucky. So yeah, yeah, you have to compete with. There's a lot of competition in E commerce, right, no matter what. A lot of competition and everything. But if it was easy to have in there one was the same. If it was easy. Every if it's easy everyone would do it right, so, no. Yeah, it could be worse, is what I'm saying. Okay, problems. So, I talked to Ross right, and he said his biggest problem was generating traffic right, getting people to show up to a store. And so that's a problem that I, you know, that I put down for this episode. Okay, competition, so I just said it like a huge problem is competition. So that's probably when I write this up it's, I'm going to talk about it once. Okay, getting people to come back. So, you know, I, I wrote a book. Right. And I'm going to release more content in the future. And they're unrelated, so I have my own ecommerce setup. And I wonder if people that bought my book will come back and buy my next writing. So, there are people that, let's say they sell a course, and they are, they have their course, people are buying it, and then they come out with the new course. Will people buy that new course, is that a problem they have. I don't know, that just. And also, like, I don't know, getting people to come back might be difficult for people that run ecommerce stores. That's all I have to say about that. Okay. So I talked I talked her us, And I got this idea from us. So I know that. Abandon carts is like a huge problem, and a bunch of people have solutions for them. That was one of the first things Ross told me he was like yeah, people keep putting stuff in their cart and then leaving. and so I gave him the idea to put coupons. So, but yeah, the, the coupons might not work. So you need more solutions to help you know decrease abandoned carts, or like, get them to come back and fill out their carpets or to fill their orders. Right, okay. So, this, this next problem is kind of related to the eco friendly packaging, I said I was going to talk about it more, right, so I've been a I've been tracking my carbon footprint and like everything I do that, um, you know, adds to my carbon footprint, and you know doesn't help the planet because I've been talking to David Shaw and I've even seen his tweets. That's why I've been keeping up with this. So yeah, if you're listening, you're the reason why I'm so yeah. And then they kind of like it hit me that everything in ecommerce, it adds to your carbon footprint, and every step like ordering your when you order your online and data centers, add to bad pollution, right, and then the actual item, you might be, dude. That shirt you're going to buy for $30. You're probably gonna wear it five times at the most, you don't need to be paying $30 for a T shirt, and then you wear that T shirt for five, you wear that T shirt five times and then they throw it away. And that, That's not, you know that's not environmentally friendly. I would say. So there's the ordering there's the item and then the packaging dude it's gonna come in this cheap plastic, and that cheap plastic is gonna get thrown into a landfill and just sit there and you know it's gonna break down and 500 years. And it's gonna go up in the air too and pollute the air, which is a huge problem, California. Right. So packaging. And then, like I've been talking about the delivery, right. Um, you know, it, it comes on a plane from New York and you have to drive it to my house. Yeah, that's a lot of a lot of carbon emissions is the word I'm looking for. So that's why I thought of like the eco friendly packaging, because it just like it's one less thing that, you know, contributes to climate change or not, but you know what I mean it like it's like one, one less gram or whatever, that's added to your carbon footprint. So yeah, yeah, yeah, that's, that's all I have to say about climate change. I stumbled through that. Okay. Finally, my opinion, You can stop. Listen to me after this fun stuff. Okay, physical products, take time, you know, packaging and shipping I've been talking about that a lot, and need to spend the money on them, right, that that shipping isn't free that packaging isn't free. These are revenue reducers right that's some and someone who isn't selling a physical product, you know what they're selling an e book, they're selling digital products, they don't have to deal with that because the products are their digital download and go. And so, yeah, I'm just, I'm a big fan of like digital products, let's just say, and I know that some people aren't. And I would, I would cater my store to those digital people, because it's less work with a physical product I actually have to hand ship every order, whereas I you know I make. It's, I want to do an e commerce Store, so that I can make money, kind of passively right like I send that email at four in the morning, and I get a sale, right, I'm asleep at four in the morning I'm not up, but with a physical product I actually have to actively do something to make money right I have to package it and go to the post office. So yeah, I don't know if that was an opinion that's there. Okay. And then speed, um, speed of the page matters I notice a lot of ecommerce companies they save millions of dollars by just creating are making their pages like point 001 second faster. Yeah, they speed up the page matters because if it takes too long to load people will leave. Right. Okay. Okay, this is the last thing I have to talk about I think now I have two more. Sorry, I don't know why I'm apologizing. Okay, so I thought a lot about this like, there's a lot of competition out there. And I think that personalization will win consumers in the future. So let me talk about that. What I mean by personalization is like personalizing, you know, a product for one consumer, right, so like I'm selling on T shirt, each consumer has the option to buy a red, blue, white, black, yellow, pink, orange, purple, t shirt. Right, and so I let them pick, and that's how it's personalized, in a way, right. Um, the little, the self hosted stores, they can't compete with big brands on price, or shipping right. There's no economies of scale for, there isn't. It's not as great as for me to sell my own T shirts, as it is for target right target as 30,000 of that one t shirt. I only can have what, let's say, 100, supremerumham t shirts, right, like they're they're able to reduce the price so significantly. And I, I can't reduce my price lower than like $20 Right. So, and then their shipping. They, I have to go to the post office and I'm, I'm at the mercy of the post office, and they're shipping. But target they ship their stuff there. Their products themselves like they can get there. Boom. They have their own stores to where, you know, they just go okay, he ordered this one shirt in San Jose. Let's take one of the shirts from the San Jose store and ship it to their house, and, you know, two hours, I can't do that. Right, so I can't compete on price and I can't compete on shipping. But what I can compete on is the product, right. So, this one element, I'm thinking of is personalization, like, allow the consumer to design their own product. And this would work like with decorations like like Christmas reuse. Imagine if a Christmas tree farm did a wreath, and they let people like design the boat, or pick the color of the bow, like, do you, What color lights do you want, things like that. You can do this with clothes or jewelry two big brands, you know they can individualize a significant amount of orders, but if I'm getting 30 orders. And they're all personalized, I can charge a little more, and just, you know, work on it. I don't know, I, I would be able to handle 30 personalized orders right, big brands can do that and that's where I can compete. Yeah. Okay. I think the value in E commerce is allowing consumers to buy items, they can't find in store, like an out of print book or vintage clothing, because for me it's a buy Oreos, online, dude. I live half a mile away from a store, I can just go get Oreos if I really wanted them, but like, like my books, some of my books are actually out of print, and I can't get them in store, or they're not at the very least they're not selling in a store so I have to go find them online. Right. And I have, I have a Yankees hat from their 2009 World Series. Um, I can't find that anywhere else if I wanted to get a new one or like, give my nephew, that same hat, and we have matching hats, I'd have to find that online. Right. Okay. Um, last thing I have to say is that many people refuse to buy,