Getting Started: E-Commerce


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Getting Started: E-Commerce

Postby Charles » Jun 24th, '10, 08:36

"E-Commerce" is the second installment in a series of articles on getting started in the tea business on a shoestring budget.http://www.tearetailer.com/article_70.html

"E-commerce Q&A" is the first in a series of articles answering common questions regarding selling tea online. http://www.tearetailer.com/article_105.html

"Launching for $10K or less" covers how to get started on a shoestring budget and what you'll find when you get there. http://www.tearetailer.com/article_106.html

Would love to hear your thoughts, and especially any stories of success or failure creating and implementing E-Commerce strategies.
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Re: Getting Started: E-Commerce

Postby jazz88 » Jun 24th, '10, 19:14

Some good advice and a pretty fair assessment of the subject.
I have to preface my comment saying that when I don't drink tea I do websites for a living, including e-commerce. Here are my 2 cents:

• Service wise "good" "fast" and "cheap" and you can only pick 2 is very true.
• you might want to read my article "What determines the cost of the website" http://www.antemeridiemdesign.com/blog/ ... a-website/ or look into other client advisory articles.

• familiarize yourself how web looks in 2010 Your site might not win design awards but is has to look professional. CartedUp gallery features some of the best e-commerce sites. And there are of course others.

• What if you are a small vendor don't have a large budget? The first thing you should have is a marketing plan. Do not think that your cousin's friend who took some classes in a community college can make you a fine website. And no, you can't do it yourself either. Think of your website as an investment as opposed to an expense. Look carefully at portfolios of different companies, hire people you like working with!

And finally if you have a question feel free to pm me.
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Re: Getting Started: E-Commerce

Postby SkiboTeaHouse » Nov 11th, '10, 06:39

Start up costs- after reading your article i have to say i am glad i jumped into the website before reading it.

I would have had a heart attack reading the numbers. I do agree with most of what you are saying, especially the "you better have enough money for 6 months part".

In my opinion that is the biggest commitment that a person makes. At that point you have put all of your eggs in one basket but it will take months for traffic to build and to find those magic AdSense words.

With little or no orders to fill you are stuck blogging, posting on FB, Twitter, etc. but the stress would drive anyone insane.

My family and i just launched our online tea store (a long time dream of mine) and although i wanted to quit my job and focus on tea 24/7 i decided to stick with my job (flexible hours, great pay) and at least wait until we made some sales and gained some traction.

Initially i wanted an interactive "Second Life" type of website and when i found out the price tag i almost fell off my chair. It was more expensive than opening a brick and mortar shop!

Right now i am banking on making a great first impression, giving out samples and counting on word of mouth. At this stage thee is no way i can compete with the big boys. I just need to find my niche and focus on developing loyal customers.

Thank you for sharing all of your insights.
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Re: Getting Started: E-Commerce

Postby gingkoseto » Nov 12th, '10, 11:55

Great article! I can't say I can afford following all the advice, but I've learned a lot from Charles' article and it's good to be aware of a lot of things mentioned in the article. I have a couple of tea friends who once got into tea business but then backed out soon. Soon after they started it, they realized loving tea doesn't always make it easier for them to do tea business.

My stand is somewhat similar to that of Skiboteahouse (but I think Skibo does much better on website than I've done :D ). I run my tea business on part-time basis and very small set-up, because I don't want to carry much stress of having to make certain profits or paying back a loan. At initial stage, not suffering much from financial loss already means success to me. Besides, I love my day job too and don't think it's totally irrelevant to tea :D Like Skiboteahouse, I mainly rely on giving samples and word of mouth and I agree that finding a niche and gaining returning customers are very important. There are so many different types of tea and tea wares. Most tea drinkers shop at multiple stores and each store has a unique collection of tea.
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Re: Getting Started: E-Commerce

Postby jazz88 » Nov 12th, '10, 13:44

As a tea drinker I would like to support smaller online vendors and try their product but in reality I have never actually done it (so far). Mostly because when I come to such low budget websites they look very generic and as a tea lover I don't see why exactly I should buy from them and why they are different/better than anybody else.

In my experience many startups come to designers/developers utterly unprepared: they don't know their budget, # of products they will be selling, have not thought about shipping, taxes, etc. Instead they often have a huge wish list of fancy interactive features and when they find out the price tag they sometimes "fall from the chair".

Before you ask a design/development company for an e-commerce site estimate you should:
• know how many products/product groups you will be selling
• have a reasonable/realistic budget (if you want to know specific numbers feel free to pm me)
• understand that any additional interactivity = more expensive
• text/copy (such as product descriptions), taxes, shipping, return policy - is your responsibility.
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Re: Getting Started: E-Commerce

Postby SkiboTeaHouse » Dec 17th, '10, 16:59

GingKoseto- Thank you for the compliment, my sister will appreciate it.

I believe that anything is possible and being an entrepreneur requires the ability and skill to come up with solutions given a set of limitations. With a website the biggest limitation is knowledge of what it takes to set up and run a website.

As with any business venture despite the best research there will always be "surprises" that you did not read or hear about from experts or friends.

Jazz shares some basic information needed to get a realistic quote, while that is a good rule of thumb it still does not prepare you for what it really means.

While i searched for a potential web designer i had all of the info needed (how many products, categories, info pages, etc.) and it was still a hurdle to convey my vision of what i wanted my website to be (not for lack of communication skills or inability to put to words what i want). Bottom line was that i needed my designer to understand my product to truly create what i envisioned.

Ultimately, people need to find a way to do it so that the final product is something that you can work with. If that means sketching each page then so be it. Otherwise you WILL end up with a generic website that lacks warmth and your personal stamp and it will make it very hard to get that "niche" that we are seeking.

What i really wanted to share is that we should not dismiss our own abilities to create what we want.

Jazz warns against using a friend who took some community college classes because he/she will not make the cut. I have to respectfully disagree, especially amongst tea drinkers.

I am biased but i do believe tea drinkers are intelligent and have greater skills than the average person. I decided that i would rather have my sister who has ZERO web design experience (she is a genius- literally) take ONE class and create our website than spend 3 thousand on an average designer.

As i said before she re did the design 3-4 times until we were happy with it and she continues to make small improvements. More importantly because she is part owner and understands the product it has allowed me to focus on the product, shopping cart, customers and marketing.

I just want those of you out there who have a dream to know that it IS possible. I am very possessive and would not have wanted to raise capital and allow others to have control over the business. I also did not want to wait yet another year to sell tea.

This is how we do it for now and each week we grow a little more and introduce someone else to our tea. Everyone who tries our tea loves it and wants to start their tea love affair right away.

As always, i welcome your ideas and comments because i know it will help SkiboTeaHouse.com to improve and provide better service to customers.

I love introducing people to high quality tea and educating them so that in the future they appreciate a good cup of tea.
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Re: Getting Started: E-Commerce

Postby Tien » Jan 24th, '11, 12:38

Sorry for joining the discussion this late.

Although I'm at the beginning of the process of setting up my own online tea shop, I immediately learned something invaluable: never be afraid to ask for help. At worst, people will ignore you. And at best, people like Charles Cain, Jazz88 and others will offer generous advice fueled solely by their passion for tea. So first off I would like to say thank you all for your time.

When I initially wrote Charles for advice, I made one thing clear: I want to start with my two feet planted firmly on the ground. Although I do have grand ambitions, there's simply no way to know whether your vision will win your target demographic over. As such, here is a general outline of my vision:

What: limited qty, designer tea tins
Value proposition: without forsaking quality, main focus is on design (packaging, wording, website)
Customer Segment: 18-35 yrs old demographic.
Channel: web store
How: 2 blends sold initially, moving with future iterations when/if the limited quantity is sold off

I welcome any feedback/criticism, and have a follow-up question of my own:
1- In speaking with another tea entrepreneur, he mentioned the importance of packaging your tea in a restaurant-grade kitchen that is inspected. Charles, are there any official rules/laws that smaller vendors should abide by concerning this?
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Re: Getting Started: E-Commerce

Postby Charles » Jan 25th, '11, 20:55

Tien, as general feedback to your strategy, let me play devil's advocate. If I'm a tea drinker and I come across a website that offers two teas, what are the odds one of those will appeal to me? And if they don't, what are the odds I'll EVER check back to see if you're offering something new? My time is valuable and my attention span is short. With hundreds of tea websites to choose from, why shop on a site with such a limited selection. Aside from the narrow appeal, that doesn't convey credibility.

On your question about packaging: if you are opening and blending or packaging food product it is SUPPOSED to be done in a facility approved for handling food by your local health department (at least this is true in the US). The truth is that I know quite a few small tea businesses that break this rule and just assume no one will ever come after them.

The solution is pretty easy. Make friends with a restaurant, bakery, or even a local church. Chances are there are "off hours" when you can borrow space for a few hours every so often. It's probably a good idea to set this relationship up whether you use it every time or not. Of course my advise is to play by the rules at all times. :)
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Re: Getting Started: E-Commerce

Postby Tien » Jan 26th, '11, 12:34

Thanks for the feedback Charles.

What mostly motivates my decision to start with 2 products are the financial constraints. A good online storefront, relevant brand, solid design and quality of teas. These are the basic criterion I want to reach and they all require proper allocation of investments. Starting out with a limited offering is also a way for me to test the waters and see if the market within my target demographic is viable. I remember an earlier post of yours that warned that with fewer $ at your disposal, things need to be done right very early on. Starting with fewer offerings allows me better control over the end product. Your advice doesn't fall on deaf ears however and I'm currently revising plans to maybe push that number up to 5. Your thoughts?

Would you also be able to give examples of your early days dealing with online issues at adagio? Namely, how did you decide which products to offer and how did you determine your target demographic?
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Re: Getting Started: E-Commerce

Postby Charles » Jan 26th, '11, 13:18

Tien, I'd refer you for starters to one of the first articles I wrote for TeaRetailer: So you want to sell tea online http://www.tearetailer.com/article_4.html. My question is, what is your hook? What would make the customer choose you over Adagio, Rishi, and others online. The flip side that you have to consider is what might make someone AVOID you. What would cause them to question your credibility?

As for the number of teas as it relates to your investment, inventory is a pretty small piece of the total investment puzzle. This is not a recommendation, just an example... Let's say, for argument sake, that you're paying $10 to $15 per pound for tea. Buy 10 teas total. Eight single estate teas: 2 white, 2 green, 2 oolong, 2 black. Then buy two tea bases for blending, one black and one green, and a handful of different inclusions for creating blends. For $250 you should be able to come up with a collection of 20 teas without much difficulty. All you need is 3-4 2oz packages of each to get started.

But seriously, if you can't afford more than $250 worth of inventory you should probably not get started yet. A $1,000 budget for inventory would be plenty to offer a collection of 50 teas. Heck, you could just buy 50 existing and proven teas/blends from a wholesaler. All you need is a bag to put them in and some stock labels from an office supply store.

A decent wholesaler can tell you what the best selling teas are. From there, it depends on your niche. There is no right answer to target demographic. If you go after the same exact demographic that works for an existing retailer you'll probably have some trouble gaining traction. :)
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Re: Getting Started: E-Commerce

Postby Tien » Jan 30th, '11, 16:13

Charles, thanks for the insight.

To be perfectly honest, I've had a hard time answering your latest question concerning differentiation in a satisfying manner. What would make my offering differentiate itself from existing and thriving retailers like Adagio and Rishi? An obvious but often underestimated question for most tea startups, I realize.

My initial reflex was to fall back on design (brand, tin, marketing msg), which I've already stated was an aspect of my startup I intend to emphasize. Indeed, I think that this is something my target demographic (18-35, affluent, narrative inclined) is sensitive to. I haven't based this on any solid empirical research. This choice mostly comes from the fact that I belong to this demographic and that I am filling a gap undeserved by most larger retailers. In other words, a boutique destination with a curated set of teas.

But I also have doubts about whether this is strong enough an offering to answer the need of this targeted segment. My goal is not to compete with larger retailers through quantity, though I may emulate quality. Rather, It's to reach that smaller group that is interested in a tea experience from the inside out.

Let me also attempt to describe the group towards whom my effort is not directed to: Connoisseurs. Best left to the Adagios of the industry. I deeply respect this segment's commitment to tea and do not entertain any illusions that I could win them over with any particular story. One of your articles on high-end packaging stated that for this particular group, one should skip the marketing part and just describe the tea and its origin. I agree.

I may be wrong but I would argue that differentiation is always found in the details. What makes an a shoe purveyor different than another? Adagio different from Rishi? The basic, logical answers would be quality, selection, etc. but these are claims that can be made by either side.

It's a long post for which I have lots to say but little to show, unfortunately. But I'm working hard to come up with an initial set. In the meantime, I am very grateful for all the support I am getting.

P.S. Where can one purchase bulk flavoring agents (oil) for blends?

Cheers!
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Re: Getting Started: E-Commerce

Postby Charles » Feb 4th, '11, 14:25

Tien,

I believe if you look closely at the brand position of prominent online companies like Adagio, Rishi, Teavana and Harney & Sons you will see pretty dramatic differences. Those differences are reflected in the core customer bases of those companies.

A customer standing in the tea aisle of a grocery store - even a premium grocery store like Whole Foods - purchases primarily on price point and packaging. On these aisles, marketing presentation is king. Online, brand presentation is critical, but is secondary to credibility. Credibility can come from story (Rishi's site is covered with pictures of the owners working with the tea in the origin countries), size (Teavana and their 160+ stores), customer service (Adagio's 50,000+ product reviews and industry leading service ratings), etc.

The biggest question for you and anyone else looking to get into the game... why should/would the customer buy from you?

A quick search online will yield quite a few companies that sell flavoring agents.
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