Spinning the Web
GROW - MAY/JUNE 2013
Online retailers and big-box stores have long dominated the Internet marketplace. Now, small businesses are getting their piece of the pie—and you may be surprised who’s making money online.
By Bridget Gamble
While it might seem that most Main Street operations like restaurants and dry cleaners are limited to their neighborhood client bases, small businesses like these are lassoing customers across the country with one simple tool: an online store.
“Almost every small business has something they can be selling online,” says Stephanie Chandler, author of Own Your Niche: Hype-Free Internet Marketing Tactics to Establish Authority in Your Field and Promote Your Service-Based Business. Even hyperlocal businesses can benefit from setting up shop online, whether it’s enabling patrons to make reservations or providing a place for customers to ask questions and share comments.
In 2011, 24 percent of small firms conducted e-commerce, according to the Small Business Administration. Still, a majority remain isolated from selling online, despite facing little competition from their local peers. Those resisting e-commerce, according to a 2010 Discover survey, attribute their decision to a lack of customer demand and insufficient time and money to create and maintain an online store.
MyBusiness spoke with small business owners who have proven that monetizing the Web can be easy, inexpensive and, most importantly, worth the effort. Here’s how they did it.
Think Outside the Folder
When NFIB members Jonathan and Robbin Rose started a community chorus in Missoula, Mont., in 2001, they didn’t realize their passion for music would kickstart a new business.
“We came to our first rehearsal on Sept. 12, rather shell-shocked after the Twin Towers disaster,” says Jonathan, who at the time was a production coordinator at a manufacturing firm. “There was such a need for community. We were expecting about 25 or 30 people, but 125 showed up.”
Immediately, the Roses realized the chorus’ greater-than-expected needs and began researching the cost of music folders.
“I found out that ordering folders from a factory overseas would cost about 25 percent as much as buying them from a [domestic] online company,” Jonathan says. There was just one catch: The minimum quantity they could order was 1,000 folders.
After consulting with the choir’s board of directors, the Roses decided to purchase all 1,000 folders, keep 125, sell the remaining 875 and donate the proceeds to the choir. With the help of a Web-savvy friend, the Roses set up an online store. Almost overnight, they watched their supply sell out. After ordering another 3,000 folders, they saw a similar sellout and began to receive calls from well-known band directors looking for custom-made folders.
They ran with the idea. With initial input costs around $11,000, the Roses started MyMusicFolders.com. The website has since expanded to selling choir robes.
“Our music folders were a sideline business run by Robbin until 2008, when I left [my job] to help her run the business,” Jonathan says. “It had more upside potential.”
As incredible as the Roses’ story may be, opening an online store doesn’t have to lead to a brand new enterprise. In fact, plenty of small businesses have found ways to expand their livelihood and leverage the Internet in unexpected ways to sell the products and services they already offer.
Broaden Your Customer Base
A small business that already has a community base can increase its revenue by taking advantage of online prospects. That’s what NFIB member Merry Bauman intended to do in 1998, when she enlisted her son and son-in-law to build a website for her family’s wholesale and retail winery, Wyldewood Cellars, based in Mulvane, Kan. Prior to creating the website, the winery’s sales came entirely from local retail and national wholesale revenue.
“At first, the website allowed people to just look us up online and phone in orders to our store,” Bauman says. “Then, more and more people expressed a desire, via our online feedback forms, to have the option to place orders directly on our website.”
To create an online retail store, Bauman worked with a local Web developer. “We shopped around and checked out the references and websites they had developed” to find the most reasonable and reliable developer, she says. Since its creation, the online store has been redesigned four times; the most recent update costing about $3,000. The company spends approximately $2,500 per year on website maintenance.
Bauman estimates that today, out-of-state retail orders constitute 75 percent of the winery’s online sales. Even Canadian consumers have expressed interest in purchasing from Wyldewood Cellars, but Bauman says conflicting liquor laws are the only barriers to exporting her wine to foreign soil.
“Online sales are still a small percentage of our overall sales, but a valuable one that is growing over time,” Bauman says. While wholesale and three retail stores currently generate more revenue for the winery than its online retail store, Bauman says the latter now rakes in about 20 percent of the winery’s total revenue.
Not to mention selling online will be crucial when the Internet becomes the No. 1 shopping preference of consumers. Last year, online shopping accounted for $226 billion in sales for U.S. businesses. (And don’t think that all goes to big business—$5.5 billion was spent online with small retailers during “Small Business Saturday” last November.) Also, experts predict that the popularity of smartphones will give way to more mobile shopping in years to come. For those reasons, Bauman considers the store a worthy investment.
A Continuous Sales Pipeline
An online store can increase sales not just by reaching out to a wider market, but also by providing your existing customers with unique and round-the-clock purchasing opportunities.
Brown Bear Car Wash, for instance, operates 49 locations in Washington state; most are open between 10 and 11 hours each day. But before and after hours, customers can buy car wash packages, car accessories, and Brown-Bear-branded water bottles and coffee mugs online.
“[Selling online] is an easy revenue stream that we as a business can preserve, regardless of what the weather’s doing,” and what time of day it is, says Steve Palmer, the company’s chief financial officer and marketing director. “It helps to offset some of those slow days when we’re not washing cars physically out on the street. We can still be creating future business.”
Brown Bear Car Wash has been selling gift certificates online since 2005. Like Bauman, the winery owner in Kansas, Palmer says the company’s first website simply aimed to establish an online presence. “But it just started to evolve. We had the opportunity to sell gift certificates—essentially prepaid car washes—and that led to being able to market our unlimited wash club, charity car wash program and car dealership program,” he says.
Digital gift certificates are a simple sales tactic that many small businesses overlook, says Chandler, the Internet sales book author. “Last year, I wanted to buy my dad a gift certificate for his favorite golf course. I went to the golf course’s website and they didn’t have that available,” she says. “A PayPal button is a very simple thing to add.”