If you have read one of my articles before, then you already know how fond I am of mentioning the financial situation of Bluefly, one of the most trafficked and seemingly successful online retailers on the internet. This is an online retailer who has hit net revenues of $80,000,000 to $95,000,000. Nonetheless, this is also a company who has never made a single year of profit since its inception in 1997. As of December 31, 2009, Bluefly has an accumulated deficit of $147,468,000. Furthermore, this is a company that states in their annual financial report that they still need to further establish brand name recognition. If you ask all the women who shop at Forever 21, Urbanoutfitters, and ModCloth if they have heard of Bluefly, then most would have no idea who they are. This is obviously not a scientific observation, but if you compare Bluefly’s approximately 30K Facebook fans to ModCloths 100K fans then there is most likely a huge issue in terms of Bluefly branding and connecting with their $80,000,000 worth of customers. Putting down Bluefly is not going to help you or me as small business owners. What will help is understanding the skills and knowledge to help you stay out of the deep end.
Please note that I am coming from a real do-it-yourself background. When my girlfriend and I first started our online clothing boutique, we did not have any funds to outsource any of the different project or jobs that the business needed. Quite honestly, if you have money to outsource every piece of work for your business, then my only suggestion is that you learn how to negotiate and manage people well. Otherwise, I am going to cover the general skills you should work on and knowledge you should acquire if you decide to pursue this venture yourself or with a partner. Of course, having knowledge about finance, marketing, accounting, organization behavior, negotiations, and pretty much everything a fashion merchandising course would teach would be ideal, but we will just focus on what I believe are the most fundamental.
As I just mentioned, the ideal situation is if you had the business knowledge of a Harvard MBA or Parson’s Fashion Merchandising major. So, if I had to choose just one topic from business school, then it would be marketing. One of the key topics within marketing is the idea of the four P’s, Product, Price, Place, and Promotion. With the four P’s, you will learn how to position and differentiate your online clothing store in this highly competitive market. With a decent understanding of marketing, you will understand how to use the four P’s to either position yourself as a high-end luxury boutique or the young and hip store with a reasonable price point for the mass audience.
If I was allowed one more topic within the MBA curriculum, then it would have to be accounting. Quite simply, if you do not know anything about accounting, then you will not know if you are going broke until the day you close down. Calculating net sales or revenue is the simplest task, but it is calculating your expenses that will help you in the end. Without accounting, you will never know what expenses are out of control and therefore never able to correct it. Additionally, accounting knowledge does not stop at financial statements, there is a whole branch of accounting that focuses on managerial decisions. In the case of a fashion retail business, you will use your managerial accounting skills to budget your inventory purchases for the season, determine a product mix using historical data, examine how to improve conversion, and just about any other decision that can be made using numerical data.
3. Web Design, Programming, and Database
I think I can easily say that I have saved over $10,000 because I was able to learn how to design my own website, install open-source contributions, and understand how a database interacts with a dynamic website. When we first started our website, about a month after launching, I realized we needed some design and functionality changes to our website. I contacted a San Francisco web design firm, told them exactly what work I needed done, and they quoted me about $3,000. I ended up doing the work myself, with just the help of the internet, within two days. A month later, I decided I wanted to do a complete landing page redesign that I felt was outside of my abilities. I hired someone through a freelancing website. Nothing was done on schedule, in the end the job had to be cancelled, and I had to go through an arbitrator to finally get my money back. At that point, I pretty much decided that I would never hire anyone to do my web design.
Now, I have built four full scale websites and can install or write just about any contribution needed for my website. I have no doubt that I have saved over $10,000 doing the work myself. Of course, if you are using a paid shopping cart, then most of this is irrelevant, but I think it is an invaluable skill for those who need to save money.
4. Search Engine Optimization
Search Engine Optimization, SEO, can partly be classified as part of web design and programming, but there is a lot more off-page SEO that can be done. If I had to do it again, then I would have focused much more on SEO than Google Adwords or Yahoo! Search Marketing when starting my business. There is a huge chance that I would not have gotten an order for three to six months, but it is a better investment in the long-run. I have to admit that when we first started Adwords, we covered the cost of advertising through our sales, so it worked out. Later, when I moved to the USA, Adwords just was not working. I think I was spending nearly $100 to just get one conversion. For a low-mid price point, that just does not work. I suspended ALL paid marketing campaigns and focused on SEO. I have not only increased my conversion, traffic, and sales, but also lowered a huge expense, increasing my profitability.
5. Do not sweat the small things
Certainly easier said than done, but necessary if you do not want to go crazy. I just lost $30 because I decided to send an order to a customer before capturing their funds through my payment gateway. A few days went by and it turned out that I could not capture those funds anymore and I sent a nice email to the customer asking them to reauthorize the transaction. Personally, if I was in the customer’s shoe, then I would do so because I received the product, but not everybody thinks that way. You will come across hundreds of situations like this. Sometimes you are right and sometimes you may be wrong. The point is that you have to let it go and just realize it is business.