For people who are starting a
Home-based ECommerce Business, one of the things
that's least understood by most is the need for basic
Market Research. There are far too many people failing out
there because they simply grab any product they can get
ahold of, slap it in an Auction or on a web site, and
expect it to sell.
A couple of days ago, I got an email from
someone who was thanking me for the free information about
ECommerce that she found on our web site. She, like most people,
had been struggling with the concept of Wholesale Distributors
and Wholesale Pricing, and had found the answers she needed on
our site. Somewhere in her email, she happened to ask me how I
first learned about Wholesale Distribution.
Now, I've spent years writing ECommerce
articles that have been published in many different languages
all over the world. My company, Worldwide Brands, Inc.,
teaches people through our web site, and our Customer Service
department, all about Wholesale Suppliers, ECommerce, Market
Research, and much more. I'm also a Founding Partner in a
Wholesale Supply company in New York. So, I've been around
the business for a long time, and learned a lot along the way.
As I started writing all those things in my
reply to this person, I realized that she hadn't asked for my
resume! She had asked where I first learned about Wholesale.
It occurred to me that I actually learned
about wholesale long before I ever grew up and went into business.
The few simple things I learned about wholesale back then apply
so well to ECommerce today that I just had to tell her (a
shorter version of!) the following story:
Long, long ago, in a neighborhood far, far
away, Chris Malta began learning about Wholesale. He was just
a tyke then, only ten years old. Chris wanted to earn some
extra money for the upcoming Christmas Season, way back
there in 1970.
He tried shoveling snow out of people’s
driveways, but there’s a lot of snow in Western New York State.
Big trucks with nasty old snowplows kept driving by and
shoveling the snow back into the driveways. He tried doing
chores around the house, but there really wasn’t enough to
do to earn him the Christmas Money he wanted.
One day, Chris’s mother realized his
plight. An astute businesswoman, she looked down at him and
seemed to come to a decision.
“Why don’t you get your coat”, she said.
“I’ll show you how to earn money like the grownups do”.
Half an hour later, Chris and his Mom were
at Beansy Altman’s Wholesale Outlet, in downtown Rochester,
NY. It was a ramshackle place, shivering in the winter
shadow of an expressway overpass; a big old four-story brick
building that looked almost abandoned. Inside, though, it was
warm, and there was a bustle of people weaving their way through
stacks of crates and boxes. They were picking this or that
item out of this or that crate or box, looking at it, and moving on.
Through the dim lighting and the smell of
damp cardboard, Chris saw an old man waving to his mother.
“Millie!” he said, “did you bring a helper
with you today?”
Chris’s Mom smiled and said, “Beansy,
this is my son, Christian. He wants to earn a little
Christmas Money this year”.
“Ah!” smiled Beansy. “Another businessman
in the family! Well, all right. We want Christmas Money,
we look at Christmas things!”
An hour later, the trunk of Mom’s car was
packed full of thick, colorful Christmas candles, and
little decorative plastic Holiday wreaths that fit
around the candles’ bases.
On the drive home, through the gathering
dark and a light fall of snow, Chris’s mother explained the
glorious concept of Wholesale to him.
“Mr. Altman sold us one hundred Christmas
Candles for twenty five cents each”, she said. “He
sold us the plastic wreaths that go around them for
twelve cents each. So, how much did we pay for the
candles, just by themselves?”
Chris had to think for a minute.
It would be another two years before he would meet
Mr. Irwin, a wonderful teacher who would finally be
successful in lighting the Eternal Flame of Mathematics in
Chris’s young mind. He struggled through to the answer, though.
“Twenty five dollars for the candles”, he said.
“Right”, said Mom. “Now, how much did we pay
for just the wreaths?”
Chris was warming up to the game.
“Twelve dollars”.
“Right again. Very good! Now, tell me
this; how much did we pay for one candle and one wreath,
together?”
Some more thought, and a quick
double-check on the trusty ole finger-calculator:
“Thirty seven cents!” announced Chris.
“Thirty seven cents”, agreed Mom.
“How much do you think they’re charging over at
Woolworth’s for those same candle-and-wreath sets?”
I dunno”.
“A dollar twenty nine. They’re
very nice candle sets. I just bought two of them
there yesterday. So how much less than that did we pay
for each candle-and-wreath set?”
That one set Chris back a step,
but before he could try to answer, Mom said, “That’s
ninety two cents, Honey. We got them for ninety two cents
less than they charge in the store”.
“Now”, Mom continued, “who do you
think might like some of those candle-and-wreath sets?”
“I dunno”.
“Are you sure about that? Don’t you
think Mrs. Gallucci next door would like to have one or two?”
“Sure, I guess”.
“Sure she would!” said Mom. “How
about the rest of the neighbors? Mrs. Furius? Mrs.
DiCiacci? Miss Cerasani? Mrs. Beilaski, Mrs. Carlevatti,
Mrs. Toth, Mrs. Sengle, Mrs. Cook, Mrs. Sadack, Mrs. Anderson…”
The list went on and on. Mom knew the
neighbors’ names like she knew the names of her own kids.
As she spoke, Chris’s eyes grew wider and wider with the
realization that he was going to sell those candle-and-wreath
sets to the neighbor ladies, and make his Christmas Money!
Mom continued; “Now, how much do you think
they’d like to pay for those sets?”
“A dollar twenty nine!” Chris declared proudly.
“No!” said Mom. “If they have to pay the same
price they pay in the store, they might not decide to buy them.
But, if they find out they’re getting them for less than the
store sells them for, and they don’t have to drive through
the snow to get them from the store, they will want to buy
them. So, what you do is charge a dollar for the sets.
Do you know how much money you’ll make if you sell all
one hundred sets at a dollar each?”
“One Hundred Dollars!” Chris
exclaimed, excitedly.
Well, not quite”, said Mom.
“After you pay me back the thirty seven dollars I spent
to buy the sets at Mr. Altman’s place, you would make
sixty three dollars!”
Well, thought Chris, it wasn’t a
Hundred Bucks, but still…Holy Smokes! Sixty Three
Dollars! To a ten year old kid in 1970, sixty three
dollars was a fortune in spending loot!
When they got home, Mom went over
the major points with Chris once more:
“Let them know that you charge less
than the store does for the exact same thing, and
remind them that they don’t have to leave the house to
get it. They’ll buy it from you, Hon. And you be sure
to be polite and say Thank You!”
(Thirty four years later, Chris
is sitting at his computer keyboard, writing this article.
Besides getting a little misty over the memories, he is
suddenly struck by the amazing similarity between what his
Mother suggested as a sales technique in 1970, and the basic
foundation of all Ecommerce today! “Less than the store
charges, and they don’t have to leave the house…”. But,
that’s not part of the story…not yet, anyway. Not for many
more years, for ten year old Chris!)
So, Chris went out selling Christmas
Candles, crunching through the frozen snow after school
each day, in early December 1970. He didn’t sell them all,
but he paid his mother back and made a nice pile of Christmas
Money. His Mom put the remaining candle sets in the attic,
and he sold the rest of them and more the following year.
During that year, and many others, his
Mom helped him make many other trips to Beansy Altman’s
and other wholesale outlets. St. Patrick’s Day, Easter,
Mother’s and Father’s Day, Fourth of July, etc., etc.
With Mom’s help, Chris bought seasonal products at
wholesale all year round, and sold them to the neighbors,
at a reasonable markup, of course. :o)
Why did I think this story was important
enough to write an article about? Because it illustrates a
very important point. Whether my Mother did it consciously
or not, she arrived at a product for me to sell through
Market Research!
Think about that story for a minute:
1. My Mother knew where my customers were.
They were right there in my neighborhood, within easy reach of
my sales vehicle; door to door selling.
2. She knew the "Demographic" of the
customers; they were middle-class women in their early
thirties. In 1970, this was a group that was almost
exclusively homemakers, thus they were actively taking
care of and decorating their own homes.
3. She knew that they would be very
receptive to buying a Holiday decoration from me,
because (a) it was the Christmas Season, and (b) what
middle-class woman in her early thirties in 1970 could
resist buying something (at a bargain) from a ten year old kid?
4. She knew who the competition was,
and what they were charging for the product; Woolworth's
Five and Dime Store, $1.29. That gave her the proper price
point to sell the product with the added convenience of buying
it right at one's own door; $1.00.
5. She knew where to get the product at
Wholesale; Beansy Altman's.
That's Market Research.
The basic concept, the core business
of what you and I do as Retailers, hasn't changed in 34
years. It hasn't changed in 340 years. It hasn't even changed
in 3,400 years. Thousands of years ago, traders would travel
to distant cities, bring new and exciting things back to
their homelands, and place them on the ground in an open-air
marketplace for passers-by to purchase. Hundreds of years ago,
merchants in the fledgling US packed wagons full of goods in
the East, and made the trek out West, where they used those
wagons as storefronts to sell their goods to those who wanted
or needed them. Decades ago, people had wholesale supply
companies deliver products to their retail stores, where
customers gathered to buy them. Today, we use email and
electronic ordering systems to have products sent directly
from the wholesale warehouse to our customers' doors.
None of it is possible, though, without
Market Research. None of those Retailers, from the sand-whipped
caravans on the ancient Silk Road to the manager of the
Woolworth's Five and Dime on Winton Road in Rochester,
NY, would have sold a thing if they hadn't known what the
customer wanted!
So, before you get caught up in the
technological hype of instant online stores, cross-linking,
mass emailing, affiliate programs, blogging, search engine
optimization, pay per click advertising, etc., etc., etc.,
go back to the basics for a minute or two. Think about who
your customers are, who your competition is, what your
customers want, and where you can get it at Wholesale.
Without that, all the shiny new technological methods
in the world mean nothing.
We have a great deal of FREE information
on Market Research and much more on our web site, and you
are welcome to it at any time.
Even today, as far as I've come in the
business world, the image that comes to mind the most when
I think about sales is very simple. I can still see it
like it was just last week. Just me, by myself, ten years
old, crunching through the frozen snow, happily selling
Christmas Candle after Christmas Candle to my neighbors.
Because my Mom knew they would buy them.
