Are you a small business owner who wants to move their operations online? While adapting your business to the e-commerce marketplace seems fairly straightforward, there’s more to running a successful virtual storefront than simply setting up a website. In this episode, Jon Aidukonis and Gene Marks discuss the most important factors you need to consider when transitioning your small business to an online sales environment.

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Executive Summary

0:30—Today’s Topic: Should I Move My Small Business Online?

3:37—Before you move your small business to the virtual marketplace, you need to consider whether your target audience is likely to purchase your products or services online.

5:35—If you strongly believe that your business would succeed in an online sales environment, then you need to invest in the proper inventory and bookkeeping tools. The best apps to use are those that can not only integrate into your existing system, but will seamlessly bridge your online platform with your physical storefront.

8:24—Because an online business will enable you to reach a larger client base, you need to familiarize yourself with the various shipping taxes of each state. You’ll also need to budget and price your goods and services accordingly in order to maintain your profit margins.

11:46—If you decide to use an existing online sales platform to host your business, you’ll need one of your employees to manage your business’s merchant site. Failure to provide an accurate account of your current inventory or communicate with your clients can result in severe penalties from the hosting sales platform.

14:31—Apart from maintaining your merchant site, business owners who use an intermediary sales platform will also need to invest in their advertising if they want to stand apart from all their competitors.

15:57—For those with a limited advertising budget, consider using your social media accounts to drive your target audience back to your primary website so that they can purchase directly from your business.

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Transcript

Jon: Hi everybody, Jon Aidukonis here from The Hartford, with my cohost Gene Marks. And welcome back to The Hartford Small Biz Ahead Podcast. On today’s episode we are talking all things online retail. I think we’ve all noticed over the past, I feel like I keep saying a couple of weeks, but let’s be real world. We’ve been in this new world since March, it’s half a year. We’ve noticed everything moving online from brick and mortar stores trying to launch online eCommerce platforms, we’ve seen gyms bringing personal training into the virtual, we’ve seen restaurants turn into food delivery services and make-your-own-box type services. And anything that could be digitized, from a service interaction or a sales meeting, even to tarot card readings can now be done digitally. We wanted to kind of poke around that and get underneath it and think about the things that we should think about, if we’re concerned and bringing our businesses online. So with that, Gene, how are you doing?

Gene: Doing good, Jon. Doing good. How about yourself?

Jon: Doing well, thanks. We’re halfway through the year, more than halfway through the year and it feels like it’s a nonstop train.

Gene: it just continues to go on, and thank God for Netflix. That’s all I can say.

Jon: I’ve been on the YouTube train lately and I found a creator who does all these true crime stories, which is really interesting. Her name is Bailey Sarian and she actually does it. She’s like a makeup YouTuber, but she also is interested in true crime. Every Monday you just get to hear this person who talks to you like they’re your best friend and giving you the background on some really interesting stories of our time. It’s a fun way to kill a few hours.

Gene: That is, and I’ve been listening to a bunch of podcasts. I’ve gotten into this podcast called Reply All. I don’t know if you’ve ever listened to that.

Jon: I do. I listen to that one, yeah.

Gene: Oh, it’s just great. I just listened to it for the second time. They have a two-parter called Long Distance, where they get involved with an India based scammer and they eventually go to India to try and find him. I don’t know if you’ve heard that episode or not, it’s two parts. It’s amazing. Just those guys are so great on Reply All.

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Jon: Awesome, yeah. No, I think there’s a lot of podcasts popping up and it’s interesting. Even to see how some of the audio platforms are starting to really build out that part of their library. I’m a big fan of a lot of the Spotify originals and it just feels like every day there’s good content put online. So I’m definitely enjoying that as we take our daily drives to get coffee.

Gene: True.

Jon: Awesome. All right, I guess just jumping right in. So Gene, you are a small business owner. You sell services as your jam, CRM products, and I think you’re probably well immersed in what people think about when they think about managing relationships online. What do you think the first things a business or decision makers should consider as they start to think about an online selling platform?

Gene: First of all, I think the most important thing, John is to really be real with yourself as to whether or not you can sell your products online. If you’re selling dental products, toothbrushes and toothpaste, I don’t think you’re going to do very well with a booth at a carnival. In our case, like my company, like you just said, we do primarily technology services and people don’t buy technology services online. They buy books, and food, and outdoor equipment, and beach chairs online, but not my stuff. So I think a lot of B2B companies, they feel like “Oh my God, I got to be online. I got to be online.” Because that’s what everybody’s doing, but I think you’ve got to say to yourself, “Is that just the right channel for me? Is it worthwhile investing time and effort to be there?” But if it is, and if you think you do have a product to be selling online, then I think there’re more opportunities than ever to do just that. Does that make sense?

Jon: It does, and I think there’s different ways. I think that there’s people who have products, where they’re looking for an online commerce platform, something like a Shopify where they can just set up a store. But I think there’s also people who are thinking about how can they sell their services or maybe activate memberships online, which are kind of interesting and I think those cases are really, probably, solutions you’d have to think about depending on the specific person’s business. Not even their business model, but their actual business and their customer base. But when we think about the eCommerce platforms, because that’s probably what most people are considering when they have this question, what are some of the recommended tools that you would suggest someone look into or consider as they’re thinking about maybe making that transition to an online sales environment?

Gene: I’ve got a bunch. Say you’ve gotten to the point where you’re like, “You know what? We can build an eCommerce business, we can sell stuff online. So let’s do that.” You want to have the right tools that do that. Now, some of the biggest names out there, and I know John, you know these. Shopify, BigCommerce is another one, Magento. Those are sort of the top three eCommerce, standalone eCommerce tools that are available. The reason why I love all three of those products, there’s slight differences between the three, but they do a few things really, really well. For starters, that’s all they focus on. So they’re not like an add-on module to an existing accounting application, for example, which is the way things were a few years ago. And there you just got sort of a half baked solution. I mean this is all they do.

And they integrate really well. I have a lot of clients that are in the retail business or they’re selling to consumers, they’ve got a shop, they’ve got a store, they’ve got up a produce stand and people come and buy stuff in their store, but then they also want to buy stuff online. And what Shopify, what BigCommerce, what Magento, Laravel is another one, Square is another one, those applications themselves will set you up with not only a point of sale system for your brick and mortar location, but then also have an online system and they speak to each other. So if you run out of apples in your store and somebody goes online and tries to buy an apple, they’re going to show that you don’t have any apples in inventory and that’s good, because therefore you don’t want to sell something to somebody that you don’t have.

So you absolutely want to look. The other thing that I really like about the standalone eCommerce platforms is that they have built-in templates and tools, not only to design your site, but also to get yourself up and running with all the stuff. The gateway services, the payment providers, the authorization services that you’re going to need. There’s a lot of different parties that are involved in this and if you go with a standalone, well known eCommerce provider, you will find that they’ve already got partnerships with all these different providers so that it’s very easy to set up. If you’re not crazy about the ones that I’ve just mentioned, if you’ve got QuickBooks, for example, and so many people do have QuickBooks. Go into its marketplace, for example.

If you’ve got a Sage product, go to Sage’s marketplace. These companies, they have marketplaces of many third party eCommerce products that might be more suited to your business and certainly integrate with your accounting system. Those are other options that you could try. Those are all some good tools to consider. One other tool I have to mention John, as well has to do with taxes. Sorry to bore you, because I know I’m an accountant here, but because of a big decision that was made a couple of years ago, it’s called the Wayfair decision, there’s a giant tax headache for anybody that’s selling online. Basically that decision allowed that if you’re selling to different states or even to different jurisdictions, those states may very well have the right to collect sales taxes from you. So your responsibility is to get sales tax from your customers and then remit them to the state, the county, the city, the town.

I mean there’s just thousands and thousands of taxing jurisdictions out there and so many of them, they’re so unfunded. They’re desperate for money and they’re going after a lot of eCommerce businesses, and it could be a huge liability for you and a huge headache. So of course, there are some services that have popped up that take care of that kind of stuff. One great one is Avalara. It’s A-V-A-L-A-R-A, Avalara. and the other one is Vertex. Those are the two big names in sales tax compliance software for your eCommerce site. They’ll take care of it all for you. I mean you pay the fee, but they make sure that you’re collecting sales tax where you need to, they take care of all the filings, they take care of all of the remittances and the payments. I think it’s an absolutely required tool that you’ve got sales tax compliance software to go along with your eCommerce software as well.

Jon: That’s interesting, because I think that’s kind of the next step. So you decide you want to sell, and what does that do to your business model and even to your risk exposure? Because you might want to think about what are you now liable for in terms of packaging or something that’s lost and how do you distribute it. So that tax one, though, that’s a really interesting one because that wouldn’t have been something I would have thought of and I think most people don’t. They think about the place they do business as place they pay taxes. That’s a good thing to have on the radar.

Gene: By the way, each state and county, they call it nexus, which is whether or not you have a presence in that state, and the rules vary depending on where you are. Again, some of these collectors can be pretty aggressive, because like I said, they’ve got budgets that they’ve got to meet. I know there’s one guy in Philly where I live, he’s a client of mine, who sold half a million dollars of products in various states around the country last year and then just got hit with these whopping sales tax bills that he wasn’t even expecting. He didn’t collect the money from his customer, so good luck going back to them. It’s a liability, right?

Jon: Yeah, no, it’s true. And that’s a good thing to prepare for.

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Jon: You know, and I think outside of things like that, to say you’re a business and you’re like, “Okay, well this feels like a lot. And I just, I don’t really want to do that, because I don’t want to do a lot right now.” What about things that are a little bit more plug and plays? Think like an Etsy or an Amazon, where it’s more like a marketplace type site. What are the pros and cons of activating online and in an instance like that?

Gene: First of all, I think I don’t agree that it’s plug and play. And by the way, that perception is very, very common. A lot of people are like, “Hey man, I’ll just set up an Amazon store and then I’ll make my millions there.” You know? Or, “I’ll just sell something on Etsy,” and whatever. Listen, Amazon is a million small businesses. Literally a million, more than a million just in this country alone that sell on Amazon. There used to be a time where all of these people were on Main Street. You would walk down Seventh Avenue and see all the shops. Now they’re all gone and replaced by yogurt places and nail salons and everybody has retreated back into their apartments and homes, and they’re selling on Amazon. So there’s a lot of competition out there. Amazon itself, just to use them as an example, they’re the world’s biggest marketplace and to succeed on there, you really have an opportunity to reach customers all around the world, but it’s cutthroat and it’s ruthless and it’s really, really hard.

If you’re going to want to sell on Amazon, like my product doesn’t sell on Amazon, but if I was going to sell on Amazon, I would have a pretty substantial budget where I’m going to be hiring somebody, probably somebody from my company, who’s going to own my Amazon merchant site. And it is like a full time job, because you’re listing your products, you’re updating your products. You’ve got to engage with your community, you’ve got to answer questions from buyers, you’ve got to respond to complaints. And by the way, if you don’t do this stuff, Amazon punishes you greatly. You’re never going to be found on Amazon or selling anything. And oh, by the way then Amazon, what they do is depending on how much you’re selling or how much money you want to spend on advertising, they elevate you or they demote you so your products get shown or they don’t get shown.

When you think about searching for stuff on Amazon, think about it, John, I went to just buy a beach chair this past week and there’s a zillion beach chairs being sold, but I’m buying the ones that are the best sellers are the ones that are being promoted by Amazon. They’re on the top of the list. It’s like Google. That doesn’t just happen automatically. I mean you’ve got to put in a lot of work and have a really good site and play by the rules. If you’re a business owner like me, man, I don’t have the time to do all that stuff. I would have to hire somebody to do all of that for me. I’m not saying that’s not something that I wouldn’t want to do, I’m just saying it’s a cost that I have to build into the process.

A long answer with a short question, but to succeed on Amazon, yes, there’s great opportunities that are out there, but you have got to be prepared to make a lot of effort, time and money. Amazon is not alone, it’s the same thing if you’re on Etsy. Do you know how many people are making masks now that’s selling on Etsy? I mean for somebody to find you, you could be making the best masks in the world, but if you build it, will they still come? You still have to have a really great Etsy site and you have to elevate yourself in prominence on that platform, and that takes time and effort and some advertising money. E-bay is the same way, Alibaba is the same way. All of those marketplaces are great, but you really have to make an investment.

Jon: Right and I think that’s the catch 22, right? It’s either going to be time or money, but you’re really setting up a new distribution channel. To your point, the audience is there and some of these more marketplace environments, but you have to learn and master their algorithm and you probably still have to pay to advertise. I think when you think about the more standalone things where they’re part of your environment and you trade off that reach of new customers, because it’s probably people who are familiar with you and then you’re relying more on things like whether it’s CO, or advertising, or other types of promotions to get your name and product out there. I think that’s kind of a pivot to the next question.

What is the best way to promote your wares online? And when you think about that, what role does social media plays? If it’s someone who doesn’t have a huge marketing budget, do you think social is enough to get the word out? Or is it really that intersection of time, money and platform, that you kind of have to invest in all three?

Gene: It’s going to take some investment, regardless. I don’t think ad words is the way to go, because I think that’s just trying to attract people to your site as well. I forget what the statistic is that I read recently that some huge amount, 80% of people, when they look to buy something, they don’t even go to Google anymore. They just go to Amazon. I know I do. I don’t know if the same, but if I need a flyswatter, I just going to Amazon and I just buy it. Your promotional dollars and effort has got to be spent on that platform, but John, you were right about the social media. There’s definitely some opportunities there and some of it is unchartered territory, which is an opportunity for a lot of businesses. Instagram is just getting there. They, just over the past year or two, have been introducing new tools to sell stuff right off of your Instagram account. The same, obviously Facebook has been doing that for a while. Snapchat is getting into that as well, so is TikTok.

It depends on your audience. I mean if you’re trying to attract a 14 year old middle school kid, maybe TikTok is the place that you want to be with some advertising and promotion, and then using some of their tools for people to just click on something to buy. But the social media sites like those are providing this way to kind of get around the Amazon monopoly, if you want to call it, and try and sell something on your own. To drive people right back to your eCommerce site, on your website, and have people just buy right from you, and that might be the place to go. But it all depends on where your audience is. Each of these, your Instagram, your TikTok, Snapchat, all of these have their own demographics. If you feel that your demographic is on one of those platforms, then it really might make a lot of sense for you to start up a presence there, build in a lot of content, and then get some advertising and promotion, and then using some of their selling tools so that you can drive people back to your website to buy your product.

Jon: I think you’re right. I think that a lot of it has to do with not only making sure they are available, but making sure people can find them, which I think is where people can get a little bit lost. It’s tough, because the internet is such a big space and I think it feels so blue sky to folks. And it’s true, the possibilities are endless. You can definitely find your market. Once you get to know them, you can really get in front of them, but it does take a little bit of time to do that and it’s not necessarily an overnight solve unless you have a highly engaged audience and can leverage that to sell you out quickly.

Gene: You and I, John, we should get somebody on from Amazon onto this podcast and talk about Alexa as well and if it’s not Alexa, then somebody from Apple to talk about Siri. We all know this is not a rumor, we’re sitting around talking about flyswatters in our house, and I’ve got an Alexa, and then all of a sudden I’m on Facebook and I’m getting advertisements for flyswatters. That is not a coincidence. Something is absolutely going on there. And I think that my question is how did the flyswatter company know that? Where do they go so that their ads are showing up on my Facebook feed, because I was talking about flyswatters in front of Alexa. You know what I mean? I think that is going to be another much growing opportunity. And by the way, I have no problem with that. Some people think it’s a privacy concern.

John, you can listen in on the conversations that’s going on in my house all the time. Trust me, you’ll be asleep in 10 minutes. But if I’m talking about flyswatters, like, “Oh, we could really use a flyswatter.” And then suddenly I’m getting some ads on discounted flyswatters on Facebook, I’m like, “Hey, man, bring me some more. I’ll buy some of those.” You know? I think it’s not-

Jon: That’s funny. Yeah, I don’t have a smart speaker home or a connected device like that, so I’ve never firsthand experienced it. I have my iPhone, but I’ve never really recognized something I said or I haven’t actively searched for it, come up in any kind of interest based advertising. But it would be interesting to learn if that’s a true thing or if it’s picking up on other cues, or maybe just because of our behavior. Analytics are that good to say, “Hey, if you do A, B, and C, you might be looking for flyswatters too.”

Gene: I’m telling you, I did not search for flyswatter on Google. I swear I was just talking about it.

Jon: Yeah. No, I’m thinking like directional. Maybe there’s two or three other things that you did that tells the algorithm that people like this also are going to look for a flyswatter next. A couple of years ago a big box retailer had gotten really good at their data and audience segmentation, and they were mailing someone who they determined was likely to be welcoming a child soon. She starts getting marketing material designed for folks who are pregnant or about to take home a child, and it turns out she actually was pregnant. The data suggested that she might be before she ever told anyone, which is crazy how directional it can be and the power of what big data can tell folks about each other. Awesome. All right.

Well, Gene, I think those were good tips. I think it’s picking the right platform, making sure you have the human capital and a little bit of financial capital to put behind making a promotion plan work, and really taking the time to investigate all the associated decisions that you’re going to have to make and responsibilities you’re going to take on when you decide to go online. So thank you again for the time and everyone out there, thanks for listening. This, again, was Jon Aidukonis and Gene Marks, and we hope you enjoyed this Small Biz Ahead Podcast and we’ll catch you on the next one.

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