At the lowest point, I looked at nearly $400,000 in inventory and decided to load it into my car and put it in the nearest dumpster. That was rock bottom. When one of the largest retailers in the world asks, in a more delicate way, “are you THAT dumb,” you have to wonder. Am I?
I suffered from what is technically called the Dunning-Kruger Effect or more aptly stated in one of David Dunning’s articles in the Pacific Standard, “We Are All Confident Idiots.” This effect refers to the overconfidence that comes when a person knows just enough about a topic to believe they are an expert legitimately. Expertise hardly ever happens that easy. The very definition of knowledge implies mastery. It’s pretty hard to master something after reading a few Wikipedia articles.
In my case, I am an expert in a related space. They are both online. How hard can it be? In 2019, I proved just how hard. After building massive tech companies to over $1B in exits and doing the work to become an online lead generation expert in real estate, here is how trying to take a small jewelry company online — nearly drove me insane.
I decided to buy a successful but struggling Balinese jewelry company that needed to figure out how to go online after selling into retail environments for years. When I took over the company, I changed the name to Spirit Wrist and set a first-year goal to sell 20,000 bracelets online. Yes, you should be laughing.
Here are the ten most important things I learned, through massive failure, on the road to overnight success in eCommerce.
- A lead is different from a purchase. I have tons of respect for eCommerce experts now. In the real estate industry, the job was to generate leads. In online commerce, you have to deliver an experience where the customer feels confident enough to get out their credit card and buy something. There is a big difference in filling out a form and paying for a product.
- The technology is incredibly sophisticated. Understanding the scale of the systems involved is a no-brainer for anyone in the space. The sheer complexity and work that goes into maintaining and managing the online ecosystems you have to play in means a mountain of detail work. Investing a small amount of time in learning how upfront saves tons of heartache.
- You have to play by Google, Facebook, and Amazon’s rules. You will never succeed online without actively participating in these significant players’ universes. They are so big you have to learn to do it their way. I often tell our team, our goal is first to ensure we tie into these systems in a way that when customers arrive at our site, they are getting what they expect. All these systems reward online retailers by delivering what the customer wants. You won’t buy your way into success if customers come to your site and don’t find what they intended. You won’t succeed with Google, especially.
- Google and Facebook’s business is advertising. It is so easy to spend money on these platforms — that is their reason for existing. I was used to investing big dollars online, so I figured I could use the same strategies in selling jewelry. Since I was optimizing for the wrong thing, I blew through $40,000 in one month during the lead up to Christmas. That netted me $800 in sales. You have to ensure your media spend is accountable. The platforms won’t do it for you.
- Every platform is different. We have had our greatest success on Etsy, and our products are hand-sewn gemstone wrap bracelets made in Bali. They have cultivated an audience looking for that type of product, and we took that for granted. Based on very little data and my eyes being bigger than my stomach, I had the team in Bali make more than 5000 bracelets knowing that what sold on one platform would immediately translate to another. We have cycled down most of that inventory, and it was a lot of expense to carry while we did. Start small, test, and learn. In the end, we have leaned into maximizing Etsy as a platform, and it’s been an incredible place to grow and be supported. Find your niche and be the best at it.
- Control costs. I repeat control costs. Right out the gate, I was so sure I would be an instant success, I hired a full-time marketing staff, operations, and fulfillment teams in addition to the production team in Bali. I overspent on inventory, media, and headcount, yet we hadn’t even shown signs of success in selling products online, at all. Most people would never make this mistake, and Dunning-Kruger was in full effect. Full. Online should be investing in learning inexpensively. Then scale once the data is supported.
- Understand your technology stack. I understand how to build a website and launched full force into creating one from scratch. There are so many incredible eCommerce platforms out there, we ultimately went with Shopify, and the investment of years and years becoming experts in their space delivers real value. The off the shelf apps and integrations made an incredible amount of learning far more natural to do. The amount of technology becomes easy enough for anyone to manage when you start with the right system.
- Study every link in the chain regularly. I never fully understood how small things like alt text on photos, upsells, your checkout experience, the way a product is titled, even the color of a button can have a considerable impact. The biggest thing I underestimated is the power of reviews. Once we learned that the most significant thing a consumer needs is to trust the online experience, we were off to the races. No detail is too small to be improved. Better photos, highly optimized social media, and SEO require study and effort to examine what isn’t working. You have to commit to learning your numbers.
- Online doesn’t mean autopilot. I made the mistake of getting into the business with some team members that wanted to have a ‘set it and forget it’ approach. Like all things in life, that’s not how a business runs. It is easy to get distracted by the fun and creative things like social media posts or content creation — unlike the drudgery of managing data accuracy across multiple products. The internet is an index of information. It’s a spreadsheet, and no great photo overcomes terrible data. Now that we have the right team to scale our growth, we are making real gains daily.
- Never give up. Commit to digging in every day. My team knows that if we improve something, even 1% a day that adds up. I was way too invested, and despite considering the dumpster move, no way was that going to happen. Those little improvements are the way you should start and the way you continuously improve. That is how to build a business.
Despite all of these setbacks that would have been reason enough to throw in the towel, we are now in the top 10% of sales on Etsy — for all time — after only being in business for six months. We are in the top 1% of Shopify stores that launched at the time we did. Yet, even now, we manage to make mistakes, just smaller ones, and we move quickly to address them. We are in the middle of one of our biggest campaigns and still managed to mess something up. We just know what to do now.
All this growth happened during a tough time for most retail sales. As we are poised to grow even further and have partnered with major global platforms and wholesale partners, all I can say is, at least, I know now I am a total novice. The goal is to continue operating that way. The fastest way to gauge how little you know is when you start believing you are an expert already.