Shoshana

Welcome to the latest in our series of webmaster interviews. Today we are hearing from Kent Johnson from Discount Leather Mart - http://www.discount-leather.net

As you will read, Kent started out in ecommerce in a way that will be familiar to many online merchants - there was little choice owing to employment changes. Kent also highlights some interesting pitfalls of the dropship model…and how this is leading to his business

The internet provides access to global audiences and markets. Where are you located and is your market influenced by your location?

I’m located in Modesto, California. I sell mainly in the USA, however, I’ve sold to many countries, specifically Canada & UK, but also, Australia, New Zealand, Japan, Western Europe, Iceland, South Africa and a few others. Locals that see my address on the site always want to drop by and check out what I have in stock, so I guess the net’s good for both local and worldwide visability.

What were the circumstances that led you to start your site/online business?

Lost my job and had contractual obligations not to work in the field for 5 years, so I had to do something. It was right after the 9/11 and Enron scandals hit, so the economy was tight for a job seeker. The internet just seemed to be a great spot. I had an idea for a novelty item…which I still have listed on my first stab at a web site, http://www.discount-leather.net/Hillbilly . I keep it up for fun, but I don’t sell the Hillbilly Dinner Napkin anymore…unless I get a ton more interest.

As I started to explore the web and specifically drop ship type operations, I came up with the leather business. I’ve been doing strictly leather ever since.

What does this site do?

Retail Sales of High Quality Motorcycle Leathers and Accessories.

Is this your only site?

It is my only site.

Are you a full time web business person or do you have other income as well?

This is what I do for a living. It represents 100% of my income, although, not a very good income, I must admit.

There are many methods of promotion for website. What do you do and which do you think are the most effective?

I use Adwords primarily, but I’ve also used Shopping.com, Pricegrabber.com and Overture Services, plus I’ve done some banner ads on various sites and even some magazine advertising, which I don’t think helped very much. Adwords seems to get me more bang for the buck than all the others though. Advertising has become very expensive though, specifically over the last year or so since so many people are now competing for retail dollars.

Early on I set up a contest on my site to drive people to it. I mainly get people arriving at the site that just want to win a prize and would never purchase otherwise, but a few have come back and bought. Plus, the contest puts a one-way link to my site from many other sites which helps my organic listings.

I also send out periodic email letters to past customers and folks that signed up for the newsletter. I normally offer seasonal discounts and introduce new products or sales and I get good response rates from this. I send on average, less than one newsletter per month to past customers. I use Topica for my subscription and mailing services.

Last but not least, link campaigns and Press Releases to get the site up further in the organic listings

Where do you see yourself in a few years time?

I’ll still have the website, but, in retail, especially with clothing items, I get many, many returns and exchanges for size or refund. I would say, that the return rate for exchange or refund approaches 25% of sales.

This leaves me with lots of inventory.

I am currently in the planning stages to get a brick and motar storefront to get rid of the returned inventory. I’ve got more than enough returned items over the last three years to stock a couple of stores. This is the bad thing about a dropship model. If you service your customer right, you need to make it somewhat painless to return items for exchange or refund.

Sometimes I think the only people getting rich off the web are the shipping companies and the credit card companies. Shipping goods back and forth is incredibly expensive and really eats into any sort of profitability. Sending them back to the supplier is sometimes done, but then you need to keep track of what was sent back, did you get credit for it, was a new item sent, shipping costs, etc. It’s too much to keep track of, so I have everything returned to my house. Also, exchanging items means that you’ve bought the same item twice, plus paid for shipping so with every exchange it is a net loss instead of a gain.

Anyway when I envision what comes next for the business, I’ve got some items written in my business plan. Over the course of running this business, I’ve gotten to know a lot of my suppliers very closely. I have made custom made jackets, textile, for a local police motorcycle squad. They are extremely impressed with the function and feel of the jackets, so I have a niche market to expand on. I’ll be having some items made under my own brand and work on expanding the business that way. I’ve also seen other items that I can have made for me that are higher quality at less price than was is currently available. Not necessarily in motorcycles, but other sporting venues.

So I guess, when I look two to five years down the road, I’d like to have a retail storefront that is coupled with the website to provide a steady stream of revenue, plus some employees to take some of the burden off of my shoulders. Then with a steady stream of revenue, I’d like to expand on the niche markets I’ve uncovered and grow the business in this new direction.

The web is an okay place to sell, but competition is fierce. Over the last few years, I’ve seen people starting up many competitive websites. I know what they are charged for an item and I see what they are selling it for. There is no way they will stay in business for even a year without going broke. As a matter of fact, I’ve seen lots of competitors come and go since I started. Returns, shipping and the cost of money are hard items to overcome with margins set too low. I think that’s why for items that need to be tried on, like clothing, shoes, etc., the internet offers great prices, but the hassel and time factor the customer goes through are not factored into the equation and I really see either declining sales or at least a leveling off of sales because of this. Let’s face it, a TV, DVD, fishing pole etc, are the same if you buy them at Wal Mart or off the net. But if you need something that fits all different body types and sizes…well that’s something entirely different.

If you could give two pieces of advice to aspiring or new webmasters/internet business owners, what would they be

1. Service, Service, Service—-It’s one of the biggest factors missing from the web, personal service especially. It seems that there are a lot of people who open web sites and run them when they get home from work at night and on the weekends. If someone calls during the morning or day, they have to wait hours or days for a return call. Plus, if you don’t know your merchandise well, which is often the case when drop shipping, you can’t answer questions reasonably.

2. Get involved in various webmaster forums and listen to the advice. Ease of use of a website is something that is overlooked quite often with cookie-cutter database style websites but it is very important. The website needs to be easy to use, offer great information, products, descriptions, pictures, etc.