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Mom & Pop Internet Business Thrives Despite Dot Com Bomb

Author: William Rowe

Bill & Christi Rowe have been saving for retirement for years. While they have been investing in their retirement, they have been investing in their retirement business. In 1999, they started an online shop on the Internet with online credit card processing, shopping carts, and a professional looking web site.

Year by year, the business has grown. There have been some ups and downs. "We have survived a recession, the dot com bust, the 9/11 terrorist attacks and subsequent loss of consumer confidence (that is, loss of business), and two wars," says Bill.

We asked the Rowes what tips they have for entrepreneurs who want a home based business that has a good chance at success.

A Passionate Focus

"The first thing we looked at was whether our shop would sell goods or services, and to pick something you are passionate about. We also recommend a narrow focus so that you, as a small business owner, may compete with the big guys," said Bill.

Bill adds, "Finding and filling a niche with a narrow focus it crucial. It is better to be zoned in on one subject and do it well rather than try to have a little of this, a little of that, and not much of anything, especially with the competition one has on the Internet. I saw one web site that just sold clown shoes, not clown noses, not clown wigs, not clown makeup. I was impressed with that."

Inventory or Drop Ship?

The next thing that the Rowes considered was whether or not to carry inventory. "In 1999, there was a lot of talk about having a catalog of items that you did not have on hand and have the maker drop ship when you got an order. I found some problems with that," says Bill. "For one, the cost of the items appeared to be higher. For another, there would be quite a bit of time for the third party to fulfill an order. And finally, what if a customer bought some jewelry from two or more vendors? The customer would get two or more packages, at different times. So, I decided that we would carry inventory and do our own fulfillment. We would be able to buy at better prices and we would be able ship very quickly."

Select Quality Vendors

The Rowes examined a lot of web sites and picked things that they liked and found the vendors that supplied what they wanted to sell. "We were fortunate to find all good people in our various vendors. We have a personal relationship with almost all of our vendors," says Christi. "That means that we can often get faster treatment in case a customer needs something in a hurry."

Credit Cards?

The Rowes also considered how their web site would work in general terms. "There were plenty of commerce sites then that did not offer online credit card payment," says Bill. "They might have had offline credit card payment where a customer could call in, or accept checks and money orders only. We believed strongly to give our customers the most choices possible, so that meant online and offline credit card payments, fax, telephone, and mail orders. For the business, we got a toll-free number for orders, a must have even then."

Web Site Specifics

The next big hurdle was primarily technical: How to get a professional web site that offered online credit card payment. After searching for a good ecommerce software package, the Rowes selected a commercial package that was used on over 300,000 ecommerce web sites at that time. "We picked that system because it was a database system that allowed us to enter the information once for each product and have each product in one or more categories," says Bill. We spent some time to devise appropriate categories that allowed our customers to find what they wanted easily." "The system is also modular and allows third party developers to write useful extensions to the basic software, a feature that the Rowes have used to advantage.

The Rowes then selected a merchant web site host that specialized in their system. The Rowes went to their bank and applied for a merchant account linked to their business checking account. Then the Rowes had to find a credit card acquiring company and an online credit card transaction service that worked with both their system and with their bank. "This was, by far, the most complex, most nail-biting part of the endeavor," says Bill. "We needed for a customer to be able to pick the product he or she wanted to purchase form our online catalog, put in their shopping basket, and be able to checkout."

"Once the name, address, shipping, and credit card information was entered by the customer, the software sends that information to the credit card transaction service. This service then looks up the company that issues the credit card, and sends it the request for the purchase. The credit card company replies with a yes or no, and the service returns the answer to the merchant software which then completes the order. This process between many independent parties must go through smoothly and efficiently within a few seconds."

"Then, when we are ready to ship, we capture the charge and the acquiring bank goes to the credit card company to settle the transaction in about two days with an eventual transfer of funds, less fees, to our business checking account. Everything must work correctly."

Credit Card Precautions

The Rowes also decided, for credit card security, that each order would merely be an authorization, not a charge. "At that time, many people had their orders come through as charges," says Bill. "But, that meant if there was abuse or fraud by the 'customer', or there was a problem with the order, the charge was already made. We decided to take an extra step and err on the side of caution by having orders first come through as authorizations. Then, if there were no problems with the order, we 'captured' the authorization as a charge when we were ready to ship."

The Rowes have had to learn a lot about online fraud with credit card orders. "All of our orders are 'card not present' orders, similar to mail orders. We never see the purchaser, the credit card, or the card signature. We have to rely on the verification of the credit card billing address, and now the three or four digit card verification value. Our policy is to ship orders with verified credit card billing addresses and to enquire and look into those that are not verified at the first go. We have had a rash of fraudulent orders from certain parts of the world that use stolen credit cards. Woe to anyone who falls prey to their traps because you will loose you product, your shipping costs, and have your credit card payment cancelled, and pay a fine. The credit card companies protect the consumer by making the merchants pay. It's as simple as that."

Shipping Considerations

The Rowes had to also consider shipping options. "For our products, we had relatively simple options, says Bill. "Our products are small. We could mail everything, so we offered first class mail, priority mail, two day, and overnight shipping to US orders and several international choices to non-US orders. Our shipping module sends the order information to the shipper's website which then returns quotes for the relevant options when shipping options are required at checkout. Finally, the faster orders are insured and trackable."

Terms & Conditions and Privacy Policies

"We also had to spend a good deal of time considering our store terms and conditions and our privacy policies," says Christi. "We eventually came up with a good set of terms and privacy policies using the golden rule as follows: We will treat you the way we would want to be treated . It has worked really well for us. We take the customer’s information in trust and use what we absolutely have to in order to transact the customer's order, but we never share this information with third parties outside of the transaction, nor do we sell, lease, or loan any customer information."

"We made sure that our terms and conditions and privacy policy was clearly spelled out on our web site," adds Bill.

Keep the Customer Informed All Along the Way

The Rowes have one more tip up their sleeves. "We believe that it is critical to keep our customers informed about the progress of their order," says Bill. "I have ordered online at places where my order seems to have gone to a black hole perhaps to show up unexpectedly weeks from now when I have ceased to remember it. We do not do that: We immediately send a confirmation email that is automatically generated, with a promise of a human generated email to follow."

"When we are ready to ship, we send the customer an email telling him or her so. If there is a problem, we email the customer and explain the situation, the choices, and ask for a response."

"We believe that one of the reasons for our success is our quick shipping and our keeping our customers informed about their order step by step. Once we have completed the order, we shut up and to not contact the customer again unless she or he has signed up for our newsletter."

Instilling Customer Confidence

The Rowes have been rewarded with a good website, repeat customers, and lots of customer testimonials. "We signed up with an independent consumer rating agency when we started. This agency asks for and tabulates consumer comments about our goods and services," says Christi. "Obviously, we want our customers to be happy, and we want them to say so about us."

"We also ask each customer what they like and what they would like to see improved at our shop," says Bill. We publish these comments as well as unsolicited emails from customers on our web site. We reassure customers this way that we are okay people to do business with. After all, they do not see us either, although I use a picture of myself on the web site to put a face to our business."

Sit Back…And Wait!

With lots of hard work, the Rowe’s business has grown. "We anticipated that it would take four to five years for the business to be profitable," says Bill. "We didn’t factor in the recession, 9/11, and the dot com bust, but we may begin to turn a profit in our sixth year. Of course, we spend a lot of our revenue investing in marketing our business."

"So many people just think that if they build a web site, customers will come," adds Christi. "Wrong! First they must find you, and that means being well placed in the search engines."

"Then, once a surfer has finally arrived at your site, you have about five seconds to make a good first impression so that a surfer will take time to look over your wares," adds Bill. "When I go to a store, I generally go in to buy something, not to shop. But on the web, it is so easy to go from place to place because there is little effort to do so, that we get about one buyer in twenty visitors."

Give Customers Complete Product Information

"It is an art to make your pictures and words as compelling as possible in order to convert visitors to buyers. We give a great deal of detailed information on each product on its product page. We have its size in inches and in metric so we may appeal to a global audience. We tell you who made it, what its made of, and what comes with it.

You Don’t Have To Do Everything Yourself

"I find that having this business has really broadened my skills," says Bill. "As a small business owner, I have to wear many hats. But sometimes, it is better to outsource some tasks. Writing is one to outsource if you are not good at it. Web site design is another. It is a lot more difficult to address everything that ought to be addressed and then implement that design for something as complex as an ecommerce web site."

From First Order to Repeat Customers

The Rowes sum it up for us: "We have really had a lot of fun and satisfaction from running our own ecommerce web site," says Christi. Getting our first order was very exciting, and, no, we did not open our store one day in July of 1999 and then see orders begin to trickle in and then start arriving in droves as some dot com commercials of the bubble times would have you believe. But, orders have come in, customers have come back."

William Rowe, the ‘Pop’, runs the successful Shop Bag End Celtic Jewelry Gifts business since 1999 while having a full-time job as an architect in northern California.

Christine Rowe, the ‘Mom’, runs this same successful business while acting as an educational grant and small business entrepreneur consultant.