10 Secrets of Selling Online With Yahoo Stores - **Please Note** The text below was written by Paul Graham in 1999. Much of what he says is still valuable information to understand TODAY.
We're often asked, what is the secret of selling online? We're happy to tell you. We make tools that help you sell online. So we don't want these secrets to stay secret. We want you to succeed.
We've been working on Internet commerce since July 1995, so we have seen almost the entire history of this industry. We have seen what works, and what doesn't. This page is a brief guide to what works.
As examples, I am going to include links to good and bad Web sites. So note that the opinions expressed here are my own, and not necessarily those of Yahoo!.
1. Work Works
If there is a single secret to selling online, it is to work hard. Hard work is the secret to succeeding in almost anything, but it is especially important on the Web.
It's true what they say: the Web levels the playing field. A high school can make a better Web site than a large industrial company. On a level playing field, how big you are matters less than how hard you work.
There are millions of consumers out there, but lots of other Web sites are competing for their attention. So you can't just build an online store and walk away from it. You have to work hard to draw visitors to your site, work hard to create a site that those visitors want to buy from, and work hard to give those buyers such good service that they and their friends will buy again in the future.
So the bad news is that starting a business on the Internet is just like starting any other business: work, work, work. The good news is that it is a lot cheaper.
The Web gives you something that has never existed before in history: an inexpensive sales channel direct to consumers. Before the Web, if you wanted to sell direct to consumers, you either had to build retail stores or do catalog mailings. In either case the entry fee is hundreds of thousands, if not millions, of dollars.
On the Web, you can sell direct to consumers worldwide for a hundred dollars a month. You have to work hard to exploit this opportunity. But if you are willing to work hard, you don't need a lot of money to get started.
2. Choose the Right Niche
What sells online? That is probably the question we get asked most. At the risk of being repetitive, what sells online is work. In our experience, the difference in success between one store and another depends a lot more on how hard they work than on what they are selling.
I know of two stores, Store A and Store B, that are selling exactly the same products. Store A sells five times as much as Store B. The reason is, Store A works a lot harder. They work on their site almost every day, and they also do more to promote it.
But although work is the decisive factor, what you sell matters too. As a general rule, whatever sells in print catalogs will also sell on the Internet. If the customer has to see something before buying it, then you probably can't sell it in a print catalog, or online. Otherwise, you should be able to sell almost anything.
It's true that more men use the Internet now than women, so if you sell something that men buy, you are likely to have a slight edge. Someone who works with computers is almost certain to have Web access, so anything computer-related is likely to do comparatively well. And Internet users are richer and better educated than the population as a whole, so luxury items may do well.
But these trends are not set in stone. When televisions first became available, the first buyers were probably richer and more technologically inclined than the population as a whole. But TV rapidly became mainstream, and the same thing is happening to the Web.
More important than the type of products you sell is the size of the niche you choose.
In the physical world, niches are based on geography. I often buy food at the corner store near my house, despite the small selection and high prices. If this store were more than 100 yards away, I would never buy anything there. But in the physical world, proximity is king.
Not on the Internet. Geography is almost irrelevant on the Internet. Niches on the Internet are based on what you sell, not where you are. And whatever you sell, you have to be the place to buy it, because your customers can just as easily visit any other online store.
So you have to choose a niche small enough that you can dominate it. For example, if you are a tiny company, it would probably be a mistake to try selling top-40 CDs online. You would have a hard time competing with CDNOW. But you would probably have a chance at becoming the site for European folk music.
One certain way to dominate a niche is to be the manufacturer. For example, Harbor Sweets is going to be the site for buying Harbor Sweets, because they make them. Manufacturers may be the biggest winners on the Internet, especially small manufacturers who have till now been at the mercy of the channel.
Finally, don't make spelling mistakes in your site. A few of those will undo all the other work you've done to make your site look professional.
3. High Production Values
In a print catalog, "production values" refers to the quality of the paper and printing processes used, the number and quality of images, and the care taken with graphic design. High production values are critically important in catalogs, which have to convince consumers to buy based on a few sheets of paper.
Production values are even more important on the Web. Consumers will not buy from an amateurish Web site.
Most of the people who visit your site will still find the idea of ordering online unusual. I have been buying online for three years, and I still find it a little unusual. So your site needs to inspire visitors with confidence. It should say that yours is the kind of company that does things right, and that if I order something from you, it will be a good experience.
Of course there is no direct connection between the quality of your site and the quality of your company. A company could have a brilliant graphic designer and lousy products. But usually there is a connection, and that is what visitors to your site will assume. If your company is unable to put up a good Web site, then it seems natural to assume that your company cannot deliver good products or services.
The most extreme case, of course, is when your company does not have a Web site at all. Occasionally I go to look for information about some product, but find that the company either doesn't have a Web site, or has a site with nothing in it. Not impressive.
Almost as bad as the empty site is the site that looks amateurish: for example Wolfco.
In contrast, take a look at Despair.com. Here is a site that says, we mean business. What makes a site say that? The same thing that makes a Ferrari look like it means business: good design. On the Web, good design means good proportions, appropriate typefaces, clear layout, and color combinations that work.
Overall the most important feature of a Web page is the organization. That is what visitors will notice first. It should be possible to "read" the structure of a page at a glance. A high quality Web site looks clear. A badly designed site looks haphazard.
Of the elements on the page, the most important are the images. A Web page consists of text and images, and everyone's text looks the same, so the difference in production values between good sites and mediocre ones depends almost entirely on images.
By images I do not necessarily mean product images. I mean gifs and jpegs, whether they are product images, display text, logos, button bars, bullets, or what have you.
To start with, better Web sites usually have more images. For example, they tend to have button bars at the top of each page, to brand the site and to aid in navigation. And instead of displaying
Titles Like This
in screen text, they often display text as gifs. Text rendered as a gif can be antialiased, meaning you don't see jagged edges. You can use any font, not just whatever the browser has, and you can also get 3D effects like bevelled edges and drop shadows, which (used sparingly) make a site look richer.
When I say that better sites use more images, I do not mean that they use more k of images. Big images take a long time to download, and that is the kiss of death in an online store. In a top-quality site, images are the seasoning, not the foundation of the site. Use small, punchy images that will carry a lot of the surrounding area.
In particular, avoid the common mistake of putting a huge image on your front page. By all means put your logo on the front page, and in fact on every page, but make it download fast. Your logo is not what your customers came to see.
They came to see your products. But don't throw full-size product images at your visitors until they ask for them. Sophisticated sites begin with a page of smaller thumbnail images, which visitors can click on when they want to see more.
If you don't use thumbnail images, your section pages will be too slow.
Make your product images as high quality as possible. Consumers won't buy from an image that looks like a badly lit polaroid. So have a professional photographer take your photos. Images shot with a top-quality digital camera look brightest, but you can also scan transparencies or even scan images right out of your print catalog.
If possible, try to make the background color for the product images either the same color as your pages, or transparent. Product shots look better when the object seems to sit right on the page.
Finally, don't make spelling mistakes in your site. A few of those will undo all the other work you've done to make your site look professional.
4. Make Your Site Easy
It is no accident that the people who visit your site are called "Web surfers". They have the same short attention span as TV "channel surfers". The average visitor to a Web site looks at only three or four pages before going somewhere else. Visitors will leave at the slightest obstacle.
So if you want people to visit and order from your site, don't put any obstacles in their way. Whatever you do, don't force visitors to register. You have to create yourself an account, with a user id and password, before you can even order from Wal-Mart. Do they expect online shoppers to remember a userid and password for every online store they visit?
Most major sites have learned not to require registration. They have also learned not to use frames. Frames are a lot more gratifying to the site designer than the visitor. To visitors, frames are merely confusing.
Another big disadvantage of frames: many search engines don't index sites that use frames. So using frames will decrease the amount of traffic you get from search engines.
None of the most heavily visited sites use frames. In fact, the more important the site, the simpler the design. Look at what is probably the most important site on the Web, Yahoo! There are no bells and whistles to distract you. The design of the site is so simple that you get it at a glance.
Most of your visitors will not start at your front page. Most of your hits will come from search engines, and when someone searches for a phrase in a search engine, they are sent directly to the page in your site that contains that phrase. So most of your visitors will drop right into the middle of your site, like paratroopers. The design of your site has to tell them immediately where they are, and what their choices are.
Most major sites solve this problem by putting a row of buttons at the top or down the side of each page. Somewhere, usually at the top of the page, they include a small version of their logo. The logo serves two purposes: it brands the site, and it serves as a link back to the homepage. For example, look at these interior pages from CDNOW and the NASA store. They all use this approach. So does Yahoo!. It has become the accepted convention for the way a site should be organized.
Make sure you put these links at the top of the page. You don't want new arrivals to have to scroll down to the bottom of the page just to find out where they've landed.
Many of the people who arrive at your site will be searching for a specific product. We find that almost half the people who place orders were searching for that particular product. You have to pay special attention to these visitors, because they are the ones who actually spend money. Every online store should be searchable, and there should be a search button on the home page, if not on every page. Every store with less than 2000 pages should also have an alphabetical index. (All Yahoo! stores automatically have both.)
5. Be Real
Anyone planning to sell online should start by shopping online. Next time you need to buy something, look for it on the Web.
When you put yourself in the consumer's place, you'll find it is not hackers you worry about, but the merchant. Almost anyone can set up a Web site. So visitors need to be reassured that they are ordering from a real company, and not just a teenager running the site out of his bedroom.
Anything you can do to show that you are real will help increase orders. Include your name, phone number, and street address. Toll-free numbers are especially good. If possible, include an image of your catalog or building, customer testimonials, or even a brief company history.
The best way to show that you mean business may be to include a full selection of products. One of the things that distinguishes winners like Amazon and CDNOW is their huge inventories, which show that they are serious about selling online.
A surprising number of companies have online stores that send the opposite message. Some don't even have ordering working yet. It makes you wonder, do these guys actually want your business?
A lame Web site is better than no Web site, but not much better. Especially since the latest generation of Web tools make it so easy to build sites with online ordering.
6. Emphasize Service
As I mentioned before, most of the people who visit your store will still find the idea of buying online a little strange. You have to reassure them. The most powerful confidence builder is a top-quality site: high production values go to work directly on the visitor's subconscious. But it's also important to reassure visitors explicitly.
For example, if you are determined to provide great customer service, tell your visitors so, right on your site. Guarantee that they will be satisfied with what they buy from you, or you will refund their money with no questions asked.
Your site should offer secure online ordering, and you should say so to visitors. But If you try ordering online yourself, you'll find the biggest concern that you have is not security. I bet what you'll find yourself thinking is, who are these guys? Did they actually get my order? Are they going to send me the products? When?
When someone places an order from a Yahoo! store, we always generate a confirmation page thanking them for their order, and telling them their order number. That is a good first start, but you as the merchant should also send them an email thanking them for their order and telling them when it will arrive.
And make sure that you ship orders quickly. Web users want fast results. They don't want to hear that they should expect to wait 4-6 weeks for delivery. This is not 1910. Tell them they will get their order in 3 days.
And make sure they do. The consumers ordering on the Web now are like the scouts of an oncoming army. They will determine your reputation for service for years to come. If you do a great job, they will tell all their friends about you.
Ordering online is still an unusual thing to do, so people who do it are proud of how adventurous they are. Have you ever listened to someone talk about ordering online? "It was no big deal," they say, swelling visibly. "I just went to their Web site, found what I wanted, and gave them my credit card number. Three days later the stuff arrived. No problem."
People love to be able to tell such stories to their friends. It's the most valuable kind of free advertising for you. So make sure that your customers have good stories to tell. If you do a bad job, your customers will also tell all their friends, and you will be in big trouble. Word spreads very quickly on the Internet.
Especially this year, treat your Web customers as if each one were as important as ten customers. Because if you treat them well, each one will turn into ten customers.
Do you want to hear what your customers have to say about your Web site or your products? You should. Tell them that you want to hear from them, and put a prominent email link and/or phone number in your site. Try including a link that will let visitors send email directly to the president of your company. Few will bother to send mail, but everyone who sees it will be impressed by your attention to customer service.
When a customer does send you mail, respond promptly! Customers who have taken the trouble to send you email are like gold. Talk about qualified prospects. So treat them like gold. If you can, make it a corporate policy to respond to email within an hour or two at most. You have to reply eventually, so why not do it right away? Customers will be delighted to see that you care about them.
7. Promote Your Site
Having a great Web site is not enough. You also have to bring people to it.
But promoting an online store is different from promoting an ordinary Web site. You're not just looking for hits. You're looking for sales. While it's always a good thing to bring more people to your site, what you really need is buyers. How do you bring them to you?
As always, the solution is to put yourself in the customer's place. If you were someone looking to buy online, where would you be?
A year ago, there was no definite answer. Maybe a search engine. Maybe a site related to the kind of stuff you sell. But recently Internet hubs like Yahoo! and MSN have been setting up areas just for shopping. They vary a lot in quality. Some are, so far, just pages of links. But in the long term (and even the fairly short term) this is where shoppers will go to look for products online.
If you're a Yahoo! Store user, you get an big head start in promoting your site. The biggest source of buyers, by far, is Yahoo! Shopping. And Yahoo! Stores are automatically included there.
After Yahoo! Shopping, the biggest source of traffic is probably still general-purpose Web searches. If you are using Yahoo! Store, our software submits your site automatically to all the major search engines (except for Yahoo, which you should do by hand). Otherwise, make sure to do this yourself.
You don't need to pay a service to submit your site to hundreds of search engines and indices, because there are only 8 that matter: Yahoo!, AltaVista, Excite, MSN, WebCrawler, Infoseek, HotBot, and Lycos. All other search engines and indices might account for 1% of your hits, combined.
Don't expect your site to show up in search engines immediately. It will show up in AltaVista in a couple days, but most other search engines are slow to add new listings. Some only seem to rebuild their databases every couple months.
Another common question people ask us is: How do I get my site to appear first in the search engines?
There is no easy trick that will work in all cases, because (a) all the search engines are different, and (b), if there were a trick, everyone would use it, and it would be just as hard to come up first.
As a general rule, someone searching for "chocolate" is more likely to get a page in your site if the word chocolate appears often on that page, especially if it appears in the title. But it will not work simply to have your page begin with the word "chocolate" repeated 100 times. Most search engines filter out sites that try that. The best approach is to use key words frequently in your site, but not in a way that appears unnatural.
For example, Vitanet is a site selling dietary supplements. The section selling DHEA contains a lot of information about DHEA. The purpose is not only to sell the product, but to draw hits from search engines. The more text in your site, the bigger a target you present to search engines.
One thing not to do, if you want traffic from search engines, is use software that generates your pages dynamically. Search engines don't index dynamically generated pages. As Internet World points out, a dynamically generated site is "all but invisible to search engines."
Most online stores can also profit by getting links from related sites. The best way to get other sites to link to you is to give them a percentage of the sales generated by that link. Industry leaders like Amazon.Com have used this technique with great results. (Yahoo! Store has built-in tools to help you create and manage revenue-sharing links.)
Which sites should you get links from? Put yourself in your customer's position. If you are selling Star Trek merchandise, go to Yahoo! and search for "star trek". The sites you get sent to are the same ones your customers will get sent to, so those are where you want to start asking for links.
Another way to get traffic is to buy banner ads that lead to your site. For example, you can buy banner ads on search engines that are tied to particular keywords. When you search for "books" in many search engines, you will see a banner ad for Amazon.Com.
Be careful when you buy banner ads. Banner ads are expensive, and even if they bring lots of visitors to your site, there is no guarantee that these visitors will place orders. Our data suggests that few online purchases are impulse purchases. Most buyers show by the keywords they use that they meant to buy before they even reached the site where they placed the order.
So if you buy a banner ad that just brings thousands of random people to your site, few of them will place orders. I know of one online store that bought a banner ad on Playboy's Web site. I can't disclose the name, but let's say they were selling modems. Most of their buyers were men, and they knew that thousands of men visited Playboy's site, so where better to put an ad? And in fact, they did get thousands of visits from this banner. But not one order. Why? Because those people were not thinking about buying modems. The mere fact that they were at the Playboy Web site showed that.
In retrospect the advertiser might have done better to put an ad on a site giving advice about which modems to buy. An ad like that might bring far fewer visitors than a Playboy ad, but they would all be people who actually meant to buy modems.
If all you know about your site is how many hits you get, then of course you tend to think that hits are what you should maximize. But hits are not what you need in an online store. Sales are what you need. So you should find the sources of hits that turn into the most sales, and focus on them.
How do you do that? Tracking tools. Good tracking tools can tell you where all your visitors come from, and how much visitors from each source spend. Yahoo! Store's tracking tools can even tell you which search keywords your visitors used in search engines, and how much money people searching for each phrase spent.
(Yahoo! Store's tracking tools are currently the best in the business. They've earned rave reviews from press and analysts.)
For example, if you are selling Star Wars products, you will get a lot of hits from search engines. You may find that you get ten times as many hits from people searching for "darth vader" as for "darth vader figurine". But I would bet that the people searching for "darth vader figurine" spend more money at your site. So what keyword do you buy from search engines? If you want sales, buy "figurine", not "darth vader".
Finally, if you have a catalog business or retail stores, don't forget to promote your site to your existing customers. If you have a catalog, include your URL in it. Your Web site is the perfect place to sell limited quantities of closeout items that would not be worth including in your print catalog. I know one company that includes messages throughout their print catalog telling customers that closeouts are available on their Web site at special prices. They say there is a noticeable jump in orders each time their catalog goes out.
8. Lower Your Prices
One of the best ways to spend money promoting your Web site is to lower your prices. You can't lose. When you spend money on a banner ad, you have to pay for everyone who sees it, whether they buy anything or not. But when you "spend" money by charging less, you only have to pay for the people who actually place orders. So you never pay for this form of promotion unless it works.
Security concerns are not what prevent people from ordering online. The real problem is that online shopping is just not a regular part of people's lives yet. Most people have a collection of physical stores and mail order catalogs that they buy from regularly. But online shopping is so new that most Web users haven't yet found their regular Web stores.
This is good news for you. It means that there is room for you in their list of regular online stores. But you need to nudge them into ordering from you, if you want to become part of their regular routine. And there are few more effective nudges than the prospect of getting the very cheapest price for something.
The emotional satisfaction of getting something at the cheapest price is almost like a drug. People will go to any length to get it. If you want to see online commerce happen, take some commodity item like a Sony Walkman and offer it for sale on the Web for $10 less than people can get it anywhere else.
It will be worth it, believe me, if you can establish yourself as one of everyone's regular stores. Amazon Books has done that, and now they have every prospect of being the place to buy books online. If Borders and Barnes & Noble are not panicking, they should be. They waited too long. Someone else has occupied the space they thought was reserved for them, and it's going to be very expensive, and perhaps even impossible, to dislodge them.
If you use lower prices to make your site a habit with some group of consumers, you can likewise lock up a valuable piece of real estate. (Hint: start today.)
Lowering prices is not just a good trick to jump-start sales. It also makes economic sense in the long run. It's much cheaper to sell on the Web. If you split the savings with the consumer, you both win.
Many Yahoo! Store users are catalog companies, and they tell us it costs between 40 cents and a dollar apiece to print and mail catalogs. The percentage of people who order from your catalog is called the conversion rate. You're lucky if you get a conversion rate of 3%. A 3% conversion rate means that 1 person out of 33 orders. So that 1 person has to pay for printing and mailing 33 catalogs! If the catalogs cost 70 cents each, that's $23 right off the top of the order.
Under conditions like these, it is a testament to the drive and ingenuity of the catalog companies that they can make a profit at all. And those who do make a profit are totally at the mercy of postal rates and paper costs. If you can convert a substantial fraction of your consumers to the Web, you can not only increase your profits, but also decrease your vulnerability to factors like paper costs, which are outside your control. From this point of view, lower prices are a strategic investment.
9. Change Your Site
Want to know how your online store did last week? Here is a quick way to estimate your sales: How much time have you spent working on, and promoting, the site over the last couple weeks?
Overall, the more time a company spends on its online store, the better it tends to do. I doubt anyone can say now what the perfect online store should look like. The whole business of Internet commerce is barely three years old. You are unlikely to get things exactly right on the first try. Like most sites, yours will evolve.
So you should be constantly improving your site. And even if you think your site is perfect, you should still change it regularly. A Web site that has not changed for months is boring. It feels abandoned. Have you ever visited a store in a remote area where the turnover is obviously very low? Where the items on the shelves are faded, or have dust on them? Do you want to buy from a store like that?
Big department stores seem to know that a certain amount of bustle is necessary to show that they are alive. They are constantly changing their displays. Change is even more important on the Web. Especially since so many of your competitors don't know it, and leave their sites unchanged for months at a time.
Regular change in a Web site is a form of high production values. Having high production values means, in short, looking expensive. And a site that changes regularly looks expensive: for most online stores it is expensive, because the site is maintained by Web consultants who charge by the hour.
Fortunately, with the latest generation of store building tools, it is easy to change your site regularly. Many of our users edit their sites several times a week, and some do every day.
One easy way to make your site change regularly is to list featured items on the front page, and to rotate them every few days. In Yahoo! Store, at least, you can do this in under a minute.
Another slightly more laborious approach is to have some kind of news component to your site. For example, Softpro Books has a new arrivals section, which is updated every weekday. This is a big attraction in a site selling technical books, because customers always want the very latest. By taking this extra effort, Softpro has made their online store into more than a store. Customers return to the site regularly as a source of news, and that is one of the main reasons Softpro is so successful.
10. Patience
A few lucky merchants get a flood of orders the day they open. But for most online stores, growth is slow and steady. In the first couple weeks, you see a trickle of visitors, and, if you're lucky, one or two sales. If you work hard, six months later that trickle may have turned into a small but consistent stream.
Even the most successful online stores grow slowly at first. International Male opened their online store in 1996. They were laughed at in the press when they received only three orders in their first two weeks. But they kept at it, and now they are the ones laughing. They have grown into one of the best selling stores on the Internet. I have seen the same pattern repeated in store after store. Growth is slow at first for everyone. The winners are the ones who don't give up.
So don't be discouraged if you only get a couple orders in your first month or two. If you work hard to satisfy those customers, they'll order from you again, plus (and this is the important part) they'll tell their friends. When all your customers are telling their friends about you, your overall customer base grows exponentially, like money at compound interest.
Growth is slow at first for two reasons. It takes a while for shoppers to realize you are out there. And it takes a while for people to order from a site even after they first find it. The first time you visit a site, you may be a little reluctant to order. You think, who are these guys? But suppose you come back a few months later, and the site is not only still there, but seems bigger and more prosperous. Then you think: these guys are real. Especially if a friend of yours ordered from the site in the meantime.
That's exactly what happens in successful stores. And the cool thing is, the growth doesn't necessarily stop. Some of our users have been online for almost three years, and their sales are still growing just as fast as they were at the start.
The graph at the top of the page shows the growth in sales for one of our users over a period of two and a half years. There are ups and downs (due to advertising) but the general trend is always upward.
The Internet is big. There are millions of users, and thousands of sites competing for their attention. It takes patient effort to bend something so big in your direction. But once it gets started, it has the momentum of a truck. If you can get a small, solid customer base, and keep them very happy, that and time are all you need.
