Saturday, March 12, 2011

Web Based Business Proving Near Impossible

From a Reader...


My wife is from (overseas) and if you have ever been there you would know that there are some very good import/export possibilities. We are very interested in importing some specific nitch products and selling them on the internet.


I went ahead and ordered your book "How Small Business Trades Worldwide" and will have read it by the time that I start your class next month. I do have a couple questions that I have had come to mind since I started your book a couple days ago. First, why haven't you updated your book? Or if you have where can I find it? I notice the copyright date is 2001, surely in 10 years time things have changed greatly and is worthy of updating the information. One thing in particular is the expansion and ease of ecommerce. On page 18 of your book you state that "a business that is only web based is proving near impossible", have you changed your stance on ecommerce? 


Reply:


We cannot know if there are good import/export possibilities until we test them in the market, which is one of the first things we do... our opinions are mere hypotheses to test...  we never risk bringing in something until we have proven the demand with orders from customers first...



Copyright dates don't change, it is the date upon which the clock starts ticking and the copyright begins to expire, so the book will always be copyright 2001. If one could simply update a copyright forever, then copyrights would never expire. The law is designed to assure copyrights do expire.

I have made plenty of minor changes to the book over the years, and as a small business start-up the point "a business that is only web based is proving near impossible" is as true today as it was in 2001, even more so since we have a decade of experience to back it up.  Of course if you can amass a few billion in advance, you can create another amazon, I suppose, but we are talking about a business start-up, which for most people means little or no assets to begin. 

I understand there are many young people who did not know the world before the internet, and plenty who wish it to be true that it is a likely success to open a web-based business, the opposite of what my book says.  It just is not true.  If you have a plan that is web-based and has worked, I'd love to hear about it and show others. A decade later I am still waiting to see a single viable example (and I mean make a living at it, since for the same time and effort, one can make a living otherwise).  What makes the web unviable for the small business is the cost of customer acquisition is too high.  Read David Ogilvy on Advertising, a book from the 1960s, which is as relevant today as it was then regarding the difference between impressions vs. sales.  

The web has been a major benefit in lowering the cost of research and communication.  That is no small thing, but beyond that, the web is perhaps no more than 4 or 5% of sales.  Or in other words, 95% of sales does not take place on the web.  It is important to go where 95% of your customers are.  And if there is any internet-based business to be done, then sell to internet retailers, do not maintain your own internet store.  But then in the 1970s, when mail order catalog business exploded up to 3 or 4 % of sales, that was the lesson then too.  I sell TO amazon.com, but not "on" amazon.com.  They are just another retailer.

One thing we do in business is make people prove claims, we test our own hypotheses.  Often claims about the 'net are sheer nonsense.  I was one of the first people to ever deliver a course on the internet, and certainly the first to do so in a financially viable manner  (most of the competitors from 1990 - 2000 are gone).  I've integrated the web into my business only to the extent it is beneficial to my customers and business.  I am constantly leaning on google adwords, seo mavens, and anyone else who claims there are cost/benefits to be enjoyed. I tested the claims that one can join the rich working 4 hours a week.  If and when the time comes that a business that is only web based is proving viable, then I will be one of the first to know about it, and will share the info.  In the meantime, I am not going to suggest anything I know to be not true.

What I do offer in the class is the hard-core steps to establishing a viable business, and avoiding the common mistakes that wreck novices to the field.  There is nothing to keep you from establishing a website and putting the niche products up for sale, and testing your hypothesis.  Quickly you would prove you would false.  Then what?  Then you could do what I lay out in my class, and find a viable business trading with any given country.


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