Lessons learnt from ociohogar.com, six years of history

After six years of starting ociohogar.com, I see quite a few things that we could have done better from the beginning and I see many things we have learnt on the way. In this first post, I’m going to start looking back in the last six years to those things that we did well and those ones we didn’t do so well, but that we have corrected over time.

The idea

ociohogar.com is online since November 11, 2011. However, the idea and decision for this projected started one year before, in summer 2010.

At that time, we decided that we would open an online shop. In the beginning, we were not very sure what we would sell. We were considering the following options:

• Sunglasses
• Cheap decoration and furniture
• High-end design and luxury items and furniture

We finally opted for the last choice, now looking back to the decision, I this this was one of the right decisions we took at that time. Selling design furniture through internet is not simple, especially in the beginning, many people called interested for our products but the first time they would ask was where they could physically see the furniture, and of course, we did not have a showroom. We were losing around 90 % of the potential customers that were interested for our products because they were finally not trusting to buy online.

However, our brand started to be known for customers interested in luxury and design furniture and the orders started growing up. During last six years I have seen many cheap furniture e-commerce sites to start and disappear, they could not compete with the large international companies that are focused also on cheap low-quality furniture. At this point, I am clear on that deciding for a luxury market segment allowed us to have a more controlled competition and focus on a kind of customer that does not have in mind as the top priority to look for the cheapest possible price.

The relationship with your suppliers is key

One of the difficult points at ociohogar.com when we started was to establish the first commercial relationships with the ones that are now our main suppliers. The market of design furniture is very traditional and many manufacturers were not confident about start using the online channel, it was difficult to convince some of them. However years after, it has been some of these manufacturers the ones knocking on our door because they were interested to see their products in our online shop.

One key point to negotiate with your suppliers is the commercial discount from general public pricing. In the beginning, starting from scratch you will not get the best possible deals, however it is important that as soon as you start getting orders, you renegotiate the conditions with them to ensure your margins are good enough. The main goal is not selling through Internet; the goal is selling keeping a good margin, the higher the better.

 

Advertising is key in the beginning, but don’t go mad with it

When we started, we tried everything in ociohogar.com, and we spent and sometimes wasted an important amount of money on it:

• Banners in high traffic decoration blogs: We had a banner at the header of every page of decoesfera.com, this blog does not exist any longer, and it is now integrated within www.trendencias.com by Weblogs SL. However, at that time was one of the highest traffic blogs in Spanish language about decoration. We paid around 2.000 € for having this banner in the home during one month.
• Advertising in Facebook: We used Facebook Ads to increment the number of Fans of our corporate fan page, we used a budget of around 150 €/month.
• Advertising in Adwords: One of the big mistakes done in the beginning was using very generic keywords for Ad activation, keywords that were attracting a lot of traffic to ociohogar.com, for instance “dining tables”. However most of the visitors coming through the Ads were not the target public that potentially would buy in ociohogar.com, most of the visitors were looking for low price products so whatever they would find in ociohogar.com was beyond their budget. Later on I will publish an article about my experiences with Adwords campaigns optimization, but in summary one of the key points is to refine the keywords for Ad activation so they are the most specific possible to reduce the traffic only to the real target that you are offering products to.
• Sweepstakes: Yes, we even gave away a Chaise Longue priced on 1,500 € among those people that registered in our Facebook fan page and our newsletter during the first three months.
• Advertising on paper magazine: Given we sell design furniture, we decided also to have an ad in Casa Viva, a magazine about modern furniture where you could typically see the same kind of furniture that we offer in ociohogar.com, we paid around 1200 € for one month.

If I would start from scratch now, after evaluating the actual impact of the advertising investment, I would start now with investment in Adwords, where you can adjust very well the investment to your target customers. And maybe I would also have ads in Facebook to start some branding. Facebook allows performing campaigns at very low price. Any of the other advertising we made, banners and magazines, are nice to have to do branding but were expensive and they do not provide a short term return on investment.

Optimize your operating expenses

In an online shop, as in any business, there are recurrent operating business that you pay every month; those are the ones you must care abou because they can have a large impact on your Profit & Losses balance. Following I give some clues about how to get low prices in some of the typical expenses and still get a good service:

• Business center: If you start a business, you would typically register it as company and you would need an address for legal communication with the administration, and it is mandatory in the EU to publish the address and company details on your website. You could your home address obviously, however another good option if you want to have a separate address is to use a Virtual Office service by some Business Center. With this service, you can use the Business Center address as the address for your business, and they are in charge of collecting all your mail. If at some point you need a meeting room to meet some supplier for instance, you can also just pay on demand for this kind of service. If you are based in Madrid, one good option is Elige Workplace in Velázquez, 15. You get the Virtual Office service paying around 30 €/month and the Business Center is placed in a nice and centric place in Madrid.
• Phone number: You could use your personal number or your home number. However, it is typically good to separate your business contact details from your personal phone number. There are companies that provide a flexible service with a fixed number (either 902, 901, 900 or just a regular number) and also a control panel you can use to route the phone number to any destination number you like (could be your mobile, your home number, etc.) and also provide voice mailbox service. With the control panel you can configure how you want the routing of the number to take place depending on the time of the day, day of the week and holidays. One good option at a good price for this is MasVoz. For around 20 ó 30 € per month you get this service.
• Accounting and legal service: In any business there are many recurrent reports and accounting that needs to be done for VAT, annual accounts, revenue and balance accounts, etc. My recommendation is that you do not do this on your own but contract a professional because otherwise, you would spend a lot of time with this and you will not concentrate on the core activities of your business. However, most Accounting and legal services in Spain for businesses are quite expensive, typical price even for a small business is 250 € + VAT monthly. This amount is too high considering the little amount of invoicing that a new business will have which means less time required for accounting. In OcioHogar, we started paying this amount, however we found other companies providing a much better price for new businesses. One good example is Ayuda T Pymes. You get the account service and legal consultancy for 75 € + VAT monthly, and at the same time the platform they provide is very powerful to upload documentation, invoices and check the accounting reports they generate. They also provide an application you can use to upload the invoices just taking a picture of them with your mobile.
• Hosting: When we started in 2011, we decided going with a dedicated server and were working with it during two years. The cost for the dedicated server was around 250 €/month. This is another important error we made, this cost didn’t make any sense because for a new website that is starting, the traffic is going to be initially low and a dedicated server offers much power processing power that you need. For a new website, I recommend you go with a virtual server. The type of virtual server you would need depends on the CMS you are going to use for your shop. If you are using Prestashop for instance, you could go with a virtual server with CentOS with 4 cores and 8 GB of RAM, it would be more than enough. The cost for this can be around 30 €/month  with OVH. OVH is probably one of the cheapest hosting options you can find, but you need to consider the technical support is in English and the type of service is unmanaged servers. They will resolve any problem with the infrastructure impacting the server (they guarantee the availability of CPU, RAM, storage and connectivity for your virtual server), however you need to manage yourself the administration of the software installed in the server.

Marketing from day one, or even before

They day you start your online website, nobody will visit it unless you do specific things to attract traffic or that you have done things previously to the switch-over. It is very important initially, as said above, to you some paid advertising to attract qualified traffic (visitors that are looking for what you offer in the shop) so that they can end up placing an order.

However, also from the day one or even before you must start with a long term marketing plan for your online shop that will improve the ranking in search engines and create a brand for your shop. Later on I will write a detailed post about “cheap marketing” for your online shop. There are many things that can be done at zero-cost and for what you would only need to dedicate time and energy. All the techniques are focused in optimizing ranking in search engines (SEO) and get visibility in Social Media.

At high level:

• Social Media: Create a business account for your company in social media, my recommendation:
  • Facebook and Twitter: Still in 2017, they are the top social media platforms based on number of active users. Facebook is perfect to keep a multimedia communication with your fans with photographs and videos about your products and services, and Twitter is perfecto for instant communication with your followers.
  • Pinterest and Instagram: They will be interesting for your business if you are going to offer a very visual product, something where the presentation of the product in photographs is very important. This is the case of ociohogar.com, we get significant amount of visitors through Pinterest for instance, for that it is key the photographs are good quality.
  • Google+ and LinkedIn: These two social media platforms are used mainly by professional users and other companies. If you have a B2B business, you offer products for other companies or you sell a technological products then these two platforms can be very interesting for you. In the case of ociohogar.com, we have not got traditionally many customers from these two. In any case, it is always good to have a company profile created.
• Affiliation: Setup your own affiliation platform and dedicate time to build a large network of affiliates, or register your website in an existing affiliation network. There are some platforms such as Tradedoubler that require a fixed cost to work with them, however there are other platforms with which you can work without any fixed costs and pay only a commission for the sells they bring. Have a look for instance to Clickwise.
• Blog: Create a blog within the same domain as your online shop and create quality content updating with new posts minimum once per week or ideally twice a week.

Growing the traffic and sales in your website requires time and dedication; it will not arrive unless you focus on the right things. I hope the experiences shared in this post will help you at least to limit the initial investment to make, and concentrate your time and investment in those things that can provide you a return of investment in the short term, at the same time that preparing the future for positioning your brand in the long term.