I’ve been running the store 20Alpha.com on the side for the last few weeks. I learned a lot from the experience, but as I’m starting my MBA at Ivey in London, Ontario, I know I wont be able to dedicate the time that the website needs to provide a great service to my customers. For that reason, I’m putting the store on hold and no longer taking any orders. For those who are curious, here were my key take-aways:
1. It’s easy to sell, hard to profit.
It didn’t take long before I got my first sale, and I didn’t even have to spam my friend base on Facebook or Twitter. The profit margins were thin, and I imagine, unless you’re making your own clothing, it’s pretty hard to get a higher than 60% profit margin. For $20 shirts, that’s not much profit per sale.
2. One-time sales are hard
Having built my previous company with a SaaS (Software as a Service) pricing model, I can see the immediate disadvantages of running a one-time sale operation. Not only do clothing need-not regular replenishment, but they’re typically not purchased more than once in a long while. Add that to my point #1, and it’s a very big problem. Maybe there’s a market for subscription clothing? So you’d pay like $2.5/mo for 12 months for a year…. who knows…
3. Branding is Boss
All it took was thinking ‘outside of the box’ for the branding. Look at what other sites do and do it differently, how you think it should be. This allowed me to make a lasting brand pretty quickly.
4. Cater to your market. Nobody else.
I focused my marketing around the ‘Bro’ demographic that I believe is being underserved. This I feel was the reason people purchased from 20Alpha. People want to buy things from their friends (or ‘bros’ in my case).
5. You can test the waters with very little funding, however funding is needed to grow.
I didn’t invest any money into marketing, but it really limited my growth. It did validate my hypothesis that there is a very unservered market however. Given a few thousand in financing, I believe I could have made some decent Facebook marketing and business development.
6. First customers are awesome.
My first customers were so responsive over email that I actually felt like we were becoming friends quickly through our convos. They gave me honest feedback and asked me questions about my products that shaped the store to be better for them, and as a result, better for me. Hope this info helps anyone out there hoping to launch their own store!