Its been almost two decades since the debut of AuctionWeb, the first online marketplace to make it big.
That sales platform, which changed its name to eBay in 1997, came of age in a less tech-savvy time. By handling site design and payment process in the early days of the web, it allowed sellers to concentrate on selling, whether their goods were clip-on earrings, mid-century furniture or hard-to-find industrial tools.
Since then, a slew of web-based selling platforms have allowed both consumers and entrepreneurs to make more exact matches than ever. In 2005, a decade after eBay appeared, Etsy launched with a focus on handmade products and crafts – it now has 800,000 sellers and 42 million unique visitors a month. A year later came Shopify, a templated service for design-focused sellers with decent brand recognition to embed transaction capabilities into their own sites. Meanwhile, eBay now processes $1 billion in annual sales in Canada alone.
“Before, you were forced to sell only to people who could travel to your store,” says Avi Goldfarb, a professor of marketing at the Rotman School of Management in Toronto.
The first big push from eBay, he adds, were artifacts with inherent value, but without a centralized set of potential buyers. “Online, that very dispersed set of customers adds up to a substantial market. If you have a unique proposition, it’s an incredible opportunity.”
That’s especially true for Canadian merchants, for whom online platforms provide an enticing opportunity to reap profits from marketplaces that are much larger than this outpost of 35 million potential buyers.
These three entrepreneurs are successfully taking advantage of these platforms, and they outline their experiences:
Jean-Francois Lapointe, Bicyclettes de Hull, Gatineau, Que.
Bicycles and bicycles accessories, including hard-to-find parts for old bikes
2012 online sales: Between $1 million and $2 million
Platform: eBay Canada, myworld.ebay.ca/bdhbikestore
By 2004, Jean-Francois Lapointe was tired of installing bike parts that his customers had bought cheaply online. “I thought, ‘that’s not cool, we’re losing business,’” says Mr. Lapointe, whose father opened the first of the family’s two bicycle stores in 1973. Mr. Lapointe chose to set up his online shop on eBay because it was the world’s biggest, best-known Internet platform. It already had a section for sporting-goods sellers, and it used PayPal to protect vendors from any payment indiscretions.
Within a year of going online, Mr. Lapointe was eBay’s top bike suspension seller. He soon branched into selling frames, seats, wheels, accessories, and then full bicycles. Now, a third of his business happens online – hardcore aficionados turn to him for iron parts for old, out-of-date bikes – and he employs four full-time staff to deal with these sales.
EBay’s fee structure fluctuates between 2 per cent and 8 per cent, depending on the cost of the item sold. Mr. Lapointe finds the cut more than fair. “It’s simple and cost effective and they have a lot of experience,” he says. “I’ve had no problems at all.”
His complaints have nothing to do with the Internet, but they will be familiar to any experienced exporter – tariffs and taxes that stymie his attempts to compete with U.S.-based shops. Like any successful Canadian seller, Mr. Lapointe’s growth has come from accessing the world market, and the United States accounts for about 80 per cent of his online sales. “The Canadian government isn’t helping us at all,” he points out.
Josh Blodans and Julia Vagelatos, Love Jules Leather, Whistler, B.C.
Handmade leather shoes, boots and accessories
2012 online sales: Between $60,000 and $120,000
Platform: Etsy, etsy.com/shop/lovejules
“Its all been trial and error, without a doubt,” says Joshua Blodans, who speaks of learning to handcraft leather goods, and then to sell them online.
The Toronto native moved to Whistler with his girlfriend and business partner, Julia Vagelatos, in 2008, aiming to find satisfaction by crafting beautiful things while enjoying the beautiful view. A year later, the pair chose Etsy as their online sales platform, largely because of the site’s reputation for nurturing artisans and attracting buyers interested in unique and handmade goods. The site charges 20 cents to post an item, and then a 3.5-per-cent commission on sales, which are processed through PayPal.
Despite its cozy feel, Etsy is a place to sell things, and Ms. Vagelatos and Mr. Blodans soon realized that process has some classic rules. “We were quirky and creative with it at first,” says Mr. Blodans about choosing the 13 descriptive terms that Etsy allows them to use to tag their items. “But it’s a bare basic search engine.”
Using Google Analytics, they soon realized that “shoes” and “leather” brought more traffic to their shop than “starving artists.” While the duo does sell goods out of its garage workshop, more than 90 per cent of sales are to non-Canadians online, with Australians and Russians especially big fans of the textures and patterns of Love Jules Leather’s handsome footwear.
Their ski-bum lifestyle was a victim of their success. This June, Love Jules and its founders will move to Vancouver, seeking quicker access to sources, sophisticated tools, and potential staff. “Etsy made us able to take this part-time hobby gig and do it full-time,” Mr. Blodans says.
They’re planning to stick with Etsy for Internet sales – their only wish, four years in, is for the platform to allow more personalization of the online shop’s aesthetic.
Eric Migicovsky, Pebble, Palo Alto, Calif. (via Vancouver, B.C.)
The Pebble smartwatch
2012 online sales: More than $10 million
Platform: Shopify, getpebble.com
“We chose Shopify because it’s pretty damn easy. I think it took us a couple of hours to get set up,” says Eric Migicovsky, maker of the wildly popular Pebble smartwatch.
By syncing with iOS, Android and Blackberry, the wrist gadget allows people to check their schedules, their email and their Twitter accounts without having to pull out a phone or tablet. Mr. Migicovsky began shipping his product early this year, after first running the most successful Kickstarter crowdfunding campaign ever, raising $10 million for R&D.
Shopify doesn’t draw browsers to a shop, or help process payments. What it does is handle heavy traffic. Mr. Migicovsky is staying loyal to Shopify specifically because of Pebble’s huge growth, and the fact that his site didn’t crash during last year’s huge sales bump.
“I didn’t have to test the website or scale it or see if it was loading in Britain,” says the former University of Waterloo student. “I relied on Shopify to keep the site running. They made it very easy to transition into being a bigger company.”
His fee remains at a reasonable, flat $100 per month.
The platform also provides users with a slew of useful apps, including tools for analystics and customer feedback. Sellers can use whatever financial transaction program they prefer and, most importantly for the design-conscious, build most of their own sites around Shopify’s specs. “It integrated cleanly with our existing PIN processor,” Mr. Migicovsky says.
“Their shopping cart is clean, and the whole thing looks professional.”
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