An interview with 1Digital Agency CEO Dan Kogan about the the challenges, and rewards, of eCommerce entrepreneurship.
Dan Kogan is the founder and CEO of 1Digital Agency. From building a successful fashion retail brand, to creating his own eCommerce cart, Dan has spent the better part of two decades in entrepreneurship or consulting for entrepreneurs. In his role at 1Digital Agency he does both, with a laser focus on building eCommerce businesses. I sat down with Dan to explore some of the hurdles and reservations that I hear most from entrepreneurs who are deciding if investing in eCommerce is right for them.
Q: Platforms often advertise that I can start an eCommerce store for about $200. I know that if you hear something that sounds too good to be true, it probably is. If I really want to start in eCommerce, how much will I need to have in the bank to make my initial investment in starting a website?
Dan: (Laugh) Ok, I understand what you’re trying to ask. ‘How can I get into this without spending my life savings?’ There are ways to start an eCommerce store in an inexpensive fashion. If you’re willing to really scrape and claw to get into eCommerce in a way that doesn’t cost you a lot, it can be done. You can start by using a free template. Add your products, and then use the SEO tools of your platform with Google’s indexing in mind. At the same time start to create a ton of content, as that content gets crawled by Google, it can start helping your domain authority.
The biggest issue is that, without a budget, you’re sort of like a gas station in the middle of the desert, with no roads leading to it. Nobody’s going to use you, because nobody’s going to find you. So, my recommendation is, if you want to do this, build your eCommerce store first. Then create some content for your blog, even though nobody’s reading it yet. Now it’s time to start building those roads to your gas station. Start going to places like eBay, Amazon or Jet.com. Any place that let’s you list products will work. List those products, and see if there’s a way you can link back to your site for more information. Check for forums related to your industry. You can always go to Reddit. Just start talking to people. You don’t want to be a spammer. Instead you want to become an authority on your chosen vertical. Just communicate without sounding to salesy. In the signature of those posts, link to your website. If you are providing useful info, you’ll start to see some people exploring back to your site for more.
So to sum it up, with a lower budget, it’s just gonna be more legwork.
Q: I’m no expert in technology, or the web in general. I want to remain focused on running my business, which is what I’m good at. Will I need to put someone on payroll to maintain my site day to day?
Dan: It’s a good question. If you go with a hosted shopping cart, like Volusion, BigCommerce or Shopify, then no, you don’t really have to worry about anything like that. It’s just up and running most of the time. If you go with an open source platform, anything like Magento, or Opencart, then it takes more expertise. You don’t have to necessarily hire somebody, but you do have to be thinking about potentially reaching out to a professional for intermittent help if you’re not technical.
Q: I’ve heard horror stories from other entrepreneurs about hiring agencies or freelancers who said they could deliver one thing, and ended up not being capable. How should I properly vet the contractors I’m considering?
Dan: Well, it all depends on who you’re speaking to. Try to identify what kind of company is on the other end of the phone. A lot of agencies are very reputable, but they’re going to be very expensive, even just for upfront discovery fees. Then there are agencies that are just sales, like Yellow Pages. Nobody’s buying Yellow Pages any more, so they sell web services now, like cheap SEO and 1 page sites. Low cost, but very low impact.
With agencies, I would typically look to their portfolio to determine if that’s the type of site you want to have. Look for reviews too. Reviews and portfolio are a good indicator of the kind of work that people are doing. Then it just depends on your budget. You may find an agency you really like, but the harsh reality of how much you can spend will end up being a major factor in pinpointing who you’re able to work with.
So, check their website, make sure it’s not a one man shop. Make sure your budget matches up with their average project price. Check their reviews. Look at multiple review sources, not just the testimonials on their site. And check their portfolio, because at the end of the day, you’re going to be one of their portfolio examples. Do you see yourself being comfortable sitting next to those other portfolio items?
Q: I’m worried that people are too used to buying from Amazon when they need something online. If Amazon carries similar products, why would anyone hunt down my site and take a chance ordering from me, when they can have an experience that they’re used to?
Dan: Amazon is a wonderful platform for quick sales. Amazon has an enormous catalogue. Not only that but, the ease and quickness of the transaction make it very appealing. It’s something that I use a lot. However, when I want to get a specialized item, like a new pair of jeans from my favorite designer Diesel, I’m not gonna find that on Amazon.
So, I think that if you have an eCommerce site, and you’re trying not to go head to head with the behemoth that is Amazon, you have to offer something very unique, or new, or fresh. If you have products that are competing with Amazon, you’d better have a lower price, or some other competitive advantage. That advantage could be something like a loyalty program, or really fantastic customer reviews. Otherwise, the reality is that most people will just go to Amazon. If you want to make people think twice about that, you have to have advantages, clear advantages.
Q: I’m worried that anyone not on the first page of Google can’t hope to compete online, and the competitors already in my vertical are big names, with big headstarts. Is it possible for a new brand to compete with established businesses?
Dan: It’s always possible for a new brand to compete with an established business, but it takes a ton of work, and even if you put in the work, you won’t get anywhere without the right game plan.
You’re never going to get onto the first page of Google, for any business, unless you try really, really, really hard. It takes effort to make progress. It’s very similar to getting fit. Maybe you go to the gym and you have 30% body fat, and these other guys have 4% body fat. Well, what do you do? You start working out. Maybe you aren’t able work to out 7 days a week like some guys, but any work you can put in, as long as it’s consistent, will eventually start to show results. It might take you a year or two, but you can get there. And the more you do, the more you can do. It’s the same thing with SEO and Google. You can compete with big brands that are already out there, but you have to put the time and effort in on a consistent basis. And you have to have dedication and passion for what you’re doing, because it’s not going to happen overnight. It could take a long time.
When I started with Emoda in 2003, it was before department stores were selling certain designer clothing, before they were selling eCommerce at all. When the big guys started to catch on, my biggest fear was: Am I going to be pushed down the rankings? But I wasn’t. In fact, on many terms, like True Religion jeans, which was a hot brand at the time, I was beating out the department stores. That’s because I had been aggressive about my SEO from the start, and I stayed aggressive when the competition got intense.
Generally the early bird gets the worm, and I think that’s particularly true when it comes to SEO. However, there’s always somebody new. If they have the right amount of activity, and the right advantages, with the right game plan, they can penetrate the top ten. But it is a ton of work, and it could be very expensive.
Q: With the funds I would spend on building, maintaining, and marketing an online store, I could put a down payment on a new brick and mortar location, invest in a new product line, or organize a major marketing push. Why should I invest in eCommerce instead of these other options I know better?
Dan: I feel like all three of those things are totally different. Investing in eCommerce is most analogous to investing in a brick and mortar location. The difference is that the brick and mortar store has a certain radius, or cap, whereas with eCommerce, there is no cap.
For example, when I had a retail store, and I was sitting there 12-14 hours a day, 6-7 days a week, and I hadn’t taken a vacation day in 3-6 months, I ended up feeling like I built my own jail. When you have an eCommerce store it’s a little more difficult to grasp what you’re doing, even if you’re doing it right, because you’re not seeing the customer, and you’re not ringing up the transaction. You’re more removed, so it can be harder to know if anything you’re investing in is making a difference. But when you figure out how to put money into it, and get something out of it, the potential is endless.
A lot of people, when they start out, just drain money down the toilet, because they have no idea how to spend it wisely. Even if they have ten grand to start with, they’ll just lose it. I haven’t been immune to it. When I started my retail store, it was the first year Philly Style magazine came out. I thought, ‘I need to stamp myself onto the Philly scene.’ So I signed an agreement with Philly Style, and I think I spent $5,000 a month on print ads in the magazine. And yes, I got our name out there. Yes, people saw these beautiful little ads. I did a great photoshoot with a girl and a guy outside of a night club. It was the worst investment I’ve ever made. At the end of the day I didn’t have one person come into the store say, ‘I’m here because of that ad.’ The return on investment was nothing. It sounded good at the time though.
Q: How would a new entrepreneur go about recognizing a smart investment?
Dan: They typically don’t. You need to have somebody that you can talk to, somebody you can trust. Whether that’s an agency, or someone who’s already run a successful business, always friend up. Find someone who’s had success, to be your guide for success. For example, 1Digital is successful with many different clients, who have been successful, so we can guide people toward a proven path. It’s good to have friends who you can trust.
- Joe Chilson
- August 8, 2017