Waking up to e-commerce potential

NZ Business, May 2008 by Bland, Vikki

When Louise Tanquay started her business Thesleepstore.co.nz from home, her previous e-commerce Knowledge was limited to ordering theatre tickets online and using TradeMe.

"I have found the learning curve fascinating and am amazed how quickly I have been able to learn things that make a significant difference to the business," she says.

Tanquay and husband Matt have two pre-school age children and another baby due this year. Their business, which sells sleep-aid devices for babies, including a wrap of their own design, employs them both full time, with a part time person employed three days per week.

The business is fully online; it broke even on the cost of set up at around six months, and at two years old is at the point of being able to support the family.

"Matt is working on an affiliated marketing programme to grow our market share and I try to keep on top of the emails every day. These are not only sales and product related enquiries; we also get a large number of enquiries for free sleep advice," says Tanquay.

This is indicative of where the web has evolved to in recent years. The phrase 'Web 2.0' relates to the use of the Internet as an online meeting place where people can share ideas and feedback and interact - site owners are beginning to work out ways to evolve their sites through the inclusion of free advice, blogs and forums. However, Tanquay says peoples' enquiries can be quite persona! and, depending on the topic, not necessarily something they would be comfortable placing in a public forum. Additionally, administrating the Web 2.0 aspects of a site can be time consuming.

"For personalised sleep advice, it can take up to a week to get back to people, so we have a lot of articles on the website designed to offer help. I also do a blog on Nappies.co.nz, but I find I just don't have a lot of time which is why I don't do a blog on my site - in the longer term it is a possibility."

Products sold on thesleepstore.co.nz include a wide range of devices designed to help babies and toddlers sleep, including sleeping bags, swaddling wraps, and 'white noise' machines. Products are sourced nationally and internationally, usually arriving in cartons which congregate in Tanquay's hallway.

Keeping accounts up to date, setting up e-commerce site payment facilities, dealing with customs and ensuring supply are all challenges to be overcome, says Tanquay.

"Initially I did all the bookwork myself and I still do all my own customs clearance. But I now have an accountant, because otherwise you spend so much time you could be spending growing your sales, filling out spreadsheets."

She says there are hidden costs to e-commerce. Around 90 percent of customers prefer to pay by credit card, with the rest making an online banking deposit. Tanquay's web consultant Zeald, which built the site, took care of setting up the payment side of the e-commerce site after Tanquay approached her bank and was told the bank was unable to provide an interface between its card systems and the e-commerce payment vehicle on the site.

"[When] processing credit card transactions, you pay your payment gateway and your merchant fee to the bank; and that can be up to nine percent commission; then you pay your site hosting fee. It is far easier to go with the solution your web developer integrates," says Tanquay.

She says it's a good idea to learn as much as possible about e-commerce, including using free courses such as those offered by Trade and Enterprise New Zealand.

"They have provided wonderful free training. We have also had a lot of help and advice from Zeald."

One area of e-commerce new site owners may miss is the legalities of online trading. Because Tanquay imports baby care products, she is responsible for ensuring these meet legal health and safety guidelines.

"I did take some legal advice and we do have public liability insurance. But there's not much more you can do except ensure your products meet legislation regarding health and safety. You have to be on top of that if you are importing."

Thesleepstore.co.nz has had a stand at the Parent and Child Show for the past two years and Tanquay says she has put a lot of effort into search engine optimisation with guidance from Zeald. The site also advertises through parenting related print media, and asks site visitors how they came to hear of the business.

"Over half our business comes from web searches and about five percent of that is international sales. Long term we would like to expand more into Australia; there's massive potential there and in New Zealand, especially with the current baby boom," says Tanquay.

She says if the business suddenly took off or received an unexpectedly large order, supplier relationships come to the fore.

"I would be on the phone to our suppliers in the US, Australia and Canada and New Zealand. Some of them [can] have the cartons on my doorstep the next day."

Not a chilly idea

When Melissa Hay, her husband Chris, and friend Rosie Henderson got together to launch an online site selling uniquely Kiwi photographic images for advertising agencies and others, they decided to do it properly. Rosie, a graphic designer, and Melissa, who has a background in the Hr industry, were frustrated by the lack of quality Kiwi imagery at affordable prices and set out to research the market as well as the e-commerce scene.