The Basics of eCommmerce

 

How do you assemble IKEA furniture? Do you read all of the instructions before you unwrap that Allen wrench that comes with the Flärdfull? Or do you forego the instructions entirely and just start putting it together?

What works for me is laying the instructions to the left and the pieces to the right. Then I follow the instructions as I go. If step 1 tells me to “lay the long piece down and screw in some smaller piece,” I lay the long piece down and screw in the smaller piece. I repeat the process for steps 2, 3, 4….until a fully-assembled chair sits before me.

If I study all of the instructions first, I’ll get too tired and lazy to assemble it. If I do muster enough to start, I’ll review the instructions along the way anyway. Why did I even look at it in the first place? On the other hand, if I don’t read the instructions at all, I’ll put parts together wrongly, undo/redo work, and end up with an upside down chair with parts mysteriously left over. Learning and doing have to clasp hands to get the best results.

This is how I’m approaching the side hustle. And after looking at various online side-hustles, we’ve decided to start with eCommerce.

 

eCommerce: the What, the How, the Why—and the What Again

What is eCommerce?

It’s basically selling products online. You might remember a time, not too long ago, when the only place to buy shirts or shoes was from a physical store. The internet easily replaced them because stores are generally nothing more than distributors—a single location where you can buy products from different manufacturers. A distributor’s greatest value to a customer is the convenience of distance and variety, so when an even more convenient way to shop (the internet) came along, the process of buying was effortlessly dis-intermediated (basically, you no longer went to the store but straight to the maker). Physical stores and online stores co-existed because while online stores provided convenience, they didn’t have the product breadth of a Wal-Mart or Target.

Even though you could do all your back-to-school shopping online, it was kind of annoying to go to one online store to choose a backpack, enter in your credit card information, then type into another online to buy pencils and enter in your credit card information again. The hardship of life. Then along came Amazon.com, where you could buy that backpack and pencils in one online location, only enter in your credit card information once, and save money for shipping if they could bundle it. Amazon solved both the convenience and variety problem. Physical stores have became nearly extinct.

Amazon.com is the new Wal-Mart, and is doing to Wal-Mart what Wal-Mart used to do to its competitors: make shopping so convenient, products so diverse, and prices so cheap that you have no chance of competing. Thus, any discussion of eCommerce needs to include Amazon.com.

How eCommerce Works

Within eCommerce, there are several strategies, but I’ve narrowed it down to the 4 major ones (there are sub strategies like white label  and black label products, which we’ll get into more as we go along).

Other Platform (Amazon) Your Own Platform
Sell Others’ Products 1. Easiest/Lowest Profit

  • Pro: very established platform
  • Pro: no inventory risk
  • Con:low margin*
  • Con: dependent on Amazon’s rules
 4. Harder/Higher Profit

  • Pro: not dependent on Amazon
  • Pro: no inventory risk
  • Con: low margin*
  • Con: not established platform
Sell Your Products 2. Harder/Higher Profit

  • Pro: very established platform
  • Pro: higher margin*
  • Con: dependent on Amazon’s rules
  • Con: inventory risk
3. Hardest/Highest Profit

  • Pro: not dependent on Amazon
  • Pro: higher margin*
  • Con: inventory risk
  • Con: not established platform

*Margin is your profit divided by selling price. The higher margin, the better.

My initial thought on this project is tier our steps to gain experience, starting with the upper left quadrant and moving counter-clockwise. Here are my project instructions:

  1. Start with upper left quadrant to learn the ropes by selling someone else’s products on Amazon.
  2. After that, eventually move to the bottom left quadrant by developing my own products (or products we develop with friends) to sell on Amazon to validate these products. If it gets a lot of buyers, spend money to develop JMC’s own eCommerce store.
  3. Eventually open up JMC’s eCommerce store. This will take upfront capital and a lot of learning, so it is key to have a product that has proven to have good demand.
  4. Once the JMC platform is established, add elements from the upper right quadrant to give the opportunity for others to sell through this platform.

So I’ve laid out my instructions above. I’m now going to start assembling with the help of Steve Chou’s course. (I signed up for his course and find Steve to be a natural teacher, helping make new concepts easy to understand.)

Why eCommerce?

Two Reasons.

One: If you build it right, you can create a brand. And when you’ve built a brand, things get much easier.

If you’re charging money for your product, a potential customer will have what we call a “Trust Hump.” That’s why we all read Amazon and Yelp reviews before buying—we want to get over the Trust Hump. If it’s free, we don’t really care. But once money is on the line, trust needs to be earned. How do we know a product is well-made or will perform as advertised? Brands have already gotten past our Trust Hump.

That shampoo may be cheaper, but I’m not putting something I’ve never heard of on my hair.

Two: It aligns well with our mission—give our readers tools to become more financially savvy, whether that be in the old economy or Automatized Age, and better able teach their children about money.

This also explains why we strive for more readers of the JMC blog. Similar to how gripping with your thumb and index finger together is many times stronger than trying to grip something with either finger by itself, JMC blog and JMC eCommerce will strengthen each other. Having been readers of this blog, we hope you’ll realize that we’re real people with real hopes and fears working really hard to make a real difference. We hope that this pares down the Trust Hump. Moreover, JMC eCommerce, if it’s successful, will link to the JMC blog for anyone looking to learn how we created JMC eCommerce so they can replicate it.

What Products?

Technology has advanced to the point where opening an eCommerce store is not much harder than starting a blog. However, as any entrepreneur will tell you, just opening a store is the easy part. The real magic is finding the right product and marketing it. Here are things we’ve been thinking about that are consistent with our goal:

  • Children’s books that discuss finance and money
  • Board games that teach finance and money (we’ve already started working on concepts with our friend, B, who we’d wager is safely in the top 1% of board game owners and conceptualizers. He’s got amazing ideas.)
  • Virtual internships in high demand fields like investment banking, big law, consulting, and more, to help you or your high schooler find out what a week on the job is really like before choosing a college or major.

 

This is all so new and, well, pretty scary… but it’s also super exciting and fun. Unlike IKEA furniture, there’s no guarantee of a working chair when you’re done following the instructions. In some ways, it’s also like art—here, we have to create and iterate.

Sometimes you like what you make, other times you have to start all over with a new piece of clay. One thing is for sure, however: we’ll give you the play-by-play.


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9 Comments

  • Lauren Fortenberry October 20, 2016 at 8:37 pm

    But what about assembling IKEA furniture in the presence of two toddlers?! Well, that might be for another time…

    Exciting developments! I learn something new with each post. And I’m wondering how quickly you can make those money and finance books available for the little ones? Anything to help a mother out 🙂

    Reply
    • justmakingcentscom October 21, 2016 at 4:02 pm

      With 2 toddlers? Impossible!

      Hey, thanks for being interested in the books! Have been focusing on the board game but do want to start an idea board for characters, plot, etc. Will keep you posted!

      Reply
  • joleisa October 21, 2016 at 3:52 pm

    This prospect sounds exciting! And by the way, this has given me an idea for a blog post! Keep it up. I’ll be back!

    Reply
    • justmakingcentscom October 21, 2016 at 4:02 pm

      Thanks for visiting and commenting! So glad this sparked an idea!

      Reply
  • amileinmyshoes October 22, 2016 at 7:51 pm

    I was away again and almost missed this. How exciting. Board games is a fab idea. We’re big on board games here. Monopoly is a favourite and we bought The game of life last week which our son loved – he kept winning! I look after 8 school aged children a week in my home (5-10 yrs), so if you want to run anything by me that I could ask the children or try out on them do let me know. Good luck! Keeping it simple would be my advice 🙂

    Reply
    • justmakingcentscom October 24, 2016 at 12:44 am

      Thank you so much! I love monopoly too and am kicking around post ideas on how to use it to teach your kids about money. We have this beautiful wooden board set that my brother in law found someone throwing away. It’s in great condition and goes for over $500. Another persons trash is our treasure!

      That’s good advice about keeping it simple. B has to remind me of that too! Our main thing is that we want it to be fun so kids want to keep playing and learn along the way, rather than become so overwhelmed that it feels like a chore. I’ll pick your brain and when we’ve completed a concept, send a few your way to test out!

      Even though I write about new ways and technology, my hope is that my children engage with real books and we bond over board games — old fashioned stuff. Get them away from staring at a screen.

      Reply
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