[Paul Wenke has been an E-Myth Client since October 2005, and graduated from the Mastery Impact! Business Coaching program in December 2006.]
Back to the Drawing Board
As I detailed in Part 1 of my story, I started an online business called Hardware Overstock without implementing any of the E-Myth principles. The result was that we had spent a great deal of time, energy and money building something that would have to be rebuilt. When we went back and consulted the E-Myth lessons we had used in building our bricks-and-mortar business, we had a clear understanding of where we had failed.
My original objective for our new bricks-and-clicks business on eBay was simply to sell products on the Internet, and that's as far as it went. While that was an objective, it was not a Strategic Objective, and that's the crucial difference.
So we started over, and began with the process of developing our Strategic Objective, where we answered the following questions:
- What line of business were we going to be in? A hardware store has a wide variety of products of different sizes, shapes, purposes and functions. Did we want to sell all of them online? Could we sell all of them? Could we ship all of them? Would all of them be profitable? As we began to study these questions, we realized we couldn't sell everything in our store on the Internet. Some things were too large to ship, some wouldn't be profitable, and some were actually unsafe or illegal to sell in this fashion. As a result of this process, we developed and codified some rules for what was to be listed.
- What were our size and growth objectives? We deliberated about how big we wanted to be, and realized that we could have as many products in our Internet store as we wanted as long as we could find reliable sources of quality products - and we now have sources for over 600,000 products. Given this large number, we then defined the critical data elements of the products that needed to be tracked and automated and developed a list of rules that would govern and manage our inventory online. With these rules in hand, we chose a consulting group and a software company with experience in Internet businesses that could help us to build our online systems.
- What would our geographic scope be? The Internet is accessible by anyone in the world who has a computer so, in effect, we could become a global business. The challenge would be getting the product from Colorado to anyplace in the world. But by using Fed Ex, UPS, and the United States Postal Service to distribute our products, we are a company that can distribute product worldwide - and we have now sold products to every continent except Antarctica.
- Who are our competitors? It is difficult to say who our Internet competitors are, and this concerned me at first. However, the key to competing on the Internet is the same as in any business operation: You must have good products, offered at fair prices, backed by good service and convenient to use and, of course, you have to be trustworthy.
As a result of answering these questions, we developed the following Strategic Objective for Hardware Overstock:
- Hardware Overstock will aim to be the largest hardware store in cyberspace by offering a wide array of products across multiple Internet sites. We will achieve this status by the end of 2007.
- We will be recognized as an honest and dependable provider of high quality hardware products.
- We will develop a method of allowing our customers to provide instant feedback to us regarding their experience with Hardware Overstock. We will maintain a positive feedback level of at least 99.8%.
- We will always offer our customers a 100% money-back guarantee to assure their complete satisfaction with our products and service.
- We will achieve $3,000,000 in sales by the end of 2009.
- The breadth of our inventory offerings will exceed 100,000 Stock Keeping Units (SKUs) by the end of 2007.
- We will always embrace technologies that will advance the efficiency and effectiveness of our business.
Based on this new Strategic Objective, we have been able to completely redesign our web site, and our online store.
We then implemented a number of Key Strategic Indicators to monitor our progress in achieving our Strategic Objective. Those Key Strategic Indicators are as follows:
- Developing rules to determine which products to list in our Internet stores. These rules will evaluate a product's characteristics in terms of profitability after all costs of Internet sales are met; product size and weight ; shipping safety; and product popularity. These rules will be a part of the software code written to manage our site.
- Developing a new product return policy; a Customer Satisfaction Policy; new shipping policies; an About Us Page; response times for pick, pack, and send; and response times for answering customer e-mails.
- Activating the new site with at least 15,000 products.
- Reviewing rules in the Post Launch Evaluation Period to make certain they are meeting our goals; reviewing customer feedback to determine any problems; monitoring pick and pack rate; monitoring customer e-mail response time; and reviewing profitability.
The process of rebuilding my Internet business took about five months from the time I recognized we had a problem. This is an incredibly fast time frame, considering it took us about a month to develop our Strategic Objective. However, the process of developing this Strategic Objective taught us a great deal about the critical success factors of our business. This understanding assisted us in finding the right people to help us, and it also painted a clear picture for them.
Making adjustments, seeing results
After we launched our new store there were a few problems, but because we knew what we were trying to achieve, we were able to correct them immediately. Our rules and corresponding systems were a great reference point, and enabled us to identify any mistakes and to make adjustments to our systems. This process of evaluation is ongoing and will probably never really end because the Internet market place changes constantly. Therefore, we must be on top of our game to make sure we stay in a leadership position.
So the real question is: did all of this work and investment worth it? Well, as of the date of this publication, our sales are up 100% from the pre launch period. And the beauty of the Internet is that these sales increases occurred overnight. We launched our new store on November 21st and our sales doubled on November 22nd.
I can't think of better proof that following the E-Myth principles pays off!
