Tony Sarno16 July 2007, 9:38 AM
Launched six months ago, APC's Geekgear reality e-commerce experiment is now about to spring back with a big surprise.
When we launched the original Geekgear store in February we wanted to show how e-commerce works by selling real products on a real online shop. Not only could you buy computer gear from Geekgear, but also get an insight on what it was like to actually run the store. To paraphrase Marty diBergi, from Spinal Tap, “we wanted to capture the sights, the sounds... the smells of a hard-working online store. And we got that; but we got more... a lot more. “
In short, APC learnt many lessons about e-commerce, some of them brutal.
It started off well. We got most things right with the store itself. Its shopping functionality was good and users were able to easily find and purchase products. We received advice from many customers on improving the store and some of that was easy to implement. Geekgear was still a demonstration of an online store but we also wanted to recover the $35K it had cost to set it up and stock it.
By the end of the second week of sales, we had already learnt much that we shared with readers – from what gadgets were the most popular sellers to our mistakes in not carrying enough of the right t-shirt sizes. None of the teething problems were insurmountable and it seemed like we’d get our $35K back in no time. But we also began receiving the first worrying emails indicating there was a showstopper problem we had not planned for: people weren’t willing to return to a store with very limited range of product.
One reader wrote: “the selection of products suck. i know some people hate to choose, But i Love a large range to select from... i'll shop at thinkgeek till u get some true geek toys and not some old hat thing that went down shit creek before USB 2.0 came out.” And he pretty much summed up why we didn’t get the return business we were expecting, and why sales on Geekgear eventually slowed to a trickle. Customers liked many of the products, but there just wasn't enough variety to tempt them back after their first visit.
E-commerce developers NetMerchant built Geekgear for APC. Managing director Luke Amery points to the basic flaw in our strategy for Geekgear: “In terms of the execution of the store itself, we were pretty happy with how it worked, but the bottom line was that it didn’t have enough of what people wanted,” he says.
“What they wanted was more to choose from. T-shirts and apparel were OK, some people were interested in the T-shirts, but, by and large, gadgets were the order of the day and Geekgear’s gadget range wasn't big enough. So what happened was that Geekgear had quite a lot of interest when it launched, but since then orders have slowed to a steady trickle.”
The main lesson, says Amery, is that while we researched the store itself well enough, we didn’t do our homework on the business model and what it would really take to make it work. Without a big investment in stock, or without a pre-existing range of product from a bricks and mortar store, we should have based the Geekgear model on a niche store with just one or two products, low running costs and unhurried delivery times. This was the kind of shop that could survive on a modest stream of once-off buyers. Instead, we built a general gadgets shop which would need a big range of product and lots of repeat business to work and compete successfully with similar online stores around the world.
“Obviously this was started as an experiment, but if we had been doing a serious business we could not have afforded to launch as soft as we did. We were only prepared to spend a small amount on stock, and that affected our ability to deliver what customers wanted. We went in soft, and we got soft results,” Amery says.
"The model would have worked better if we were an existing bricks and mortar business that already had a large product range and was just adding another sales channel to the business. But setting up from scratch was quite a challenge. It’s clear that if you’re going to start from nothing, as APC did with Geekgear, you need to be niche and small, very focused and targeted. It’s easier to do marketing as well and easier to rev it up when business picks up.”
OK, we’ve learnt the big lesson – get the business model right, not just the online store. So are we going to make Geekgear all niche and modest and low cost? No way. We're APC. We’re going to massively increase Geekgear’s product range and become a real online gadgets store.
Geekgear is in negotiations with a major Australian distributor of computer gear to become a reseller. We’ll be increasing the stock dramatically in coming weeks. But, as always, what will set us apart from any other online store is that we’ll actually take you inside and show you how the store is trading. You won’t get a better insight into e-commerce than by watching the agony that's involved in making an online shop work.
Amery says: “We have learnt from our experience and are about to try something different. This is what business is all about. You need to find out what’s worked and what hasn’t, and try again." Then he adds "…as long as you don’t lose all your money along the way.”
Next week – an insight into the discussions with our new distributor.