The Market vs Domain Name

[julian]

You rent a nice pitch at a market (or rent a shop with a good position in a highstreet or mall). You have ready made walk-by traffic that you sell your stock too.

You buy a nice domain name and have your expensive website built. But you have no traffic to sell your stock too. You have to spend money to market yourself and get traffic from one source or another in an online arena with more and easy entry for competition to take you on.

is the benefit to being online these days diminishing in some ways..

 

[Skinner]

Depends what you are selling and how competitive surely ?

Give me some business types or examples ?

Surely I could say, isn't the internet kinda diminishing when libraries references sections are not online ? In very specific cases it maybe true, but then I'm full on crazy so what do i know

 

[spiderspider]

You have to spend money to market yourself and get traffic from one source or another in an online arena with more and easy entry for competition to take you on.

No, you don't. There is a multitude of things that can be done, that only cost time, to generate traffic and returns.

Running a shop or stall, you need to know how to display your product, so the public can see it, and make the decision to purchase. There is no point hiding your big ticket items behind the value beans, and vice versa.

Online is bit more like standing outside a shop called 'Yellow Bead' (example) with blacked out windows, and asking people to come in and have look at your range of kitchen utensils. They can't see what you sell, or guess by the name (unless emd) until they enter. Its how you stand out there and talk to the people to get through the door that counts

 

[julian]

Ok, but what can blogs the market trader do with no skill or knowledge of internet workings in his time for free (please don't say tweeting and facebook)

There is a hidden cost to things that only cost time methinks..

No, you don't. There is a multitude of things that can be done, that only cost time, to generate traffic and returns.

 

[PanzerWagon]

You rent a nice pitch at a market (or rent a shop with a good position in a highstreet or mall). You have ready made walk-by traffic that you sell your stock too.

You buy a nice domain name and have your expensive website built. But you have no traffic to sell your stock too. You have to spend money to market yourself and get traffic from one source or another in an online arena with more and easy entry for competition to take you on.

is the benefit to being online these days diminishing in some ways..

:lol: this line of thinking / reasoning is horrendous. I am surprised people are giving genuine answers.

 

[julian]

Why? Please enlighten me to what is so obviously horrendous about my reasoning - I am genuinely interested (I need help )

 

[Edwin]

If offline was half as easy as you suggest in your opening post, shops wouldn't be closing at the rate they are!

One of the big issues with offline is that the system is "rigged" in favour of the landlords i.e. they will soak up (most of) the profit by virtue of the price you're paying every month in rent to occupy the location. This point was well made a few weeks ago in a "Business Boomers" program on the BBC http://www.bbc.co.uk/programmes/b040v3ld where it was clear that, even though selling coffee is on the surface an extremely profitable business, when you take rents into account suddenly the numbers look much, much less rosy - and the rent aspect alone is enough to flip the business in question into the red. If you set up a more profitable business, they just claw back more in rent until you're almost back at square one again.

By contrast, a domain name is a one-time expense that has the potential to improve the position of an online business. It's not a silver bullet that negates the need for any other sort of effort, but a strong generic can make everything else that little bit easier, as the business looks more credible, more established than its competitors and blah blah blah i.e. all the good stuff that comes with a strong domain name. (No point in rehashing the list, we all know it by heart by now.)

Sure, it may cost a few hundred, a few thousand or even a few tens of thousands of pounds - but after that the benefits accrue to the online business "forever" at no additional cost.

There are some businesses - many, in fact, if we're talking at a local level - that will benefit very little from being online. And having the singiest and danciest site in the world will make very little difference. All they need/want is a simple website so that if somebody Googles them, they show up (and the basics are there such as opening hours, contact details etc.) For them, buying a premium name is as wasteful as building a very snazzy site.

But that doesn't take away from the fact that for other businesses, online can be an important or even crucial part of their business (or, indeed their whole business). And there, a one-time investment in an appropriate domain name may be well worth making for what is effectively an "ongoing return".

So unless you're talking about a scenario where the business is just renting the domain name, it's not comparable to any offline situation (such as renting a particular location) since one is a one-time expense, and the other is a never-ending one. Buying that generic domain effectively turns the business into the "landlord".

 

[Edwin]

No one has addressed Julian's point about how and what the costs are to drive customers to a web site. It isn't as easy as buying a domain, building a web site and then sitting back and waiting for the orders to start rolling in.

That's probably because it's "how long is a piece of string" territory.

If you want to buy visitors for a hyper-competitive niche such as life insurance, you might end up paying several pounds a click and competing with dozens of other advertisers.

If you're in a less competitive niche and/or can "think laterally" to find tangential but related expressions that people might search on, then you can buy traffic for a few pence per click.

Ditto for SEO and organic traffic - if the niche is very competitive then unless your pockets are as deep as the Grand Canyon you're not going to rank for anything useful - but if the niche is much narrower and less well covered there's a good chance if you keep plugging away with interesting, relevant material and a bit of link building that you'll gradually come to enjoy "walk in" organic traffic.

It doesn't necessarily take a lot of traffic to make a great deal of money, depending on the type of business (especially B2B). It's well worth taking the time to read back through the archive of posts at http://www.david-carter.com/ to learn step by step how a very lucrative business has been created off some (relatively) simple sites with small amounts of traffic.

It also makes a massive difference where you stand in the "food chain" - are you an affiliate, a lead generator, or the actual supplier of the product/service? All this will make huge differences to the available margins, and hence to what you can potentially afford to pay for more traffic (whether via PPC, SEO or other means)

Coming back to Julian's point, I suppose you could think of the rent you're paying offline as similar to buying PPC traffic - say you're renting a shopfront for £2,000 a month and for that you can expect for example 50,000 people to walk past in a month (= banner impressions). Of those, X% will actually come into the shop (can be affected by visible offers, window displays etc. just like you can write better ads, or make better banners) and Y% will buy. If you can make a profitable business out of that passing trade, great - but most businesses will need to actively advertise to
A) Encourage more visitors to seek out that particular shop
B) Increase the % of people who will actually BUY at that shop

 

[tifosi]

The high street is dying a death due to upfront costs of setup and running. Online is struggling due to search engine & big-brand monopoly. One may have walk-by clients but that is a limited market. The other has a global market but needs to reach out to them.

Swings and roundabouts. Choose your market. Choose your battlegrounds. Really depends on your product/service.

I know I'd still be inclined to the online market. It's the reason for the massive upsurge in quick and easy modular storage space you've seen spring up and in tv articles/features where businesses can essentially run an online business from a modern 'lockup'. Many even have business features like business lounges/wifi etc.

No one ever said it was/is/will be easy.

Until councils have the power and exercise that right to limit the length & cost of leases for new business then the majority of new shops will be poundland & charity shops. I've seen it in my town centre where the main hub area has a significant number of empty shops.

Many councils shoot themselves firmly in the foot by setting parking rates / quotas at ridiculous levels.

 

[Skinner]

A serious comparison ?

2500ft2 just outside the centre of manchester so not in the centre per se, 110,000, ONE HUNDRED AND TEN THOUSAND POUNDS PER YEAR, I put that nice and big for comparison, oh and it was a 10 yr contract, and now 3 yrs later the shop is STILL empty.

Compare.

Edit: it was on this road here https://www.google.co.uk/maps/@53.4...!1e1!3m2!1sQFgyvtYYiwYWg2gqOaFcmA!2e0!6m1!1e1

 

[Edwin]

Here's a look at some of the ongoing costs of online vs offline

OFFLINE
- rent
- business rates
- utilities
- salaries
- spoilage (damaged goods, shoplifting etc)
- wastage (stuff that's last season, nobody wants to buy, etc.)
- insurance coverage
- shop repairs/refits/maintenance
- cleaning
- product displays
- signage (sales, new products, etc.)
- marketing
- PR
- transport
- credit card processing services and infrastructure
- re-stocking costs
- misc costs of sale (bags, till receipts, hangars etc.)
- Costs associated with staff facilities (toilet, break area, etc.)

ONLINE
- hosting
- domain name renewal
- new content
- SEO or PPC or other marketing/advertising activities
- salary
- shipping/packing overheads
- re-stocking costs (this may be near zero if no inventory is being carried i.e. drop-ship/just-in-time model)

It should be pretty clear that you can put almost any number in for the above and still have online come out cheaper-to-much-much-cheaper than offline. That's not to say that it will be a viable business, only that the ongoing month-to-month costs online are just a tiny fraction of those incurred by offline businesses.

Similarly, consider the startup costs

OFFLINE
- security deposit
- advance rent
- shop redevelopment/outfitting costs
- signage
- store fixtures and fittings
- inventory (have to fill the store Day 1)
- packaging, hangars, shelving, etc. i.e. everything needed to display the stock
- stock layout/merchandising costs
- IT infrastructure (including a website, POS equipment, etc.)
- insurance
- staff hiring costs (including staff training)
- marketing and PR

ONLINE
- domain name (premium or £5)
- hosting (could be as little as a few £/month)
- site design/development (basic to complex)
- content (outsource or write in house)
- inventory (could be anything from zero - just-in-time model - to a small amount of core products)
- marketing/PR

Again, the startup costs offline are >> the online costs.

 

[Murray]

It's surprising on a domain forum you have to explain the difference between online and offline

 

[tifosi]

It's surprising on a domain forum you have to explain the difference between online and offline

Sometimes a slap in the face is better than a stern talking to!

 

[julian]

Chaps I should of put my question more succinctly - I've not gone full-retard (yet)

What I am saying is, that it feels that the better competitive margins and advantages of the good old 'Internet start up/turnkey/instant success story' days have diminished due the growing volume of people going online.

In a nutshell - I'm saying it must be costing more now to be successful in todays competitive online market than it was 5 years ago - and even one man band 'niches' don't remain niches very long due to low barrier of entry.

 

[Edwin]

In a nutshell - I'm saying it must be costing more now to be successful in todays competitive online market than it was 5 years ago - and even one man band 'niches' don't remain niches very long due to low barrier of entry.

It depends. You can get sophisticated off the shelf/cloudy apps, SAAS etc. that would have cost an arm and a leg to customise or build from scratch a few years ago. And hosting has come down dramatically. You also have access to a wide range of simple payment processing services when once you might have had to go for a "full" merchant account solution, with all the overheads and hassle that entailed.

Not to mention the commoditisation of design, development etc. at the low-to-medium end via PeoplePerHour.com, ODesk.com, eLance.com, 99Designs etc. etc.

So the costs of setting up/running the online business - aside from promotion/marketing costs - have probably never been lower.

You're right when it comes to traffic acquisition though.

 

[julian]

this is my main point - the tools maybe better/easier cheaper (wiX etc) but the cost of getting a slice of the traffic pie must be higher & harder to get.

You're right when it comes to traffic acquisition though.