The
Dotcom Dinosaurs Are Becoming Extinct
By
Terry Dean
The
playing field is quickly being equalized for the small low budget Internet
web sites.
The
past several months have been host to one largeover funded company after
another having to shut their doors online.
Petstore.com
& Reel.com are the two most recent sites which have fallen by the wayside...with
many more sites still to come.
You
can keep an eye on the recently departed Internet through the Dotcom Graveyard
set up by Upside Magazine:
http://www.upside.com/texis/mvm/story?id=392ec4c10
One
company has even set up an entire domain dedicated to keeping you up to
date on the most recent web sites which are failing online:
http://www.dotcomfailures.com/
Money
has also put out an article concerning the demise of several large web
sites:
http://www.money.com/money/depts/techinvestor/archive/000613.html
If
you pay any attention to the stock market, then you can also note that
the past several months have been extremely hard on companies with big
dreams and no profits. Stocks with high flying prices but no real profits
quickly dropped in April by up to 60% or more.
In
other words, the investment community is waking up to the fact that the
Internet needs to be treated just like any other business. Large ad budgets
and millions of visitors do not equal a successful web business.
Profits
equal a successful web business...
I
am pretty sure that your own web site does better than most of the major
companies on the web. You aren't losing 100 million dollars a year, are
you? Well, if you aren't losing millions, you are more profitable than
95% of the major dotcoms currently out there.
As
a matter of fact, in the above articles, one of the top CEOs was quoted
as saying, "Profit? Are you kidding?"
I
have had to earn a profit from day one in my own little web business. My
web sites have become successful without financial backing, a large advertising
budget, or dozens of staff members.
You
can build a successful and profitable web business in just a few months
if you follow the successful business models.
Here
are a few of the lessons that we as small businesses can learn from the
recent collapse of these web sites.
1.
Don't Compete With Wal-Mart.
One
of the biggest mistakes many of these companies are making is that they
are trying to have the lowest price on low margin items.
They
are not leaving themselves any money for profit. They are trying to run
their sites, pay their staff, ship products, and grow a business while
earning only 5% on the products they sale.
Several
companies are now even trying to sell at their cost so they can have the
lowest prices. It doesn't do you any good to sell to millions of customers
if you lose money on every single one of them (especially if you don't
have a plan to earn profits on the backend either).
These
unsuccessful sites are selling products such as pet supplies, toys, consumer
electronics, and the like. There is a store on every block and thousands
of them on the web selling these exact same products. So, they are trying
to sell one price without having enough profits built in to pay the bottom
line.
Look
at sites which have become profitable...both large and small. Large companies
such as Yahoo and Ebay invented new business models and do not compete
on price.
For
example, Ebay doesn't make any claim or effort to have the lowest listing
fees for your auction. What they have done is create the largest auction
house in the world and have become a household word. Plus, they have received
much more word-of-mouth advertising than they could have ever purchased
on overpriced advertising.
Many
of the most successful home based entrepreneurshave succeeded through creating
their own information products such as books, ebooks, audios, videos, etc.
These have large mark-ups since people are paying for information and not
the packaging it comes in.
No
matter whether you are selling information or a hard product, you need
to make sure that you have the necessary profit margins built into your
web site selling system. Don't just try to compete on price. Develop a
Unique Selling Position of having the best tech support, highest quality
products, or most up-to-date information.
2.
Don't Waste Money on Ineffective Advertising.
The
second mistake that these companies are making is that they are wasting
millions of dollars on advertising with no way of testing or tracking the
results.
The
going rate for a commercial during the Superbowl this year was $2 million
per 30-second spot. If you watched it, I am sure that you noticed that
most of the airtime was being taken up by Internet newcomers...A few of
which we are now watching quickly run out of money.
They
never tested their ads before they ran them on the most expensive TV ad
time available. They had no idea whether the ads would work or not. It
is simply a gamble, which many of them lost.
You
should be testing the results of every ad even if you only spent $10. As
a small business, you can't afford to spend one penny on ineffective advertising.
Test
two different ads in a newsletter. Test different newsletters. Test banners.
Test places you can use to advertise your banner.
The
key to spending money on advertising is to test many different avenues
as cheaply as possible. Then, roll out your campaign when you find something
that is successful. If a banner ad produces $200 in profit for every $100
spent, then it will often produce $2,000 for $1,000 and $20,000 for $10,000
spent.
The
expense in advertising is testing the different processes until you find
the working solution. Once you find advertising that works, run with it!
Many
of these large companies don't do any testing of their advertising. They
can't tell you where their sales are coming from or even if their $1 million
a day in advertising is even producing any of the results (or if they are
getting all of their sales by word-of-mouth).
Even
if you spend several hours a week marketing your site and don't spend a
single penny on advertising, you should still be testing your response.
You need to know how you can spend your time most appropriately.
Do
the search engines produce traffic for you? How about submitting articles
to ezines and web sites? Maybe press releases are bringing in your traffic.
If you are testing your methods, you will know which portions of your time
are most effective.
3.
You Must Plan and Adapt.
Some
of the CEOs of these major corporations have publicly announced that they
have no idea when or if their sites will become profitable.
You
can't afford to make this mistake. You should have a written business plan
for your business including sales, advertising, expenditures, and profits.
Do
you know what your competition is doing? Have they come out with better
prices or a more unique position for their business than you? If so, then
you need to study them and adapt. Find ways that you can show your uniqueness
in the marketplace again and exert dominance over the competition.
In
my own business, we are just been reviewing the past two years and have
noticed that the best use of my time (in profits) is in creating new information
products. Whenever I dropped my attention and starting working on other
types of projects, our income would suffer. So, by keeping track of my
time and income, I am going to be able to focus more time into the most
profitable area of my business.
If
you don't keep track of what is going on and be willing to adapt, you are
going to find that the future online will become increasingly hard. There
are two sides to having a worldwide marketplace. The good side is that
you have worldwide customer base. The bad side is that you have worldwide
competition.
How
do you plan to profit and adapt in this new world economy?
Terry
Dean, a 27 Year Old Indiana Farm Boy, Reveals His Secret Formula for
Generating New Automatic Streams of Internet Income For Any Business In
72 Hours Or Less...Free Report: mailto:formula@bizpromo.com
http://www.bizpromo.com
| *NEWS
FLASH* - Private
Tours of Successful Web Sites Now Available!
Take
a private tour of two "Mom & Pop" web sites every month that
earn
$100,000+ a year... and discover the exact step-by-step strategies
they have personally used to generate these massive profits.
When I first
came across http://www.SecretsToTheirSuccess.com
I was shocked to find REAL successful people just like you and me who were
willing to give away their most coveted Internet marketing secrets.So if
you want to skip the failing promotions, click
here now and learn the "No BS Strategies" these real
people are using to make real money on the Internet! |
-