It's hard to believe that today is my 5 month anniversary purchasing IceWraps.com. Before I go any further… this is the point in the story where I want to let my wife know, I'm aware that we have a much more important anniversary coming up…. our 9 year wedding anniversary. I have something special planned babe, I promise! Ok, back on topic… how have things been going with IceWraps.com? Well, lets just say I don't regret the purchase (or the marriage).
As I was putting together an outline for this post, I was actually impressed with what I've accomplished over the past 5 months with this project. I'm pretty hard on myself, so I don't normally say stuff like that. However, reality is that over the past several months I've been able to take a website / business that was on the brink of bankruptcy and turn it into a profitable one. On top of that, the website is experiencing hockey stick growth. So, I'm expecting even better things to come. Now that I'm done patting myself on the back, lets review what I've been up to over the past several months step by step.
Setting The Groundwork
I really had no idea what I was getting myself into when I purchased this site. It was really just a gut feeling that this would be a good purchase after looking at all the numbers. If you're interested in reading the back story on how I came to purchase IceWraps.com, you can read that here.
The first step was to travel to Hudson, MI to pack up all the existing inventory and get training from the then current employees. I flew up to Detroit, MI at the end of January, then drove out to Hudson. At this point I didn't know the first thing about ice wraps, the manufactures in the space, how to answer customer's questions, etc. It was going to be 100% baptism by fire.
Before arriving, I coordinated a U-Pack truck to arrive around the middle of the week. U-Pack is an awesome service that will drop off a full size trailer and allow you to use as much of it as you want. You only pay for the space you use and you don't have to commit to more than 5′ of space in advance. I estimated that we would use 7′-9′ of the trailer – we used 11′.
Once everything was packed up I spent the rest of the week learning as much as I could from the employees that were there. It was sad because they knew they were going to be out of a job, and they were pretty emotionally invested in the business. I wanted to keep at least one of them employed, but didn't want to establish Nexus in another state – Michigan. So, at the end of the week, I paid them out a severance, and we said our goodbyes. I didn't have to give them anything since they were the responsibility of the old owner, but I've never met two people who were so amazing in my life. They could have made the situation totally awkward, or been total jerks to me, but they were nothing short of forthcoming with anything I asked. Maybe it was small town hospitality, or maybe I've just been unlucky in the past with people I've encountered. Either way, it really helped get things kicked off on the right foot with IceWraps.com!
I got back to San Diego at the beginning of February ready to thaw out from the sub zero temperatures, courtesy of a brutal Michigan winter. At this point I had an inventory manifest of everything that was rolling my way from Hudson. The problem was that the old owner was having cash-flow issues, so he let the inventory counts run down pretty low. So, the first order of business was to contact all 13 manufactures that I was going to be working with, establish a relationship with them, fill out new vendor paperwork, negotiate the best possible prices, and place orders. The inventory value I purchased from the old owner was around $25,000; I placed about $50,000 in initial reorders. Placing these orders was a bit of a shot in the dark. I had some reports from the old owner that showed what sales they had done in the past year, but I knew past performance wasn't going to be indicative of future results. I just took the best educated guess I could. It worked out pretty well.
The next order of business was the get support under control. The old owner was running a site at both icewraps.net (his main site) and icewraps.com. This meant 2 support email addresses plus the phone support. I immediately setup email@example.com and forwarded everything over to that. I also converted the support system over to helpscout.net, which was a fraction of the price of what they were using – plus it's a better product.
I also needed to get the toll free support number off of Ring Central (which is exorbitantly priced), so I ported that over to Phone.com. For the first 2 weeks I just setup a voicemail on the number that said something to the effect of “We are in the process of moving our warehouse from Michigan to California. During this time we will not be able to answer our phones. Please email us at firstname.lastname@example.org”. I did this for a few reasons… 1) I didn't want to be bothered by phone calls while I was drinking from a firehose. 2) There was a 90% chance I wasn't going to be able to answer their questions intelligently anyway, since I was just learning the products / business 3) email allowed me to research the issue if necessary before replying. After 2 weeks we setup the phones to ring to us from 7am – 4pm Monday – Friday PST and it's been that way ever since.
By mid February, all the inventory from Hudson had arrived along with most of the initial orders I placed with vendors. So, we had to spend a good amount of time reorganizing our warehouse, taking inventory, labeling inventory bins, etc. Once we had everything in place, I decided to reopen for business, but with phone orders only. At this point I realized that the systems that the old owner was using were not going to be what I was going to use. They were using a combination of Yahoo Web Stores for IceWraps.net (the main site at the time), WooCommerce for IceWraps.com, and a product called StoneEdge for their backend. All of this was just awful. If you haven't explored Yahoo Web Stores for your eCommerce site, you should – purely for entertainment.
This was a pretty big crossroads for me. I made the bold decision to just keep the old sites shut off for new orders until we could get the new site up and running. As an entrepreneur, you hate to miss a single order. Doing this made me sick to my stomach, but I was thinking long-term. My goal was to turn IceWraps.com into a $1,000,000 business as quickly as possible. This meant leaving a few orders behind in the early going. I knew it would be a minimum of 10-12 weeks before we could have a new site up and running, but that was the sacrifice I had to make. Spoiler alert: we relaunched on March 16th and got our first order the same day…..
Full Steam Ahead
So what was the plan exactly? Here was is in a nutshell…
1) Keep both IceWraps.com and IceWraps.net turned off to web orders until the new site was ready to go. The sites were up otherwise, but checkout was just broken.
2) Take phone orders for anyone who called in by manually keying in credit cards into Stripe's interface. We got a surprising amount of phone orders during this time.
3) Build a new version of IceWraps.com from the ground up using BigCommerce.com.
4) Toss out all the existing content on the website and replace it with more professional, much higher end content. This included all new product descriptions, rewriting every blog post / content piece, and taking new product photos.
5) Setup a test site for BigCommerce that was hidden so we could see our work on the fly.
6) Hire a programming firm to help customize the template I picked to do everything I wanted.
7) Get a bare minimum version of the site up and running without bells and whistles at IceWraps.com. Part of this included having to tabulate 301 redirects for every existing page on IceWraps.com, so when it launched there weren't a bunch of 404 errors.
8) After I was happy with how things were working at IceWraps.com, we started adding articles to the site that corresponded to those on IceWraps.net. We couldn't port the site over until every page that was on IceWraps.net was on IceWraps.com.
9) Create a new server for IceWraps.net with nothing but an .htaccess file to setup 301 redirects. Test TEST TEST to make sure that all the 301 redirects were working correctly.
10) Change the DNS on IceWraps.net to this new server and hold my breath hoping existing rankings and traffic would come over smoothly.
As I mentioned earlier, I gave myself 10 weeks to get all this done – we got it done in 5. We got our first sale on the new IceWraps.com site on March 16th and ported IceWraps.net over to IceWraps.com about 10 days later. At this point we were generating about 3 sales per day via the website.
In The Meantime…
As if there wasn't enough going on with everything above, there were still three major areas that needed to be addressed ASAP….
In addition to IceWraps.com and IceWraps.net, I also purchased a great Amazon Seller account with lots of history. In the few months leading up to the sale the account had kind of been let go, but it still had 1000's of feedbacks and lots of historical data. I started to evaluate this data with a fine tooth comb and cherry picked the best products to sell at Amazon FBA. This amounted to about 25% of the SKU's on the site and required additional inventory purchases.
When I purchased the account from the old owner they had done just under $1,000 in sales for the previous 30 days. Just under 4 months later I've got that up to $35,858 for the previous 30 days on 1,716 sales. I'll be talking a lot more about Amazon later on in this post. During this time period however, my main focus was just getting inventory into Amazon and seeing results.
I also purchased an eBay PowerSeller account along with everything else. This had also been floundering quite a bit, but we have somewhat resurrected it as well. We started on the eBay project about 2 months after the Amazon project, so the results aren't quite as impressive (yet). Over the past 30 days we've sold 192 items amounting to $3,967 in revenue.
With the launch of the new website looming, it was vitally important for me to find backend systems that would keep me from pulling my hair out. What I needed was an inventory management system that could keep things straight between BigCommerce (IceWraps.com), Amazon, and eBay. I didn't want a situation where I sold an item on eBay, but then didn't have the inventory to fill an IceWraps.com order. In addition to this I also needed a graceful PO management system and something that could interface with my accounting and shipping systems. After just over a month of evaluating about 7 packages, I ended up with Stitch Labs. It's a bit pricey at $199 a month, but without it I would be totally screwed. As a side note, this interfaces with Ship Station for shipping management and I recently switched to Xero for accounting.
Great, You Relaunched The Website, Now What?
This brings us to right around the end of March. At that point I had the new version of IceWraps.com up and running, the backend stuff humming, Amazon sales increasing, and eBay sales increasing. So, what have I been working on the past 3 months, from April to July, and what are the final results to this point…. These items are in no particular order.
The old site had been using a product called Power Reviews to take in product reviews and display them on the website. However, there were some compatibility issues with Power Reviews and BigCommerce. This combined with the fact that Yotpo is a superior product, I decided to make that switch. It's not cheap software, but it's the best on the market in my opinion for getting customer reviews. We saw conversion rates almost double once we installed Yotpo and were able to display customer reviews again. To be clear, this wasn't directly Yotpo's doing… this was us being able to display review data again. It's not surprising that having customer reviews on products is a major trust builder and conversion optimizer.
There were about 2,500 reviews in Power Reviews, but we were only able to port over about 1,400 of them. Most of the lost reviews were obsolete products that I didn't bring over to the new site. Yotpo converts about 5% of our sales into reviews. This is compared to 1% or less from the built in BigCommerce system. The only downside to Yotpo is that we can't use the inline SEO features because BigCommerce has their head buried up their butt on this. You can find all sorts of posts on BigCommerce's support forum with people begging for this feature. It seems BigCommerce just doesn't care. If / when BigCommerce opens this feature it will make Yotpo that much more powerful.
Once we had everything setup on the new site the way I wanted it (mostly), it was time to start up PPC again. I started up PPC for Google Adwords, Google Product Listing Ads, and remarketing ads. I will be working on Bing and Facebook ads in August. To this point the PLA ads have been working the best with an average CPC of $0.07 and a $1.95 Cost Per Conversion. The rest of the ads are performing fairly well and we are working each week to improve performance.
White Label Products
If there is anything I'm certain about in 2015 and beyond, when it comes to eCommerece, is that you need your own branded products. This could be a blog post all on its own, but I'll keep it brief… The only way you can protect your website brand, profit margins, and destiny is to have your own branded products. Over the past 3 months we have launched 11 IceWraps branded SKUs with several more in the pipeline. Right now this amounts to less than 10% of our business, but we hope to grow it to at least half our business by the end of 2016.
Remember when I said IceWraps.com has been experiencing hockey stick growth? Well, almost all of that can be attributed to SEO and organic traffic we've been gaining. I wasn't able to do anything in terms of SEO until relaunching the website, but as you can see by the graph below, the work I've done has produced dramatic results.
To this point, most of the work I have been doing has been on site. There is no doubt in my mind rewriting all the product descriptions on the site, so they weren't just canned manufacture junk, has helped quite a bit. I also think having all original images on the product pages has been helping. Also, by posting strategic content on the site that seems to be having a profound effect too. Finally, I've been setting up landing pages for manufactures and other key terms to help get that traffic.
I have a major content plan laid out for the rest of the year. I'll be using a combination of professional writers and my GVA to get the job done painlessly for me.
We already rank number 1 for a lot of major keywords such as “ice wraps”, “shoulder ice wrap”, “knee ice wrap”, etc but I know there are a lot more long tail nuggets out there to attack. On top of that we have a lot of product categories in the medical space, but outside ice wraps that we can go after too. The future seems bright when it comes to SEO!
Google Trusted Stores
I'm happy to say that IceWraps.com was accepted as a Google Trusted Store around the 1st of July. I submitted to Google to become a Trusted Store back in May, so it took right around 2 months for the approval process. I haven't seen any major jump in conversion since being accepted, but I have seen increased rankings in the SERPs. Now, Google swears there is no correlation, but those in the SEO community have a different opinion – I do too at this point.
We added live chat to the site back in April and this had a pretty big effect on conversion rates. We don't get a lot of chats, but I think it helps people feel comfortable that someone is there to help if needed. Having someone on live chat and / or phones all day increases overhead, but our conversion rate on calls or chats is well north of 75%. We don't officially keep track of this, but just being around the office all day it's pretty easy to tell. It's well worth it for us to have call and chat support…
I added an upsell interface to the website. Basically, when someone adds a product to their cart a popup comes up suggesting other products they might want. In particular, I've done this with any ice wrap that has extra inserts available. So, we suggest an extra set of inserts and it's been quite effective.
This isn't something that's increased revenue, but it's increased our profit margins quite a bit. Back in April I evaluated every shipping service and the products they offered. The end result got our average shipment cost down to just under $7.00. Compared to an average shipping cost of $11.00 for the old owners, this is a pretty dramatic savings. The old owners had a big advantage over us as well since they were shipping from a more central area of the country. The difference for us was using padded flat rate envelopes or regional rate A / B boxes, when possible. We have done everything possible to squeeze every last cent out of our shipping costs.
I putting this here because I was able to take a pretty epic vacation from July 3rd – 21st. It was the type of vacation where it was almost impossible to respond to emails and / or get any work done. I thought it was a pretty major achievement getting the business to the point where my full time support manager could run it. He's basically made out of Awesomesauce and isn't your typical employee; he's super reliable, actually cares, and is an all around good guy. Even still, getting the business to the point where I could just pick up and leave for the better part of 3 weeks was pretty awesome. On a side note, it was one of the best vacations I've ever had. It couldn't have come at a better time, because I was definitely getting burnt out pretty bad. Doing 10 month's worth of work in 5 kind of does that to you…
Show Me The Money
Ok, so I know what you really care about… how much moolah is this project pulling in now? Well, lets pull it all together.
The IceWraps.com website itself has pulled in $20,701.82 so far this month, which is a pace of $24,841 for the month of July. This is on 309 orders, with a pace of 370 orders. As you can see from the screenshot below, this is close to the same revenue numbers from last month, but we are on pace to do about 60 more orders this month. That works out to almost a 20% growth in order volume over last month – yippie. Our AOV can be effected pretty easily because we sell custom gel packs. These orders are normally 10-20x more $ than a typical order and just one or two more / less of these orders per month can change things pretty drastically.
As I mentioned earlier, we've done $35,995 in Amazon sales over the past 30 days. This is almost a 20% growth from the previous month and I hope to see similar results next month. We are adding new SKUs all the time and that has been helping our growth.
I don't ever see eBay being a “main” source of income for us, but it's a great supplemental source of revenue. Over the past 30 days we've done just under $4,000 in sales on eBay.
Pulling It All Together
Thanks to Stitch Labs we have a realtime running counter of all our sales. As you can see by the screenshot below, we are at $64,501 in sales over the past 30 days across all channels. Amortizing that out annually, that works out to $775,000 in sales. So, we are well on our way to my goal of making this a $1,000,000 business within the first year.
In closing, I'm pretty happy with the purchase of IceWraps and how things have been going so far. It hasn't all been a bed of roses, or easy work, but it's been super rewarding. I'm ultra proud at what we've been able to accomplish in such a short period of time. On top of all this, I really like the business. It's been awesome helping customers with their aches and pains and provide awesome customer service along the way. It's such a welcome change from Treadmill.com where customers were always upset at the fact we couldn't deliver on time. Having inventory in our warehouse allows us to ship same day and I love comments like “I can't believe how quickly my item got here”.
I'm not sure what the ceiling is for growth on this business, but I can certainly see doubling revenue by this time next year. Even if things just stay where they are at, it has been a great investment. Remember, I paid $72,000 for the business, which included about $22,000 in inventory. Subtracting the inventory out, I paid about $50,000 for the business and I'm easily going to make that money back in the first year of operations. It's not very often an opportunity comes along where you can effectively buy a business for 1x earnings.
That's it for now… I'll be back with another update later this year.
Very cool. Love your work.
Thanks very much Jeff.
Very much enjoyed reading your icewraps blog posts. Firstly, thank you for sharing that info, I wish more people offered e-commerce info as comprehensive as that. My question is this, why have you yet to exploit any paid traffic, is it just a first things first and that is the next step sort of deal? When you do start to drive paid traffic to your site, will you focus on one source at a time, optimize, then move on to the next paid source or do you have another strategy? Lastly (and I only feel comfortable asking because you shared hard numbers – thank you again), at a run rate of 775k revenue right now, what is does your yearly revenue target look like with paid traffic? Yikes, I just realized I asked a mouthful, please feel free to shoot back quick notes on whatever you can, thank you again for your time and all the best on icewraps :)
Mark – thanks very much for the comment and kind words. It helps keep us motivated :)
I actually have been doing paid traffic for the past couple of months. There is a section in the post titled PPC, but I pasted it here again for reference.
I waited to start PPCing until the website was at least 90% of the final product I wanted. PPC is a tough game to start with, why make it harder not having a “perfect” website. Once we got to that point I started to crank things up. At this point I would say I’m at 50% of the final goal with Google PPC, but 0% with Bing and other platforms. One of the things I mentioned in the post is that I don’t see a reason why revenue can’t be double of where it is today by this time next year. I see PPC being a decent chunk of this new revenue. The issue this site is going to have is capping out traffic, not budget. Meaning that there aren’t a lot of high traffic keywords to bid on.
Thanks again for your comment and I hope this answers your question?
That did indeed, thank you :)
Where do you go about finding unused amazon/ebay accounts to buy?
Hi Yury, thanks for the comment.
This isn’t something we do, so I wouldn’t even know where to begin with that. In the case of IceWraps.com, they had an Amazon and eBay account that happened to come with the site / business.
You can just start an Amazon account on your own though. It’s easy to setup and the ramp-up time isn’t that bad to get the minimum amount of reviews you need to have a fully functioning account.
Thanks for the great and insightful post! I found out about you and Grant on your Reddit post on your businesses. I am a young entrepreneur looking to learn from those such as yourself. I’d love to get some constructive feedback on our online business, http://www.helensjewels.com and bounce off some ideas with you. Please let me know if we can chat some time next week.
Thanks for posting. Very interesting read, seeing all the tools, planning, logistics, etc that go into selling physical products online.
Dropping in from Scotland having read your posts and have to say there are a lot of small business owners over here who should take the time to read about the journey you have been on. I am an expert help advisor over here. The Scottish Government has a scheme which deploys us out for a day to look at websites and put them up on the ramp so to speak and see why they ain’t working and of course you have highlighted in your story that there can be a multitude of reasons.
I like one of your earlier blog readers was interested in the PPC side of your activities as over here in Scotland there is a lot of fear amongst smaller business owners about spending money in this channel and how much. I do worry about some of the website business owners who operate single handed, been in business for around 9 months and say they are turning over £5k now but have set themselves a goal of £40k in the next 12 months. And over and above that they tell you they have a £2000 annual marketing budget.
With the experiences you have gone through what would you say or suggest to some of these smaller business owners here attempting to do ecommerce as to what to do and where you would spend your buck? Do you think in your opinion they have set their sites to low? I personally think they do. I can’t see an ecommerce business making it online with an annual budget of just £2k for example. And what sort of monthly spend in AdWords do you consider when you are planning to increase these businesses you buy.
Anyway of you have a moment I would be very grateful for any feedback you offer and would certainly tell the story and make reference to you when I am doing workshops and seminars over here to educate these businesses, as I think you have told a great story here.
Thank you for you for stopping by and for your comment.
Your question is very hard to answer because there is so much at play.
First, it really depends on the industry and the Cost Per Click in that space. Typically, it’s much harder to compete in more competitive, higher CPC markets than the opposite.
It also depends on your site’s conversion rate. For instance, we used to convert only about 0.5% of our traffic on treadmill.com vs over 4% on IceWraps.com. Conversion rates greatly effect the equation.
The next thing you need to look at is profit margins. Again, using treadmill.com vs IceWraps.com we had 15% margins vs 50% margins respectively.
It also depends if the business is a full time job that you need to live off of vs a side project.
Is the business being funded solely by profits, or is the business owner willing to invest money out of their own pocket into advertising?
How savvy is the person running the PPC campaigns? Google is very good at getting you to waste money and unless you are ultra savvy running PPC you can end up with big losses running ads.
So, as you can see it’s not just a one demential question. It would be hard for me to arbitrarily say “Invest $x into PPC each year”.
I will tell you that almost every industry and run profitable PPC campaigns. I have someone in my mastermind group that runs a drop shipping business making less than 20% margins and he makes it work. He makes it work BIG time. However, he is a PPC expert and has refined things significantly.
My advise would be to start small, very small. Then, slowly refine your PPC campaigns one at a time until they are profitable. Once they are you can increase the budget to “unlimited” and let them roll. The easiest first target is Google Shopping since that is the lowest hanging fruit.
Hope this helps.
So pumped I found this website!!! Do you guys need a social expert? I have over 61,000 fans on fbook.. And do over $1 mill a year on my ecomm website on BigCommerce…. Mostly through social. Thanks again for the blogs and podcasts. I did follow you on Twitter too.
Do you have a great developer? Love to implement the new checkout you guys have.
I think you spoke with Grant this weekend?
Just shoot us an email and I would be happy to share the developer contact with you.
This is bloody amazing.
So motivating. I feel I need to read these posts daily to keep the hope.
What do you propose for someone starting from scratch.
Michal – Thanks for the kind words and positive comments about the article. My advise for anyone just getting started is to focus on niche selection. It’s very important that your products meet certain criteria and if you’re starting from scratch the world is your oyster. I have several posts and podcasts about picking the right niche and products. Check them out.
Build a very niche site that is highly difficult to compete in, that doesn’t scale well. If you can succeed in this niche site, then move onto larger niches.
Examples: Rare / hard to find items, customizable gifts, focus on certain breeds of dogs/pets, etc. Anything with under 10,000 searches a month that doesn’t have existing competition is quite workable.
Thanks Michael for this great post ! It is amazing to know how you managed to revive this online business. I recently started theboutiquesociety.com and we are in the process of setting up our omnichannel sales using OmniPim- a system by Inventrik ( I will be looking at Stitch labs too now)… Its a lot of effort and time.. but Having read this article it makes me wanna keep going… thank you!
Thanks Neha for the nice words :)