Monday, October 16, 2006

Online Business: Location! Location! Location!

One of the first rules that any businessman knows about being successful is the old phrase “Location, Location, Location!” But how does that relate to the internet?

Just recently, my wife and I decided to take a break from our lives and the kids and decided to head 5000 feet into the clouds to the Southern California resort town of Arrowhead Lake. Our whole goal of the trip was to cleanse our minds from the commitments of life and focus more on relaxation, clean air and each other. I did not even bring up my laptop and went days without checking any affiliate sales or emails. But through all of this, my online marketing mind could not be turned off.

It only took me about 4 hours up in the mountains before I really started to realize this state of online business nirvana. The enlightenment was not very spectacular, but it made a lot of sense to me. It started when I walked into a Christmas themed store in a little village of boutique shops located along the lake. Personally, I really had very little interest in holiday novelties, so I sat in the corner while my wife browsed around. I noticed the store currently had about 12 customers in it. Of those 12, two ended up buying a couple of gifts (valued at about $30 a piece). There was a girl working the counter and another younger guy re-stocking the shelf. The store overlooked this beautiful lake and in my mind, I felt that the business was running very smoothly; I would consider it “successful” during the 15 minutes I sat there. The store had a great location and fit a good niche for people visiting the center.

The following day, we drove up to Bear Valley Lake and again, I found myself in another boutique store, selling Christmas and holiday stuff. This store was not on the lake and in an area when 2 out of every 3 stores seemed to be boarded up. An older woman worked here. We were the only ones in the store. We did not buy anything. Same niche, similar area, poor location. Still, this little hole-in-the-wall probably supports this woman’s lifestyle, but from a business stand-point, probably does not bring in much money.

In either case, I got to thinking about what it took to get these stores to where they are today. The first boutique made much more than the second and seemed to get a steady stream of visitors. Still, I think about all of the work and money that was required to build this moderately successful storefront. The location is probably where most of their profits go. The staffing and the stocking are the next major space and money guzzlers. And at the end of the day, this “prestigious” location probably averaged about 20 visitors per hour.

This is when it hit me! If you add in the leasing, the presentation and the up-keep of this store, your cost per visitor must be enormous! Not only that, your target visitors is geographically constrained to the locals and visitors who just find themselves to be right there at the right place and the right time.

I actually felt guilty about my online ventures (especially since my part-time campaigns probably make a comparable earning at the end of the day)! First, let’s put aside the fact that owning an online business removes the store-front costs, much of the staffing costs and possibly some of the stocking costs. When I got into online business, I knew that and it was extremely appealing in both a business as well as a risk standpoint. My main discovery here is LOCATION, LOCATION, and LOCATION! This store probably pays thousands of dollars per month to lease this relatively high traffic location. And again, unless you happen to find yourself in front of this store during an hour of operation, you will not ever buy anything from them, ever.

Now think about the world wide web. This is the ULTIMATE location! Sure, you do not have the luxury and satisfaction of holding the product and buying it on the spot, but your reach is almost immeasurable. Anyone in the city, state, country or (or even world) can visit your store (at all hours of the day). Instead of 20 visitors per hour, you can have 1000s! It is almost unreal when you think about it (my local Costco probably only has a few hundred customers at any given time). This is why making money online is SO profitable. It is a numbers game without much of the overhead: A win-win situation.

At the end of the day, I am sure there is a lot of pride with owning your own store-front business. But if it is truly just “money” that you are looking for, online selling is an ideal opportunity for anyone with the “be-your-own-boss” mentality. Not only is it a low risk opportunity, it may carry the biggest rewards of them all…and this is because the world wide web is truly what Location, Location, Location is all about!

- Matthew Bredel

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