Why Selling Online Only Almost Always Leads to Failure

I have come across so many clients who think they will strike it rich by selling their 1 SKU line on their website. The thinking goes - "I get to keep all of the margin. All I need to do is sell 1 million units and I'll be rich!". Unfortunately I have the job of letting them down. The top 10 online retail sites are as follows: (I think the data is from 2008, but it doesn't matter)

1 Amazon.com Inc. $24.5 B
2 Staples Inc. $9.8 B
3 Dell Inc. $4.53 B *
4 Apple Inc. $4.25 B * *
5 Office Depot Inc. $4.1 B *
6 Walmart.com $3.5 B *
7 OfficeMax Inc. $2.775 B *
8 Sears Holdings Corp. $2.774 B *
9 CDW Corp. $2.47 B
10 Best Buy Co. $2.45 B

* Internet Retailer Estimate

Take a close look at the list... What is the difference between these sites and yours? 1) They sell tons of DIFFERENT PRODUCTS, 2) Many also have a large, established brick & mortar retail presence, 3) They have established brand names. The list goes on and on.

The problem with your business is that you may be selling a 1 SKU line or a multi-SKU line of one category (e.g. dog toys, shampoo, mp3 players, whatever). That's one problem.

The real problem: YOU WILL NEVER BE ABLE TO SPEND ENOUGH TO GET MASS AMOUNTS OF PEOPLE TO YOUR WEBSITE. I don't care how good you are at Google Ad Words or at buying media you are. If you don't have millions to spend on advertising you are done.

What to do? Unfortunately you need to suck it up, hand over a 50%+ margin and go retail. It is the only path to success.

On another note: I have never seen anyone be successful just selling at a retailers .com site. You need both. Getting on Target.com is a good start because it gets you a vendor number. But the next step needs to be getting on the shelf.

Good Luck & Good Selling!