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I have been selling menswear online since 2004.
So think of my view of e-commerce the same way you think of how George Washington could discuss American history if he were still alive today. Because I’ve been here pretty much since the e-commerce revolution, and I’ve seen it all.
There was a time when people like me would look at people like you (brick-and-mortar store owners) and think what kind of dinosaurs you guys were. Outdated. Leaving money on the table by not opening your own e-commerce store.
And we were right. But not much anymore.
In the early 2000s, the Internet looked a lot like the United States in the early 19th century. Mostly undetected. Undeveloped. Few people occupy the space – either as stores or as consumers.
I was one of the first to create a menswear brand on the Internet. I was one of the original “disablers”.
At that time, large supermarkets did not have websites. Or if they did, they were selling a very limited number of SKUs. Brooks Brothers and Jos. A. Bank is hardly involved in e-commerce. By the time they all started putting together their online offerings and investing in e-commerce infrastructure (2008-2010), they were already years behind local online brands, and still had a lot of learning to do.
By then, early online brands like us already understood the e-commerce shopper. We have mastered digital marketing. We figured out how to leverage media to drive traffic and customers to our websites. It was a glorious time.
But things have changed.
For online brands, customer acquisition has never been more difficult and expensive. This is because digital marketing has become less targeted (via new privacy standards). Customers are becoming less curious about the brand, and now everyone and their mom (sometimes literally!) can sell their wares online.
In fact, it is now believed that acquiring a new customer through opening a physical store is now less expensive than acquiring a new customer through online advertising – something completely unheard of just five years ago. Most of the original online brands, in order to expand or even survive, need to open at least one or two stores. However, very few of us can afford it.
It is said that a customer has to view your ad seven times before they simply click on your website. Even then, the probability of him making an order is only 2 percent. So you can imagine how much money is spent on marketing before you finally reach a new customer.
Without the personal connection, it is almost impossible for online brands to develop a true relationship with the customer. Don’t listen to the hype of building “online communities” and “customer engagement”. Yes, it is a thing, but it’s nothing compared to what actual merchants have created with your well-curated stores, special events, and exceptional customer service.
So as 2023 begins and you’re thinking about getting online, my advice is simple: Enjoy your lawn wherever you are. It might just be a darker shade of green than what we have now.
Greg Sugar is the owner of Beau Ties of Vermont, an American-made clothing and accessories company based in Middlebury, Vermont. In 2004, he and his wife founded The Tie Bar, one of the first consumer-oriented menswear brands. The company was acquired by a private equity firm in 2013. Greg is also an active investor and teaches entrepreneurship at Florida Atlantic University School of Business.