The Rise of Subscription (Cheese) E-Commerce

Cheeseboard and cheeseknife and cheeses

There’s been a lot of interest in the subscription e-commerce business model lately. It’s a model that I think is particularly powerful.

Getting Someone to Buy is Hard

Anyone who has run an e-commerce website will tell you that getting a website visitor to buy something is hard.

Think about what’s involved:

First, you have to get them to your site (often no easy feat in itself).

Next, you need to explain your product and service in a clear and compelling way.

Then, you must reassure them that your website is a safe place to buy something.

Even if they’ve stayed with you this far (and most won’t have), there’s still a good chance they’ll abandon their purchase part-way through, leaving you in the dark about why – perhaps their friend just called; maybe they fired up Amazon to see if they could get your product cheaper elsewhere, then got side-tracked into buying the latest DVD boxed set; or they might have just changed their mind.

Put all this together and you can appreciate why, on average, only about 2% of visits to a typical e-commerce website result in a purchase.

Subscriptions to the Rescue!

Subscriptions are powerful because, with them, you only have to get each customer through that difficult funnel once. Then it’s up to you to provide a wonderful service. As long as you do, your customer will, more often than not, remain subscribed.

Six UK Cheese Retailers can’t be Wrong

What’s that? You don’t believe me that subscriptions are powerful?

It turns out I’m not the only person to be keen on subscriptions. UK cheese retailers seem to be particular fans. Incredibly, there are now at least six subscription e-commerce cheese services in the UK alone:

1. Pong

2. Norbiton Fine Cheese Co.

3. The Cheese Yard

4. The Cheese Gig

5. The Corbridge Larder

6. The Cheese Shed

What could You Sell by Subscription?

I’ll be interested to see where this trend of subscription e-commerce goes over the next year or two. With the emergence of technology making it ever easier to launch subscription e-commerce services, I expect lots more things to be tried. Who knows… perhaps there’ll even be more cheese subscriptions on offer.

What do you think about the recent interest in subscription e-commerce? How far will it go? And what would you like to see sold by subscription?

Update: I’ve now launched a website about subscription commerce where I discuss the subscription box industry and subscription commerce in general.

Photo by Ben Sutherland

Startups: 23 Ways to Save Money Without Cutting Corners

You’ve started your business, but money’s tight. You haven’t got much cash to play with.

Here are 23 tactics you can use to be frugal and save money:

1. Use Lean Startup Methodology

Red-eyed fly
Credit: quinet under Creative Commons license

Make sure you’re building something people want and will pay for. Don’t spend time and money building it before trying to find out. Talk to them first and make sure you understand the problem you’re trying to solve.

This is one of those things that sounds obvious, but that most people only really learn too late. Read more here.

2. Use Quick and Dirty Prototypes

Final Countdown!
Credit: juhansonin under Creative Commons license

As part of the Lean Startup ideas above, test out your ideas and assumptions with potential customers. Consider using Powerpoint slides to describe your ‘product’ before you build it.

3. Build a Minimum Viable Product, Nothing More

Paperclip Trebuchet
Credit: robad0b under Creative Commons license

To start with, build a minimum viable product (MVP) — be ruthless about leaving out everything that you possibly can.

4. Keep it Simple

Credit: dno1967b under Creative Commons license

The fewer the features you try to build and the simpler you can keep your business, the faster you can move and the cheaper it’ll be to run.

5. Don’t Hire Until You Have To

kors oversized
Credit: Idhren under Creative Commons license

Don’t hire too soon. Only do so when you and your cofounders really cannot manage any more.

6. Hire Interns

Credit: avhell under Creative Commons license

A job in a startup can be exciting and provide great experience for someone just getting started in their career. Offer a great learning opportunity and, especially in a tough economy, you can get help from talented, enthusiastic people for much less than you’d pay more experienced staff.

7. Get Cheap Help from Business School Students

Dunedin Internship 2011
Credit: Samuel Mann under Creative Commons license

Business school students are often keen to apply what they’re learning to real-world companies and may be willing to do projects for you for free or very cheaply.

8. Get Free Help from Local Universities

Travels in China
Credit: University of the Fraser Valley under Creative Commons license

Universities are keen for their students and staff to get involved with industry. Some offer schemes where they’ll do projects for businesses either for free or for very subsidised rates.

9. Hire Talent Over Experience

Aim to hire people with talent who haven’t yet got the experience to command high salaries or rates.

10. Use Google Apps (Free Edition)

Credit: quinn.anya under Creative Commons license

If you have 10 or fewer employees you can use Google Apps Free Edition for your email and intranet.

11. Join Microsoft BizSpark

Microsoft Partner Day
Credit: Microsoft Sweden under Creative Commons license

Microsoft’s BizSpark programme supports startups in a variety of ways. An important one is that they’ll give you access to free Microsoft software (Windows, Office, etc.)

12. Use Free Trials

Beer snobs
Credit: waitscm under Creative Commons license

There are lots of web-based tools that can be handy for different things during your startup’s life — market research, website load testing, keyword analysis, and more. Often you can get a free trial of these tools, and the trial period can be long enough to get a lot of value. Later, when your business grows, come back and invest in a paid subscription.

13. Get to Know Your Customers Even Better

Two business men chatting, Pia Gioielli jewelers lion sign, a waiter from Pedro & Lola restaurant, set tables, palm tree, customers, Machado Square, Centro Historico, Sinaloa, Mexico
Credit: Wonderlane under Creative Commons license

You can’t get to know your customers too well. The better you understand them, the more effective your paid marketing will be and the less you’ll need to spend to get the same results.

14. Set Up Reciprocal Marketing Deals with Related Businesses

Meeting with Andrzej Poczobut 06
Credit: PolandMFA under Creative Commons license

Find a business that targets a similar demographic. Promote their business to your followers in return for them promoting your business to their followers.

15. Set Up Revenue-Sharing Deals

Instead of paying up-front, negotiate with publishers to market your business in return for a cut of the profits they bring you.

16. A/B Test Continually

Talking Logistics
Credit: Gamma-Ray Productions under Creative Commons license

A/B testing can improve the effectiveness of the key conversion funnels of your business. Many small, incremental improvements over time can translate to a huge improvement in the long run.

17. Do Your Own PR

Credit: Gonmi under Creative Commons license

Instead of hiring a PR consultant or agency, do your own PR. Journalists prefer to hear from founders anyway. If you’re based in the US, subscribe to Help a Reporter Out (HARO) to connect with journalists writing relevant stories.

18. Hire Freelancers Over Agencies

Credit: banditob under Creative Commons license

Save money by hiring freelancers instead of agencies. Freelancers typically have lower overheads than agencies and can be more flexible about the rates they charge and the way they work.

19. Attend Local Industry Events to Get Free Advice from Experts

Women 2.0 Startup Weekend San Francisco 2011
Credit: adria.richards under Creative Commons license

If you live in a major city there are probably events where you can find experts in different areas. Don’t abuse it, but you’ll often find people willing to give you some free advice over a couple of drinks. Some events are more structured and directly tailored to startups, for example BootLaw in London is a great way to learn about law related to startups.

20. Work From Home

New display is BIG
Credit: Iain Farrell under Creative Commons license

If it’s just you when you’re starting out, work from home. Save the money you’d otherwise be spending on rent.

21. Ask Suppliers What Special Deal You Can Get

Bad maths
Credit: Danny Nicholson under Creative Commons license

If you don’t ask, you won’t get. Being a young company is a great reason to ask for special deals. You won’t always get them, but it doesn’t hurt to ask.

22. Keep Tight Control of Spending

Credit: sovietmole under Creative Commons license

Consider having just one credit card for the company so that all the money goes through one person with an overview of the company’s finances.

23. Champion Frugality

Lead by example and cultivate a culture of frugality within the company. Make it clear that a frugal attitude is valued.

(Thanks to Julian Hearn for tips 18 & 20.)


7 Reasons to Start a Business Instead of Doing an MBA

Funny Pictures - Business Cat

People sometimes ask me if I’ve found having an MBA helpful in starting businesses.

So is it?

If you’re thinking of starting a business, here are seven reasons why you might not want to do an MBA first:

  1. MBA Costs are Potential Startup Capital: Doing an MBA is expensive. If you’ll be putting your own money towards it, you might want to use that money as capital for your business instead. Even if you lose it all, what you learn by having a go may well be an even better education.
  2. Drive is Important: If you’re itching to start a business, that’s a good sign! Entrepreneurship takes passion and energy. You may have the hunger now and less of it later.
  3. Timing is Important: A large part of successful business is good timing. If you’ve got an idea and you know the time is right for it now, waiting may not be a good move.
  4. MBA Students May Not be the Right Partners: MBA students can be smart and analytical, but they’ve often grown used to corporate environments where lots of day-to-day chores are done for them. In small businesses, you need people who’ll pitch in and get their hands dirty. That’s not always a good fit. So your prospective fellow MBA students may not necessarily be the best people to team up with. (It depends what sort of business you’re looking to build.)
  5. Learning Isn’t Doing: The stuff you learn during an MBA is interesting, but it’s always going to be more theoretical than practical. There’s nothing like doing something for real to really learn about it.
  6. Large Companies are not Small Companies: The truth is, most MBA courses are geared mainly towards producing executives for large companies, management consultancies and investment banks. Learning about complicated financial modelling and the challenges of large companies can be great fun, but it’s also a far cry from the implementation skills you need when running a small company.
  7. Employer Lock-In: If your employer is willing to fund your MBA, lucky you. Many people would envy your position. But beware: ultimately, your time is what matters the most. Think carefully before you get into a situation where you have to work for a company for a certain period of time after your MBA. You’ll be postponing your foray into entrepreneurship even further.

There are, of course, good reasons to do an MBA, too. For me personally, I think having an MBA has been useful. I’ll say more about that in a future post.

How about you? Are you thinking of doing an MBA? How are you weighing up this question?

Or have you done an MBA already? What advice would you give to someone following in your footsteps?

Leave a comment. I’d love to hear your thoughts.

Creative Commons License photo credit: mark.hogan


85 Great Resources for London Startups


If you’re setting up a web-based business in London, there are lots of resources that can come in handy once you know about them. I thought I’d share some of my favourites here in case there a few you don’t yet know about.

This is a selection of everything from interesting events to attend and good books to read through to tools to boost your effectiveness. Some of them will only be useful if you’re based in London or often visit here; the others are more widely applicable:

  1. BootLaw – free events where you can get your legal questions answered (and be entertained, too!)
  2. Microsoft BizSpark – startup community offering free Microsoft software
  3. DrinkTank – drink beer with startup founders and occasional investors
  4. Launch48 – meet potential co-founders and try to start a business in a weekend
  5. Startup Weekend – meet potential co-founders and try to start another business in a weekend
  6. Minibar – see entrepreneurs pitch their startups while you drink free beer
  7. London Business School Entrepreneurial Leadership Lectures – hear experienced founders talk
  8. UK Business Forums – get nuts and bolts advice from owners of small businesses
  9. SeedSummit Term Sheets – see how the investment terms you’ve been offered stack up against ‘standard’ ones.
  10. Don’t Make Me Think – learn how to make your website easier to use
  11. Visual Website Optimizer – run A/B tests easily and get more from your website
  12. Google Apps (free edition) – host up to 10 email accounts for free
  13. Ajax Whois – quickly check whether domain names are available
  14. MailChimp – send mass emails and track what happens to them (and get UI inspiration!)
  15. Viral Marketing – a nice article on the Maths behind viral marketing
  16. Super Conversion Button – create good call-to-action web buttons [no longer available]
  17. Load Impact – easily run load tests on your website
  18. Linode – get cheap, reliable hosting in UK or US data centres (but set the servers up yourself)
  19. Ultimate Guide to Google Adwords – learn how to run Adwords campaigns
  20. Influence: The Psychology of Persuasion – understand how to nudge people into doing what you want
  21. TechCrunch Europe – read the European bit of the blog that every startup person reads
  22. Fiverr – get small tasks done for $5 (try this out for fun at the very least!)
  23. Pingdom – get an alert if your website goes down while you’re at Minibar drinking beer
  24. Lean Startup – methodology to help figure out whether you’re starting the right business
  25. Mixergy – learn from interviews with successful entrepreneurs
  26. Hacker News – read what technically-minded startup people are finding interesting at the moment
  27. Hacker News London – meet technically-minded startup people in the flesh. Drink beer with them
  28. Business Link – find official government information about business regulations
  29. WordPress – build all sorts of websites quickly and cheaply (definitely not just for blogs)
  30. Woothemes – get a great-looking theme for your website
  31. Clicky – get realtime analytics for your website (and impress your co-founders with their very cool ‘big-screen’ display)
  32. SurveyMonkey – run surveys easily
  33. SendGrid – make sure your emails get delivered
  34. TechHub – work surrounded by fellow entrepreneurs at this startup-centric office space
  35. OpenSoho – have drinks with startup and digital media folks
  36. Facebook Developer Garage – find out the latest goings-on in the world of Facebook (update: no longer running)
  37. Mobile Monday London – find out the latest goings-on in the world of mobile
  38. LRUG -meet smart Ruby developers and learn clever coding tips and techniques
  39. Moo – order yourself some cute mini business cards
  40. TweetDeck – track lots of things at once on Twitter
  41. Magento – set up a powerful e-commerce website
  42. – see how many times people click on the links you share
  43. Starbucks – get fairly reliable free wifi almost anywhere in London
  44. Le Pain Quotidien – hang out in a nice cafe environment with free wifi
  45. British Library Business & IP Centre – get free access to market research reports
  46. – find legal information about IT and e-commerce
  47. 99designs – get a logo designed
  48. SeedSummit – find seed investors
  49. The E-myth Revisited – learn why you should create a system
  50. Seth Godin – learn why you should forget your system
  51. Getting Real – read how to build web apps faster and more easily
  52. The Ultimate Sales Machine – read ideas about how to sell more effectively
  53. Appsumo – save money on stuff for your startup
  54. Google Alerts – find out whenever someone mentions your startup online
  55. SEOMoz Search Ranking Factors – learn what’s important for appearing high up in search engine results
  56. The Four Steps to the Epiphany – read the original bible of the Lean Startup movement
  57. The Entrepreneur’s Guide to Customer Development – read the cheat-sheet version of the Lean Startup bible
  58. Ogilvy on Advertising – understand advertising better
  59. Google+ – get dabbling. It could become important for SEO
  60. Twitter – follow fellow entrepreneurs to pick up some great tips
  61. Paul Graham’s Essays – pick up entrepreneurial wisdom from the guy behind Y-Combinator
  62. Futuristic Play – learn more about online marketing
  63. A Smart Bear – absorb entrepreneurial wisdom from an experienced founder
  64. Adwords Keyword Tool – find out how many people are searching for something
  65. oDesk – hire people on the other side of the world
  66. PickyDomains – challenge people to find you a great domain name or slogan
  67. Enternships – hire entrepreneurially-minded interns
  68. Seedcamp – get money and coaching in return for a share in your business
  69. UserTesting – find out whether anyone can use your website
  70. PSD2HTML – convert that slick PSD your designer created into CSS and HTML
  71. Sedo – buy a decent domain name
  72. VirtualBox – run a virtual Windows machine so you can test old and annoying versions of IE, even if you have a new and shiny Mac
  73. Dropbox – share documents with your co-founders
  74. Google Docs – share documents with your co-founders and edit them together
  75. ProductTank – hobnob with product managers
  76. London Startup Digest – get a curated email of London’s startup-related goings-on
  77. Social Innovation Camp – do something good with your talents
  78. Toastmasters – become more confident talking in front of an audience
  79. Enterprise Finance Guarantee – get backing from the government to help you get a loan
  80. The Gary Halbert Letter – improve your copywriting
  81. PatternTap – web UI design patterns
  82. Technology Strategy Board – enter funding competitions and apply for grants
  83. The Equity Kicker – read views from Nic Brisbourne, a London VC
  84. Dragon’s Den – entertain your friends and family by pitching your business on TV
  85. OpenCoffee – attend weekly coffee meetups and mingle with budding entrepreneurs

Last, one bonus resource [something I’ve set up]:

I hope that’s helped you discover at least a few new things that will come in handy.

Did you find this useful? If so, please retweet it now:

Photo by Lillais.Burke.

Boudoir Privé – Beauty Boxes by Subscription

Two pink boxes with the Boudoir Privé logoI’ve recently launched a new subscription e-commerce business and it turns out we’re in a hot space again (as we were with DealBunch and the daily deal phenomenon last year)…

Boudoir Privé is all about meeting the desire that a lot of women have for beauty products. Each month, we send out luxury ‘beauty boxes’ with 5 or 6 deluxe-size samples of everything from makeup to skincare. It’s a way for people to try out expensive and high-end products to figure out which ones work best for their personal needs.

Each product comes from a different brand and, for the brands we work with, it’s a great way to get their products into people’s homes and to reach a key, influential group of customers who are both passionate about beauty and active in social media.

I’m happy to say we’ve had a great uptake since our launch. Only about 12 hours after the public launch of our website, all our August boxes had already been snapped up.

If you or someone you know would like to get hold of one of our September boxes, then don’t miss out! Take this tip from me: sign up here now and we’ll let you know when the September boxes go on sale.

Update 1: I’ve now launched a website covering the subscription commerce industry in general. If you’re interested in subscription commerce, take a look at Subscription Commerce Insider.

Update 2: We ultimately sold Boudoir Privé to French beauty box company JolieBox who in turn sold to Birchbox.


Getting to Critical Mass: How to Start a Marketplace Business


Are you thinking of setting up a two-sided marketplace business?

It’s a hard thing to do, so you’re going to need all the help you can get.

Why not learn from how other people have managed it successfully in the past?

One challenge of creating this kind of marketplace is that you’re going to have to understand and meet the needs of two completely different communities and you’re going to have to somehow bring enough members of each community together to give your marketplace liquidity.

Why are Marketplace Businesses Attractive?

Why try to set up a marketplace anyway? Why not keep life simple and provide a product or service to a single community instead?

Here are three reasons why marketplace businesses can be attractive:

  1. They’re a natural fit for the information-sharing potential of the web.
  2. Operationally, they can be simple: as a purely online business, there’s no inventory to look after and no service to deliver apart from the marketplace site itself.
  3. The more users you have, the more useful the marketplace is. This network effect becomes an important barrier to entry to potential competitors and goes a long way to explain the long dominance of sites such as Craigslist and eBay that, arguably, have done relatively little to innovate and improve over the years.

The Critical Mass Problem

Your marketplace will only be attractive to buyers if you have things on sale. Likewise, sellers will only be interested if you’ll be bringing them buyers. Often, to start with, you have neither. This chicken and egg problem can be a hard one to overcome!

8 Ways to Kick-Start Your Marketplace

1. Spin Out of an Existing Community

If you’re in the fortunate position of running a community that would be natural users of the marketplace, you could be in luck. SitePoint, a community for web designers, very successfully launched two related marketplace sites: Flippa (for buying and selling websites) and 99designs (a marketplace for web design). Both services originally started informally when people were posting messages advertising websites for sale and looking for web design services on the SitePoint forums.

2. Partner with an Existing Community

If you don’t own an existing community, you may be able to partner with one. You bring them new revenues; they help market the service to their members. There are various ways to do this which might involve giving them a share of the business or agreeing a revenue-sharing deal. Through white-labelling you may be able to work with multiple partners in this way.

3. Capture Contact Details to Connect Buyers and Sellers at a Later Date

A visitor to your site who doesn’t find what they’re looking for isn’t necessarily a visitor wasted. Why not give them a form to say what they’re looking for. If, at some point later, it becomes available, send them an email to bring them back to the site.

GiftCardRescue, a US gift card marketplace, does this nicely.

4. Focus on a Niche

However broad your ultimate vision for the marketplace, you might want to start by focusing on a narrow niche. For example, a marketplace for buying and selling used electronics might seem very empty with only ten listings. A marketplace for used iPads with ten relevant listings could already deliver value and appear active.

Geography is one dimension of focus that is particularly popular. Many now-successful sites (Craigslist, for example) started in a single city and only expanded once they’d reached critical mass in their initial location.

5. Advertise

This can work if you have lots of money to spend (or can raise it), but otherwise gets expensive fast (especially if the first visitors to your site see barren pages with few signs of life — they’re unlikely to participate).

6. Contact Individuals and Invite them to Join

This and the next two tactics were all used by the founders of crowdSPRING.

While researching the business, Ross and his co-founder contacted freelancers and contractors individually and asked them about their problems with existing marketplaces and what they’d like from a new one. Later, when crowdSPRING was ready, he invited these same individuals to join their new site.

7. Ask Friends and Family to Use the Site

With a healthy number of freelancers already signed up to the site, crowdSPRING then needed to address the other site of the market: jobs for those freelancers to do. One tactic they used was to ask their friends and family to post jobs.

8. Subsidise Early Use

To further encourage use of the site, crowdSPRING covered 100% of the costs of the first 50 projects that were posted. They also paid 50% towards further projects until they were satisfied that the service was working well and was ready to stand on its own.

Further Resources

  1. Brant Cooper has a post on how customer development applies to marketplace businesses. Worth a read if you’re a fan of Steve Blank and co.
  2. Mixergy has an interview in which Andrew Warner talks to Ross Kimbarovsky, founder of crowdSPRING, about how crowdSPRING got their outsourcing marketplace off the ground.
  3. How Thumbtack built a marketplace for home services.
  4. How Skillshare built a marketplace for online education.
  5. 7 frameworks for predicting online marketplace success.

Any Other Examples?

How about you? What tactics have you seen used successfully in launching a marketplace businesses?

Please share them in the comments!

Photo by mklapper

What’s the Future of Local Advertising?

What will local advertising look like a few years from now?

BIA/Kelsey recently released the following slides about the local ad marketplace in the US.

A few interesting points they make:

  1. It’s Big – The local ad market brings in $133 billion annually
  2. It’s Fairly Traditional – 92% of local ad spending still goes to traditional media companies (TV, radio, yellow pages, etc.)
  3. It’s Top-Heavy – 81% of the spending is by the largest 22% of companies

What are the takeaways? There is a lot of hype around ‘local’ at the moment, what with FourSquare, Facebook Places and the Google/Groupon non-deal, but for the companies that get it right there are huge real opportunities in local advertising over the next few years.

Google Boost – Simpler Self-Service Ads for Local Businesses


Google today announced ‘Boost’ a new, simplified self-service ad offering. It’s in beta for the time-being and only available in a few cities in the US, but it could be an interesting step in helping small businesses get started with online advertising.

Google have, for some time now, been encouraging small, local businesses to set up Google Places profiles with various information such as address, opening hours and phone number. Boost makes use of this information to help create relevant ads for the business. The business owner still needs to write the ad copy and specify categories to advertise under, but the tool apparently sometimes provides suggestions and then figures out the mapping to actual keywords and Google maps. The ads are charged on a pay-per-click basis with the business owner setting a maximum budget.

From the screenshots in Google’s blog post, it certainly looks like setting up ads through Boost will be less intimidating for the average user than going the standard Google Adwords interface. I suspect a service like this is still asking too much for most small businesses to attempt, but it’s certainly lowering the bar they need to cross and I’m sure that’ll be enough to encourage some small business owners to give PPC advertising a try when they wouldn’t have done so before.

If Boost helps significantly more local businesses advertise online then it should, in turn, help publishers of local and hyperlocal content generate more ad revenue. Perhaps it’s time for me to have another look at Localmouth

Further Reading

Creative Commons License photo credit: Bdale Garbee

Tips from Business of Software 2010


Patrick over at Micro ISV on a Shoestring has a fantastic post summarising lessons learnt at the recent Business of Software 2010 Conference.

He goes through highlights of a number of talks and it’s good reading for anyone in the business of selling software. Here’s one nugget I found particularly interesting that’s potentially handy for anyone trying to increase the open rate of emails to existing customers (from Patrick’s summary of a talk by Rob Walling of Software by Rob):

Email is far superior to competing methods of repeatable contact with customers—such as Twitter, blogs, RSS feeds, or your favorite social network—because it allows “personalized broadcasts”, where you can scalably communicate with an arbitrarily high number of people while also making it feel like everyone is getting individualized attention.  (Not nearly enough people use this to its maximum potential, particularly with SaaS.  Free tip from me: note what search term sent them to your website, put a variation of it in the subject line of the email, watch your open rate go through the freaking roof.)

That last bit’s a fascinating idea. I can’t wait to try it out. Though I can see it being a more natural fit in some instances than others.

Another gem from Patrick’s summary of the same talk, is that, if you’re trying to get website visitors to give you their email addresses, offering them something they can get immediately in return, such as a white paper, can be very effective. That much I knew. But apparently you should call your white paper a “report” because that will give it higher perceived value.

Anyway, there’s lots more good, actionable stuff to browse through. Read the (very long) post here. Nice work, Patrick!

Creative Commons License photo credit: batintherain