Building Platforms to Sell
Successfully entering and selling goods or services in competitive markets online can be an exhausting, costly process, if not next to impossible. Too often you must rely on heavy ad-spend to drive traffic, and low profit margins to undercut competitors pricing.
However, building platforms to sell is a strategy that may allow you to enter competitive markets with higher margins and less costly traffic.
And, it is evergreen.
What Do We Mean Building a Platform?
A platform, by definition, is “a raised level surface on which people or things can stand.” When we reference building platforms, we are talking about websites that maintain a stable surface to support additional websites (or additional sections of a website). The goal in building platforms is to establish websites and content that are capable of launching, supporting, and boosting future online business. Let’s pause to briefly examine the few basic, but important, factors that ultimately determine the profitability of an online business, more specifically, an eCommerce business:
- Conversion Rates
- Average Order Size
- Gross Profit Margins
Successful platform websites should assist in increasing the four-above metrics, and ultimately the bottom line of your online businesses. They will allow you to drive traffic to other websites, provide content that sparks interest in products, and sell those products at increased margins.
Our favorite type of platforms? Blogs! Podcasts, email lists, social media groups, and others are great too. Anything where you can build an audience or a following for free.
How Does A Platform Increase the Bottom Line?
Good platform websites, or section(s) of websites, typically drill down into a niche that is less competitive than the over-lying industry. Writing blog posts and content targeted towards less competitive keywords and topics will assist in generating traffic, and lead to better search engine rankings. Additionally, presenting consumers with insightful content may help build a higher level of trust, and make consumers recognize an interest in products they were not previously interested in. Depending on the industry and product(s) or service(s) you are selling, there may be unique opportunities to increase your average order size by presenting complimentary products. To summarize:
Platform websites can boost traffic by generating content in niche markets. This will lead to better search engine rankings, thereby generating additional traffic without relying on heavy ad spend.
Presenting consumers with informative content can help build trust in products you are selling. It may also spark interest in products or services the consumer was not previously interested in or did not know existed.
Average Order Size
Content provides opportunities to inform customers of unique ad-on products, or products that compliment others.
Driving free traffic to your website via increased search engine rankings allows you to sell products at higher margins, rather than competing in price.
All of this sounds great, but how can it be implemented? The idea for platform websites never crossed our minds until we stumbled upon it without fully realizing what we were building until recently. Our experience highlights how platform websites operate, and why many doors have opened that would not be possible without this website.
The Website We Started Out of Passion For BMW
In 2016, Jake and I were coming off the sale of our initial BMW parts business, which had its ups and downs but ultimately did not work out for us. We were battling a competitive market with a website that did not rank well on Google, and supplier pricing that made it tough to compete with lower prices. Although this website did not work out in the end, we both drive BMW’s and are passionate about cars and aftermarket products.
The Initial Idea
We knew we wanted to start another BMW website, however, as we were both entering the corporate world we needed something with low operating costs that would be easy to run and manage in our little spare time. Suddenly the idea hit us. A vast majority of online content regarding specific BMW models and engines was contained on forums. Blogs and content websites rank significantly better than forums in the search results. Why? If you have any experience browsing BMW forums you likely realized finding answers can be complicated. Forum threads can be littered with conflicting answers, banter, and toxic arguments between members. A blog with organized, insightful content will easily outrank forum threads where organization is not even a known word.
The point is, we found a niche in the online BMW content marketspace. In the first year of the website, we created blog posts containing information forum members were frequently seeking but struggling to find definitive answers. Suddenly, a year later we had a website that was consistently generating 20,000 unique visitors monthly. The website began making a few hundred dollars a month from AdSense, Amazon Affiliate links, and an advertising deal we set up. Months went by where we put next to no effort into the site; we were not writing new posts (although revenue and profit still slowly trended upwards) and did not truly consider monetizing the site any further. Little did we know.
High Quality Traffic is an Often-Overlooked Secret
A lot of the clicks landing on our website are people in the early stages of researching aftermarket performance modifications for their BMW. Basic performance modifications can boost the engines horsepower and torque, from the factory 300, to well upwards of 500 or more. One common theme throughout our blog posts is the importance of changing your spark plugs and ignition coils before tuning your BMW. The massive increase in horsepower and torque puts additional strain on spark plugs and coils, so its excellent general maintenance to tackle before tuning the engine.
Jake and I eventually realized this is the perfect opportunity. Due to our past failed experience in the BMW parts industry we had zero interest in entering the competitive parts market when we first started our blog. However, this time around we had the perfect platform; we have a website that is driving significant free traffic, and our content is highly targeted in a niche market.
Rather than cluttering our blog/content website with a parts section we determined the best route was to begin a new, simple website. This allowed us to build a clean website with one specific purpose: to sell spark plugs and ignition coils. We linked any mention of spark plugs and ignition coils on our blog (“platform website”) to the new spark plugs site. Parts pricing from suppliers can fluctuate frequently and significantly, so we built in 25-35% margins to error on the side of caution. How successful is our platform website? Within 72 hours of launching BMW Spark Plugs we got our first order. The site was not even fully completed – product descriptions and images were missing, and some products were not even added to the store yet. At the end of March 2019, the spark plugs website was only 3 months old. For March alone the website did:
Profit Margin: 28.1%
The numbers aren’t huge, but nonetheless, it is impressive for a 3-month-old website that we started in less than 10 hours and built in high margins in a competitive market. Its potential upside is much more significant than the initial platform blog we started. Additionally, BMW Spark Plugs is merely scratching the surface of the opportunities we now face.
2020 Update! Nearly touching $3k of monthly profit
January is one of the worst months for ecommerce sales. January was our sites official 13th month in business. We did over $40,000 of revenue in 2019 at a ~30% net profit margin. In January of 2020, this site alone did $8.3k of revenue and $2.9k of gross profit.
We began tracking profitability at a consolidated level between all of our websites. So, I can only accurately provide gross profit for the site. But, our only operating expense is our $30/month Shopify plan.
Still to this date, we have spent $0 on paid advertising to achieve these results! Obviously, paid advertising is great too. But we now have a sustainable level of organic business. We are just about to start running paid advertisements to see if we can ramp growth even further.
There are significant numbers of tuning and aftermarket performance parts manufacturers and suppliers, however, a majority of them lack one thing – a platform to sell those products. Often, they make excellent products for good value, but their websites can be next to impossible to find. These companies rely on BMW forum advertising to sell most of their products. It usually works, but they are left competing with others on price and quality, and they fail to capture a portion of the market that does not use forums. This is where our platform comes into play. We have the ability to sell products to consumers and bypass the competition by targeting a market that was not previously reached. We don’t want to bore you with all of the specifics of the industry, so we will quickly highlight a few opportunities our platform website has opened.
-BMW Performance Parts
-General BMW Parts/Maintenance Items
These are simply a few areas we are now looking to expand our business that likely would not be possible to succeed in without our platform website.
Our BMW Summary
BMW Spark Plugs instant success helped us realize we built something much bigger than a simple blog; we truly stumbled upon and built a platform to expand our business. Content and blog posts highly targeted in a niche market allows us to capture high quality traffic without heavy ad-spend. It enables us to provide insightful information to consumers and truly sell them on our purpose and products. Further, we are able to operate in competitive industries with high margins by capturing a portion of the market that was previously not targeted.
Platform Websites Summary
There is no specific strategy that is always successful when building a platform website. However, as evidenced by our BMW website experience, it can certainly work wonders to start a platform in a less competitive industry and provide consumers with insightful information. It enables you to rank higher in search engine results thereby generating targeted, quality traffic without relying on ad-spend. Building a platform website allows you to increase your businesses bottom line and eventually enter competitive markets by initially drilling down into a niche and providing consumers with helpful content.
What do you think about the concept of platform websites? Have you experienced anything similar?