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:

• Traffic
• 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:

Traffic

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.

Conversion Rates

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.

Gross Margins

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.

BMWSparkPlugs.com

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:

Revenue: $1,553.50

Profit: $436.48

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.

Further Development

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

-Merchandise

-Tuning E-books

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?

 

Online Business Monetization: E-Commerce vs. Content

It is easy to quickly become confused with online businesses as there are so many different forms of monetization discussed. Dropshipping, affiliate, Amazon FBA, SaaS, adsense – the list goes on and on. However, by taking a step back, we see that online business is not as complicated and complex as it may appear at first glance. As we all know, most businesses earn revenue by selling goods and/or services directly. Other businesses earn revenue by indirectly selling goods or services. Almost all online business monetization falls under the umbrella of e-commerce, content, or both.

Simplifying Online Business Monetization

The basic definition of commerce is, “the exchange of goods and services.” E-Commerce is simply the term for online or internet-based commerce. Often, I see e-commerce referenced as a monetization method separately from things such as dropshipping or Amazon FBA. Both monetization methods involve selling goods and therefore fall under the umbrella of e-commerce. Likewise, monetization methods such as SaaS (Software as a Service) fall under e-commerce they are offering a service.

On the other hand, content-based businesses typically offer goods and/or services indirectly. Google Adsense, for example, empowers other businesses to advertise on your website. This is indirectly selling an advertising service. Affiliate monetization is indirectly selling goods or services; links lead to specific products or websites that directly sell goods or services, and commission is earned when a consumer makes a purchase through that link. Essentially, content only online businesses aim to drive traffic that is then re-directed to, usually, another business that directly sells goods and/or services. That business then provides compensation to the content business for directed traffic to their site.

It is important to note, content could also be classified as e-commerce as sending traffic to another site may be considered offering a service. Additionally, content on its own may be considered offering a service by providing useful information to consumers. The important differentiating factor is the indirect nature of content businesses. Content drives revenue as opposed to the direct sale of goods or services. The below shows a general breakdown of a few common monetization methods that fall under content or e-commerce.

Prior to starting or purchasing an online business, it is important to consider the over-lying monetization methods and determine which may be more appealing to you. Of course, each of the under-lying monetization methods have their own benefits and downsides. It is tough to make generalities about the over-lying, however, the following benefits and downsides apply to a majority of each under-lying method.

E-Commerce: Pro’s and Con’s

As shown above, e-commerce businesses do provide more monetization options. Although the basic concept remains, selling goods and/or services, there are many unique approaches to e-commerce. Dropshipping allows you to sell goods without directly handling inventory or order fulfillment. With Amazon FBA, you can sell products online without even having a website of your own. These are just a few of many different e-commerce businesses that exist.

Additionally, e-commerce sites typically generate higher revenue and profit than content only businesses. As you likely guessed, selling goods or services on your website has higher revenue potential than advertising other businesses products. Content sites may rely on affiliate deals to generate a significant portion of revenue, however, not all businesses offer affiliate deals. It may be easier for an e-commerce business to manufacture or source products than it is for content sites to find affiliate opportunities. Below is a list of the benefits of e-commerce sites as compared to content sites.

Benefits of E-Commerce Businesses:

• More monetization options
• Higher growth potential
• Greater revenue and profit potential
• Many different products/services that may be sold

Downsides of E-Commerce Businesses:

• More time consuming
• Website maintenance
• Finding new products and services to sell

Content: Pro’s and Con’s

Content businesses are typically highly passive once the content exists on the website. Depending on the specific industry or niche, you likely need to continue adding and refreshing content. Product or service recommendations, affiliate links, and advertising deals may need to be updated from time to time. However, unlike with many e-commerce businesses, you could take a vacation for a month and likely not have any day to day tasks to worry about. You might not even to touch the site for the entire month, but revenue and profit should be relatively unaffected.

Once the content is out there, it is out there forever; unless, of course, you decide to remove the content from the business. The 20 hours you spent on your recent blog post may have been a fair bit of effort up-front but could continue to generate revenue 10 years down the road without any further work. Similar benefits may exist for info products, however, they would fall under e-commerce as you are selling a product directly to the consumer, whether that be an individual or business.

Benefits of Content Businesses:

• Highly passive
• Content may still pay off 10+ years down the road
• Less website maintenance
• Easier to drive organic traffic

Downsides of Content Businesses:

• May be tough to find affiliate deals
• Content may become outdated over time
• Lower revenue/growth potential

Summary of Benefits and Downsides

As discussed, these are very general benefits for the over-lying monetization method and each specific monetization method may not follow this exactly. For example, selling info products may be highly passive, pay off years down the road, and not require significant maintenance or updates. However, in general e-commerce businesses have more monetization options and higher growth and revenue potential, at the cost of requiring more time to manage. On the other hand, content businesses are typically highly passive, requiring minimal maintenance and day-to-day tasks. At SaleAway, we believe the best way to build a truly great online business is by combining content and e-commerce.

Combining E-Commerce and Content: Building Platforms

This could be an entirely separate post, and likely will be down the road; for now, we wanted to provide a brief overview of why we believe combining content and e-commerce is the best way to build a profitable, sustainable business with massive growth potential. Content helps drive organic traffic to the website, while e-commerce helps expand growth potential and boost revenue and profitability. We refer to this concept as “building a platform.”

What Do We Mean Building a Platform?

Building a platform is a simple concept that may be executed easily by any online business owner. It does take some time, effort, and patience to execute well, but in the end may provide significant opportunities. A platform is, “a raised level surface on which people or things can stand.” The idea is that content and traffic are the platform that the e-commerce portion of the business relies on. Taking it a step further, the content should aim to drive high-quality, organic traffic to the e-commerce business; the content and traffic together are the “platform” to sell.

An Example of What it Means to Build a Platform

We stumbled upon the idea accidentally – a few years ago we started a BMW blog for one specific engine. Initially we expected to keep it as a content site only and for the first 18 months we worked on generating content, finding affiliate deals, and a few small advertising deals. Eventually several blog posts were ranked in the top 5 spots on Google, and we were organically generating 20,000+ unique visitors per month. We realized we built a platform that had way more potential than we expected.

In January 2019, we began considering how we wanted to enter the e-commerce space to grow revenue and profit. Come early February, we officially launched a website that sells BMW spark plugs, ignition coils, and vanos solenoids. We use our blog, or our “platform”, to drive traffic to the parts website, which managed a respectable $14,034 revenue and just shy of $5,000 profit in its first 4 months. The crazy thing is we are only selling a few BMW parts; this was kind of a test run in a way. We have not even scratched the surface of all the doors our platform has opened. There are opportunities to sell additional OEM BMW parts, gear/clothes, aftermarket parts, info products, etc.

To date, we are still working on expanding our platform prior to focusing further on e-commerce growth. The more we grow our blogs and the more high-quality organic traffic we gain, the easier it is to successfully expand our e-commerce portion of the business. Again, we will write in depth about building platforms in the future.

Summary

E-commerce and content businesses are the two over-lying monetization methods of online business. Under each umbrella is an expansive list of specific monetization methods. E-commerce businesses typically have higher growth and revenue potential at the cost of more work. Content businesses are highly passive, requiring little work once the content is generated, but may be tough to achieve significant revenue and profit. Combining content and e-commerce is a great way to build an excellent online business. Referred to as building platforms, content helps drive high quality, organic traffic to the site while e-commerce helps boost growth, revenue, and profit opportunities.