Entrepreneur's e-commerce success in the bag
US internet entrepreneur Peter Cobb has some simple advice for anyone thinking of starting their own e-commerce site: Do a financial projection, then double your expenses and cut your revenue in half. If you still have a profit, you probably have a workable business model.
"You can guarantee there's going to be curve balls," he said. "There will be obstacles pop up that you can't even imagine and so you need to build an organisation that is nimble and not afraid of change and can react in a timely manner."
For Mr Cobb, the founder of online luggage business ebags.com, the unexpected was the 9/11 terrorist attacks a couple of years after he and his partners started their business, which hit the global travel market and hence the demand for luggage. Fortunately, the site had already started moving into everyday items such as briefcases, handbags and backpacks.
More than a decade later, ebags.com has sold 17 million bags and is one of the top 100 e-commerce sites in the US.
Mr Cobb will visit Australia next month for the three-day eCommerce Conference and Expo in Victoria, where he and other internet entrepreneurs will outline the different technologies, trends and insights needed to succeed in the burgeoning online economy.
Having worked as the marketing manager at global luggage maker Samsonite, Mr Cobb and a couple of colleagues decided to make "the world's greatest bag site". They set out to make a better retail experience online than could be had in bricks-and-mortar stores, with a wider range of products and reviews from customers.
"One of the very first things we did - and it wasn't really done at the time - was customer reviews and testimonials," Mr Cobb said.
Reviews were an innovation when the site launched in 1998 and gave the site a competitive advantage - a factor Mr Cobb said every e-commerce site needed to be successful. The site now has a vast archive of customer reviews - 2.5 million at last count.
He said one of the keys to the site's success has been its "drop ship model". Ebags.com does not buy, store or even handle any product. Instead, it shows the bag ranges from various manufacturers. When customers order from the site, ebags.com sends the order to the bag manufacturer, which ships the product direct to the customer.
This means ebags can have 55,000 different styles of bag on its site and better cash flow because it is not buying stock up front.
The company also changes pricing on its goods as often as every six hours as it responds to prices offered by competitors.
Pinny Gniwisch, another US web entrepreneur who will be appearing at the conference, also cites flexibility as a key to a successful e-commerce site.
"If we weren't innovative and quick and nimble we wouldn't have survived," said Mr Gniwisch, who founded online jewellery retailer ice.com. "We changed the tyres as the car was moving and that's the lesson for a successful online company - that things change so quickly that either you adapt or you die."
Ice, which turns over about $US40 million ($38.5 million) per year, has been quick to jump onto the latest communication trends, such as blogging and its own YouTube channel. Most recently, it has created an app that lets users take a picture of a finger to see how a ring would look on it.
Mr Gniwisch said entrepreneurs needed to understand the language of the web, which is different to the offline world. "That language is about conversation and the ability to talk to the consumer in a human way - that's one thing we've learned over the years."
Consumers can talk to the site's customer services people on Ice's Facebook page and a shopper can, for instance, send pictures of her daughter's prom dress and ask for recommendations about jewellery to match.
"Our agents are trained in a way so they act more like your best friend who you would go to for advice than a company that is trying to sell you something," Mr Gniwisch said.
He nominated one final factor that he said helped make his site a success: luck.
Frequently Asked Questions about this Article…
Peter Cobb suggests doing a financial projection, then stress‑testing it by doubling your expenses and cutting your revenue in half. If the business is still profitable after that adjustment, you probably have a workable e‑commerce model — and you’ve allowed a buffer for unexpected curveballs.
ebags.com introduced customer reviews early (when it launched in 1998) to create a better retail experience than bricks‑and‑mortar stores. That focus on reviews built trust and a competitive edge — the site amassed about 2.5 million customer reviews and used them as a cornerstone of its online offering.
ebags.com operates a drop‑ship model: it lists ranges from manufacturers but doesn’t buy, store or handle stock. When a customer orders, the manufacturer ships directly to the buyer. This lets ebags offer around 55,000 styles without large upfront inventory costs, improving cash flow and lowering working capital needs.
ebags.com updates pricing as often as every six hours to respond to competitors. Frequent price adjustments help an online retailer stay competitive, capture price‑sensitive shoppers and react quickly to market shifts.
Both Peter Cobb and Pinny Gniwisch emphasise that flexibility — being innovative, quick and willing to change — is essential. Entrepreneurs need organisations that can adapt fast to new obstacles, new technologies and shifting customer behaviour or risk falling behind.
ice.com has embraced blogging, a YouTube channel, social media customer service (including Facebook), and even an app that lets customers photograph a finger to see how a ring would look. Those conversational, human‑focused tactics helped drive about US$40 million in annual turnover.
The 9/11 attacks reduced global travel demand, which affected luggage sales. ebags.com had already diversified into everyday items such as briefcases, handbags and backpacks, which helped it weather the drop in travel‑related demand.
More than a decade after launch, ebags.com had sold about 17 million bags and became one of the top 100 e‑commerce sites in the US. Founder Peter Cobb and colleagues drew on retail and marketing experience (Cobb had been a marketing manager at Samsonite) and set out to create 'the world's greatest bag site' with a wider range and better online shopping experience.
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