The internet revolution means new opportunities including this new silk road as a Facebook business
The internet has brought about some amazing work from home opportunities and people are still learning how to make many work. I’m all over blogging, self-publishing and freelancing but the biggest upside may be in traditional retail sales coming online. Online retail sales in the U.S. jumped 15% in 2015 to $342 billion compared to overall retail sales that rose just 1.4% over the year.
Despite the massive e-commerce growth, online retail sales are still just 6.5% of total retail sales. On new opportunities in social media like Facebook business pages and Pinterest marketing, I reached out to a friend to share how she has used online sales to create a new business model.
Carolina runs her online store almost completely off a Facebook business page. Ruta de la Seda, or Silk Road in English, specializes in belly dancing accessories and elements as well as other decoration and gifts from the Middle East. In a country with 10% reported unemployment and many people working for the minimum wage of $231 per month, she’s turned a passion into a profitable business.
What I like most about Carolina’s Facebook business is that it’s unique among the popular work from home strategies we hear about like Amazon FBA, blogging and publishing books. There are a million ways you can use the internet to launch your business idea!
Describe your Facebook business and how you got started.
Ruta de la Seda is an online shopping business almost entirely on Facebook, selling belly dance accessories and elements. I also have another line of products specializing in home/office decoration, personal style and gifts. Everything is inspired by the middle eastern culture.
Since high school I had something very clear in mind and it was that I wanted to have my own business and I didn’t want to spend my whole life working for another person. For a long time, I didn’t feel like I had the experience, knowledge or money to start a business.
I’m have a degree in International Business so from day one of college I started looking for opportunities whether it was importing or exporting products. One of my passions is belly dancing with eight years’ experience as a dancer. While I was trying to learn and was falling in love with the culture and all the things related to it I realized that here in Medellin we didn’t have a lot of options to buy the products, elements and accessories we needed to practice it. There were only like two or three stores, owned by middle eastern people and everything was very expensive.
In 2010 I went to Egypt as part of an excursion. I fell in love with the country, the people, the culture, and all the amazing products that you just can’t find in Colombia. The prices were very low compared with the prices in Medellin. I saw a huge business opportunity there. I went to the manufacturers and kept their information.
It wasn’t the right time for me to start a business because I had a job where I was constantly traveling and I needed that stability of working for a company. I never stopped thinking about my business idea though.
Three years later, I was in a very unusual moment in my life. For the first time I was unemployed; I had a bad experience in a new job and I decided to quit. I had no plans and a lot of hesitation about what was going to happen with my life.
That was the moment when I realized that it was the perfect time to start something different. What could be better than mixing what I loved to do with the professional experience that I had? Once I knew what I wanted to do, I did all the research about the prices in the market, contacted the suppliers I met during my trip to Egypt, the cost of the products, shipping rates and options and taxes around importing goods.
I didn’t have all the money that I needed to start my business so I had to look for an investor. It took me almost two months to get the investor and place the first order.
How did you get your first customers and how long was it before you started making money?
Getting my first customers wasn’t that difficult. My long experience practicing belly dancing meant a lot of connections so my first customers were friends and teachers. I knew what kind of elements and accessories they needed and the limited options they could find in the market. I had an advantage over my competitors, the middle eastern themed stores. They were more interested in the decoration and clothing lines while belly dancing accessories is just an extra for them so they don’t carry anything more than the basic products.
The belly dance academy I belong to is one of the largest in Colombia and is a big referent in the market. Once I was regular supplier for them, it was easy to approach other belly dance academies and offer them my portfolio.
The most important opportunity I had to get more customers was seven months after I began my business at the International Arabic Dance Festival of Medellín, one of the biggest festivals of oriental dance in Colombia. I had a booth for all my products and sponsored a part of the event. This was very important to me because it gave me the chance to meet the directors and students of many of the belly dance academies from other cities of the country.
I was able to start establishing a relationship which is a key factor when you are selling online and the other person doesn’t know if they can trust someone on the other side of the internet. They could also verify the quality of my products and gave them another reason to trust my brand.
Including the amount of time it took to start my Facebook business, I would say it was about 18 months before I really started to make money.
What are the risks in this type of business? What should someone understand before doing it?
I think that the major risk is the cultural difference between the Egyptians and Colombians. You have to be very specific about the products you want and the price you are willing to pay. They can tell you USD $10 while the real price is USD $2 in their local store. You have to understand how to bargain and get the best price possible.
Since I buy my products direct from the manufacturers in Egypt, I have to deal with the fact that they don’t have the experience as exporters. They are used to selling their products to the tourists and they don’t have to care about import regulations or specifications because the clients buy what they see.
I’ve had a lot of situations where I order for something like ten dresses and they send me seven dresses and three bags. They didn’t have the quantity I ordered, but they don’t tell you, you just see it when you get the order and you can’t do anything about it. This is a big risk because they might send you products that you can’t sell or they don’t send you the complete order and you already paid for it.
Lead time is difficult to deal with also. It’s normal to have a supplier tell you shipping will take a week and it ends up being four weeks. Besides this, you have currency risks to deal with. When I started three years ago I paid 1,820 Colombian peso per dollar, now I have to pay more than 3,000 pesos per dollar. Since my suppliers won’t accept pesos, I have to convert my order into dollars and that means prices have gone up in my local currency terms.
If you want to start a business like mine, you have to be very careful with the cultural differences, to be very patient with international suppliers. Many cultures use bargaining as a part of selling. They aren’t trying to take advantage of you, it’s just their culture to haggle back and forth for a price. You also need to know any customs regulations, freight options and be able to find the right suppliers.
About how much can someone making with this kind of business?
It all depends on finding the right suppliers at the right price and the relationship you can build with them. You have to get good prices, discounts and cheaper shipment options, even if it sometimes means slower transit times.
Egypt, China and Turkey have very good prices, but shipping costs and taxes are very high here in Colombia. Wherever you ship from or to, you need to know all your costs and how much you can charge for the final product.
If you know how much you can charge and how much it will cost to ship, you can work backwards to understand how much you can pay your suppliers. That’s your max price and anything you can negotiate lower is just extra profit.
I noticed you sell exclusively through a Facebook business page. Are there advantages to not having a website and how do you sell through Facebook?
In Colombia, we don’t have a deep culture for online shopping yet. We are used to having a salesperson telling us what’s good and bad about the product. People are still really hesitant about the safety of online payment, they just don’t trust the technology.
This is a big obstacle when you want to have an online shop, because you have to find a way of building that trust with people that can’t see you. With a website, the business feels too much like a commercial transaction. People see the product, pay for it and wait to receive it.
Having an online shop solely through a Facebook business page is a very millennial way of entrepreneurship. A Facebook business allows me to have a special kind of connection, that kind of relationship people want to have with the seller. The purchase process is much more a social transaction. I get customers that come back to my Facebook page to post pictures and show how happy they are with the purchase.
Another advantage of a Facebook business page is that it’s perfect for social marketing. Customers can show and share on my wall their events, performances and class schedules with all my contacts and followers which helps to develop the entire community.
I post all the pictures of my products to my Facebook business page. I let my community know every time I have a new product or a new collection. Through Facebook I know what kind of events or workshops are coming, and I use this information to promote the products they are going to need or the things I can provide them related to the event.
Most of my success with the online shopping process is thanks to the relationship that I get with my customers through a Facebook business page and that couldn’t be possible through a website.
There’s a lot of great advice here for anyone thinking about launching an online retail business, whether on a Facebook business page or otherwise. Carolina faces all the same business challenges and risks as someone would in a traditional retail business but she has the power of the internet and social media to overcome them. I’ll pass any questions you have about her business model to Carolina and look forward to hearing your own business ideas.