From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs (Part 3)

Sramana: How did you handle the e-commerce transactions when you first launched the website? Did you just generate leads that you would complete by visiting in person or over the phone?

Kim Pederson: I would put listings of our inventory online, and visitors could print out a copy of our inventory list and mark the items they wanted. They could then fax in the order or give us a call, and we would finish the order over the phone. One of my first online orders was almost $800.

From the very beginning, I had a concept in my mind as to how I wanted to market this. As a straight commission salesperson, I would have small accounts, medium accounts, and some very large accounts whose orders would be palletized. I put my inventory on the website but priced it at the same levels that I sold to my big clients. I knew that the homeowner would buy at that price. I executed that strategy and I operated with very low margins. As my volume grew, I went back to my manufacturers and convinced them to give me a better price.

Sramana: Before you had the website operational you did $180,000 dollars a year in sales. What were your sales like after you launched the website?

Kim Pederson: After that first year on the Internet we had 50% to 70% growth year after year.

Sramana: What year were you able to actually start transacting an entire order online?

Kim Pederson: We began accepting payments online in 1998. We were doing over a million dollars a year in sales.

Sramana: What was happening in the larger marketplace at that time? I presume that competition was beginning to emerge online and that search engine optimization began to emerge. How did that impact your business?

Kim Pederson: Our biggest problem at that time was not the competition, it was managing our own growth. Our volume had increased to the point that we had to get a warehouse. I do remember when pay-per-click campaigns were first introduced. From day one I was ran my own pay-per-click campaign, and I ran them for years.

Sramana: How did you find out about pay-per-click campaigns?

Kim Pederson: They were right in my face. I was always online and conducting searches to find out where 1000Bulbs.com was ranked. Suddenly pay-per-click campaigns were introduced, and I saw them everywhere. I knew I had to jump on the bandwagon. At the time I was hoping it would go away, but that did not turn out to be the case. It became the way I had to do things to stay on top, so I taught myself how to run a pay-per-click campaign.

Sramana: What was your strategy with pay-per-click in the beginning? How did you execute your campaigns?

Kim Pederson: In the beginning the prices were relatively low. They were 10 cents a keyword. I did not have any matrix or tools to measure the success of campaigns. I placed ads and tried to generate business from those placements. In the beginning there were a lot of negative issues. It was almost like going to Las Vegas and gambling. I would see people outbid me and had to decide if I needed to keep going or not. I wasted a lot of money in those days.

This segment is part 3 in the series : From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs
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