Leveraging the Network

Last week I wrote about how life is getting tougher for small business online.

Over the last year in particular, truck-loads of VC cash have financed the arrival of hundreds of new start-ups online.

Faced with this kind of well-heeled competition, what are the options for someone who wants to boot-strap their business from the ground up?

Clearly, there’s no simple answer. But one of the smartest routes I can think of is to really take advantage of the networking potential of the online business environment. Leverage the network.

What do I mean by that?

The best way I can illustrate the point is to quote at length from an email I received recently from Stratis Morfogen, founder and CEO of FultonStreet.com, purveyors of fine seafood and much more.

“My family started down at The Fulton Fish Market in the late 1800s… I am a third generation of Morfogens down at the market…

“I created our B2C initiative back in February 1998, launched the site in September ’98…

“’98’s sales were $111,000 with $15K in advertising on AOL…’99’s sales were $1.3 million with $200K in advertising… 98.5 percent on-time fulfillment…

“We do the fulfillment for 1-800-flowers, Send.com, Urbanfetch, uBid, JCPenney (coming next month), plus many more smaller sites.”

To understand this reference concerning fulfillment for 1-800-flowers, take a look at the 1-800-flowers site. You’ll find that they sell fine seafood (as part of their Gourmet Treats section). And guess who provides it. Same with Send.com, etc.

Back to Stratis Morfogen:

“UrbanFetch has been a blast with same-hour delivery to Manhattan 24/7, and now their Penn Station storefront for suburban commuters bringing home a lobster dinner, movie, and a bottle of wine to their home, and then bringing back the video the next morning… Pretty cool, and it has been very successful!

“Last year at this time we had 600 sq. ft. with three employees; this year, 144,000 sq. ft. with everything in-house (e.g., customer service, fulfillment, etc.) and 88 employees for the holidays, and 35 presently…

Flooz has been incredible in promoting our brand extensions such as commercial kitchenware, steaks, and high-end groceries… We give many reasons to use their Flooz dollars besides seafood…

BizRate, for us, was an opportunity to shine… Where other merchants are offering ZERO in discounts to bizrate members, we offer 30 percent off… Even if we make 5-10 percent on each order, the customer acquisition is slightly profitable… Also, our 4 1/2 customer-certified rating doesn’t hurt… :)”

Over the course of a few paragraphs, Stratis mentioned relationships formed with no fewer than eight other businesses.

Every one of these relationships works to promote his name, his site and his products.

He’s not spending millions of dollars on advertising. He’s being smart enough to truly understand the nature of the business environment in which he’s operating. It’s a network.

Not an advertising medium. A network.

And that means there are much more efficient alternatives to spending zillions on billboards and glossy ads.

So if you’re looking to grow your business the smart way, think about the kinds of partnerships you could create for your online business.

Who could you supply to? Who could you fulfill for? Or who could do it for you? Who else shares your space – but is non-competing?

So here’s your test for the week: Think of eight potential partners for your company in the next fifteen minutes. Starting now.

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