How to build online communities
Tuesday, 30 October 2007
Last Updated: Tuesday, 30 October 2007
By Amanda Gome
Software developer Alfred Milgrom founded publishing company Melbourne House, electronic game business Beam Software, and co-founded Smarty Pants Publishing. His latest venture is online shopping site Zazz.com.au.
Milgrom (left, with Alain Sarfati) talks to SmartCompany about how to build an online community.
Any questions? Email feedback@smartcompany.com.au and Milgrom has promised to answer.
In March last year, serial entrepreneur Alfred Milgrom, then 59, started Zazz.com.au after he saw the idea in the US. On the surface, Zazz sets out to do a simple thing every day: Sell one product – mainly an electronic gadget – in large quantities.
But in founding Zazz, Milgrom set out to build a strong online community because he was convinced it was essential to his success. He Milgrom says Zazz now has 25,000 members and half subscribe to the daily or monthly email. Revenue is about $4 million and operational costs are about half a million. He and his business partner Alain Sarfati started with three staff and now employ 10, and outsource a lot of functions. It took six months to be profitable.
While August and September traffic figures were a bit flat, he says the site has since bounced back. The speed at which competitors have emerged has shocked Milgrom, but he believes the strong online community he has built gives him a sustainable, competitive edge.
Amanda Gome: Why Zazz?
Alfred Milgrom: We wanted to create a new shopping experience that is fun, exciting and surprising. It was based on a successful US site that I saw but did nothing about until my 27-year-old son prodded me and asked, why not?
Online is the only direction I wanted to go in and in all my other businesses I have tried to attract a mass audience rather than a niche one.
When we started, we primarily sold electronic gadgets and selling toys, and on Sundays we sold homewares. Now we are trying to work out what sells best for audiences on weekends. And although we get the traffic on Sundays, we don’t get the conversion to a sale.
Why did you need to create a community?
The level of trust between a retailer and a consumer is very important. Why do you buy from one retailer and not another? It’s not just price. Besides anyone can set up a website. Building a community establishes trust and creates an extra level of transparency.
Sometimes you get on sites and the product is not what you expect. Good customer service means dealing with complaints.