Lessons in entrepreneurship: Small ad platform starts to make big money

By Julia Scott
BargainBabe.com

Talking to Emily Lowrey, founder of ShopBirmingham, was like getting kicked in the
pants. While major news sites struggle to generate online revenue streams, Lowrey has it figured out.

“We’ve been profitable since the first month,” she said in a southern accent that was as charming as it was confident.

Her secret is textbook Business 101.

Solve a problem people are willing to pay to cure.

The problem Lowrey, 36, has been solving since June 2011, when ShopBirmingham launched, is to deliver ecommerce to local mom and pop stores. Doh! Why didn’t I think of that?

Lowrey’s money-making solution is as obvious as her path into news entrepreneurship. Lowrey studied journalism at Jacksonville State University and has an MBA from the State University of New York at Buffalo. She has worked in the advertising departments of newspapers owned by Newhouse, Community Newspaper Holdings Inc., and Gatehouse Media.

At Gatehouse, she experimented with online revenue models. “Everything beyond banner ads,” she said. The score? Not a single home run.

“Because we were still funded in large part by the print products, we never had to have a digital product that paid off the bills,” Lowrey said.

While in business school, she consulted for The Buffalo News, looking at revenue across all channels. She noticed the bulk of revenue was coming from big box retailers. If that declined, there was nothing priced low enough for mom and pop shops. But mom and pops were eager to go digital.

So Lowrey melded the paper’s community news site, Buffalo.com, with ShopBuffalo.com, an ecommerce site for local businesses. The pairing worked because the focus was the same: local community.

After graduation, Lowrey moved back home to Birmingham to be closer to family and to replicate the Buffalo community experiment, this time with ShopBirmingham and its community news sister site, MagicCityPost.

“We looked at data,” Lowrey said. “The average person spends about $500 per year online. When mom and pops don’t have their products and services online, they are not getting any of those dollars.”

She knew, as so many news entrepreneurs are learning, that it is difficult to make a living off banner ads. Lowrey wanted much more than to make a living – she wanted to create a company where people could work full time.

Using $125,000 of her own money, she launched.

Lowrey sells just two products. Both offer local merchants a low-cost, low-maintenance route to market themselves online and get their products online. The difference is that one product includes labor, and the other gives merchants the technology and tools to do it themselves. Both products include the ability to sell inventory online, send unlimited press releases directly to media outlets, have a social media presence, upload videos, send a monthly enewsletter, distribute coupons, and coming soon – sell daily deals.

Without labor, the price tag is $995 per year. With, $335 per month.

A third of revenue comes from the annual package, and the remainder comes from the monthly package. Lowrey has 67 customers.

The business has made in the “very close ballpark” of $70,000. She has two full-time employees, plus herself, and two independent sales contractors.

Traffic to ShopBirmingham is moderate, about 8,000 unique visitors a month, but engagement is intense. Some 71% of visitors return, and on average they stay for 7.5 minutes.

From a consumer’s perspective, ShopBirmingham makes shopping locally online possible. No need to wonder if a mom and pop in your ‘hood has a product you want. You can go online and look.

In the next year, Lowrey plans to launch similar efforts in Baton Rouge, La., Charleston, S.C., and Nashville, Tenn.

She scoffs at large newspapers trying to make money off consumers who click through their site to big box retailers, clicks that earn fractional fees.

“If I wanted to shop big box, then I could go to Walmart or Amazon or Target.”

Update: Emily Lowrey added this comment to a cross post at Knight Digital Media Center:

Big shout out to the folks at ShopCity.com who power our kick-ass ShopBirmingham.com site.  Because they built an incredible digital marketing platform designed specifically for local businesses (e-commerce, newsletter/email marketing, coupons, daily deal that doesn’t bite, a newsfeed…), we get to walk in to see our potential customers with the confidence that we have a product that works for them at a price that’s fair.  We are beyond pleased to have partners like ShopCity.com who get the “heart” that’s so important to entrepreneurs in this space.

This is a cross post from Knight Digital Media Center @USC. Emily Lowery is on the faculty of KDMC’s Block by Block News Entrepreneur Super Camp in October..

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