If you can't raise venture capital to "get big fast," as Amazon.com did, your best strategy to build a profitable Web site is to pick a niche and become the best source of products and information for a specific set of enthusiasts.
That's what Jon DeKeles has done with his family-run e-commerce site, LargeScale.com. Its topic is model railroads -- "G scale" or "garden railways," as devotees know them. You might never imagine that this old-timey subject would do well on the Internet, but time has proven it to be well worth the effort.
After working for several years for ZDNet, an online publisher, DeKeles and his wife, Jo Anne, decided last January to quit each of their paying jobs and devote their full time to the site. Run from their home in Post Falls, Idaho -- a town of 18,000 in the state's northern panhandle -- their e-business now earns enough to pay their mortgage and all their living expenses, DeKeles says.
In an interview, he explained that the site, which was founded in 1995, only started making money within the past two years. He found that he needed revenue from three different sources to be profitable:
1. SUBSCRIPTIONS.
Aficionados of garden railways pay $21.95 per year for a site membership. Members gain access to articles that aren't available to other site visitors. They also receive a password into discussion forums on model railroad topics.
2. ONLINE ADVERTISING.
Although ad buys are down on Internet sites generally, DeKeles says model train manufacturers want badly enough to reach buyers that advertising still makes up a substantial portion of his site's revenue. He also charges advertisers to design e-mail campaigns and Web sites they can use on their own to reach customers.
3. SALES OF TRAINS AND ACCESSORIES. A sister site, GardenRailwayGear.com, sells working engines, train cars, tracks, model buildings, and all the other stuff that goes into a custom-built layout. Members of the main site are eligible for discounts on purchases of gear. A member's annual fee in the main site can easily be recouped in the first purchase from the online store.
DeKeles says the primary printed magazine for large-scale hobbyists has a circulation of about 40,000. By comparison, his site now has 15,000 subscribers, including both the recipients of a free newsletter and a more extensive version that goes to paying members.
It took the recent addition of the third revenue source -- the sale of merchandise -- to made LargeScale.com viable, DeKeles explains. "Subscriptions and ads just weren't generating enough revenue," he says.
Now that he's found a working formula, DeKeles expands his subscriber base by attending conventions, such as the East Coast Large-Scale Train Show. The growth of the business has even inspired his son, Bryan, to start his own e-commerce site, which sells hand-made office accessories: PencilCups.com.
The two sites keep them plenty busy -- when they're not playing with their model trains. For more information, see: http://www.LargeScale.com@n6.be/4e75.