Lessons Learned: Licensing a Language Platform Is Ecommerce Success

Dan Roitman based his education-focused ecommerce firm, Stroll, while he had been a student at the University of Maryland, studying international business and German, in 2000. He financed his fledgling company on his credit card, leveraging $70,000 to select the business to profitability in 2002.

Roitman was born in Germany and relocated to Maryland with his mother when he was nine. Eleven years later at the college, Roitman found an electronic text-scanning highlighter pen produced by a Swedish firm.

“I thought it’d be a excellent tool to make study guides, outlines, and summaries for college students and I convinced my former professor — that had been Swedish — to fly to Sweden to pitch the concept of marketing it to school students,” Roitman said.

His approach was to donate the pencils to college libraries, which would encourage the pens to their pupils.

“With that supply list, we can advertise to students directly. The producer liked the idea and gave me a funding, and that’s how the company began.”

While the manufacturer chose to pull from the U.S. retail marketplace, leaving Roitman with no product to market, the plan of taking a little-known educational product and utilizing direct marketing fundamentals to advertise it, became his way of conducting business.

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Roitman convinced educational publishing company Simon & Schuster to grant him the rights to some virtually unknown language learning application, Pimsleur Approach, which is currently a pioneer in audio-based language learning and the next bestselling foreign language system following Rosetta Stone.

Dan Roitman

Today, Stroll is one of Simon & Schuster’s largest reseller of audio content, increasing its earnings at a compounded annual growth rate of over 70 percent since 2002. Stroll made gross earnings of $16.7 million in 2009, $17.03 million in 2010 and $35 million in 2011. Roitman anticipates Stroll to become a billion-dollar plus firm by 2020.

Shopping Carts

As with other gifted young ecommerce merchants without needing to invest in an off-the-shelf shopping cart, but with tons of drive and time, Roitman built his own site by following a”learn how to program in 24 hours” book.

While he can’t recall what it was based on, the first Pimsleur Approach shopping cart is currently habit, with an in-house team of 20 developers, designers and quality assurance specialists who manage all its web development.

“We believe in agile programming methodology with short release cycles to facilitate continual testing and continuous optimization.

“This approach enables us to build incrementally on what we have set up, so we do not need to put plenty of cash into new functionality at every new stage, because we have already vetted and tested it.

“But we plan to change to a hybrid platform that combines our proprietary platform attributes, like the multivariate testing suite we have assembled, with off-the-shelf functionality.”

Credit Card Payments

The first Pimsleur Approach shopping cart has been incorporated with payment gateway VeriSign which resulted in a merchant account held with Roitman’s bank.

“We have always always opted for having a real merchant account versus using something like PayPal because it gives us more control and is less costly.”

Order Management, Shipping and Inventory Management

“Initially, we cobbled together our own tools for this particular purpose,” Roitman said.

“As we began to generate important orders in 2003, we invested in an outside order management system that was a traditional software based platform.

“It worked for us for about two years before we moved on to some web-only platform because accessibility on the initial system was much less reliable.

“Fortunately, there are lots of great SAAS hosted back-office solutions on the market. In addition, we have an 18,000 square feet distribution centre in Philadelphia where merchandise is sent.”

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Hosting

Roitman thinks ecommerce hosting needs depend on your volumes.

“For our first $2 million in earnings, hosting costs were approximately $50 a month and met our requirements. As earnings increased, we could not afford a second of downtime. Now we spend around $50,000 per month on hosting when you factor in content acceleration network expenditures.”

Employees

Stroll has grown from 46 workers in 2010 to 166 workers thus far, with most working in its head office in Philadelphia.

Roitman said Stroll is obsessive about picking employees who think strategically and can tough it out when things get hard.

“Stroll hires workers who meet our five core values: strategy-mindedness, psychological strength, possession thinking, results orientation, and being the very best,” he said.

As an education-focused business, Stroll pays for workers to attend business, trade, and media events, workshops, and training programs, to buy and read business publications, and subscribe to business publications.

Search Engine Optimization

Roitman learned SEO and site conversion abilities by networking with experienced marketers to learn what really worked — monitoring and measuring how well he had been converting website visitors to clients from each advertising source.

“For example, during an early email campaign, I re-tooled the subject line to fortify the deal and enhance the emotion until I achieved the desired ROI.

“I saw that the return I got on each and every advertising dollar I spent which enabled me to systematically examine creative strategies.”

Roitman concluded that if little tweaks over time compounded into large consequences for an email marketing campaign, it might work with every part of his business–from marketing to human resources and management.

“Over time we have built very sophisticated data and analytics models that enable us to run on a grand scale and expand quickly.

“We take a very’white hat’ approach because we do not need to be subject to abrupt changes in Google’s algorithm since we employed a strategy that is not long term. Our search engine optimization strategy is focused on being a really useful, engaging site.”

Roitman said Stroll has spent more than $1 million in providing free resources, games, and resources for the wider community as part of PimsleurApproach.com’s online resource section, which assists SEO.

Product Sourcing

Pimsleur Approach has become a major language learning program.

Roitman found Pimsleur Approach online in 2001 and knew it was a product with great potential but just not marketed effectively.

“We are always on the lookout for customer educational program products that improve our clients’ lives, provide high margins, are’informational in from and transformative in substance’, and which are scalable.”

Roitman intends to purchase more companies or permit other products beginning in 2014.

Expense Control

“While many companies budget once annually, we’ve experienced periods of growth where we’re budgeting monthly, to make sure that we are completely calibrated with money availability and need,” Roitman said.

In 2010, Stroll streamlined its internal accounting processes by going paperless, including the use of Bill.com for cash flow management.

“I would strongly recommend it to anybody who wants to maximize their entire financial controls procedure. Even as we scale farther, I’m always on the pulse on each cost and know exactly where we stand.”

Social Media

Stroll utilizes social media, but doesn’t see it like a true acquisition channel currently.

Customer Service

Stroll has always used an in-house call centre due to the lower cost and greater level of flexibility. In 2008, the corporation’s customer support department has been significantly upgraded to boost processes and expectations, employing a new group of customer service representatives who reflect its core values.

The business monitors calls each week, giving employees feedback many times each month, with individual agents receiving evaluation on a continuous basis from an external supplier.

“We monitor call volumes daily to be sure our telephones are being picked up in 30 minutes or less,” he said.

Appropriately for a business whose largest product is its own foreign language learning system Pimsleur Approach, Roitman said most of his call centre representatives have a label over their desk, that designates which languages they speak or are in the process of studying. Next year, the company needs call centre agents to demonstrate their learned language skills on at least 50 percent of calls.

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Biggest Mistakes

Roitman and his former business partner successfully test-marketed the electronic text-scanning highlighter pencil at two universities and were going to expand to 20 universities when the Swedish maker suddenly pulled from the U.S. market.

“I had failed to make sure they were dedicated to the market and was left without a product to market. Unfortunately, they wanted to license their technologies in the safety applications field and leave the retail area,” he said.

Another early mistake was attempting to sell expert development products that demanded a direct sales force calling on human resources sections.

“I did not have the funds to hire, train and maintain a group of sales professionals so that I needed to change my business model to concentrate on direct advertising. It cost me a year about $30,000 in debt.”

It was at the time Roitman turned his focus on language learning products, where he could target customers directly via advertising.

“The lesson I took away from it was to remain as near my core regions as possible.

“Our strategic focus is on putting the infrastructure in place to have the ability to purchase or license products to plug into our platform and let us scale”

Biggest Successes

Being a hyper-growth firm, Stroll has had many successes.

Roitman cites his main success as when he persuaded Simon & Schuster to permit to Stroll the rights to market Pimsleur Approach.

“I started by working through a distributor as a licensed reseller. What actually opened the door to working directly with Simon & Schuster has been Stroll’s proven ability to accelerate sales of the goods.

“Once they found that we can supercharge sales, we forged a relationship directly with Simon & Schuster and as earnings grew, Stroll became one of the biggest resellers in their audiobooks branch. A year later, we negotiated a licensing arrangement.”

Since that time they’ve become one of Simon & Schuster’s biggest partners.