Idea bouncing - New e-website fulfilled by establish shop

[jammy_basturd]

Need to bounce an idea off you business-minded people!

I've got an idea for an ecommerce website, according to Google Trends the sector has been growing nicely for 2-4 years so far and from my research the current sites are all a bit amateurish, there isn't one predominant site and it looks to be relatively uncompetitive on the SEO/Adwords front. Obviously there maybe a reason for this, but that's what I intend to find out with a MVP of a website before scaling things up should the first basic iterations be successful.

So, I can build the website quite quickly, but wanting to do this as quickly and cheaply as possible I want to avoid the cost of stock and fulfillment whilst in experimentation phase. Luckily, there is a shop I know of in the sector, close by, that has a website but no ecommerce capability. My plan is to go to them and offer to sell the products they stock on my website; for each order that comes in, I would send the order to them, for them to pack and post.

For them, they get an online presence, some free marketing/advertising and the chance to dramatically increase their sales if the idea is successful. I would look to keep ~30% of the revenue to pay for marketing and server costs (I'm assuming most of their products are on a 50-100% profit margin).

If you were the owner of such a shop, would you go for this deal?

[DSLiverpool]

Do they already post orders out? If not they won't know where to start or be motivated just for you.

Seriously how many orders a day do you expect? I did 6 in my lunch time when I started out going home to pack and post.

[Dejay1788]

You need to find out why they don't have an ecommerce presence themselves really. It could be that they think it will be a huge amount of work or don't think that they have the ability to pull it off, but with platforms such as shopify etc which make it incredibly easy to sell online it begs the question why they would pay you to sell on their behalf, surely they would have success themselves selling on a platform such as Amazon, who would likely take less of a cut depending on what they sell.

[jammy_basturd]

DSLiverpool said:

Do they already post orders out? If not they won't know where to start or be motivated just for you.

Seriously how many orders a day do you expect? I did 6 in my lunch time when I started out going home to pack and post.

I don't believe they currently post out orders. I'm not expecting a large amount of orders. I'll be driving traffic via Adwords and specifically targeting a certain product type. I'm not looking for a volume of orders for the first experiment iteration to be successful, just a show of demand and some data to judge profitability. It'll also be used to gather potential customer contact details in order to get some all important feedback!

Dejay1788 said:

You need to find out why they don't have an ecommerce presence themselves really. It could be that they think it will be a huge amount of work or don't think that they have the ability to pull it off, but with platforms such as shopify etc which make it incredibly easy to sell online it begs the question why they would pay you to sell on their behalf, surely they would have success themselves selling on a platform such as Amazon, who would likely take less of a cut depending on what they sell.

They're a "homely" type of company, very traditional. Setting up an online presence might be a lot easier now, but the marketing certainly isn't. I take your point about being cheaper to sell on the likes of Amazon.

[DSLiverpool]

Well for a trial buy from the shop at any deal you can make as its only a trial ?

Or FBA it assuming not heavy or easily returned.

Amazon are doing some free shipping to them at present which is a handy saving.

You could send say 10 and gauge reaction

[AyBee]

I'd certainly consider it if it was my shop, but you'd need to be doing the whole online presence including the posting and packing for me. I'd also want to know what your plan was once your experiment was over, i.e. once you realise there's potential (or not), where does that leave me?

[MrSparks]

For it to be sustainable you don't really want to be buying from another shop who buys from a wholesaler, your trust is all in them to make sure they have stock and ship it adequately. If they aren't good enough or can't keep up then ultimately it's your reputation on the line not theirs.

I would get the website built and then buy the product from them if it sells, you won't make money but you get an idea of how it could be.

The other thing, and I've just done this for two websites, is to create a blog... so for instance I'm about to start importing something in particular and I want to get the ball rolling in Google and also gauge interest, so I have created a WordPress blog on the domain (hosted by me, not wordpress.org) I have then made the category structure similar to how the eCommerce site would be and I'm adding the products as SEO optimized blog posts, and also adding any other similar items I can find.

I will then see what the visitor stats are like, if it starts generating a lot of traffic (obviously work involved in this) then I will either convert it into a eCommerce site or I will simply just use it to drive traffic to my main site... at the minute I have added affiliate links to products on Amazon and I also link to my own sites. I doubt it'll generate any money via affiliate sales but at the end of the day it's a fairly low competition niche so if I can get it to page 1 of Google for the related terms then visitors can read, learn, engage and then they'll be able to find my sales website easily enough when I tell them where to buy the product.

So there's two options for you I'm now going to be doing the blog route for numerous ideas, even if they don't go anywhere it gets them out of my mind and into something real, it really started to clear my mind over the weekend when I got these two up and running and at least it's out there doing something.

[akirk]

30% seems quite high - though can depend on the retail sector, for some sectors margins are way below that, some they are way above!
how would you deal with returns?
how would you structure it legally - would it be the shop selling, and you are simply selling them marketing / it skills - or are you selling to the punter and then passing on sales monies - %%?
do you actually want someone to dropship for you - if so look into how dropshipping works...

[walm]

Just FYI but you have compared apples with oranges on your margin calcs.
“30% of sales” is your charge.
Then you say that they have a “50-100% gross margin” which is wrong (no one has a 100% gross margin) – you mean that they have a 50-100% MARK UP.
Which means a 33-50% gross margin.

So if they are selling at the lower end of the range then you are taking ALL their gross profit, pretty much.
Even at the higher end of the range you are taking more profit than them, per item.
So if you are right about that mark up range then I agree that 30% of sales is too high a charge.

[russy01]

Nice idea, but you'd be spending all your hard earned on a website and then being totally reliant on shopkeepers who likely have no idea of online retail? Sounds like a nightmare!
Its likely that they wont keep on top of stock particularly well, wont fulfil on time consistently, wont want to resend replacement items, wont want to handle returns, wont want to spend £ on decent packaging, wont answer emails etc etc - all of this will drag YOUR Site down.

Then if sales started going well they'd scrap you off and go alone - using you as a pilot for testing their market. Plus I dont know how experienced you are in e-commerce - but getting traction and sales on a website is much easier said than done.

These guys tried this in our local town Wells - http://myhigh.st/ Dont hear much about it to be honest...

[jammy_basturd]

Thanks for the feedback guys!

Just to answer a few of the questions first:

I have since discovered that they do already sent items out, but I gather that this is not very often.

30% is quite high, and you're right walm, I did mean 33-50% g.p!

For the experiment, returns would be sent back to me, I already have an office, and fully refunded. Again it would just be the feedback I'm interested in, the products are low value so unless I have some sort of mega-money order, I shouldn't be able to lose much money in the first iteration, especially if I limit stock numbers on the site initially.

MrSparks said:

For it to be sustainable you don't really want to be buying from another shop who buys from a wholesaler, your trust is all in them to make sure they have stock and ship it adequately. If they aren't good enough or can't keep up then ultimately it's your reputation on the line not theirs.

I would get the website built and then buy the product from them if it sells, you won't make money but you get an idea of how it could be.

The other thing, and I've just done this for two websites, is to create a blog... so for instance I'm about to start importing something in particular and I want to get the ball rolling in Google and also gauge interest, so I have created a WordPress blog on the domain (hosted by me, not wordpress.org) I have then made the category structure similar to how the eCommerce site would be and I'm adding the products as SEO optimized blog posts, and also adding any other similar items I can find.

I will then see what the visitor stats are like, if it starts generating a lot of traffic (obviously work involved in this) then I will either convert it into a eCommerce site or I will simply just use it to drive traffic to my main site... at the minute I have added affiliate links to products on Amazon and I also link to my own sites. I doubt it'll generate any money via affiliate sales but at the end of the day it's a fairly low competition niche so if I can get it to page 1 of Google for the related terms then visitors can read, learn, engage and then they'll be able to find my sales website easily enough when I tell them where to buy the product.

So there's two options for you smile I'm now going to be doing the blog route for numerous ideas, even if they don't go anywhere it gets them out of my mind and into something real, it really started to clear my mind over the weekend when I got these two up and running and at least it's out there doing something.

You're quite right, for it to be sustainable I don't want that supply chain, but at the moment I'm just wanting to gauge interest. I like your idea about the blog and it's very similar to what I was planning for this first iteration.

I had also thought about buying the product as and when it sells, as you say. This would also allow me to use stock from a couple of other shops too.

Is there a reason why you use a blog, instead of just adapting an ecommerce store? You could change the 'Add to cart' button to be the affiliate link and then it's much easier to change back should the idea/product be successful.

[daemon]

Out of curiosity, can the ecommerce site be successful, selling at high street prices?

Or are their products very niche?

Edited by daemon on Friday 4th September 13:57

[jammy_basturd]

Without trying to give too much away, it's a niche, but a relatively large niche that covers many different products. People generally choose to pay a premium for such products, similar to The Body Shop.

I won't know if my website can be successful until I've tried and know a bit more about demand and marketing costs.

[daemon]

jammy_basturd said:

Without trying to give too much away, it's a niche, but a relatively large niche that covers many different products. People generally choose to pay a premium for such products, similar to The Body Shop.

I won't know if my website can be successful until I've tried and know a bit more about demand and marketing costs.

I think in principal its a good idea.

I guess the risk is that if the shop see you doing well at it, they'll either try to renegotiate or just do it themselves.

Also, if you're particularly successful, you could be sucking their stock out of their bricks and mortar business, with it still having high overheads?

EG, if they get in 20 "widgets" at a great price, and a massive markup, which helps them offset slower selling lines or lower markup lines, then you sell 17 of them over a weekend at little real profit to them, are they going to be happy with that?

Also, are they going to be happy sharing their markup details with you?

[jammy_basturd]

Yea, I think the idea that they will fulfil orders for me is a Plan B at best now. Though, FWIW, I would look to sell the products at the same price as they have in the shops, thus preserving their profit margin, but taking a small cut.

My plan now is just to advertise the products at full price, buy the items and fulfil orders myself, and if the demand is there then I'll set up accounts with wholesalers myself.

[MrSparks]

jammy_basturd said:

Is there a reason why you use a blog, instead of just adapting an ecommerce store? You could change the 'Add to cart' button to be the affiliate link and then it's much easier to change back should the idea/product be successful.

Wordpress blogs are quick, easy and cheap to set up and look good and to rank in Google. eCommerce sites can be pretty easy to make as well, but they risk looking cheap and non-trustworthy, they're also geared to products not content.

If you made an eCommerce site then you'll add all your products, people may come to it but they won't be able to buy so they'll leave and probably forget about it.

You want to provide content, videos, guides, information on that particular genre. Give people a reason to stay on your site, learn, read, interact, maybe sign up to something.

This is the one I'm working on, it'll be slow but steady, this site was actually intended to be a blog in the first place, but it shows the idea. Please note that I don't pretend I know what I'm doing, or if I'm doing it right, or if my blog posts are good enough or even the right way forward, I just have a few ideas and a few domains and figure that having this out there now and adding to it over time is better than it always being in my head.

www.ipadtvremote.co.uk

I am listing every iPad TV remote app I can find, including high end home automation systems etc. I'm writing blog posts on every system with focus keywords. I'll then be adding other guides and info such as the one I wrote a couple days ago "5 iPad Apps To Turn your iPad into a remote control". I use Google keywords tool to see what long tail keywords people are looking for and will be focusing blog posts on that as they're easier than the more competitive ones. Once I have enough content on there I will start trying to do guest posts on more popular blogs and work on getting links. I'm trying to make the site very informative so that someone wanting to control their tv with their iPad can actually learn from it, that way they're more likely to save it or share it.

You'll notice that in the limited posts there are so far, the bias is towards iRemoteControl and Global Cache because that's the ones I sell via other sites (which I link to). So whilst I'm writing about anything and everything to provide content and improve general exposure in Google, I bias towards products that I will earn from. By bias, I mean allow more exposure to, I don't slag off or avoid competition, quite the opposite actually, I will just be showing much more links/content to those than the others.

I am using some Amazon affiliate links (quite hard in this niche to be honest) and I have adsense on there too. I highly doubt these two will make any worthwhile money but it's no aggro to add it and doesn't really detract from the site enough to worry about.

There is a couple more sites I'm working on for products, I'm doing the same theory but in the future I could re-make the site into an eCommerce site, but to be honest it might work just fine linking through and advertising my products...

Again, not pretending I'm an affiliate king or eCommerce god, this is simply how I'm doing it... and your product could play a part in the viability of this anyway, I doubt this method would work for every product!

Edited by MrSparks on Friday 4th September 16:10

[The Moose]

I've not read the whole thread, only the initial post, but from their perspective why would they want to work with you?

Sure, they may sell some additional stock in the short time, however if the niche is as good as you think/hope it might be, then in a short period of time you'll become in effect a direct competitor to them and potentially detract from their business long term.