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Ecommerce Forum

Customer X
Local Business wants me to be a 'front' for them

 1:43 am on Mar 27, 2002 (gmt 0)

A customer of mine, 'Customer X', sells widget1. Now I happen to make a metal part for widget1. I also make the ENTIRE 'widgit2' for them...which they sell under brand name 'customer X'.

I've been asked to look to set up an online store for them under MY name...to sell over the web widget2. I believe selling widget1 AND widget2 and widget3 through widgetx on the web is better than just widget2.

The widgets are about $400 to $900 apiece. This particular group of widgets is untapped for SEO on the web, very little web competition, and approx 30,000 searches a month (overture) for these widgets.

Does 30,000 searches for these widgets constitute me accepting the role of 'e-commerce webmaster and sales rep'?

I've been offered 7% to 10% of sales. The company X will pay for any expenses getting everything set up. I know their products well...and could write content for Google, etc. to my hearts content..

With 30,000 searches a month, is it worth my time? Is it worth their money?

What they want is an Internet presence. They also want it to look like THEY have nothing to do with it...so it doesn't cause complaints from their buyers on the retail end of it.

Thanks in advance for your replies.


brotherhood of LAN

 2:21 am on Mar 27, 2002 (gmt 0)

Just by looking at the stats, I would say you could get a much better idea if you knew the average conversion rate of these widgets online.

Now doubt there will be some statistics online that may say its worth it for you, or not worth it.

Just by glancing over at it, I say its worth it. The only cost to you is time, and whether you choose pay for inclusion. Perhaps you might want to cover your server costs with the client just as a pillow to fall on if its not turning out well


 2:22 am on Mar 27, 2002 (gmt 0)

"I've been offered 7% to 10% of sales. The company X will pay for any expenses getting everything set up"

What have you got to lose? It doesn't cost much to test the waters.

You can never remove ALL risk, but it sounds to me like the risk you are thinking of accepting is pretty minimal.


 2:25 am on Mar 27, 2002 (gmt 0)

I hope this long and informative thread can help.



 2:31 am on Mar 27, 2002 (gmt 0)

Brotherhood of Lan,

I have no idea of the conversion rates...

It's a pretty specific term. A product name that I wouldn't search for unless I was looking to buy one...

Would 2% be out of line?

30,000 x .02 x approx retail of $600 x 7%= $25,000 a month

Conversion rate would be a key thing....any ideas out there?


 2:36 am on Mar 27, 2002 (gmt 0)

Hi Scott
Sounds like an interesting deal. Since you understand the product the site will more then likly be productive.
Quick numbers, If you can get 15% of the 30,000 searches and convert 2% you would sell about 90 widgets a month. Just a guess on percentages but a good starting point.

You just need an arangement so that if it takes off that they can't cut you off to soon and if it doesn't do well that it's not a long term drain on you.


 3:13 am on Mar 27, 2002 (gmt 0)


Understand the product? I more than understand the product...I built the doggone thing. I engineered it, drew it up, protoyped it, tested it, refined it, put together the bill of materials, quoted it, cut myself two or three times on it:>), etc.

I even had engineers from a Dow listed company come and try to help us...they couldn't figure it out....but I did.

Widget2 is MY baby. MY company will not pay to market it online, the company we sell Widget2 to WILL pay to put it online.

I tried to get our President to understand it today...but he passed. He just didn't 'get it'. But my CUSTOMER did 'get it', and is encouraging me to do it.


 3:23 am on Mar 27, 2002 (gmt 0)


I read through that thread several times earlier, and once again at your suggestion.

I still don't have a good feel for how a conversion rate would work.

I DO know that keyword1 widget2 had 74 searches last month...and I imagine the conversion rate of that would be pretty high. It's a product not really even offered online...we would be the first. In fact it's really not even offered RETAIL...


 3:40 am on Mar 27, 2002 (gmt 0)

Just to get this clear, is company X approaching you

1) as an individual, or
2) as part of company A, your employer?

If option 1, then you perhaps need to think about conflict of interests with your employer and similar issues, ie, the legal standpoint. Also, what happens when the lights go on with your boss and he decides he wants his own site offering the product and ends up in competition with you and company X? Quite a few issues to be dealt with here and get them on paper, particularly with your Boss.

If option 2, and the Boss doesn't get it, then go to option 1.



 4:58 am on Mar 27, 2002 (gmt 0)

okay...short and sweet scenario.

Throw up a widget sales page.

Purchase the widget KW's on OV.

See what you get. Nothing fancy, use phone# and email links, maybe one form. Make it a buy now! kinda deal (special price if you call), whatever.

You said the guy was going to cover expenses, that is part of the expense. It could get a whole lot more expensive if you don't do it that way.

You can find out if this is viable in 48 hours.


 12:07 pm on Mar 27, 2002 (gmt 0)


He first approached me with option 1, I told him I was uncomfortable with that arrangement and I said we should consider option 2.

I took option 2 to my boss...he didn't understand it....he wasn't interested.

So I am back to option 1. If it's successful, he won't be able to do much at all. He'll be selling my widgit2 to company x which lets me sell them on the net at a price that beats company x's retail stores.

Nobody will be the wiser.

Everybody is happy.


 2:09 pm on Mar 27, 2002 (gmt 0)


why don't set up your own website selling widget2 only, how long would it take to create a small database driven shop cart so at a later date you can add widget3,4,5 etc.

work out all your costs :- Hosting, PFI, credit card company etc add 20% for Time and tell them this is the setup cost.

If you think the risk to you personally are to high.

or find a partner to front it for you.


 3:35 pm on Mar 27, 2002 (gmt 0)


My risk is a time commitment. His risk is money.

I'm not sure how widget2 would sell on it's own. It's a new version of widget1, and it we have not established a market for it, yet.

I think selling widget1 through widgetx is totally open on the web.

Widget1 through widgetx is available at niche brick and mortar stores...but there is only one or two small retail stores per 1,000,000+ people. There are no major chains.


 4:27 pm on Mar 27, 2002 (gmt 0)

want it to look like THEY have nothing to do with it...so it doesn't cause complaints from their buyers on the retail end of it

It sounds like a reasonable arrangement but the above statement would give me pause for concern. It would seem to me that your potential partner doesn't have an issue with circumventing an agreement he has in place with retailers to not sell the product.

If a manufacturer that I buy from hid behind a front to sell into the same markets as me, I would be plenty upset. In a business agreement like you describe, trust is paramount, and if your potential partner has shown that he is willing to be dodgey with others, what makes you think he won't attempt the same type of thing with you? </devils advocate>


 5:13 pm on Mar 27, 2002 (gmt 0)

I think pmac has an excellent point.

Other than that:

Sales conversion rates on the web are often over 2%. I believe 3% to 4% are more typical, so I'd feel good using 3%.

Don't do a test site without online credit card ordering. That would really negatively impact sales conversion rate and give you a false test.

Except for pmac's comment I'd say go for it. But if company X is covering expenses, try to get them to cover your online marketing expenses as well - then, how could you lose? Gambling your time seems well worth it to me.


 6:31 pm on Mar 27, 2002 (gmt 0)


It's not quite that way, but close. He'd 'sell' me his product for the same price others can buy it for. I mark it up say 15 to 25% (Industry average is 30 to 40%), they pay me, I keep 7 to 10%, he takes the rest.

It's borderline, I suppose. And you're correct that trust is paramount. If I keep my risk low...ie-domain name in MY NAME, MY work on the website...etc. He won't be able to go to others...because he wouldn't know what to do, otherwise he'd be doing it now. The whole industry is pretty wide open, that's what makes it so attractive from my standpoint.


 1:41 am on Mar 28, 2002 (gmt 0)

ummm.... correct me if i'm wrong, but ...
you make the widget for X
X wants you to sell the widgets you make
X wants you to do all the work
X wants you to take all responsibility
X lets you have 10% of the sales for doing 100% of the work
X pockets 90% for doing nothing

sounds like you're being mugged.

why not sell sell the widgets yourself for 100% of the profit and forget about X?
or, why not create a site for X and charge him for it, then charge him an hourly rate to run it? you'll probably get more income that way.


 1:56 am on Mar 28, 2002 (gmt 0)

As I understood it:

PERSON works for Company A
PERSON designed widgets for Company A
Company A manufactures widgets for Customer X
Customer X now wants PERSON to sell widgets online for 10% commission
PERSON is not actually the one manufacturing the widgets
PERSON would essentially be working for Company A and Customer X at the same time under this deal, apparently as an engineer for Company A and an affiliate/commission salesperson for Customer X

I say, as long as Customer X will pay all the expenses of the online venture, go for it. Extra pocket cash, if nothing else.


 2:06 am on Mar 28, 2002 (gmt 0)

Mivox-very close:

PERSON is not actually the one manufacturing the widgets

(Not true- I do manufacture them-family business).

PERSON would essentially be working for Company A and Customer X at the same time under this deal, apparently as an engineer for Company A and an affiliate/commission salesperson for Customer X

This part is correct!

I would work for both companies. As an engineer, product developer for my family business (Company A), and as a commisioned salesperson for Company X (Online only)


 9:45 am on Mar 29, 2002 (gmt 0)

this just sounds more and more bizarre.
i still say set up on your own without X. why should X get all that income for doing nothing? why shouldnt you have that income instead?

You estimated: 30,000 x .02 x approx retail of $600 x 7%= $25,000 a month

but if you sold them direct without X, it could be 30,000 x .02 x approx retail of $600 x 25%= bucketloads more cash because you would be buying them at cost price and keeping ALL the profit to yourself


 11:27 am on Mar 29, 2002 (gmt 0)

I know it sounds odd.

But I am sorta forced to go through company X.

We have an agreement with them (on paper), that we will only manufacture widget2 for them, which they market under their brand name.

Besides that, company X also is a manufacturerer...and sells 'wadgits'.

I realize I could do this by myself, but I would not have access to low enough prices on a lot of items.

UNLESS, you guys are telling me that I can mark-up retail stuff, and actually sell it?


 8:55 am on Apr 9, 2002 (gmt 0)

in response to your post, my company acts on behalf of many companies in generating leads for them, we get paid in two ways on and individual basis for every lead or the one we prefer is a conversion for that conversion we get a substantial amount of money. we also run sever shops computers, animal health produts and so on. to be successful you need to get the site seen and also to be in control. on two shops we actually do nothing but promote the site with the engines, all orders and shipping is done directly with the client. however be carefull if you are proporting to sell the products make sure you are not liable for refunds or damaged goods.
by the way dam good way to earn money after the initial build cost everything is profit set another company up and enjoy the pension

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