|How lucrative can e-commerce be?|
My question relates to sites that have memberships and provide essentially a huge pool of contacts. Dating and Auction sites come readily to mind but there's plenty of other examples.
These sites are selling a facilitation service rather than any specific product. They're relying upon member subscriptions or percentages and fees. Fine. This is all pretty obvious.
So how many of these sites are out there making a tidy profit for their owner/operators? How many of these sites are run by a single person?
Let's take a scenario. Fred decides to set up a small job listing site where people can advertise their services for a monthly fee. Let's keep it low, say, $10 per month. Fred runs this full-time from his home office.
Now, Fred's competent and he designs a clean and efficient interface that is attractive and user friendly. After a couple of months he has a modest number of subscribers numbering 1,000.
So, Fred's gross income is now $10,000 per month or $120,000 per year. Sure, he has taxes to pay (but so does everyone) and his main cost is his hosting. Now, looking around it's easy to get good deals on high bandwidth and large storage with all the bell & whistles for a surprisingly small monthly cost. So, after taxes and hosting costs and some advertising expenses to keep the membership up, Fred has a nice income.
How many people are in this situation? And, is it a huge advantage to be an owner/operator who can also do his own programming? I think it is. And, I think that's where the real money is, especially for smaller subscription based sites.
|and some advertising expenses to keep the membership up |
Hi Ross, and welcome to WebmasterWorld and to the online business.
It's not that simple to get those 1000 subscribers and to keep them paying the subscription for months,
The online business and e-commerce has a lot of opportunities but needs the same efforts and work that the offline business needs.
Sure, I've run bricks & mortar businesses so I know about that side of things very well.
Let's look at it from another viewpoint.
A sites that rely upon a community of users/subscribers such as job listing, dating or auction sites have to reach a "critical mass" or they must fail. If there aren't enough users of a site like this, people will go elsewhere. The raw material of the site id the sheer number of users it has. That's it's attraction.
Imagine eBay with only 2,000 users. How many potential buyers do you have? Few.
So, to rephrase my question slightly. How many sites are well constructed, but once they have been operating for awhile simply fail to reach this critical mass that keeps users interested?
A good example of how to do it is one of my current clients. He's setting up one of those cell phone barter sites (I have no idea how it all works, other than I am building the application for him). His site would be like a ghost town except that he's a top player in the field. So for him to populate it in the beginning is a snap...then he'll be able to sit back and collect cash.
If you want to do something like that, pick a field you're good in and have a ton of content and/or connections and go with that.
Granted, there is no guarantee and if he poops out and doesn't keep the site very populated, he'll never get over the initial hump.
Mall23, thanks for the reply.
Granted, there's no magic formula. Hell, if there was, we'd all be rolling in clover.
But, there must be good (albeit, not foolproof) strategies that enable sites to reach that critical mass. And, it's obviously not about SEO. I get the impression that many people think that all you need to do is get Google to shunt them up to near the top of the search list and they're grinnin'.
There's a never-neverland between a site going live and a site becoming a self-sustaining entity.
Overall you should follow the recent trends and competitiveness of e-commerce business making it profitable and sustainable growth.
"I get the impression that many people think that all you need to do is get Google to shunt them up to near the top of the search list and they're grinnin'."
Google traffic = gold.
"Google traffic = gold."
It can be, or it can be liquid gold that slips through your fingers, IMO. I'm starting a web-service e-commerce business and don't want to rely on Google traffic at all. I'll rely on affiliate partners and advertising instead.
Mmm, my original point was this:
There must be a ton of sites out there that just quietly do what they do and make a very good living for their owner/operators. Read my original post for what I mean.
Don't discount the power of traditional advertising. A small, cheap ad in the classified section of a daily newspaper for a few weeks (cost=very little) could pull and hold more people to a well designed site than many internet marketing methods. Don't ya think?
First an foremost you have to have a good site offering a good service. A niche in today's market is essential. I'm not talking about reinventing Amazon :-)
I may be biased, but I feel at this point in time you need to have a brick and mortar business to compliment an online business. For a couple of reasons, firstly the delay in building traffic and then convincing people to place an order. Secondly, a successful online business is no different than a traditional business. There is usually two years of losses before you start to turn a profit. That is if you are going to profit at all.
Plus, you need a supply chain. To get the best discount with manufacturers and suppliers you need volume. If you already have suppliers and a proven track record you will be able to offer competitive pricing on the web, it is so easy to comparison shop on the web that price and delivery usually closes a sale.
Now I am sure there are plenty of people who are making a fair living putting up optimized content, doing the aff. thing. But they all have a head start on new players and have been building links and traffic for years.
I do not want to discourage anyone, but the easiest days of instant online riches are long gone.
I realize you are talking about selling a service and not goods, but most of my post applies.
Rugles, I'm not sure your post applies much at all.
That was actually the *point* of my post.
The internet affords people a new business paradigm with relation to specific types of services--services that *only* the internet can supply. See? That's the thing.
How would eBay any one of the hundreds of succesful auction, dating or employment sites be possible in the bricks and mortar world? They wouldn't. Not in their ability to rapidly and easily bring people together to trade goods and skills. They are internet specific businesses.
My point about "critical mass" was important as well. As I said, a start up auction site or dating site has a major problem. It may have a slick interface and flawless execution, but initially, it's lack of members is the only thing that makes it unattractive to new members. It's almost a vicious circle. My sense of it is that these types of sites either ramp up member numbers very quickly to make them attractive or they fade away very quickly.
|The internet affords people a new business paradigm with relation to specific types of services--services that *only* the internet can supply. See? That's the thing. |
Every "significant" technological development brings with it a wealth of business opportunities, both in support of the "new technology" itself and in terms of new services that only that new technology can supply.
But that doesn't change the rules of business at all, and we still have a relatively stable economy with its control mechanisms (such as inflation) to keep everything in check.
It is absolutely possible to build a lucrative web service business by yourself working from home; it's just no more or less possible and no more or less hard work than any other self employment business opporunity in any other industry.
None of this balancing talk should stop you going for it though. You never fail until you give up.
>>>but most of my post applies.
What I meant by that was this.... many others have a huge head start on you. They have acquired hundreds or thousands of links. They may also have developed some branding. They have bank accounts full of money to fend off new competition.
I am open to the possibility that you will come up with some new twist on a job/dating/auction site. Or actually find a new undiscovered niche in the online world.
I am not trying to be negative on purpose, but I have been part of the e-commerce world for 6 years and have seen thousands of sites come and go.
Best of luck :-)
do not forget how Google had out-performed sites like Yahoo ans MSN. The first was in the search business earlier (or am I wrong?), the second has really good pockets.
There is always a possibility -- but you have to try, and try hard to find out if you are the right guy to make a revolution.
Oh ya, I agree you have to try.
I was just afraid that people are getting into an ecommerce business thinking that it leads to instant riches. When in reality, it is just like any other business. You have to build a better mouse trap, or offer better pricing or something to stand out from the competition. Which there is lots of on the internet.
agree; you still need to know how to do business, and all the peculiarities of this particular kind of business. An MBA knowledge is of value also here.
This is kinda going back to what some of the others were saying earlier...
I agree with the "new" (read: irony) concept of using traditional marketing techniques to get your site rolling. Oddly enough it seems that you can do SEO backflips and still not be ranked high, or get blacklisted. But I've seen when I do traditional marketing, I get business AND my google listing goes up. Maybe it's my imagination because I'm not so focused on my google rank...and it's not going to make or break me. Maybe not. My site doesn't have all the SEO mumbo-jumbo, but rather plain english for my customers -- google is NOT my customer.
Also, for my line of business, I have to look at a LOT of sites that you would THINK depend upon SEO traffic. I have the Alexa bar (I know it's not perfect) and it seems like many, many successful companies have very little traffic. Again, it goes back to traditional marketing and networking.