Possiblibies are endless.
An average would be hard to give, $100 a day is not unrealistic, more would be quite an accomplishment IMO.
It really does depend. I can tell you that it will start slow and you will have to nurse it to a good ranking.
Great majority of sites make NOTHING... including many huge sites (that's what the Dot Com bust was about) and the biggest often didn't have to pay interest since they were funded by equity rather than debt, plus their employees were largely compensated with stock and not cash.
A minority of sites, of course, do nicely in terms of sales and --more important-- profit.
|Possiblibies are endless. |
My one woman show, about $250/day and just getting warmed up!
I've got years of accounting experience and I can't recall seeing the word "make," as used here, in any accounting resource.
Are you refering to revenues or profits? Before taxes or after? Even the question is hopelessly vague.
We are essentially a two person business selling digital copies and shipping CDs and DVDs.
We are averaging between 13k and 15k a month.
This average seems to be increasing every month as we add products.
I'm retiring from my day job in 5 weeks. woo-hoo!
|I've got years of accounting experience and I can't recall seeing the word "make," as used here, in any accounting resource. Are you refering to revenues or profits? Before taxes or after? |
gross adjusted income would be my understanding of how much one "makes"
If, in an employment interview, you were asked "how much did you make at your last job" most people would take the question to mean "salary" before deductions for tax, etc.
Talking about how much money a BUSINESS makes is hopelessly vague.
I'm guessing the first poster wants revenue info. But who knows?
I would say that it is defined as net income revenue - cost of goods sold - general admin expense - other expenses.
So it is how much you get as income, same as salary, because in the case of salary, you really have no expense. In business, I would define it as the total amount of revenue minus total cash based cost(or if you want to accrual based, but that would be too annoying).
But either way, I just want a general idea : )
Also do you guys find it better to specialize in ONE TYPE of product? say I sell poker chips, I just specialize in poker chip and home gambling products. This way I can probably get these products cheaper but really don't have much product variety.
Another method is say.. new egg, where I am just the portal between consumer and suppliers. I will probably have razor thin margin but can have large volumn.
Which way is better?
See jsinger? THIS is why accountants are not invited to parties! ;)
Give the poor wo/man a break! S/he is looking for figures to satisfy an urge to jump on the bandwagon. :)
Yes, but the figures have to be meaningful. You tell a person they can make $5 mil. in revenue per month, so they quit their day job and jump into it full-time, only to discover that expenses add up to $6 mil. They don't get upset at themselves for not specifying the question, but instead blame the answerers for not reading their mind and giving them the answer they wanted.
The accountants may not be invited to parties, but guess who a lot of people visit every Tax Season!
|See jsinger? THIS is why accountants are not invited to parties! ;) |
Yup, I made a lot of enemies in the 90s. For example, I suggested to some clown that his wife's beloved and briefly-valuable Beanie Baby collection was surely a bad bet, as was another friend's Mickey Mantle baseball card.
I was an early proselytizer of the web. But by '99 I was urging the dumping of overpriced Dot Coms. (isn't it it interesting how the only people not sucked into that frenzy were those who actually ran websites?)
Anyone disagree with my statement that MOST commerce sites don't make money? I think that's one of the few valid generaizations that can be made about the profitablity of internet selling.
|Anyone disagree with my statement that MOST commerce sites don't make money? |
|I can't recall seeing the word "make," as used here, in any accounting resource. |
Even you disagree.
|I've got years of accounting experience |
I thought you had been in the retail business for the last 70 years?
|Anyone disagree with my statement that MOST commerce sites don't make money? |
I disagree. I think we're long past the 90s where money losing projects were continually propped up by more investment money. Nowadays, if you don't make money, you die. It may drag on for a few months, but the end will surely come. So no, I don't think most commerce sites don't make money.
Now, if you mean historically as opposed to currently, I might agree with you.
Been in retailing for 40+ years counting summer work as a kid.
It costs almost nothing to keep a site running once the huge upfront costs are paid. Like building an office tower or shopping center, if it turns out to have been a stinking idea, they don't tear it down.
Venture capital is flooding into web businesses (or it was until two weeks ago LOL).
In terms of "making" money, I was referring mostly to the myriad of small mom and pop sites not getting traffic, not selling much and not "making" money. In our field 80% of sites can't possibly be generating significant revenue. (You know the ones...that still say Copyright 2001, when a new product was last added)
I'd guess 90% of Ecommerce sites over 3 years old are in the black (profitable), while 90% of Ecommerce sites under three years old are not.
More importantly, how much can one lose?
These kinds of questions are unanswerable. Wal-Mart started as 1 store. I've known people who owned small car washes that make $150k/year with little to no work. I've also known people own businesses where they work 80+ hours per week and lose lots of money. A website can be the same way.
I'm sure there are some 1-2 man web sites that make $250k+ per year. As others have noted, there are also many many sites that make 0 or lose money since hosting isn't free.
Just be sure what you are selling on the net makes sense. 20lb bags of dog food does not fit into that category!
"20lb bags of dog food does not fit into that category!"
And don't try to compete with me in the 15lb bags of dog food niche. ;-)
|More importantly, how much can one lose? |
Good point. While I'm guessing that most sites aren't profitable, I think a whole bunch hover near break even. If you are on the ball, you probably won't lose much, other than time, if your niche doesn't pan out. You can test an idea on EBAY, move to a simple Yahoo Store, and then plunge into something more costly and elaborate.
Key to making money with low risk: Doing most of the early work yourself. (and knowing how and when to delegate later on). Ideally, your web business should also be your hobby, which it was in my case.
wow it seems like ecommerce site are not very profitable, but, I think plenty of nich ecommerce website makes very decent money.
Its safe to say that "MOST" ecommerce site don't make money or looses. But I say for every 10 ecommerce websites, there are 7 that are just casually ran, 2 semi-professional and 1 really professional so of course they loose money. However for those semi-professional and professionally ran website, I would say a 80% of them make decent profit. Don't we think so?
The trick is to find a niche and a product which someone has not yet found a way to sell with success on the net and do it well.. I launched an e commerce site in my country for a product which has traditionally been sold only in a specific way. The idea is new and is gaining acceptance. It is true that it calls for heavy advertising expense in the formative stages to push the site, but over time, I think it will be successful.
This is called "Entrepreneurship"
and is not a game for accountants or risk averse retailers.
It requires Guts/ belief in your idea/ perseverence and of course smart hard work.
I am sure I will make it so I persevere. After, a year and a half, I have broken even, and I am ecstatic.. Now I will make money.
Finally , I will sell my successful site to some VC or big corporation for millions and retire...
|But I say for every 10 ecommerce websites, there are 7 that are just casually ran, 2 semi-professional and 1 really professional so of course they loose money. However for those semi-professional and professionally ran website, I would say a 80% of them make decent profit. Don't we think so? |
I agree totally. I bet that 90+% of WebmasterWorld posters will make money with their commerce sites. I know plenty of commerce sites that are owned by people who virtually never use the web themselves, have no interest in learning the required technical stuff, and had someone build them a site only because they read that websites were The New Thing. THOSE are the money losers I'm referring to, mostly.
It's the niche! I am a two person operation that sells the same product others sell, but it's not like we're selling cell phones, Ipods, or computers. You have to have an actual storefront and display manufacturer products to get the preferred pricing. Upfront cost is about $20K.
We're currently making approximately $ 30,000 per month-- or net profit. Our site...actually mine, because I wrote the entire thing is unique in it's content. It offers more than the average e-commerce site in our industry. Many buyers use us as a free reference before they buy from the cheaper priced sites. It used to bother me, but when the business began to take off I could care less. It's all in the numbers.
I have a real good feel what our competitors pay for the same products because our sales reps have the same accounts. Why they try to constantly low ball each other is beyond me. We average 15 sales per week. At one point I considered competing with them but thought "why should I. I'd have to hire additional people, buy more office equipment, pay more insurance..and the list goes on"
I just don't get why some people feel satisfied when they "gross" 3% on a $ 12,000 order. It's so gosh darned stupid in my opinion. The credit card companies make almost as much as they do after they give the freight away. Btw, freight costs are expensive in my industry. That 3% doesn't even reflect their overheard costs.
At one time I would chat with one competitor and asked him why his prices are so low. "If you want the volume you have to have the low prices" was his response. When he started selling online he had 4 employees..now it's up to eleven. Where's the logic here I thought? Sure volume is great, but have we looked at the additional expenses AND potential headaches to boot?
Some people have different views on what is profitable and what is not. Me? I'm happy with my two person operation and the results we're getting. Naturally I couldn't have done it without Google and more importantly WW.
I'd like to say that its not just niche. Location has a lot to do with the revenue generating capacity of an ecom site. For example, the entire population of my country is the size of Chicago. We are more appreciative of overseas orders because of this ;)
A little off the topic, but how focused should an ecommerce site starting off - with little experience be?
10 - super broad -like walmart.com
5- Focused on one theme, say pet products, travel products, adult products.. ect.
1 - super focused, on just 1-2 products
I am focussed on one theme...
One Broad 'niche' and many sub products within that theme..
It is not really possible to compete with ' Walmart' for the variety they offer.
Better to specialize and offer something big guys can't...
I would definitely start small and build from there. Our catalog is getting fairly large now due mainly to providing for customer requests.
"Better to specialize and offer something big guys can't..."
Most larger dot.coms have major overhead....offices,tv commercials, overpaid CEO's and employees, many needing to make $1,000s a day just to clear overhead, before ever seeing any profits.(that was one of the major things that caused the dot.com crash.)
Its easy to make money with a good small site....
and if you get larger......Keep the overhead down!
This is going great : )
I see a lot of ecommerce site out there selling, well very commoditized products. I do have some access to very decent manufacturer price and realized that some of those "ebay" prices are amazingly low.
My question is, how do you prevent your products from being commoditized and squeezing your margins dry? Customize? do something that someone else doesn't have? (than you will be serving a very small group).. what do you guys think?
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