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Web business idea.
Any thoughts?
Truck




msg:778195
 10:37 pm on May 25, 2002 (gmt 0)

I own and run a successful web site and am interested in starting another web site. I have this idea that I would appreciate your comments on. Here is the idea.

I would like to contact some local stores (that sell some type of merchandise) that does not have a web site and offer to be their webmaster. I would pay for all the cost associated with the web site, so basically the web site is mine the merchandise is theirs. In exchange for a regular salary I would build, promote and maintain their web site for a percentage of the sales made from the web site. I am thinking 5 to 10 percent of the sales. Is anyone else already doing this? Is this a good idea? Thanks for your input.

 

bossmanty




msg:778196
 10:42 pm on May 25, 2002 (gmt 0)

Sounds like a great idea to me if you can track the sales...

How will you promote the site?

brotherhood of LAN




msg:778197
 10:44 pm on May 25, 2002 (gmt 0)

Truck I have something similar in mind, but I best be secret about it :) :)

Perhaps I would re-word what you propose. I would create a website template, and then approach local companies, and see if they would like to join your "affiliate program" where information about their company/product is included in a large database that can be cross-referenced with other local companies/products

I guess when it comes to locality, you want to make those who wish not to participate that they are being "left out"!

The hardest part is swaying them to understand it is worth their while.

I seen a site that I *knew* I could "improve" upon, but the guy wasn't interested in parting with the readies. Perhaps its because he had already paid someone else to make him a half-baked site ;)

Could you explain more as to what you have in mind? :)

caine




msg:778198
 10:44 pm on May 25, 2002 (gmt 0)

Its sort of like an affiliate setup, its feasible. though you would need to find products, that will either sell very quick en masse or high quality expensive merchandise.

Obviously if you are selling things, are you meaning online (e-comm)? or just being a contact point. Heck of a lot of difference between the two.

Also the products that you would be trying to sell via the websites, are you capable of getting the sites to the top of the directories and search engines for the products visibility > hence ROI

IanTurner




msg:778199
 10:56 pm on May 25, 2002 (gmt 0)

It ain't that easy Truck, I spend some considerable time dealing with questions from potential buyers. This and the distribution can be time consuming and expensive, be very sure that your business model takes into account these things.

Truck




msg:778200
 10:59 pm on May 25, 2002 (gmt 0)

My idea is that a lot of stores want web sites to supplement their regular brick and mortar store. I am talking about specialties stores not something that is on every street corner. If I pay for the site, build, promote and maintain the site there is no risk in it for them. Tracking sales I donít think would not be a problem. Thanks for all your input.

4crests




msg:778201
 11:56 pm on May 25, 2002 (gmt 0)

truck...

I have been doing something similar for a while now. It's working great for me. I use Yahoo Store to host the site. I wouldn't choose Yahoo Store for my own sites, but it works good in this situation. Yahoo Store has tons of different reports and tracking features. But, best of all it's SIMPLE. And believe me, when you are dealing with the type of people you are proposing, YOU NEED TO KEEP IT SIMPLE.

IanTurner




msg:778202
 11:57 pm on May 25, 2002 (gmt 0)

A lot of stores may want websites, however they don't have the infrastructure to deal with delivery to Egypt or Argentina. Web site orders can be from anywhere in the world.

4crests




msg:778203
 12:00 am on May 26, 2002 (gmt 0)

truck...

Also, I wouldn't do it for less than 15%, but I guess it depends on how much other work is on your plate.

txbakers




msg:778204
 5:08 pm on May 26, 2002 (gmt 0)

I had the same idea about 2 years ago for an internationally known catalogue company without a web presence. I offered to do the whole thing for free upfront, with a 5% take on sales.

It would have been a great deal for both of us, but he was still hesitant about being able to fill all the extra orders. His major complaint was two-fold. 1)He couldn't get enough supply for his regular business and 2)He wan't comfortable with giving up control outside his office space.

So it lingered. He eventually got a domain and a little mini-site, but nothing with ecommerce attached.

Oh well.

addall




msg:778205
 7:30 pm on May 26, 2002 (gmt 0)

The idea is looked similar to half.com, Amazon zShop/marketplace.
The main problem should be, you may need to do promotion and spend like crazy to attract users to your yet-another-shopping-mall.

pleeker




msg:778206
 11:48 pm on May 31, 2002 (gmt 0)

The main problem I see with the idea is this: a person or company's interest in something tends to be commensurate with how much they've invested in the idea. If you give them a free web site, they are very likely to not care at all about it, and if they don't care about it, you have very little chance of getting them to follow through on their end of the business agreement.

(Many years ago, we did something similar, but it was informational, not commerce-oriented. Getting the businesses to care enough to provide even the most basic updated information was a huge hassle.)

Another problem: by accepting a percentage of sales, you are tying your salary to their wagon. Your income should be based on your ability to execute your business, not their ability to execute their business. What if they are just awful businesspeople? What if they are awful at fulfilling orders? What if the products they sell are awful? Too many variables for me to be comfortable trying an arrangement like this, but I'd wish you good luck if you go forward. Keep us posted on your success if you act on this idea!

Ranger




msg:778207
 4:22 pm on Jun 1, 2002 (gmt 0)

Hi Truck:

I agree with Pleeker: It can be very dangerous to tie all your investment to a company that's not even paying you a small amount down. They have NO incentive to listen to you, fulfill your orders, etc.

I know from experience; we built a store way back in '98 for a major Canadian distributor who had no presence in the US. We had a great deal: items at cost, don't have to pay for inventory 'til an order comes in, we can mark things up as we like (and did!)

Though things seemed rosy at first, it quickly went downhill...eventually we had to supply our own stock person in their warehouse! The company owner wouldn't give any of his own to fulfill our orders... and there weren't that many orders, either, its not like it would take them that much longer... Didn't take long to realize that we could make way more money doing web site design.

If I were to do it again, I'd *never* tie myself down to one business, one product line, 'cause if they go down for whatever reason, all your work is for nothing.

ALL THAT BEING SAID:

It would be great to tap into someone else's branding, advertising, and distribution network... but I'd start with a rock-solid lawyer written contract that stated:
- when and how fast orders are to be fulfilled, and penalities incurred when they are NOT
- what expectations there are on screwed-up orders and returns (who pays for them?)
- when you get paid in the chain of things (unless you're receiving the money and paying THEM for the cost of the order...but see above for problems there)
- some kind of NO COMPETE clause, where you are a) the ONLY business allowed to sell their stuff on the Internet and b) that they CAN'T start their OWN store to compete with you

Best of luck, and let us know how it goes.

JayCee




msg:778208
 5:13 pm on Jun 1, 2002 (gmt 0)

I'm doing something like this for one of my clients. There are no cautions above which I don't agree that you would have to deal with.

It is dangerous to tie your fortunes to someone else's performance (though we do this all the time - think, doctor, lawyer, teacher, police, government).

Here is why I think my own situation has some probability of success:

1. I'm only doing one of these - so I can react quickly and give it a fair amount of attention.

2. There is very little competition on the web and the competing products are somewhat inferior.

3. The owners are mom & pop local store owners and could not be nicer folks. They are intelligent and will usually follow my advice. We communicate almost daily and maintain an excellent relationship.

4. They understand that in lieu of a big SEO fee, I must do their work in my spare time and have to spend most of my time on bread-an-butter work for others. I get a small monthly retainer, plus 10% of each online sale. For the retainer, I promise to spend a minimum monthly number of hours on their behalf.

5. I totally believe in their product, its high quality and its sales potential. I completely researched their "value proposition" and believe in that too.

Even with this near ideal situation there are problems (of course - what fun with no challenges?).

A. The owners steadfastly refuse to do "community-building", write content, do a newsletter, or any of those community-building things that low-budget sites can do to compete with deep pocket sites.

B. They are also selling retail and agressively spreading into hundreds of U.S. retail stores (which we list on the site in a searchable database). That means the online sales (which are the only sales I get a commission on) are in competition with the off-line sales - from my point of view.

C. When customers call in orders (rather than buying online), it is hard to know if I'm responsible for that sale. Happily, my clients are scrupulously honest about this and try to help me get paid for these sales.

D. With little or now SEO budget available, my SEO options are limited.

E. Because this is a physical product, rather than software, etc., buying online entails a delivery wait for the customer. The nature of the product and the problem it solves are such that people want it right away. This tends to limit online sales to those locations distant from retail stores which carry the product. So, as the number of retail stores my clients sell through increases, the potential for online sales goes down.

Good luck on your project and please do keep us informed of your progress.

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