Forum Moderators: buckworks
I've designed and started many websites in the past that have been more informational rather than profitable. I'm by no means a professional but have learned over the last 5 years a bit of the ins and outs of the internet marketing, website design, etc etc. I've always wanted to start a profitable website and in the last week thought it would be worth my time to do some research in starting an ecommerce website.
I have a few questions, and remember that I don't know anything about the process's the capital or anything that goes into starting up an online store...
What are the start up costs? I've done some research in finding a company to my liking who has experience in building an ecommerce website for around $4,000. I'll find a company to market the website for around $1200..
My questions are more in the carrying costs of all the security, credit card processing etc.. Of course at first the process will be rather simple.... simply because it's small.. But what would be the estimated start up costs?
Also what techniques are there in securing wholesale prices of products.. For example: let's say I wanted to sell pens in BULK, (for those consumers who want to save money and buy in bulk) what would be the steps in speaking with the pen company? Would I have to purchase a supply from them first and then sell MY supply? Or would I be able to run each purchase through them..
I have many more questions and will follow them up when some of these are answered. Also if you have some short cuts and savings you've learned along the way that would be great!
My questions are more in the carrying costs of all the security, credit card processing etc.. Of course at first the process will be rather simple.... simply because it's small.. But what would be the estimated start up costs?Depends on the country. For argument's sake, let us say you are in the United States. And since you are posting on this board, you are not selling something high risk (like gaming, adult material, etc).
The merchant account discount rate can vary. Usually 2.29% or lower is good. If you are doing high volume, then you can also sometimes get a lower rate. Transaction fees are usually $.30-$.35. If you have a lot of transactions, you might be able to get a lower transaction rate.
Usually there is a $10-$15 a month fee for the account. Some call it a statement fee, others might call it a customer service fee. It's $10-$15.
You might have a monthly minimum - let's say $15.00. But if you do $1,000 that month, you met the monthly minimum (2.29% times $1,000 is $22.90). So chances are there is never anything to worry about there
Now comes the electronic payment gateway. This is the connectivity for your website to the transaction processor. The gateway is usually $15-$50 a month. Some might charge you $.10-$.15 a transaction (yes on top of what the merchant account provider charges). Some will give you a certain number of transactions per month. And some gateways won't even charge you a transaction fee. Set-up for the gateway usually varies but between $0-$300 is the normal.
-Corey
A guy ive used before will write the sales copy on the home page, $30 - he is well worth it.
Ill use Mals cart set to pro level $100 per year (I think), 2checkout for the payment provider, they seem to have ironed out any winkles they had previously. Cost $50 one time payment and more importantly they payout once a week which means a smaller working capital requirement for me.
I have a hosting package that gives me unlimted bandwidth and 500mb of space along with a whole host of other goodies including several very good tracking programs - $36 per year.
I use mals button maker (free) to make buy now buttons, this is the only thing I do myself, for obvious reasons.
A good graphic artist I know draws the buttons and category headings for $100, another one edits the product pictures for around $10 (yes ten)
The SEO was previously done by myself now I make a deal for revenue sharing with an SEO guy living near me.
So for around $526 (£213 in grown up money), with very little reoccuring cost I now have a business that can take a small fortune and more importantly add to my very small fortune.
The best bit is all teh mentioned people are way, way better than I am at their respective trades but all work for way way less than I would.
Only thing I do is visit trade shows, meet with suppliers (which I love doing) and ship the goods.
Now what other business channel/arena/area allows you to do that?
Do any of you work directly with a manufacturer.. And do you purchase your own inventory or are you doing drop ship..
if you have a home built website with paypal etc then it generally looks poor and looks like a small home based part time business
but get a properly built (and optimised) website with shopping cart and credit card processing from the start and you can sell almost anything - it's an investment
$1200 for marketing? errr ..... marketing is an ongoing thing - you don't stop promoting ........ ever .....
even the UK's biggest supermarkets still advertise continuously on TV and the web .....
if you're serious about going into business, then take your business seriously and get things right from day 1 - otherwise save your time and money and find something else to do
Do any of you work directly with a manufacturer. And do you purchase your own inventory or are you doing drop ship.
Ah, the bane of any merchants existance, inventory. Unless you are setup to handle inventory, I would suggest drop ship all the way. The last thing you want to do is carry inventory and get involved with shipping and handling.
But, here's the problem, there is still a whole generation of manufacturers out there that WILL NOT drop ship your orders. They don't want to take on the expense of pick and pack either. They may drop ship larger dollar items but those smaller one's are shipping to you.
So, what happens in the above scenario? You incur additional costs which have to be passed on to the consumer. Your cost is now the total of the invoice which includes shipping from manufacturer to you.
Another issue you'll run into are minimum order values. You may have to order $200.00 worth of product to fill a $60.00 order. :(
Inventory? Stay away from it if you can. If not, you'll need to do some serious planning in advance to handle what the future holds. ;)
yes, yes and yes
If I do end up starting the ecommerce site.. I will do it the right way and not skimp on anything.
perfume shop is one and wasn't sure if it's worth looking into or not.
[edited by: lorax at 12:37 pm (utc) on April 27, 2007]
-Corey
