How many people are required to run an ecommerce business?

[SilverShine]

How many people are required to run an ecommerce business?

To those who are running their own ecommerce businesses (or working in one), I'd like to know how many people work in your business (including yourself) and how many people are required to run a business for any given level of turnover (i.e. less than $100K = 1 or 2, more than $250K = 4, etc).

I realize figures will depend on the type of goods sold and their value, so I am asking this of those who sell widely available & general merchandise goods, the type that most people will have need or use for.

Also, any tips or advice that you'd like to offer would be most welcome.

[JackieBlue]

This is a loaded question and will vary widely on what products you are selling, method and marketing, etc. We are able to do $1M with 2 people (we probably need a 3rd) but utilize a lot of outsourcing, have custom software, and I personally put in a lot of time due to being the owner. If we had more large items (most of our items fit in a CD size envelope or a flat rate postal envelope) we would need more people.

[Marshall]

It sounds like there's a joke in the title.

As JackieBlue said, I believe there are too many variables to get a good answer. The size of a product, how labor intense it may be (if it's made to order for example), shipping methods required, accounting/bookkeeping, etc. But given today's software and say shipping options, again referring to JackieBlue's comment, you could conceivably run a multi-million dollars business with one person, especially if your selling downloadable software online.

Marshall

[SilverShine]

>JackieBlue: I don't know why you think its a loaded question.
Loaded how?
This is a genuine search for info so I can have some idea of what I should be planning for and how others manage.

I am planning to sell only manufacturers' goods and only via drop shipping until there is enough volume to warrant stocking directly from manufacturers.

On re-reading my question, I can see now why someone might seem that its a joke. This didn't occur to me before.

[incrediBILL]

If you can make a good living being a one-man automated drop shipping ecommerce site, I'd milk it for all it's worth.

I am planning to sell only manufacturers' goods and only via drop shipping until there is enough volume to warrant stocking directly from manufacturers.

Stocking is a bad idea, that's when things go to hell.

You'll need a warehouse (aka garage), insurance on the stuff, probably actual staff.

Worse case the market changes and you get stuck with a boatload of stock you end up dumping at a loss.

As a smaller fish, you can't get the same great shipping rates your drop shipper gets either and you'll be competing with people warehousing at Amazon using Amazon Prime shipping unless you go that route as well.

My situation ended very badly, So. California wildfire reduced the warehouse and many thousands of dollars of content to ash overnight. I was left holding a big fat credit card bill (and I mean HUGE) with suddenly no income from the site, and an insurance company dragging their feet at a glacial pace. Not fun.

Been there, done that stocking thing, won't do that again.

In the end, after all the overhead with stocking my own stuff, it would've been just as profitable to be someone's affiliate and earn about the same profits at the end of the day.

[Planet13]

@ incrediBILL

My situation ended very badly, So. California wildfire reduced the warehouse and many thousands of dollars of content to ash overnight. I was left holding a big fat credit card bill (and I mean HUGE) with suddenly no income from the site, and an insurance company dragging their feet at a glacial pace. Not fun.

Ouch. I am truly sorry to hear that. (The fires from a few years back stopped about a mile and a half away from where my parents live in Southern California. Lots of their friends lost houses.)

As incrediBill suggested; it would probably be a good idea to look at your drop shipping options first (and maybe last).

If you are going to start an ecomm business, one of the things you are going to have to concentrate on is marketing, and managing stock is NOT conducive to marketing.

Unfortunately for me, one of my drop shippers says they are going to cancel their service after the new year, and another one seems to be having economic problems (high employee turnover, delays shipping out orders, unasnswered emails, phone calls not returned...)

[votrechien]

Stocking is a bad idea, that's when things go to hell.

Agreed, there are definitely a lot of inherent risks in stocking product. Cash flow can be a real nightmare as well.

However, stocking products also brings a whole set of advantages too. Mainly, IMO it's easier to create a competitive advantage by stocking unique products (if it can be drop shipped, chances are everyone and their aunt is stocking it).

With that being said, if first starting out, drop shipping is a definitely a relatively risk-free way to learn the ropes.

In terms of the OP's original question, again, it's way too broad of a question (it's basically like asking 'how many people does it take to run a business') to answer with any specificity. However, assuming it's your normal ecommerce business, some stocked product, some drop shipped, my experience is it's pretty easy to achieve $500,000+ revenues per employee by outsourcing enough.

[SilverShine]

The niche I have discovered is not really being addressed by anyone else, which is either a very bad thing or a very good thing.
So we aren't going to be competing much with others and won't have to play and manage the constant and insane race to move up Google search results and writing newsletters, content, etc, which I see as taking up a lot of time.

[incrediBILL]

Those things you see as taking up a lot of time are how you keep in contact with customers and keep your site looking fresh. If you aren't warehousing then marketing is your only edge to staying on top and those time consuming things will keep you on top.

Otherwise, anyone can easily swoop in and knock you off your spot if you don't keep building on it consistently which others are quite adept at doing.

[SilverShine]

As we will more or less be the only place for the niche, and certainly the only one specializing in it, we won't have any or much competition, so who are we keeping on top of?

I understand that other operators may come into the niche in time, but also, they may not.

[incrediBILL]

so who are we keeping on top of?

- Customer expectations, if your niche has repeat customers stale is bad

- Future potential encroachment of competition, if you're a success, they'll be after you

Remember, often a neglected niche just takes one success in the niche to prove it's viability and make more take notice. They will attempt to carve out their spot as well and being first doesn't always mean you can maintain control of the niche, seen it yanked out from under a few before, they never saw it coming.

[SilverShine]

So I have to be a writer as well?
I don't have writing skills and TBH, I am not inclined to spend most of my day or a large part of it, writing text to tempt people into buying products. I am not salesperson-ish person.

[SilverShine]

I haven't really understood why newsletters must be created for online businesses and emailed every week, etc.
I don't get newsletters from Amazon or ebay but I buy from those sites when I need stuff.
I can understand it if there's some new magical product that comes out and that we will get, but this won't be happening regularly.

Maybe I've missed something.

[SilverShine]

IncrediBILL: "keep in contact with customers and keep your site looking fresh."

Why do I need to keep in contact with customers?
Why do customers need to be constantly kept in touch?
Why is a site where the products don't change every week considered stale or not fresh?

Surely, people aren't visiting a shopping website to look at what's changed - they only go when they are looking to buy something.

I am sick and tired of companies who send me marketing emails or newsletters every so often, especially those who do not explicitly offer me the option to receive this stuff or not.

I don't want to be like those companies.

[incrediBILL]

Did I say weekly?

Did I say constantly?

Did I even say newsletter?

Your words, not mine.

People forget you exist, and if they forget about you, they don't come back and don't refer others either. When I had an ecom site I'd only send out a brief email about 2-3 times a year telling them we're still here, gets a little business too.

Besides,you don't even have to be a fabulous writer to drop a mass email out 2-3 times a year reminding people you're still there, offer a discount for referrals or repeat business, nothing complicated.

Also, refreshing a website can be as simple as adding a new version of the product shot, beef up the description a bit, link to reviews, more pictures showing all angles, lots of simple things that can be done to make it look like more appealing as time moves forward.

So I have to be a writer as well?
I don't have writing skills and TBH, I am not inclined to spend most of my day or a large part of it, writing text to tempt people into buying products. I am not salesperson-ish person.

Which begs the question, if you aren't a salesperson, and you aren't a writer, how are you going to sell products?

That was a actually pretty negative statement about your overall commitment, so why get into sales and risk it if you aren't those things?

Seems like a plan doomed for failure unless you actually think you can do it all, otherwise save your money and do something else.

[SilverShine]

incrediBILL: "People forget you exist"

How is this likely to happen if we are the only site in the niche?

We believe that for some of our markets, we will have a similar experience on people to the experience people had when they first saw/experienced an iphone and ipad - they didn't know they wanted one until they saw it.

I realize that its good to tell people "we're still here" but I've attended some local classes this year on starting and running an online business and the speakers' emphasis on the "keeping your name in front of the customers mind" part was quite overwhelming, to the point that this was the given almost the most important position in the business operation.

The way in which emails, newsletters, facebook updates (I still don't understand how or why facebook plays a role for businesses) and all the twitter nonsense were expressed to me, was that I would have to spend a lot of time (or someone else will have to) churning out constant relevant content for customers, or else you fade into obscurity.
This and acquiring email addresses were talked about as key elements, next to appearing high in search results, which we won't have to worry about, at least not in the immediate to medium term (1-5 years), by which time I expect the business to have established such a name that people automatically enter out name in the address bar rather than search in Google.
We anticipate a good portion of our customers coming from word of mouth, peppered with some carefully targeted advertising.

Of selling, I am not concerned about selling products or of describing features and benefits and uses of X or Y product and having multi-angle photos of products, etc.
What I have difficulty with is thinking up new ways to say the same thing for hundreds or thousands of products on a regular basis, many of which don't need any augmentation or "selling".

I figured that meeting the need for the niche market we have identified, providing excellent customer service in all sorts of ways, sourcing new manufacturers especially those that don't have a national presence, going to trade shows and working to establish good relationships with wholesalers, would be the most important elements.

If our business idea was one that was commonplace or there were already many other operators in existence, I wouldn't bother giving our idea a moment's thought, as it would likely be highly risky and excruciatingly difficult to differentiate ourselves.

We don't have such issues to contend with, which gives us significant confidence & motivation to pursue our idea.

[Marshall]

SilverShine,

You should welcome constructive advice from people who have been around the block like incrediBILL. The only way places like Amazon got where they are was through name recognition via advertising, emails, etc. And even though they have such a dominate position, they do not stop doing it. Neither do places like Walmart or sites like Facebook. Remember My Space? Remember Netscape? Remember Montgomery Wards (if you are in the U.S.) You do not reach the top by sitting on your hands, so to speak.

That being said, if I were a betting man, I would not bet on your success. Just an opinion based on your posts.

Marshall

[SilverShine]

Marshall: "You should welcome constructive advice from people who have been around the block like incrediBILL."

What makes you say this?
I do and I have replied to the points raised and asked questions.
I haven't objected to his postings.

The old names you mentioned did not die or diminish because of lack of name recognition. There are always multiple factors in any rise or fall of something.

[wheel]

Rookie mistake right here:

I am sick and tired of companies who send me marketing emails or newsletters every so often, especially those who do not explicitly offer me the option to receive this stuff or not.

You are not a representative sample of your customers. Sending emails and newsletters will increase sales, without regard to how you feel about it.

I would never - ever- provide my personal contact information in exchange for a white paper. Yet I make my living from people that do. Me <> my customers.

I send out very occassional newsletters. Every time I do, I make sales. I remind people about upgrades and new products. Some buy.

They liked me enough to buy from me once, a newsletter reminds them that they may want to buy from me again, particularly if I gave them something of interest. That's 'sales'.

I am not salesperson-ish person.

Sorry, the attributes you're disdaining are the very attributes required to run most successful businesses.

[edited by: lorax at 10:00 pm (utc) on Dec 19, 2011]

[wheel]

What I have difficulty with is thinking up new ways to say the same thing for hundreds or thousands of products on a regular basis, many of which don't need any augmentation or "selling".

I sell an intangible product. Prices are fixed for all retailers, there is 0 deviation allowed in terms of the pricing or product features. And there's ten's of thousands of retailers of this product online and offline. It's beaten to death.

Yet I can and do write about it all day long because I'm an expert in my market and I'm excited enough about the product - and the idea that you should own it - that I can always find something else to write about.

Either you're excited about your product or you're not.

[edited by: lorax at 10:02 pm (utc) on Dec 19, 2011]

[SilverShine]

To wheel

I am sure you don't express yourself with such honesty to your customers, which makes you just a simple, angry, two faced person.

You don't have to like what someone says or what they want to do and you don't have to comment when no comment is asked of you, especially when you have very little to contribute except low class language.

[wheel]

Incredibill has extensive experience retailing extremely competitive products against large retailers. I have similiar experiences.

If you want input from people that have experience, you've come to the right place.

If you want soothing words that confirm how wonderful you are, pick up your phone and call your momma.

[SilverShine]

wheel: I just think you are a very angry person who is looking for venting opportunities to shout at people, for no reason whatsoever.
No-one is compelling you to write what you did.

Not only have you not added anything worthwhile to my topic with your posts, you haven't bothered to consider answering or engaging in the question I posed, which reveals what your true motivation is with your posts.

Maybe your momma didn't tell you this but if you don't have anything good to say, don't say anything at all.

I have read, very carefully, what incrediBILL has written and will keep this information. I will welcome any further contribution that he makes, as well as those from other worthwhile & genuine contributors.

[buckworks]

if you don't have anything good to say, don't say anything at all

That's not always an appropriate guideline, especially when someone sees that you're walking straight into danger.

Silvershine, Wheel's style is sometimes rough around the edges (and note that he's been edited), but the core of what he's saying is rock solid and if you are wise you will think very, very hard about it.

In a nutshell, no matter how cool your idea is, if you don't get good at marketing in one form or another, your hopes of building a profitable, sustainable business will be vanishingly small.

You can do a thousand other things right but they won't take you very far unless you also implement some effective marketing strategies.

similar experience on people to ... iphone and ipad - they didn't know they wanted one until they saw it.

If your product is like that, all well and good ... but it's marketing that gets it in front of people in the first place.

Yes, people loved the iPhone and iPad when they saw them, but never forget that Apple had laid years of marketing groundwork before that.

[buckworks]

especially those who do not explicitly offer me the option to receive this stuff or not

This is an important point that some folks seem to have missed. Marketing is vital, but it needs more finesse than merely inflicting yourself on people.

[wheel]

Not only have you not added anything worthwhile to my topic with your posts, you haven't bothered to consider answering or engaging in the question I posed, which reveals what your true motivation is with your posts.

And what we're learning is that you're too busy complaining to listen to what you're being told.

Every single person you've dealt with has told you to use newsletters and the like to market to your clients. And you're still arguing about it. At what point are you the one that's wrong instead of everyone else?

When you figure that one out, you'll be a lot further ahead in the game.

[wheel]

You seem stuck on how harsh the facts are. Let me soften them up for you, since you claimed I've not provided anything worth your while. I'll do this one time only, its completely against character.

You are not a representative sample of your customers. Sending emails and newsletters will increase sales, without regard to how you feel about it.

I would never - ever- provide my personal contact information in exchange for a white paper. Yet I make my living from people that do. Me <> my customers.

I provided a calculator for years, to thousands of websites. The retailers demanded that I allow them to collect personal information via the calculator. I refused, because its' clear (as you've noted) that nobody is going to trade personal info in exchange for a whitepaper or calculator results.

I finally relented after a friend said - 'just do it for your customers'. Everyone wants it, just put it in. So I did.

I was 100% wrong. Calculator sales increased - and my customers made orders of magnitude more sales.

I didn't just make up the above quote - I told you that because it's the truth, across tens of millions of visits to my calculators. You are not a representative sample of your clients. Don't do what you want, do what your clients want and what makes sales. That's important - and you ignored it.

In a deleted quote I further told you that someone was going to eat you for breakfast. You noted that you are unique in your industry.

You took away that I used the 'f' word. What you should've taken away is that you're a meal. You should realize that there are some big sharks that are going to look at your business, realize that you have put 0 effort into marketing or listening to anyone, and they're going to walk in and take your business. You need to be lying awake at night planning what you're going to do when a savvy business person decides that you are low hanging fruit and moves into your sphere with some real marketing knowhow. You're not lying awake at night though, you think you've got it made in the shade - and you very much do not. I'm right to be abrasive, you need a wakeup call.

[incrediBILL]

Incredibill has extensive experience retailing extremely competitive products against large retailers. I have similiar experiences.

I've actually been in the game since '96, wrote a major ecom package and marketed it before selling directly from my own warehouse. Also had a few major customers (you would know them by name) that I built and maintained sites for many years before I fired all my customers.

I do know a thing or two about it ;)

However, if someone has an idea about a niche and think they can exploit it without all the standard ecommerce trappings, I do encourage them to try because I've seen things I thought would fail succeed and things I thought would be an overwhelming success flop like a dead fish.

Go forth and just DO IT!

Let us know how it works out and all the best in your endeavor.

[lucy24]

Can we try this from the other side?

SilverShine, what do you want to do?

What do you expect to do (if different from no. 1)?

What do you plan to do (if different from nos. 1 or 2)?

Never mind what everyone has been saying. What's your vision of your e-business?

Early in the thread you said "we" a number of times. Does that mean you anticipate having employees or partners right from the beginning? Or does it mean that you're asking the question on behalf of two-or-more people? Or are you trying to decide whether you and spouse should both throw everything into the venture as opposed to having one of you keep their day job?