Forum Moderators: buckworks
This is my background:
. competant with IT - not daunted with LAMP setups.
. never setup a live site
. currently employed - thus need to setup a business in addition/inline with my 44hr week job.
. not shy of hard work
These are the stats for the products I wish to sell:
. rough cost of about £25 per item
. delivery cost would be perhaps £8 per £100 order.
. items to be imported into the UK.
. probably will store everything in my loft.
. will need at least 15K of stock
My assets:
. no investment required on PC side of things - I have IT equipment at home.
This is what I would like to achieve:
. create a successful site with my own brand of [x] using oscommerce (currently testing oscommerce at home)
My budget:
. 20K
My desired GO LIVE date:
. OCT 2006
My proposed plan of action:
. test oscommerce setups at home - make sure I can configure everything etc. to create my own brand.
. familialirize myself with php/mysql etc.
. create a satisfactory website
. place order for items [x]
. fine tune my site whilst waiting for delivery of stock.
. upload my site with all images/pricing/shipping details of stock yet to arrive.
. GO LIVE! when stock has arrived
.... I hope I haven't lost any of you yet!
Before I go and blow all of my budget on stock of [x] - can anyone offer any advise on how I should be doing things?
I'm confident I can get a site running with the necessary stock levels. I don't know how to generate traffic onto my site.
I've been reading and reading and reading - but I need to bite the bullet sometime... your advice will be gratefully received.
Even if you are not selling anything from the site yet, get something up there for the Search Engines to chew on for a few months.
Put lots of ORIGINAL text writeups in there, perhaps a lot of general and specialized info about your product. Search engines like originality.
When you are finally ready to actually start selling, it will be relatively easy to add the ecommerce part,or move the domain to one.
This will need some research. And I wouldn't rely on SEO if I were you. The SEO approach from scratch is very very hard if you are going for established markets and will take a lot of time to move up in the search engines.
I am also based in the UK and have some experience in this area, so if you would like to chat send me a private message. I might be able to help.
I don't think I will be able to hit my target market mainly by SEO. I will have to market my products the old fashion way as well (magazines, newspapers, journals etc.).
I'm hoping the manufacturers will be able to provide professional images. I haven't a clue how much magazine ads cost to create and publish.
I know my project has a lot of risk (15K won't even get me 50% of my ideal stock level) and I'll risk pumping even more money into the business before I get a regular return.
I just launched my ecommerce site in the UK 11 days ago now, using a LAMP setup all done in my own time, so I think I'm in the same boat as you!
To answer your questions, I currently use Google Adwords to drive traffic to the site. It's a necessary evil, as although the site is all designed around SEO, I've got plenty of ground to catch up on my competitors in this department. The key to making this work is to track what's working - all the URLs I put into Adwords have a tracking code on the end (id=112 for example) so I can track where every single order comes from. Alternatively, you can include Google's order tracking tag onto you order confirmation page and Adwords will track this for you, but I've found this isn't entirely accurate. So now I'm in the position that I can kill those keywords I'm paying for that aren't getting me sales.
2 bits of advice I'd give you (from 10 years of running household name ecommerce sites in the UK as my full-time job):
1. Spend a reasonable amount of money on design (over a thousand!). The aim is to build trust with your visitors - a well designed and professional looking site builds the impression that you can be trusted. This money will make an enormous difference to your conversion rate.
2. I'd worry a little about your stock cost. 15K in stock is a big sum to start off with! What's the lead time on you getting more stock in? If you can reduce your level of stock and order more in when you need it, you'll substantially reduce your level of risk and free up more cash for design and Google Adwords. We carry very little stock and put in orders with our suppliers at the end of every day, as we need it.
Everything else you've said looks like a good idea to me though, so good luck! You can't beat the feeling you get every day when you see the orders coming in!
I do plan to put a professional looking site, but I plan to build this myself. Aside from the aesthetics, I'm intending to use active marketing to drive more sales in future. This would only be possible by understanding the site database and having full control over all scripts. e.g. "you've bought this product, have you considered this also?", "Your order value is £80. Orders £100 and over get free shipping!"
I would also need to track my users within my site - to see how they navigate through the site.
I didn't consider Adwords. How can you tell which adwords work for you if they all have the same id? How much do you suggest I budget for this?
My 15K stock level is a bit high, but it may be necessary because I have to get the stock manufactured. I might even have to order more to get a reasonable cost price.
Are you going to be doing the graphic design yourself? This is what I was talking about spending the money on - I can't stress how much difference it can make! Unless you happen to be a dab hand at it though :)
If you break your Adwords up into groups, each with a separate campaign or ad group, they can all have different URLs - hence the different tracking tags.
I'm spending around £40-£50 per day and I'm getting 500-700 visits a day. My conversion rate is just under 1% so I'm making money on some keywords but not others. They key now is to get a bit more data, then work out why the unprofitable ones aren't working. This was really useful as it made me realise my prices in one category were way higher than the competition!
I've spent months of my time poring over log files and analysis of how users behave on a site and I can't say I've learnt very much from it! So many people do things in different ways you end up getting very little gain from this. The two things which have made a massive difference on this though are:
1. Checkout attrition. At one multi-million turnover site I was running, I noticed that 80% of people were leaving at some point through the checkout. After simplfying the process and adding in more information, we reduced this to 16%. That piece of work increased sales 4 fold! Are you doing your own checkout? Using a 3rd party is easier, but will increase your attrition. I did the checkout on my site using Protx and it was a breeze! Although having said that, I have done it before.....
2. Look at the referer logs, i.e. what page people are coming to you from. This gives you an idea of what people are expecting to see and you can then focus on these areas.
So go for it and let us know how you get on!
To keep it simple and scaleable, I was simple going to choose a colour scheme together with standard fonts (verdana?) throughout the site. For my logo, I was going to "extend" a standard font using a font editor.
The actual 'feel' of the shopfront would be via a customised oscommerce setup. I hadn't looked into checkouts - thanks for the Protx suggestion.
It sounds silly, but I haven't even decided on a name for my brand yet.
I would be so delighted to achieve a 1% conversion rate on 500 visitors/day as I'm hoping my minimum order will be around £75.
- Regardsing stock: try to reduce it as much as you can; try to get delayed payment terms; try to make supplier to finance you. Be shy to buy stock to just sit on it before you have good customer base.
- Regarding advertisements: be as cautios as possible; always plan your business as if you get exactly zero sales from you marketing efforts.
- test
- test
- test
A good business is not much about risk, but rather about planning, where you know it, and testing, where you don't.
Don't worry too much about the name! Just something simple and memorable that's reasonably easy to spell. You don't have to think of that straight away.
Have you thought about where to host your site? There are many hosting providers out there although not all of them provide exactly the same products. In order to get Protx to work with my site, I had to ask quite a few providers until I found one - it's around £18 per month for reasonable storage and bandwidth.
Have you taken VAT into account? It's a common thing people overlook - Mr. Taxman will want his 17.5% cut of your sales!
And a good point from Morgenhund - have you thought about risks? Try making a "risk list" of everything you can possibly think of that could go wrong and then try to think of actions you can take to mitigate as many as possible.
I haven't read up or been recommended any hosts yet. I know the service varies, but I also want confidentiality - I don't want my customer base to be accessed.
I haven't taken VAT into account. I have a dormant company that is already VAT registered that I was hoping to use, but the existing name is an issue -it does not complement my proposed brand.
Morgenhund - I've benefitted a lot from bricks-mortar business experience in the past and I can see that your post comes from good experience. I hadn't thought of delayed payment terms - I can try this even though importing from a non-EU country might mean paying up-front. It is still a good bargaining tool perhaps to lower the unit cost.
I like your quote at the end:
"A good business is not much about risk, but rather about planning, where you know it, and testing, where you don't."
I had thought about joining an affiliate program in the beginning for a similar product. But this would just delay my ambition.
The thought of having 15K of dead stock if everything fails is scary though.
I would need to convince the manufacturers to allow me a small order size though.
A) Find a distributer who will drop ship (Im talk about real distributers and not those scam artist middlemen who pretend to be distributers).
B) Find a distributer who is close to you and can ship stock to you in 1 or 2 days, and keep stock at very low levels.
We used to have 30-60K worth of stock and now we are down to 0K, and drop ship everything.
A) its nice, not to have to do inventory at the end of the year
B) no stock to manage
C) no breakage or defects to deal with
D) no dogs to discount at the end of the year
However, I never considered running a venture purely doing drop ships and now I find myself brainstorming again.
Under TOOLS you'll see a TRAFIC ESTIMATOR. Enter in you're main general keyword, like "widgets" and a maximum CPC of $100.00 - not that you'll spend that much but this will show the average CPC for the first three positions. Report back this range and what it says for the estimated clicks/day. Do the same for a more specific keyword, i.e if you only sell plastic widgets enter "plastic widgets".
If you're keyword has a high clicks/day and a low CPC you may have struck gold, most likely it falls into one of these categories though:
1) High CPC & high clicks/day = competitive market where you will have to find you're own niche to be successful.
2) Low CPC because of low clicks/day = you'll have to find a way to generate traffic on you're own without relying on the search engines.
Nothing is set in stone of course, but the info you can get from Adwords will definitely give some insight.
William.
What regarding brand name--possibly, the main thing is to distinguish it from your competitors' as much as possible, or customers think of them every time when think of you. Definitely no need :)
It is also nice if you can tell it by telefone without spelling. For this case, numbers in brand name are dangerous.
Many letters also sound differently in different languages, what makes creation of ultimately international brand so hard task :)
A name of retail store near me is 'Absolut Bad' (absolute bath in German). What about 'Coffin Immobilien'? Not bad, either :)
I'm looking into adwords now....
Average CPC: £0.95 (at a maximum CPC of £5.42)
Estimated clicks per day: 54 - 62 (at a daily budget of £60.00)
This was just for the UK market. Including US does not make it much better.
If I only get 50-60 clicks/day - and convert 1%, I'd be looking at a small order every other day?
Is this bad news for me? a reality cheque maybe?
Average CPC: £0.09 (at a maximum CPC of £0.10)
Estimated clicks per day: 136 - 202 (at a daily budget of £20.00)
Average position 4-6.
That would be ok'ish I guess.
Drop shipping would never work for us - we also have a B&M store that we sell out of. And we do a lot of installations for large UPS systems and the like, so that is pretty much totally not viable for us. Add to the fact that some products have very long lead times - some as long as 5-8 months - and you can see why non stocking is not always a good thing.
I need to stock at least 60items/style and need at least 15 styles to look professional (10K-15K investment). Maybe my upfront cost is too much.
I'll be living on the marketing forum for a while to learn off experience of others. Hopefully, it will be inspirational.
Also take what people say here for what it is. Anonymous guessing. Really who knows what people posting have done. To me 15k in inventory is nothing. But to others it seems like a lot. Some people here are happy with 2 orders a day and others might run 10 million a year ecom giants, I don't know. But you just might be giving up your business idea/dream by taking advice from a 16 yr old who hasn't done anything more than sell a few things on ebay. If you are worried about getting stuck with inventory you can always list it on ebay starting at .99 with no reserve and get rid of it.
I am happy to report that my current business is rather more successful. If you've planned it properly, you've asked all the right questions and there is real, demonstrated demand for what you want to sell and you can turn a profit even when you've taken into account the cost of sale then go for it. Even if you fail you'll learn something and the next time you'll do it better. You will wince when you think about the money though :)
I've had projects fail, and wasted money. I have learnt from them, true enough, but never did I go into something which I thought could be doomed from the start. I always though my concepts would work.
Don't just dive into it headfirst because it is your 'dream.' Nice ideal, but yes, a reality check is needed.
And I think you know it.
NB if you have 15k and a bit of entrepeneurial spirit why not team up with people who have a mix of experience in these areas? I'm always looking to collaborate, I know other people are too, and not everyone is a scammer (though you do have to be wary if going into partnerships). You would be less likely to waste your investment with some expertise behind you.
