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Creating an ecommerce site and being paid via perfomance

Help needed with building first ecommerce site and billing details

     
12:43 pm on Jan 21, 2003 (gmt 0)

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joined:Nov 18, 2002
posts:63
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Hi all,

Have recently been asked to create an ecommerce site for a friend of mine based in Australia. Ive done some web design etc using dreamweaver/coldfusion but no ecommerce or paid work. Would appreciate some comments and help on whether the following makes sense and Im on the right track. Personal preference is to be paid on a perfomance basis.

Client:
Artist/painter
Selling reprints & paintings (~20 items)
Wants ecommerce site
No merchant account

My offer:
Build ecommerce site (html rather than coldfusion as its so small)
Use shopping cart (not sure which one yet- any ideas?)
Use payment gateway (again not sure which one yet - paypal?)
Collect emails
Market/promote site

My cut:
Build site for free and take 15% each item sold (most will be around $20-40 US)
..or should I use a sliding scale 10% for XX sales, 15% Xy sales?
Charge him hosting fees ($15 US month) and host it through my host. Already have host so Id pocket this.

He pays:
Hosting fees (per month) to me
Domain registration
Pays me percentage of profits
Pays payment gateway their percentage (up 15%?)
Pays to get listed in Inkintomi or yahoo if decide to do that at a later date

Did I miss anything and does anyone have a timeframe they reckon I could achieve this in if I worked on it fulltime.

Thanks,
sleepy

1:20 pm on Jan 21, 2003 (gmt 0)

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WebmasterWorld Administrator rogerd is a WebmasterWorld Top Contributor of All Time 10+ Year Member

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Hi, Sleepy. I don't think anyone can predict a time factor, but unless your artist buddy is well known my guess is that it will take quite a while to pay back your development time at 15% of an average $30 sale. (Did I interpret that right, i.e., is your typical cut $20 - $40 or is that the list price of his art?)

His name recognition is critical because if collectors search on his name, your site should be able to rank well fairly quickly. If (as I suspect) there aren't hordes of collectors out there looking for his work, building traffic is likely to be a slow process.

My recommendation would be to undertake this project only if you have nothing better to do, or if you really believe this guy's art is the Next Big Thing.

This really sounds more like a recreational project than a business venture - if you look at it that way, you won't be disappointed. Good luck!

11:19 pm on Jan 21, 2003 (gmt 0)

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I agree with Roger:

Plus among the bigger concerns are, what happens if/when the artist decides that either you're getting too much commission, or that he otherwise doesn't want to sell his products online anymore - then you're up a creek with no paddle, a store with no inventory.

I saw this happen once with a friend and a similar site based on only one manufacturer. My friend had to toss the whole thing when the manufacturer decided to pull out of it and put up their own site! This was early early before e-commerce became common at all. It didn't take the manufacturer too long to figure that once the sales were there, it was far better for THEM to pay a flat rate once vs. 15% per sale. What my friend did was test the water for them, for free. Lesson learned.

If you're going to go to the trouble of making a commission only store, why not broaden your horizons and add all kinds of products to it? You can even all Allwall.com products and other affliate programs... then you're maximizing your investment and keeping control of the product line. He's dependent on you, not the other way around. Good leverage makes for good partners. :-)

One thing BIG THING to figure out: who handles the inevitable product returns? Who takes the financial hit? Can you be sure the artist will mail things out immediately? What if he doesn't? And who handles the general customer service problems or phone calls ('cause you'll need a phone # on the site for maximum customer confidence)?

I know a team of guys who put together a store based on edible products - they were seeing great revenue almost immediately, but they had so many hassles with returns and other bad orders that they shut it down in 3 months rather than continue. Ex., someone would order $1,000 worth of food overnight, eat it, then insist that the order was "spoiled" and they wanted their money back...! Cancel the VISA charge, and that was that... although that's not 100% applicable to your product line its something to be aware of.

Finally - who handles advertising? Banners? Who pays for it - surely not just you making only 15%.

Good luck with it, and let us know what you end up doing.

12:59 am on Jan 22, 2003 (gmt 0)

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i have to agree with the above comments. it's very risky. i do it with 2 of my clients. for one of them it's worked out really well but not so good with the other.

the first client (a friend) lives around the corner, he's one of those genuine blokes that would drive across town to give you a penny if he owed you it. he knows nothing about building websites and i have 100% control over his sites. i've built him 5 sites so far and optimised them as best i can. one of his sites is first on every major engine and directory for his main keywords. on some engines, he has 4 or 5 sites in the top 10.

i've spent a lot of time on his sites and now i just sit back and collect my 20%. it'll take a long time before i get paid for all the work i've done so far, but it's coming in. my main reason for doing this was work was slack at the time and i had a free hand to do what i wanted. sort of like training on the real thing.

the other site hasn't worked out quite as well. again work was slack at the time. the client had a very poor site and very low sales. he wanted to earn before he spent, but that would have taken years. i offered to build for free and collect later - the perfect demo site to go on my portfolio. it pays some, but nowhere near enough to cover the time i put in - i set the commission rate too low. but then if i'd done a demo site for myself, it might not have earned me anything directly anyway.

the site owner now makes just enough from the site to go full time instead of running it as a part time business. he's paid me separatey for other work including 2 new sites and optimisation, so it's not that bad. again, the client is 1005 dependant on me so i know i'll keep getting the small commissions and i'll get the odd extra bit of paid work from him.

there are some benefits in that it's good experience and can be displayed on your portfolio, but make sure you retain 100% control. you need to own the domain name and be the only person with access to the server - you don't want anyone taking your code away.

you also need to make sure the client makes those sales, not just for your commission, but to keep him interested and so that he sticks with you. that means you need to optimise and promote very well. it'll be an ongoing job for many months.

at your proposed rates, he'll need to sell several hundred items just to cover your initial costs. he'll need to sell hundreds more to cover your ongoing maintenance, optimisation and promotion fees. it'll take a long long time to pay you back ....

 

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