How does an online business venture succeed when others are offering similar?(29 Posts)
Ultimately I want to open a bricks and mortar shop. However there is nothing available in the way of retail startup funding, so I'm planning to start online without the huge overhead of a retail outlet.
My concern is that the products I want to sell are already available online, both direct from brand websites and from similar websites (I would be reselling rather than launching my own product).
I will be restricted on price by RRP, and there are a limited number of brands that fit the bill, so the way I see it I need to take the following into account:
Searchability (ffs, is that even a word?)
Visual appeal of website
Range of product types and brands
Promotions (including use of social media)
I'm considering the possibility of trade stands at large local and nationwide family events both for retail and to promote the website.
Eventually I do plan to have a shop, if only as a front for the online business.
What am I not considering here? How can I make my website succeed among competitors?
Thank you so much davidjrmum, really helpful to have input from someone doing similar.
Would you mind me asking the approximate markup on wholesale price please? I'm having doubts about this
Just wanted to respond to your point re price being the incentive - you'll find that incredibly difficult. When we started out we looked at the wholesale price and the RRP and thought we'd have no trouble making a profit as our overheads would be low. Once we got going we found that lots of people offered the products we were selling at way below RRP (e.g. on ebay and amazon) and once we took postage into account, payment gateway fees and VAT, our margins were much tighter than we expected. Added to that are the losses that you inevitably make on returns (even if you can resell the item, you lose the originally postage costs as you have to refund outward postage to the customer). Then getting people to your website is much harder than you imagine so you almost certainly need to spend on marketing. Conversion rates online are generally low - 3% is good - which means that you need 100 people to visit your site to get 3 sales. Your price does need to be reasonably competitive but you need to give people other reasons to shop with you - fast delivery, gift wrapping, whatever. Then once they've shopped with you, you need to find ways to keep them coming back, email marketing, sending catalogues, social media.
We've had an online business selling childrens products for the last 3 years. We're doing quite well now but it has been really hard. Customers are very price sensitive currently which is quite a challenge. We use trustpilot for our customer reviews and now have a few hundred very positive reviews which has helped our conversion rate. Also, we are using social media more now and sending regular newsletters. We didn't know anything about selling online when we started out but read a few books and did lots of research on the internet. What also really helped is that we weren't dependent on the income from our business as we had jobs too, however, it did mean working all week in our day job and then all evenings and weekends on our business which was exhausting! Re the legal side, this is a really good resource - http://dshub.tradingstandards.gov.uk/
As far as giving a reason for customers to choose us over competitors is concerned, I would be aiming for price to be the incentive. As Xenia has pointed out, it's illegal to fix the price or insist on a product being sold at RRP, but there is the issue of supply drying up. I thought we could get round this by offering a discount on first orders, then follow this up with discount codes and free D&R to keep the price low. I'm also considering the possibility of attracting customers via a cashback site.
WRT building a local presence, yes I've considered selling via parties, markets, reps and at large family shows and festivals. Definitely a strategy I plan to follow.
No I don't know much at all about marketing either on or offline I'm afraid, but if I were to allow that to prevent me from having a go I'd be stick on my current job forever. What I do have is a number of friends with various business specialisms to sound out. Though at this very early stage, the food for thought I'm getting here is invaluable.
I do also appreciate where you're coming from on the cupcakes and children's clothing cliche. The 'idea' presented itself to me simply because there isn't a similar business in this relatively affluent area. You can buy cheap supermarket stuff, high street brands and higher end designer childrenswear, but nothing of the ilk that I'm looking to sell. However this applies to the original idea of a physical shop, of course I realise the sorts of brands I'm interested in are widely available online. And I do realise that the likely reason that there isn't such a shop in the area is probably because noone else sees a market for it.
It's not very imaginative really is it? It has occurred to me that what I really ought to be doing is looking at technology retail or something like that, but I have precious little knowledge if anything outside my own specialism (teaching).
All of the input here is much, much appreciated.
Are things like customer service enough? All businesses claim that on their websites? How can you prove your customer service is better
Going back to the Distance Selling thing - they don't need to physically return the goods within 7/14 days - they simply need to notify you of their intent - not sure if this NEEDS to be in righting, but I know an email is sufficient.
In addition to kids clothes and cupcakes, there's an enormous array of "wedding paraphenalia".
I really agree with Saffra and learnt the hard way with my first business - I built the site, SEO'd it and then sat there drumming my fingers...
Lots of good advice here already. I would just echo what Saffra has just said. If there are competitors out there then you need to consider why a customer will choose you over them. What can you do better? And what can you make your point of difference? By that I mean find something unique about your business (eg is it that you have amazing customer service, faster delivery, better wrapping, or a better website?). It doesn't have to be a huge thing, but it does need to be a benefit to the customer - and then you need to really market the fact that you offer this.
Whenever you are starting a business, always think from the customer's point if view, not from your business. If you can find new answers to their problems that are not being solved by your competitors, you can start to win their business.
I would agree with others here and say marketing is key. Customers buy for a variety of reasons - product range, service, reputation, perceived trust, website usability, price etc. Your success is dependent on these factors... You need more than an interest in the product, you need commercial acumen.
Having worked in an agency that developed sites for many SME start - ups, I was always sad to see so many businesses fall short of expectations. A nice looking site is only one part of the equation. Launching the site is only the very start of the journey.
And definitely, you do not need to reinvent the wheel. You just need to do certain things as well as possible to give you a reason for a customer to choose you over a competitor.
i think women like to go into something they know. for a lot of mothers their main interest is children.
Xenia - I think that women tend (?) to think that if they are familiar with something that they can sell it. That's the basis upon which I got into my own business. I learned so much, so quickly, that I wish now that I had gone into importing oil from Russia or sim. because I think you can learn practically any industry in a remarkably short time, and practically any industry is more lucrative than cakes/children, sadly.
Sometimes new isn't good. If we know something works very well for internet selling then that can be a reason to go for it. No one might be doing something because it just doesn't work.
(It is such a shame that women always want to sell cup cakes, children's clothes etc. Why can't it be oil from Russia? Why does it have to be so domestic and so likely to result in low profits?)
I am trying to do a very similar business selling baby and toddler items or party items. When I do the research it seems hard to get something that is different. I've also looked at buying a business but they seem to be very expensive! I don't know if it's worth starting. Obviously if I work on seo and marketing it will make a difference but is it enough?!
It's so hard to find a new business
If you are targeting a local market, I would seriously consider some other off-line options especially because - as NotYou points out - it doesn't look like you know anything about online marketing.
Are there local markets or school fairs where you could sell your stuff? Could you go to people's houses and do a Tupperware style thing?
Setting up an online presence from scratch with a "if I build it, they will come" mentality can be a very expensive mistake.
Am I right in thinking that you don't know anything about online marketing yet?
How are you having your site built?
Distance selling etc is pretty simple. You must tell customers they ve a 7 day (14 days I think from next year) period to cancel. If you look at the terms on most sites you can see what they say. You can make the customer pay the cost of the return if you make that clear although some customers buy from a site because it covers all postage - I know one of my daughters will pick XYZ site ASOS?) because it does free returns so I suppose there is a marketing issue about how generous or otherwise you want to be.
I suspect the hardest issue like with most website is marketing and how to get anyone to take a blind bit of notice of your site so getting some advice from a google adwords expert is probably even more important than getting legal terms right.
Thanks again. Can you guide me to somewhere I can find out more about retail law, in particular eCommerce and distance selling please? Sorry, I realise I'm asking a lot. Feel free to tell me to do one
That's right so those who want to fix the resale price (which is illegal) instead to be more clever about it may just refuse to supply although they are not supposed to do that either if the objection is because of your resale pricing. The football shirt suppliers were fined millions for this kind of price fixing but it's certainly very common. Toy companies were fined for this too I think. Argos, Hasbro
50% yes, that might be right. I think it just depends on the products so hard to generalise.
That's interesting, thank you. But they don't have to supply you in the first place do they? So why does it then become illegal for them to insist on a price point or to refuse to supply?
By the way, I'm finding that wholesale prices are around 50% of retail. Does that sound right?
I thought that might be so. That is illegal in Europe. They cannot force you to resell at their RRP, although in practice they may just cut off supplies and you might find you don't want to sue them or cannot prove it or interest the OFT. However it is a widely used internet model - internet seller finds stocks of expensive branded products and piles them high and sells them cheap, manufacturers and other dealers are up in arms, low price seller can make a lot of money particularly if they can keep finding supplies.
Xenia, I mean that the brands themselves already offer their own goods at RRP, and will only supply if the price point is in line with their own. Doesn't prevent me making special offers I guess.
Pendipidy, the reason I'm keen on the product types I've mentioned us because, bizarrely, despite the town being fairly affluent it just isn't available. High end childrenswear and supermarket type stuff is available, but nothing at all in between. Specifically I want to sell organic cotton. Am I just hopelessly naive?
I'm not in a seaside town, that's a different thread. However if I do ever get to the point at which opening a shop becomes affordable, there is a particular location which seems to have a particularly affluent footfall!
The things that you want to sell are vastly over offered and always seen to be the products that start ups want to sell. That and kids clothes.
If i were you, i would not waste my time. There are far too many shops selling the same and already established. You need to look for another niche that actually is a niche, not mainstream.
Not positive i know, but realistic!
What did you mean by "I will be restricted on price by RRP"? Do you mean others sell fairly cheaply and as you have to compete with others it will be hard to make profits from that product?
ineedthatfork you need to investigate the "distance selling rules" which are (unfortunately) law and heavily biased towards consumer rights as demonstrated frequently on AIBU.
Basically you can ASK that the goods are returned unopened and labels still on, however you cannot refuse to refund if they're not.
I totally agree about needing to network. You can build it, but they won't necessarily come.
As to how to compete when you've only got RRP then you need to provide value. Did you say you were a seaside town? Perhaps a pamphlet/blog of nicest local coastal walks, best rock pools, safest places to swim, nearest loos, nicest cafe at the end of x-cliff walk.
I sell eco friendly and fairtrade toys so along the same kind of lines! I attend a few green fairs that are further afield but mostly stick around the localish area at the moment. I'm hoping to attend bigger festivals in a year or so (when I can afford the table hire costs!!). Keep me updates as to how you are getting on, good for you for giving it a go.
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