person to set up e-commerce website + get % of sales ?

andyjo

My uncle has a long established small niche shop and is just about doing ok / surviving, but I really see he needs to do more online. Profit margins are thin and people can compare prices online. He does not have the time or expertise to set up a proper on-line shop ( hundreds of items if you include different models + sizes ). He has sold a little bit of mail order in the past and some ebay. He does not want to spend a few thousand euro, have a mediocre website compared with his competitors
and not get any sales out of it....
Has anyone gone down the road of getting someone to set up and run a website, on a percentage of sales basis ? Say the website was to generate 50,000 of sales in its first year , and the website designer was on 5 or 10 %, thats 2.5k or 5 k profit.
A couple of businesses in Ireland are in his market sector and are selling partly or fully online - is there any easy / cheap way of finding out their turnover , apart from paying money at the companies office for latest accounts ? He reckons his biggest competitors who are selling online make thin enough margins - between 10 and 20% after paying for bank charges, delivery etc.
He does not know what to do. The cost of sending goods for here to the UK is always going to be a lot more than internal carriage in the UK, so its unlikely he can gain much market share in the UK in a very competitive marketplace. However he thinks there may be an opportunity in Ireland.
Without critical mass and a good cheap web designer though he will find it tough. Any thoughts ?

DeVore

He/you could talk to the Adverts Marketplace guys and they will give him a merchant account. Similar to Ebay but more Irish focused. After that, pay someone to point a website at his list and there you go.

But this is a poor mans route really, selling online isnt about the website, its about the marketing/sales. It takes constant attention and 2.5k to 5k annually isnt going to cut it.

Ideally he would offer something like 60% of the profit to the web guy for say, 2 years with year 3 and onward dropping to 20% or lower.

Yes, you are handing a lot of the profit to your web guy but
1. You dont think it will sell much anyway.
2. Its no real skin off your nose as its new sales most likely, not existing customers.
3. If he is successful enough to make you regret the deal, he has built you a great site for when you take it over 2 years from now.

Anyway, those are just my thoughts, I wouldnt be interested myself I'm afraid.

DeV.

The Apprentice

Also a point that you forgot would be researching your niche area for the Designer.. Where do u see this going

50k in sales a year with 10% margin.. meaning 10k to divide between boss and future partner. Can you elaborate on the specific natures or area of sales he is doing, if its public already its no skin off your nose to say what items he is selling.

It all sounds fine and dandy but realistically deals like this are a dime a dozen for the web entrepreneuer, more specifics needed.. Traffic ?? Specific broad and phrase ? Areas for development ?? Other possible revenue opportunitys, Specifically is it a micro niche product or pico niche ?? Im assuing just micro considering the high volume of sales.

YouBuyLocal

Shopify.com

http://www.vendorshopsocial.com/

Etsy, ebay, donedeal

Don't get a web designer, get a social media agent. Social media agent gets a budget from your uncle, say a two hundred quid per month and (s)he develops a web strategy for generating sales and sends your uncle the orders. Then the agent takes a percentage of the profit generated by them. That would be like 30%, but would depending upon projections. I agree that they would probably be new customers so wouldn't interfere with regular business much.

The Apprentice

Im actually considering this !

Could u possibly send me some info on it, pm etc.. ?? Possibly give me a phone call ?

Depends on lots of variables but i might be able to help in some way. Advice is free anyway

andyjo

thanks for your replies. My Uncle is away for a few days but when he comes back I'll show him the thread and he can decide if he wants to go ahead with any proposal. I do not want to give away his business name or market sector, but I can say its a niche in the sports equipment sector. How well the few competitors that are online are doing selling in to the Irish market is unknown... anyone know is there any easy / cheap way of finding out their turnover , apart from paying money at the companies office for latest accounts ? If I could tell my uncle the size of the market / see how well the on-line shops are doing (or not), it would help evaluate if its worth proceeding or not. Most small shops which have tried to sell on-line seem to have failed. If he does it, he does not want it to fail.

YouBuyLocal

I think that isn't a very good attitude to go into it with, its very conservative. If it fails, it could fail for any number of reasons that have nothing to do with its viability. It may fail due to a lack of understanding of how internet sales work, how facebook works, buyer behaviour on-line. A really smart and committed person developing & implementing the strategy can mitigate against a lot of those risks.

I'll give you some simple advice

1) A website is useless if nobody can find it

2) On a cost/benefit analysis the time that goes into SEO can be ineffective, unless you have someone very good - and for people that don't understand SEO it is hard to tell who is bull****ting and who actually knows what they are talking about. I think Google is losing market share as hubs for different services & subjects are developed, like Etsy for example. I mean that in the sense that if you develop an SEO strategy for your business and there is a hub where people get all of their sports gear then that hub will always be above you in ranking. So it can be better to spend the SEO budget on being involved in that hub. Then again, sometimes that "hub" can be bad for businesses and very congested. Example: Amazon is a hub for books; Etsy is a hub craft stuff; Donedeal is a local hub for second hand stuff; etc...

3) Social media requires a lot of care and attention, you need someone that lives social media, someone who can really focus on your brand. Its low budget but high maintenance and is totally dependent on viral growth. I know a woman who sells shoes on facebook imported from Paris. But its hard.

I would go in with an attitude not of "hope this will work", but "this will work, but it will be hard and I have to commit to it". You've failed before you start if you are going to give up at the slightest hic-up or bump or uncertainty.

andyjo

YouBuyLocal wrote: »

A really smart and committed person developing & implementing the strategy can mitigate against a lot of those risks.

Thats what my uncle is looking for. He can bring other things "to the party" like contacts + goodwill with suppliers, working capital, a bricks and mortar premises, and knowledge of the products.

Most ( ninety five or 99 per cent plus ? ) of small shops in Ireland which have tried to sell on-line seem to have failed. My uncle has survived decades in business and has paid all his suppliers, taxes , bills etc. He has sold a bit on the internet and on ebay, so is not totally stupid. However he is careful about setting up a proper catalogue website,....he knows he does not have the time or talent to live social media, develop an SEO strategy etc. Thats for the web person to " bring to the party". He does not want to waste his hard earned money paying someone xx euro an hour to do so...but reckons if they were on a percentage of profits that would concentrate their minds.;)

YouBuyLocal wrote: »

I think that isn't a very good attitude to go into it with, its very conservative..

I think given the economic times we are in, its realistic. If my uncle is going to spend time + money marketing on-line properly, he says himself he wants to avoid being the ninety something per cent of Irish shops who have tried this and failed. He has seen too many businesses pay xxxx to web people and not sell enough to recoup the costs.

Does anyone know a small " bricks + mortar" shop in Ireland which does do well selling on-line , in an industry where there is serious on-line competition from on-line retailers in the UK, who have greater economies of scale + often lower costs ? - let alone be the web person behind it ?
Profit margins are small and carriage to the main centres of population ( UK ) etc high from Ireland. Returns + guarantee problems and goods damaged in transit all could complicate the mix. ( he has experienced all of these). Do web people sometimes work for a percentage of profit and what is the usual % required ? ( considering they do not have to order + hold stock, risk having old / olsolete / non-selling stock, do the packaging etc )

Zonua

andyjo wrote: »

Most ( ninety five or 99 per cent plus ? ) of small shops in Ireland which have tried to sell on-line seem to have failed.

Please, can you provide a reference to this?

andyjo

only word of mouth from talking to some owners of same. Also, looking at many websites of small shops in Ireland which are trying to sell goods online e.g. the golf shop at the local golf course, the local stationary shop, the local kids clothes shop, the locally owned sports shop, the local bike shop , the bookshop, the local kitchen accessories shop, ......the vast majority of these seem to have failed as far as selling a viable quantity of goods on-line. The people who seem to be selling on line seem to be very big and have great economy of scale. Or am I missing something? Most Irish web designers have done websites which have lists of products for sale, but a quick phone call to the owner of the business ( to chat about the web site ) establishes the website is not really working ( as far as getting people to pay the money + order goods is concerned, to generate enough business to employ even one person on the on-line side of the business ). Correct me if I'm wrong, I would love to show my uncle examples of sucess stories ( small Irish shops which have sucessfully diversified in to selling goods on-line ) and say to him, here is someone who will do a website like wxy for z% comission.

The Apprentice

To be honest andy if its a very specific niche and the sales are being taken from the uk or internationally..
You and your father could potentiallly throw a bag of money at this and never get a return. I think you could possibly run a ppc campaign over a few months 3 ?
Although google results can be questioned sometimes, they are an indication of the traffic that is looking to buy your product..

Do your own research if your unwilling to give out the product to us, as in see how many searches per month your specific keyword is bringing into your "potential" website.
It seems to me that he,s unwilling to release for fear of competition, but if he doesnt he will never find out is it commericially viable to set up an online store.

You state its sports equip sector, im going to assume that its hurleys, or helmets with the gaa orientation. To be specific on those particulars it isnt worth his time shipping them to the uk because as you stated above, economys of scale over there, shipping costs, damages, returns etc.
In reality ireland might be your only market online, but ideally u need to be more concrete on what kind of visitors are hitting your website if you were indeed no1 on the search engines.
You could do a rough guesstimate on what your competitors do online if you had an average sale in your own shops with current traffic relevant to their search engine postion.. "ROUGH" being the operative word.

I suggest download market samurai.. do the legwork yourself.. if you get stuck give us a holla.

moggie4000

I have set-up a new facebook shop this morning. Thanks very much for the information.

You can take a look here - <link pimp removed>

Moggie

gigino

The Apprentice wrote: »

I suggest download market samurai.. do the legwork yourself..

Thanks. On page one of market samurai http://www.marketsamurai.com/ it says " 99% of sites fail ", ...I feel quite encouraged to read further:rolleyes:. I guess most web people who set up B2C sites do not tell their clients that first. Still, the research continues, I promised my uncle I would do that for him while he is away for a few days. He has done me a few favours over the years + I want to research this for him. I will install market samurai. Thanks for pointing me in the right direction.

The Apprentice

Meh.. i wouldnt beleive that particular stat lol

Keep her lit, if run into probs give us a shout..

Pro tip.. Its exact monthly search
And must not be broad.. :P

TheCostumeShop.ie: Ronan

In the product your selling whats the average sell price and margin? This is a major influence on whether it can work online.

andyjo

TheCostumeShop.ie: Ronan wrote: »

In the product your selling whats the average sell price and margin? This is a major influence on whether it can work online.

sports equipment...so some small things about 20 or 30 or 40 euro ....probably 20% gross margin on these after paypal fees are paid.

On the larger items , which sell for 100 to 200 euro and up, its thought the margin would be about 10% after paypal/ visa fees, free delivery etc.

Its not highly lucrative...there are a number of hungry competitors in the UK who are in a race to the bottom to see who can sell product cheaper. Some items are advertised by competitors @ 5% above trade. If vat increases here by 2% it will make things harder still.

TheCostumeShop.ie: Ronan

I think your going to find those tight margins hard to succeed with as it will limit your cost per acquisition and you'd need high volume to justify the set up costs of a fully operational ecom system.

It's interesting you assume free delivery, while this works well in markets where delivery is cheap (US & UK), Ireland has substantially higher transport and operational costs. Test everything before making these kinds of assumptions.

5% above trade doesn't mean much, you can be sure that big players aren't paying list price.

janekw

You are really going to have to do you research on this!The problem I see with ecommerce start-ups is the notion that it can be cheap to set-up and that anyone can do it.
While that may be true to a certain extent, if you want to seriously compete in your market you are going to need to invest in a number of areas:
If you go with a website this is only your online presence - similar to an alleyway shop - it may look good but if it is not optimised and the proper seo is not implemented no one will ever find it. SEO (Search Engine Optimisation) is key - basically if you're not ranking highly on google search for your keywords/niche well simply very few people will find your site. This can be quite expensive to outsource and while some can be done yourself, if it is to be done correctly in a competive search field will need to pay for it.
Other things you will need to consider would be paid search - Google adwords being the main one - check out adwords PPC which may be your best bet.
There are also the uses of social media (Twitter, Facebook, etc) which can help drive potential customers to your site and make then aware of your brand!
Anyway best of luck with whatever you do..while it's difficult it is also an exciting venture getting a business online an attracting customers that would never have been otherwise.