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Turnover/Sales Forecasting for Online Retail

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  • 21-06-2012 11:49am
    #1
    karlkarlson
    Registered Users Posts: 55 ✭✭


    I'm wondering if I could get some pointers on Turnover/Sales Forecasting for Online Retail.

    The advice I've read so far seems to pertain to businesses who make calls, get leads etc. and can predict down the funnel based on these. For selling clothes online in Ireland and perhaps abroad, it seems difficult to predict how much you will sell and over, say , a three year period.

    Thoughts?


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    #2
    DoMyBooks
    Registered Users Posts: 355 ✭✭DoMyBooks


    Its not easy:
    Look at expected visitor numbers to the site, multiply by your expected conversion rate and multiply that by your expected average sale value.
    So if 100 people visit the site in a day you expect a 3% conversion and your predicted average sale is €40 your looking at a turnover of €120 per day.

    You can use google keywords tool and adwords to test your ideas. Because the barriers to entry on ecommerce are 'relatively' low you can also jump right in and use your actual site for testing ideas.

    Also go download the accounts of similar businesses. You generally won't get the turnover figures but you can get some info from the balance sheet.

    There's ASOS's accounts if you want some inspiration
    http://asos.annualreport2011.com/our-financials/consolidated-statement-of-comprehensive-income


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    #3
    karlkarlson
    Registered Users Posts: 55 ✭✭karlkarlson


    Thanks for the reply.

    This sounds like a sensible approach. Unfortunately our site isn't built yet so there's not much playing around I can do on our side. As for predicting traffic, this might be a figure I'd need to pull out of the air, unless you've any tips on how we could estimate that even if it was just for Ireland.

    As for the accounts for other business, this was something I'd been thinking of but I wasn't sure where to obtain them Is there a central repository here and/or in the UK where you can find such concerning public companies? It would be great to find the specific accounts of some direct competitors if they were available.


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    #4
    sandin
    Closed Accounts Posts: 1,594 ✭✭✭sandin


    Online retail is way more difficult than offline. It will take a lot of advertising and about three years of losses before it will become a good business.

    Turning stock will be a big issue - you stock will need to be fresh and you will have to have new stock arriving on a regular basis. If turnover is low, this will be difficult. Possibly look at combo between retail & online - retail rents are on the floor and its easy to get 6 month leases.


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    #5
    karlkarlson
    Registered Users Posts: 55 ✭✭karlkarlson


    Thanks Sandin for your thoughts.

    We're thinking of using pop-up stores in various locations and even have people of facebook vote for locations so we can consider good spots to try. We don't want any long term rents or even a block 6 month one, though the rents might be reasonable. Our focuses will be on seasonality and also perhaps Saturdays only if we can negotiate it--and with the amount of vacant premises around I think we can.


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    #6
    DoMyBooks
    Registered Users Posts: 355 ✭✭DoMyBooks


    karlkarlson wrote: »
    Thanks for the reply.

    This sounds like a sensible approach. Unfortunately our site isn't built yet so there's not much playing around I can do on our side. As for predicting traffic, this might be a figure I'd need to pull out of the air, unless you've any tips on how we could estimate that even if it was just for Ireland.

    As for the accounts for other business, this was something I'd been thinking of but I wasn't sure where to obtain them Is there a central repository here and/or in the UK where you can find such concerning public companies? It would be great to find the specific accounts of some direct competitors if they were available.

    You can get Irish company accounts here http://www.cro.ie/ and UK ones here http://www.companieshouse.gov.uk/

    If you search for the Irish company accounts you want, and send me the company number i'll email you over the reports save you paying for them.


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    #7
    bceltic
    Banned (with Prison Access) Posts: 54 ✭✭bceltic


    Hi Karl,

    There are three key things you need to calculate:
    • Traffic
    • Conversion Rate
    • Average Order Value

    1. For calculating your traffic, use this traffic estimator tool from Google:
    https://adwords.google.com/ko/TrafficEstimator/Home?__o=te - it's not perfect but will give you an idea of the search demand and what traffic you could buy if you want to acquire that all via paid search. This is the hardest thing to acquire. To make it sustainable traffic, you need a solid SEO strategy, social outreach, produce lots of content people want to see/read/hear, and having a great brand helps.

    2. Conversion Rate - Plan for 2%, the industry average for ecommerce sites. I've seen lower and higher, it really depends on your products & target market. This is where you can make the easiest wins. See some examples here: http://www.blogstorm.co.uk/average-ecommerce-conversion-rates/

    3. Average Order Value - Depends on what you sell but again an easy place to make easy wins. Adding related products, combination deals, shopping free over certain amount (although any shopping fees can harm conversion rate).

    Also don't forget to focus on customer loyalty once you do the hard work to make the sale.

    So if you want to make 1,000,000 EUR, assuming your average order value is 100 EUR, then you need 10,000 sales. At a 2% conversion rate, that would be 500,000 visitors (but don't all have to be unique visitors).

    Best of luck with it!
    Brian


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    #8
    TheCostumeShop.ie: Ronan
    Company Representative Posts: 1,740 ✭✭✭TheCostumeShop.ie: Ronan


    sandin wrote: »
    Online retail is way more difficult than offline. It will take a lot of advertising and about three years of losses before it will become a good business.

    Nonsense. Maybe in America a three year loss might be swallowed by investors, but in Ireland that would never happen.


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    #9
    Atlas_IRL
    Registered Users Posts: 1,857 ✭✭✭Atlas_IRL


    DoMyBooks wrote: »
    You can get Irish company accounts here http://www.cro.ie/ and UK ones here http://www.companieshouse.gov.uk/

    If you search for the Irish company accounts you want, and send me the company number i'll email you over the reports save you paying for them.

    Not sure if many know of this site but duedil.com is amazing and free.


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    #10
    karlkarlson
    Registered Users Posts: 55 ✭✭karlkarlson


    Thanks folks for all the replies, much appreciated.

    DoMyBooks - I'll do some searching for competitors. If I see any listed I may take you up on your kind offer to pull some info.

    bceltic - Great information, really helpful. I'll be doing some work based on your suggestions.

    Ronan - Good to hear that. The comment re: 3 years of loss wasn't very encouraging even if the poster was just trying to be realistic from what they've seen. We don't aim to draw a salary for 2-3 years but we don't aim to makes losses either, even if that might be the reality at the beginning we're aiming to make a good product, well presented and marketed to the right demographic.

    Atlas_IRL - I will check out the link.


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