What do I need to do?

lightgrey

There's a product that's produced in the UK that sells both to the public and to the trade (sells to some Irish retailers but I don't believe many sales to the public over here) and I'm looking to buy in stock to sell online only. Number of products in the initial opening order is looking to be around the 300 mark (50 products, 6 of each). Average cost per item (including the terrible conversion rate and postage) is just under €4. I need to figure my postage and packaging costs exactly but I was hoping to sell for no more than €10 (and that's taking into account shipping which will most likely be €3).

- Do I need to register as a business first? I'm an employee at the moment so I'm not exactly sure what needs to be done in this regard as it will be a small side business.
- In terms of E-commerce, what's recommended (considering approx 50 different products but with the possibility of being double/treble this amount)? Shopify? Bigcommerce? I don't have a domain (nor an idea for a business/website name!).
- Is there anything else I'm naively leaving out?


I would appreciate any feedback at all thanks.

lightgrey

- Is there anything else I'm naively leaving out?

Think I'll answer this myself. VAT. Should I register for VAT? If not, I guess I'm looking at paying the 20% UK rate on imports (so the average cost now becomes €4.80 rather than €4).

pedronomix

Uk Post rates recently shot up, are you sure of the cost and here for postage? If you register for VAT you will have to take Irish VAT out of your selling price (divide by1.23 to get nett price). Your margins look way too thin to me to ever make a return unless you can scale up significantly.
You should consider doing a short/evening eCommerce course, you will meet peers in the same space and have access to expertise of course tutors.

jimmii

We import from UK and the exchange rate jump has been pretty painful! Its better to charge a flatrate postage than fit it into your pricing so that it encourages people to buy multiple products it should cost you any more to send unless its a bulky product. For non food products the typical mark up would mean a product with a landing cost of €4 would be around €10 so you're looking good there as long as you price postage seperately. You could have a free postage offer once there is enough margin in it for you something like free over €40.

Regarding VAT then its really down to you as the consumer ends up paying the same just means the VAT goes to HMRC instead of the Revenue! If this is a side business and its not going to teach the VAT threshold then it will make the paperwork that bit easier for you to do in your free time.

pedronomix

jimmii wrote: »

We import from UK and the exchange rate jump has been pretty painful! Its better to charge a flatrate postage than fit it into your pricing so that it encourages people to buy multiple products it should cost you any more to send unless its a bulky product. For non food products the typical mark up would mean a product with a landing cost of €4 would be around €10 so you're looking good there as long as you price postage seperately. You could have a free postage offer once there is enough margin in it for you something like free over €40.

Regarding VAT then its really down to you as the consumer ends up paying the same just means the VAT goes to HMRC instead of the Revenue! If this is a side business and its not going to teach the VAT threshold then it will make the paperwork that bit easier for you to do in your free time.

jimmii according to hiim , he is selling at 7 plus post and his cost is 4.40!

jimmii

pedronomix wrote: »

jimmii according to hiim , he is selling at 7 plus post and his cost is 4.40!

Yeah that's just not going to work! 10+p&p definitely the minimum needed to make it work especially as processing costs haven't been factored in which can be considerable at low turnover levels!

lightgrey

I guess I'm looking at the postage costs from the perspective of the customer. If I just saw a set price (9.99) which included free postage, that would entice me to buy more so than the same product priced at 6.99 but had a separate postage charge of 3 euro. Might sound silly but I doubt I'm alone?

So my cost to buy in is looking to be 4.80 (actually more since I need to source packaging). This includes UK post rate. An Post will be the postage option and to post in Ireland it will be 2.70 (standard post). Let's say 7.70 all things considered. If I was to go down the 'free postage' route, is 11.99 still cutting it too fine?

jimmii

lightgrey wrote: »

I guess I'm looking at the postage costs from the perspective of the customer. If I just saw a set price (9.99) which included free postage, that would entice me to buy more so than the same product priced at 6.99 but had a separate postage charge of 3 euro. Might sound silly but I doubt I'm alone?

The postage cost would be about the same so for two items it would be €18.98 + "free" postage or €13.98 + €3 postage the second option would definitely encourage me to buy more!

jimmii

lightgrey wrote: »

So my cost to buy in is looking to be 4.80 (actually more since I need to source packaging). This includes UK post rate. An Post will be the postage option and to post in Ireland it will be 2.70 (standard post). Let's say 7.70 all things considered. If I was to go down the 'free postage' route, is 11.99 still cutting it too fine?

Don't forget you will incur some form of transaction cost that you need to factor in that is likely to be 50c-70c to begin with.

11.99 on a 7.70 cost item if you aren't registered for VAT isn't horrible so long as you aren't going to be spending too much time unpackaging and repackaging etc. Do you know how they will be packaged? Will it be possible to just break them down to single items and stick them in the post or will there be any additional packaging costs? If they need to reboxed that is another 20c-€1 depending on the size and whether it needs to be single or double walled.

How many units do you expect to turn over a month?

I operate a high street shop in Dublin 1 an item costing us €7.70 we would be selling at €14.95-€19.95 including VAT depending on the supply and demand of the product.

lightgrey

Thanks jimmii. I hear what you're saying regarding postage and I will have to make sure that 2+ items doesn't fall into parcel territory. Am I overrating the free postage angle?

In terms of transaction cost, I'm thinking that Paypal will be the payment option on the site, so is 50c-70c about right for that?

Packaging is something I'll have to do myself so I'll be having a look on Viking etc for some ideas.

My 4.80 cost is rising and rising

Units per month? To start off with, 30? 50? It's a hard one for me to put a figure on as it's an entirely new area for me.

jimmii

lightgrey wrote: »

Thanks jimmii. I hear what you're saying regarding postage and I will have to make sure that 2+ items doesn't fall into parcel territory. Am I overrating the free postage angle?

In terms of transaction cost, I'm thinking that Paypal will be the payment option on the site, so is 50c-70c about right for that?

Packaging is something I'll have to do myself so I'll be having a look on Viking etc for some ideas.

My 4.80 cost is rising and rising

Units per month? To start off with, 30? 50? It's a hard one for me to put a figure on as it's an entirely new area for me.

Thats about right for Paypal I think its 3.4%+35c or close to that for <€2k/month. 30-50 is probably very optimistic unless you planning to put a bit into adwords etc.

You are better off with one of the specialist packaging suppliers than Viking Alpack, ePackaging, Macfarlane should work out a good bit cheaper.

How delicate will it be? One of our popular products is bags which we just post in a postage bag which makes it a lot quicker to package and a lot cheaper as they only cost about a tenth of even a small box.

With postage it is always better to have a tracking number what are you going to do if a customer turns around and says that it didn't turn up? You can bulk buy Parcel Labels from An Post for €4.95+VAT and that is for upto 10kg. Obviously its another cost but its something to consider.

lightgrey

I'll check out those suppliers, thanks. Some products will be delicate so now it's a decision on whether to go cheaper and go for single walled boxes, or double the price and get double walled. With regards to missing items, I think that's a risk I'm willing to take starting off.

jimmii

lightgrey wrote: »

I'll check out those suppliers, thanks. Some products will be delicate so now it's a decision on whether to go cheaper and go for single walled boxes, or double the price and get double walled. With regards to missing items, I think that's a risk I'm willing to take starting off.

Buy some bubble wrap or foam chips as well to make it a little more secure give it more of a chance of surviving the trip! With An Post they can be quite rough with packages so stick a good few fragile stickers on thats another 5c-10c a package! It all adds up!!

lightgrey

Ha yeah, it's adding up quite fast

Would you know much re being an employee and setting up a side business? Would the first port of call be registering a business name with the CRO?

jimmii

lightgrey wrote: »

Ha yeah, it's adding up quite fast

Would you know much re being an employee and setting up a side business? Would the first port of call be registering a business name with the CRO?

Register the business name. Then for tax returns you fill out a form 11 or form 12 depending on your circumstances each year. Its a lot more straight forward than people imagine.

pedronomix

i note you have not addressed my suggestion of doing a course, you still have much to put in place and work our before you are ready for market, if you want to do it yourself!

jimmii

Yeh definitely do a course if possible.

lightgrey

Sorry, totally passed me by. Is there one out there you would personally recommend?

jimmii

lightgrey wrote: »

Sorry, totally passed me by. Is there one out there you would personally recommend?

Your Local Enterprise Office is a good place to start. They should have a few relevant courses that you could pick up a few things from.

lightgrey

Hey, just a quick update. Margins are looking very thin initially. Total cost per unit (packaging/postage/fees/returns) 9.00. Revenue per unit (incl postage) is coming in at 14.50, giving a margin of close to 32%. Volume will be incredibly low starting off so this is looking to be a tough one! Postage rates not helping either (presuming that only one item is purchased). To make it worthwhile I'd need to be upselling so I'm posting 2+ each time.

lightgrey

And just on the postage costs..product cost alone is just under 5.00 and the postage for one is 3.4 which doesn't sound right/look good!

jimmii

lightgrey wrote: »

Hey, just a quick update. Margins are looking very thin initially. Total cost per unit (packaging/postage/fees/returns) 9.00. Revenue per unit (incl postage) is coming in at 14.50, giving a margin of close to 32%. Volume will be incredibly low starting off so this is looking to be a tough one! Postage rates not helping either (presuming that only one item is purchased). To make it worthwhile I'd need to be upselling so I'm posting 2+ each time.

lightgrey wrote: »

And just on the postage costs..product cost alone is just under 5.00 and the postage for one is 3.4 which doesn't sound right/look good!

Yeh that is the nature of online when the numbers are low! How long do you think it is going to take until you reach the VAT threshold? If its going to be any time in the next year you should register now save the problem of possibly being liable for VAT on previously sold items that you haven't taken it into account on. When you reach 20+ deliveries a week then you should find you'll be able to negotiate the price down a good bit. If you haven't check them out yet another company worth looking at is City Post.

lightgrey

Think it will take a while to reach the VAT threshold, definitely not within the next year. So, best holding off registering I guess? I'd like the headache of figuring out what company to go when it reaches 20 deliveries per week. Looking at my costs, once I hit three items in the one delivery, it's cheaper to go with a courier than with standard An Post (I'll take a look at City Post too, thanks).

jimmii

lightgrey wrote: »

Think it will take a while to reach the VAT threshold, definitely not within the next year. So, best holding off registering I guess? I'd like the headache of figuring out what company to go when it reaches 20 deliveries per week. Looking at my costs, once I hit three items in the one delivery, it's cheaper to go with a courier than with standard An Post (I'll take a look at City Post too, thanks).

Yeh its quite complicated and its unlikely to find one company that is the best for everything. I would say my usage is 80% An Post 18% Fastway 2% GLS/UPS don't think I have used anyone outside those four for at least a year.