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Down in the dumps over business :(
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16-03-2017 5:36pm#1So writing this as much to get it off my chest than anything else.
I run a small e-commerce toy store. Started it two years ago, got on the BTWEA scheme. Started off GREAT! I sell through Amazon, using the FBA service, so buy stuff, ship it over to warehouses in England, Amazon take care of customer service and shipping. First year is brilliant, really rapid growth.
Second year starts ok. Then I hit the VAT threshold, and things go bad. The nature of Amazon is I can't just jack up the prices by 23% to cover it, so that 23% has to come out of the profits I'm making. That sucks. It got really hard to turn decent profits, since anything that sells needs to cover...
1. Amazon fees and costs (about 40% of the sale price)
2. VAT (23% of the sale price)
3. Transport from here to England (Usually 75c an item)
...and whats left over comes back. The margins become tiny. Brexit hits too, which kills the exchange rate (something I had benefited on; selling in England, I was being paid in £, which the exchange rate helped with).
So that sucks. I'm having to spend €10 to make €1 profit, if I'm lucky. And because I don't have a massive operations budget, that really grinds things to a halt. But I get to September, and then the Xmas market starts to kick in, and that means higher prices AND higher sales volumes.
And then Xmas ends, and Amazon ****ing dies. I know it's been bad the last two years, but business is practically dead over the last few weeks. This time last year, I was selling 20-25 items a week on a slow week. Now it's 6 or 7 on a good one. Competition has gotten stronger too; if I lower my prices by a cent, someone else lowers theirs by 2 in a race to the bottom. Which means its harder to sell toys.
BTWEA scheme is over. I managed to get partial JSA, but the entire reason I started the business was to get off that, and I'm nowhere close now. I've got a tonne of stock, but none of its moving.
In one of those positions where I'm just massively down in the dumps by the fact I've hit the densest of brick walls, and don't know what to do. I'd clear everything out and start fresh, only I have no real faith in being able to get stock that will sell at a workable profit. I'd try another platform, but I chose Amazon for a reason; it's more expensive but reaches a larger audience. I'm half-tempted to sell everything and see about doing something completly different, but I've no actual ideas as of now that are viable, or if they're viable, I don't know if the market is there or if I have the ability to carry them out.
Not looking for answers here, mind. Just wanted to vent about things
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alig123aileen wrote: »Firstly well done wow what an achievement to set up your own business and step away from the security of paid employment to the wonderful workld of being self employed.
Its clear from your post that you are innovative insightful talented and a gifted entrepreneur and I am sure whatever you decide to do you will have ultimate success. I know you didn't want advice but please don't give up. Success will come to you I know.
Thanks, the kind words are appreciated
tea and coffee wrote: »Would selling it through a social media network be an option- set up and drive traffic to a FB page, for example? Or through something like Donedeal or Adverts?
I've tried through Adverts before and currently. The market is pretty small, but it only costs 25 cents to make a listing, so when I try Ebay, I tend to stick it up on Adverts as well. Donedeal though, I have found it's dreadful for selling individual toys. Job lots, sure, but even then, it's all people offering 20% of your asking price
Social media is something I feel I need to study big time though.CIARAN_BOYLE wrote: »First off are you claiming vat on all purchases that you are paying vat on. Have you checked for Irish suppliers where you would be paying more but claiming a vat input? It might be better now that you are vat registered.
Have you considered cutting your volume dropping under vat threshold and continuing to trade part time (not charging vat) and therefore having more of a profit but less of a trade.
There's a massive lack of toy wholesalers in Ireland, and other wholesalers tend to sell generic and cheap pound shop style toys, for which I think there's no market of online. I do have one Irish wholesaler I use when they get decent stock in, but they seem to go through patches of having really great stuff and absolutely nothing. Shopping abroad often lets me get branded stock that sells well, just not for much. But the search for Irish toy wholesalers is like looking for a needle in a haystack.
I have considered dropping the volume down as you said. Its happening naturally anyway :P My main worry is that I fear I'd jump above the threshold quite quick again if I got the boon from not having to pay VAT, and it would turn into a massive juggling act of trying to keep sales up without crossing the threshold again.Can you up your cashflow by selling direct/through website or even the dreaded car boot?
Have tried the website idea. Find it very, very hard to get people to go through it, as opposed to just going on Amazon/Ebay. I worry there's a philosophy there that when people are buying from Amazon/Ebay, they feel they are buying off that group, not off me as the individual. So if there's other items of a similar nature they want, they'll just go back to Amazon/Ebay, rather than checking out a direct website. Selling on those platforms don't seem to generate any loyalty whatsoever to the seller.
Not tried car boot sales. Its on the list though.As others mentioned, Adverts, donedeal, Your own website and facebook page(Promoted through facebook ads), ebay, brochures, gumtree,
As aboveWell done for getting it to the point its at. Rather than getting down over it and sticking your head in the sand you need to look at ways to reinvent yourself and try pivot slightly or add something to your current offering.
You sell toys - one type of product or lots of different toys?
Assuming I can buy this toy off other people do you do anything different to make me want to buy it from you over them?
Outside of lowering your price to be cheaper, is there any incentive to buy from you? Can you add value to the product to make me buy off you because it seems like a better deal but at the end of the day the cost to upscale is minimal to you and you can make some profit off that?
Is it a seasonal purchase or something people buy all year round?
Do you have a website of your own and are you selling on there, if not you should consider this and then using adwords, facebook ads and social media to drive traffic to the site. Depending on how long you are in business you may be able to avail of the LEO Online Trading Voucher which will match fund you 50% of your spend on a website up to 5k. Send me a pm if you want to know more about it and I can point you in the right direction and advise you how to get the most out of it.
Different types of toys, mainly based on Amazon sales ranks and what I feel I can turn a profit on. Amazon doesn't offer much chance to retain customers, in that you're really just a name on a list to buyers. The only incentive to buy from me is because I have the lowest prices. Otherwise, there's zero mechanism to help (other than to try their advertising programs which I have never seen any good come from)
I try and convert Ebay sales into sales through my direct website or into social media followers, but not having much look. Toys are seasonal, definitely; Xmas, as I said, was amazing.
I'm certainly looking at the pivot though; I've been looking at clothes (which I know are a similar issue to toys in terms of margins, etc), and trying to find other wholesalers of other goods too.
But doing serious research into how to develop and grow a website, so I'll get back to you on the offer if I reach that stage 0 -
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It would help a fair bit if you could post a link to what you are selling (fair enough if you don't want to). This would help us to see if we think affiliate marketing/micro-social-media-influencers/vloggers would be a good shout to help shift some stock.
Also, is the toy very big? €0.75 transport cost per unit seems pretty expensive considering it costs around €110 to ship 1 pallet to the UK.
Most toy wholesalers I've found are selling end-of-line stuff, but its really just branded toys that vary month on month, depending on what they get in stock. So one month it can be Barbie dolls, Marvel Action Figures and Pokemon cards, the next it's Dungeons and Dragons board games, novelty bobbleheads and Disney plush toys. I tend to stick more towards "nerdy guy" stuff. At the risk of running into "self-promotion", I've got some stock up on Adverts right now that there's a link to under my username (not a lot; just testing the waters with Adverts to see what its like).
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Because I'm "smaller", a lot of manufacturers who have larger minimum orders are out of the question. I tend to avoid looking for brand new (as in just released) stuff because the competition on them tends to be crazier and the prices drop way quicker; when I get end of line stuff, the prices tend to be better because there's less competition, and its harder for other people to restock. "Newer" stuff also tends to be more freely available in shops; I've got some Pokemon toys, for example, on Ads and Ebay, cheaper (even with P&P) than Gamestop but people seem to rather go there to get them.
Cost of transport SUCKS but it's the best I've been able to get, shopping round with the various couriers. In general, it's only two shipments out to the UK a month, and most couriers just had no interest in me if I wasn't doing multiple shipments a week. DHL were the only ones who'd facilitate a business account and decent business rates with the level I ship out. I have managed to negotiate cuts once or twice, but its still expensive, I knowJack the Stripper wrote: »Adverts is the pits, all op will get is offering swaps for used Penneys clothing.
In fairness, set up a shop account and "Offers" seem to drop quickly. You still get people trying to convince you to drop prices, but its very rare anyone tries offering swaps to a shop :PIf it were me, I'd sell the stock I have at weekend markets and start over with something else. Go back to the toys at Christmas but stay away from them in the offseason. If you're signed up with Ali Express, for instance, they send out texts with what is selling in Ireland at the moment so you can sell what's in demand. Online shopping is not going away - are you targeting Irish customers because they have a low online shopping presence - approx 40% as opposed to approx 60% in the UK. Is your stock going straight to Amazon from the supplier?
95% of the Amazon stock goes to UK customers. It was a massive advantage of the Amazon system starting out; using it gave me access to a far, FAR bigger market than here. I find selling stuff here makes it hard to compete with UK sellers, because the postage costs get so much more expensive for customers.
I've not gone anywhere near Ali Express or China, cause I've heard absolute horror stories there. I did try running a custom product for a while (A Zombie Survival Kit, custom printed to have names and such), but despite it selling very well last Xmas, it sold nothing this year, even at a reduced cost. So I've scrapped it. I am trying to think of other custom stuff though. I'm a big admirer of Loot Crate and such subscription crates, and am trying to think of something along those lines :PWhen you had your own site, what were you spending on promotion.
I'm running something along the same lines as yourself, probably a bit more niche but 99% of my traffic came from Google ads and could see a massive difference in traffic and sales when i changed my ads.
I've not really invested much in Google ads yet. If I switch over from Amazon to Ebay/Adverts/Personal Site, then I know thats an avenue I have to explore more. I've been researching, but seem to get such differing opinions on the worth of such programs tbh.0 -
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Sorry bout the delay replying, have had a busy few days so not had a chance to write anything up here.Deregister for vat too.
The more I think about it since posting this topic, the more I realise this is the way forward.
Being honest, I think I grew so quickly, it hid the reality of trying to do this on a large scale. But the thing is, I'm "lucky" given I've not got massive overheads on me. Originally, the plan was to make as much money as possible as quickly as possible to expand from my dining room into opening an actual brick-and-morter store. If I can dial everything back to how it was pre-VAT, I'd still be able to withdraw as much as I'm making on the dole, without the misery of having to be on benefits.
So yeah, I guess I can honestly thank everyone for opinions and feedback here, cause it has helped me gain some optimism. Not in terms of growth, but in terms of realising how the best way to move forward.Have you considered listing on Amazon but not using FBA? I understand there are some negatives (listing positioning?) to not going FBA but you may be able to retain a better margin, managing shipping yourself or by a UK third-party while still availing of the larger audience that Amazon offers
Listing on Amazon from Ireland is an absolutely non-runner. Despite cost of fees and shipping everything over, it still works out cheaper than trying to hold everything here and post. Because of postage costs being higher here than in the UK, I couldn't store stuff here and charge the same price. Fees would lower (I think to 25% instead of about 40%) but I'd have to slash the price of everything to the point there'd be zero profit at all. Plus Amazon drastically favours giving the buy box to FBA sellers. If I lived over there, it would be an option, but there's zero way it would be viable to ship stuff from here while remaining in any way competitive 0 -
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