Is there any money in eCommerce?

[Chris Kaday]

I have recently invested in an ecommerce business and am considering investing in a few more. My question is simple. Is there any money in it? By which I mean profit or failing that building significant turnover which can eventually be sold on.

I get the impression (well a fact really) that most of the heroes in here who have ecommerce sites (and that includes most of you) are scrabbling around just to break even or at best pay a working wage. We met a highly visible ecommerce business recently which was turning over £12m and still only just about breaking even. I also reckon in terms of turnover most are sub £500k or even sub £250k and breaking the million is a mile away. I could be wrong of course.

Naturally I do not expect you to reveal your revenues or profits but it would be most interesting to know if my assumptions are correct. More importantly it would be interesting to know what would make a significant difference to your profits and turnover. What level of investment would it take and what would you do with the cash or is actually having more cash not really the solution? For example say I gave you £200k what would you do with it to grow significantly. Hope this is a thread that we all could learn from? I am of course happy to add value as we go along too.

Regards to all

Chris Kaday

[awebapart.com]

We met a highly visible ecommerce business recently which was turning over £12m and still only just about breaking even.
Here is an interesting retrospective read on what happened to Watford Electronics Savastore, a company that was turning over £50m and coming away with a profit of just £51800:
www.channelregister.co.uk/2007/02/09/watford_aftermath/ (http://www.channelregister.co.uk/2007/02/09/watford_aftermath/)

[RayB]

Hi Chris,

That is a good question, with no easy answer. I see these as the key points:


ecommerce is not going away anytime soon - so better to be in it than not
On the web people buy on price first in almost all cases
Therefore, streamlined back end and automation are key for extracting marginIn our case our online business was zero this time last year, and now online sales are annualising at around £750,000 (Overall company turnover has doubled in the same time to over £2.2m annualised)

In terms of profit - without giving to much away we are much more profitable than our sector average - mostly down to overhead control, automation and lower cost or acquiring sales.

Hope that helps

[RayB]

PS,

Forgot to answer the £200k question,

In printing it is all about utilisation, so I would invest that kind of money in online marketing to capture more market share. That would get our plant runing 3 shifts (24 hours) instead of the current 16 hours.

Everyting bar materials (paper) and wages would fall to the bottom line for the extra shift

[Chris Kaday]

Great post Ray
I think you are saying that the web is a route to market but not necessarily the only route to market. I totally agree, you need a number of sales channels all working together. Easier to achieve for a business which started out non web which presumably yours did. Really looking forward to meeting you

Chris Kaday

[awebapart.com]

For anybody doing their ecommerce research, here is another very recent article/report which might be of interest and might be encouraging:

www.theregister.co.uk/2007/08/21/e-commerce_sales_record/ (http://www.theregister.co.uk/2007/08/21/e-commerce_sales_record/)

the report suggests that UK online sales rose 80% on last year in July, breaking the £4bn a month barrier last month. As with any industry stats, take them with a pinch of salt.

[RayB]

Just giving this a bump, because I think Chris deserves some respect, and he posts some really insightful stuff

[DuaneJackson]

Hi Chris,

I'm involved (as a shareholder and developer) with a e-commerce business that's been doubling it's turnover each year for the past few years. There's certainly money to be made there, the profit margins aren't bad.

As Ray alludes to, a very important part really is to automate as many processes as possible.

I'm having to extract myself from the business as KashFlow has taken of big time and I can't give the other company the attention it deserves or provide the services I was meant to in return for the equity.

It's London based and will be owned 100% by the founder once I return my shares. So if you're interested in having a chat with the owner then let me know. He's a good bloke with his head firmly screwed on.

[sirearl]

I don't think there is a simple answer to your question Chris.

It comes down to what type of product you are selling ,the profit margins and the overheads.

Having set up many online retail sites,most have been reasonably successfull but some that I expected to be OK have bombed.

I will say that a good profit margin is probably the most important thing next to the demand for the products and obiviously a good position on the search engines.

Which is probably the hardest thing for a new business to obtain.

As for the future of e-commerce every year our more successfull sites have grown.

incidentally the site with the largest turnover £1.5m is doing the poorest in terms of profit but is also in a highly competative area.

Earl

[ChrisMono]

ecommerce is growing, and with china being introduced into the online world... its going to go through a huge growth. Think of the thousands of factories and wholesalers which will setup websites.. easier and cheaper to get a supply which will probably be passed onto the consumer!

And if you look at google who can afford to go and spend a couple of billion on any website they want at any time they desire..... thats money you can't really ignore!

[An Oasis]

Being nosey here I have no idea what the current term/definition for "an ecommerce business" really means today, would be grateful if someone would explain.

10 years ago they all made bucket loads of dosh and could not put a foot wrong, are we talking a "now" highly competitive market, or am I way behind the times?

Sorry to be a nosey parker just could not resist.

[DuaneJackson]

10 years ago they all made bucket loads of dosh and could not put a foot wrong, are we talking a "now" highly competitive market, or am I way behind the times?

I think you're confusing "ecommerce" with internet businesses generally.

10 years ago ecommerce businesses weren't making huge money - they're wasn't anywhere near the number of people online as there is today.

Internet businesses weren't making a lot of money either - not from revenue anyway. A lot of money was made (and ultimatley lost) from their share prices though.

[An Oasis]

Ok to clarify ecommerce solutions providers 10 years ago were making bucket loads.

[DuaneJackson]

Sorry, I'm with you now.

Very true too. There were much fewer people with the appropriate skills back then.

Also, in the gold rush it was those selling the shovels that made the real money.

[An Oasis]

Should say I nearly took a job as business development manager for local company who used to service the likes of tesco, probably still do... but they wanted to bounce me round to country and the hours were going to be ridiculous...

Anyway back to the original question what's changed, if anything?

[An Oasis]

Ok we are on the same tack, anything changed?

BTW you are posting to near to my posts, can you ease of, my fingers don't type so fast these days due to too much manual labour. ;)

[Comspec]

This is an interesting thread - Chris you can pick'em man :)

I assume when you talk about eCommerce, you relate that to online trading, rather than any other form of web-business.

I see loads of people doing it, but not so many actually making a good living off it. I am an active member of a dropshipping forum and actually supply some 'Etailers' PC stuff which they resell. I would say that there are quite a few setting themselves up really as a second income - and not expecting to hit the heights of million-quid turnover, etc. There are some, however, who are very serious about what they do and they can/will make a decent business for themselves in the future.

I think it is similar for any type of business - lots don't make money initially until the business model is perfected - and others just fall by the wayside, as in any trade.

There are quite a few members on there, and on here, who run a very successful business online and who would say it is definitely possible. There are also 10 less than successful stories for every good'un though.

Difficult question that original one Chris, but you have got me thinking anyway..... :)

[Chris Kaday]

Thanks Ray. So come on folks. Are you happy with your current turnover, are you making any profit? What is holding you back? If you had £200 in your bank account on Monday how would you spend it (new car holiday and designer clothes is not an acceptable answer) Is it really possible to build a million pound plus web based ecommerce business with no other route to market? Is everyone working from home packing good by hand or taking on staff – what kind of staff? I am sure many in here would like to know how others are doing. We see the sites but what’s behind them? No need to give away anything confidential.

Thanks everyone

Chris Kaday

[RayB]

Just to clear up the "what is ecommerce" question - to me it simply means an online stor that sells stuff

Is it really possible to build a million pound plus web based ecommerce business with no other route to market?

The short answer is yes, here are our online sales YTD

April £16k
May £18k
June £37k
July £51k
Aug (MTD) £57k

We will grow this to £100k per month online sales within six months.

Sure this is not our only route to market (by a long way) - but it is where the core growth is

[Page]

Like any business there will those be doing well out of it and those that do not.

If it is easy money - more pile in until it is not easy money. In the longer run a mature market situation is reached.

Because of the way the web allows things to change very quickly and also because ecommerce has very low barriers to entry it will continue to evolve quickly.

Those doing well in the past may not do so well in the future.

For example end retail ecommerce sites may become cut out of the loop - or at least pushed right to one side - as trade goes to the manufacturers selling direct.

I know people this has happened to. You just have to keep on moving - do what you do very well - be prepared to change etc.

We already see on ebay uk - goods being sold into the uk direct from abroad. This is beginning to creep into other areas where the goods are higher value and lower volume and weight.
Stored - packaged and dispatched from China (say). The airfreight costs are set off against lower other costs.

So business as normal - tough with changing windows of opportunity and nuggets of gold to be found.
(Shovel sellers - competing with other shovel sellers - gold diggers fighting over the same patch of ground)

There are - still hard - ways around this such as own label branding and design.

[sirearl]

Like any business there will those be doing well out of it and those that do not.

If it is easy money - more pile in until it is not easy money. In the longer run a mature market situation is reached.

Because of the way the web allows things to change very quickly and also because ecommerce has very low barriers to entry it will continue to evolve quickly.

Those doing well in the past may not do so well in the future.

For example end retail ecommerce sites may become cut out of the loop - or at least pushed right to one side - as trade goes to the manufacturers selling direct.

I know people this has happened to. You just have to keep on moving - do what you do very well - be prepared to change etc.

We already see on ebay uk - goods being sold into the uk direct from abroad. This is beginning to creep into other areas where the goods are higher value and lower volume and weight.
Stored - packaged and dispatched from China (say). The airfreight costs are set off against lower other costs.

So business as normal - tough with changing windows of opportunity and nuggets of gold to be found.
(Shovel sellers - competing with other shovel sellers - gold diggers fighting over the same patch of ground)

There are - still hard - ways around this such as own label branding and design.

good thought provoking post page:)

Earl

[amaze]

Hell yes. Just innovate, don't replicate.

[Chris Kaday]

Oh yes Amaze that sums it up perfectly

'Me too' will never make the millions

Chris Kaday

[stephendoyle]

great posts and insights on this thread.

certainly gets you thinking about your own situation and positioning.

regards
steve doyle

[sirearl]

Hell yes. Just innovate, don't replicate.

I can't agree with that,there are very few innovators in life,most have to compete selling similar products or services .

Innovation is certainly no guarantee of success as witnessed by the millions of failed inventors ;)


So while you sit and wait for that flash of inspiration all the rest are coinning it :D


Earl

[DuaneJackson]

Damnit, Earl. I agree with every word you just said. And it's not because you agreed with me on the other thread Chris has going!

[RayB]

I can't agree with that,there are very few innovators in life,most have to compete selling similar products or services .

Innovation is certainly no guarantee of success as witnessed by the millions of failed inventors ;)


So while you sit and wait for that flash of inspiration all the rest are coinning it :D


Earl
Earl, you are right - I never tyre of hearing how you cornered the dolls house market without blowing a gasket - all while enjoying the Whitstable Scene

How is the Jet Skiing today?

PS - I need a new part fot my SeaDoo - can you help

[amaze]

I can see your point, however it depends on the degree of innovation! ;)

Maybe my answer was too short.. I'm not talking about thinking of the next "tetrapak" or a "zip". Innovation isn't alwayts thinking of something unique, but improving on an existing idea - finding a niche!

Of course there are examples where replication has worked, but I would bet there are far more successes where innovation was the key factor!

[sirearl]

Damnit, Earl. I agree with every word you just said. And it's not because you agreed with me on the other thread Chris has going!

Never mind Duane I'll think of something to get up your nose ;)

[Chris Kaday]

Duane Earl Amaze Ray - I love you guys - so funny

Would be really nice to meet up over some good food and wine but I do realise geography is probably against us. Since joining UKBF I have been thinking of having a regular business networking session at my place (10 or so people max) and maybe I should follow through the idea. However maybe there are too many of these already?

Chris Kaday

[sirearl]

Earl, you are right - I never tyre of hearing how you cornered the dolls house market without blowing a gasket - all while enjoying the Whitstable Scene

How is the Jet Skiing today?

PS - I need a new part fot my SeaDoo - can you help

yep been a nice day here plenty of jet skiing going on,so they will all be down the shop tommorow with there broken down ski's ;)

course we got a bit for your Sea doo ,but we don't do cheap :D

what model have you got the new supercharged RXP will out accelerate a Ferrari

http://www.thejetworks.co.uk/

Earl

[DuaneJackson]

Offline networking is an odd one.

I run trustnetworkers.com (http://www.trustnetworkers.com/)- and there's a decent number of attendees all the time from offline places (mainly ex Princes Trust and via LYST (http://www.lyst.biz)) - but whenever I extend the invite to UKBFers, lots say they want to come but very few actually do.

[RayB]

,but we don't do cheap :D

Earl

Liar :)

PS - I Need a new budgie - Earl, I bet you have one going "cheep" - a cheap one would be nice :D

[Chris Kaday]

Let me know when the next event is in London Duane and I will certainly come if I am free

Chris Kaday

[DuaneJackson]

Always the last Wednesday of the month. (Except this month - everyone is on holiday)

Next month we'll be at a pub in St Pauls for a casual get together. Then October at DLA Piper. We've still not arranged the speaker yet though.

Are there any topics you think you could give a useful speech to a group of young(ish) entrpreneurs on? You have a wealth of experience behind you.

If you register on the site then you'll get an email from me when details are confirmed of future events.

[Chris Kaday]

Certainly Duane

I have done lots of this and would be happy to speak. Might even do some interaction too if that is allowed.

I make the last Wednesday in October the 31st correct?

I have a success formula which is 'passion + purpose + process = success' and would be happy to talk on that. just the thing for would be entrepreneurs. Or I can suggest other topics too.

Happy to make arrangements off line

How many usually attend?

Chris Kaday

[DuaneJackson]

Interaction is certainly allowed - it usually works better.

Numbers varie from 15 to 40. It's so hard to tell in advance how many of those hwo say they'll come actually will.

Can you send me some more info about your success formula/talk topic along with your profile/biog so I can pass it on to my colleagues that arranmge the events with me? duane at kashflow.co.uk

Yep, I make it 31st too.

[Alice3537]

To the guys who 'do' business on the net - how many of you are on your first on-line business? How many of you have had other businesses on-line that didn't take off? If you did, what lessons did you learn and what did you change to make your next venture profitable?

To those who are making a healthy profit, what is the SINGLE most important factor in that success? For instance, is it a high ranking? But - without a 'good site' the ranking can be high, but no-one will buy. Or is it the quality of the site? But a site could be brilliant and suffer due to being on page 5000 on a search!

I was going to muck about with Google to look for success/failure rates (depending on whether I felt glass half full or half empty at the time!) but would rather see what 'the community' has to say!

(Plus, I couldn't be bothered to have to keep redefining the search!)

[DuaneJackson]

I guess you'd call KashFlow an online business? If so, the single most important factor (having given it atleast 40 seconds of consideration) has probably been testing, analysing and refining conversion figures from visitor to sign up.

[amaze]

Alice,

It is my first "true" business. When I was 14/15 I used buy and sell PCs (always been an interest since MS DOS 6.1!) in loot, not really a business, but made good pocket money.

When I was 18 I set up a online site importing and selling "grey" market consoles from Hong Kong. I wish I would of followed it though, but I ended up going down the F\T path and then went travelling. Oh well you live and learn!

SERPS is obviously ideal, but adwords makes up for crap SERPS! Our site now doesn't rank as well as it used to as we used some "grey hat" SEO techniques and got punished by Google (ooops),. Only problem is our adwords budget is very expensive and if we had good organic rankings it would be much lower!

Don't forget print\banner\referal advertising as well... :)

Cheers

[Alice3537]

Thanks for the responses, guys!

I always think it more interesting to get a 'feel' for how things 'really are' - after all, I can research, but his beats the impersonal aspect of that, IMO!

[quikshop]

We have created, bought and sold several Internet shops since 2002. Our first in aromatherapy peaked at 12.5k turnover the Xmas before we sold it, all achieved with no CPC advertising! Our second, we bought a rough and ready fashion business in Oct'04 and in Dec'05 it turned over 35k in that month alone, all with a really bad looking web site :redface:

The fashion business was a case of right place at the right time, we had the seasons' must have PRODUCT and it flew out... in truth we never caught the tip of that wave again before selling the business. With the aromatherapy business we had fun running it because we believed in the products we sold, and therefore attending all those craft fairs, putting the hours in with our little Actinic web site seemed like the right thing to do.

So the conclusions to be drawn from the above waffle are:

1. Get the Product(s) right for your market and they will sell despite presentation.

2. If you enjoy and believe in what you are doing / selling, you'll put in the time and effort without noticing it.

Would be great to hear about other successful retail stories and what their own conclusions are :D

[Hedgie]

In the first 12 months my site gained momentum but never really hit any significant figures. Only after a revamp and some marketing has the site improved, however I still struggle to put the time in to get products loaded and really push the site into the rankings.
Maybe I just need to give myself a good kick up the backside and get those sales figures up :)

[Chris Kaday]

Very interesting post Dave

I think retail sites certainly need a star product to lift sales which I suppose is just the same as on the high street. If your great Christmas month had been repeated every month you would have produced around £400k revenue which is a goodly sum for a home based business or even one with a slightly higher overhead assuming the margin was there to cover it. However I suspect with ‘me too’ products on line breaking the million especially is by far the exception. I also get the impression that there are low or in many cases no profits and if one added up all the hours of effort the hourly rate would be a bit frightening. Also seems that having other more traditional routes to routes to market really helps.

Chris Kaday

[sirearl]

However I suspect with ‘me too’ products on line breaking the million especially is by far the exception.

Chris Kaday

not to sure on that one Chris would love to see some figures?

I think it depends on a number of factors.

products

type of people involved in the business

maybe an ability to see the bigger picture.

quantity and range of products

capital available to invest

I must admitt the business's I have had any involvement in that made it big,were run by clever people with driving ambition,and a profound knowledge of there industry.

Earl

[Chris Kaday]

I must admitt the business's I have had any involvement in that made it big,were run by clever people with driving ambition,and a profound knowledge of there industry.

Earl

I absolutely agree with you on this Earl. I have spotted a couple on here.

Chris Kaday

[sirearl]

I absolutely agree with you on this Earl. I have spotted a couple on here.

Chris Kaday

Oh and the other common factor was that they all had bags of charm,and never flapped,no matter what the problem.

and they always listened to what other people had to say

Earl

[Chris Kaday]

Yes I think personality drives a business especially when it is small or even when it grows come to that - look at the CEOs of some of the top FTSE companies.

[tradesecur]

Ecommerce is alive and well, just in certain 'fad' areas, being influenced by hype and media attention, the margins are getting squeezed ever tighter. In this arena it's becoming increasingly important to optimise and automate everything to the nth degree, and extract and leverage each customer as fully as possible.

[Chris Kaday]

There speaks a man who knows - good summary. My marketing company used to generate as much net profit percentage as the margin percentage many ecommerce companies have to run their business. Also with marketing services as opposed to products no one knew what the fee would be until you opened your mouth. On occasions when we were snowed under and really pushed to deliver the work I used to add 25% on or even double the figure the second before my mouth opened. We still won 50% of what we pitched for.

Chris Kaday

[awebapart.com]

Ecommerce is alive and well, just in certain 'fad' areas, being influenced by hype and media attention, the margins are getting squeezed ever tighter.

My marketing company used to generate as much net profit percentage as the margin percentage many ecommerce companies have to run their business.
With any industry that has a perceived goldrush fever about it, it is usually the service companies, those selling the pick axes, that make the money - and it is usually the pick axe sellers who are saying there is gold in them thar hills.

For anyone entering into ecommerce you really have to do your research (market, competitors), question the hype, use your common sense, find your niche, and be realistic and be prepared for when your venture isn't the overnight success you imagined, be prepared for the long haul.

[Chris Kaday]

Absolutely right Paul

I would also add that as with many emerging industries more good margin can be made from training people how to do it than ever doing it yourself. The overcrowded coaching market is a good example of this. The companies who have made the most money are the ones training people to be coaches, not the coaches themselves who in the main have no idea how to run businesses let alone coach with impact. A lot of those in here have masses of knowledge and experience around every aspect of web based business and this could probably produce as much if not more bottom line profit for them than their actual businesses if properly packaged and marketed, not doled out on a casual basis. A real opportunity if ever I saw one!

Chris Kaday

[Fredhopper]

The fact that eCommerce is growing is an undeniable fact; the proportions of online sales in UK retail for example are still growing exponentially. One of the main problems is that many companies have systems that do not allow them to reach their full potential in terms of online sales. In order to increase conversion rates it is important to use software packages that help the user to intuitively find what they are looking for and also provide relevant merchandising possibilities. This along with a developed back end (particularly business reporting being used to configure eCommerce strategies with the company’s business model) is key to success. There is much of this kind of software available right now and it is certainly a growing concern, with many of the products reaching very high levels of sophistication. This is certainly an area worthy of investment with eCommerce as some software packages have been proven to increase conversion rates by up to 40%.

This is just one aspect to consider…hope you find this useful.

[amaze]

Fred what products would you recommend?

[Fredhopper]

Hi Amaze,

I have to admit that I'm not really qualified to give you this advice as I'm working with my company in the field of eCommerce software packages. My previous post is certainly true and there are many companies offering this kind of package, so really it depends on your size and what you plan to do with it. You can google my name as all one word and look at what we are doing if that helps you get an idea...but I would just say look around the net at the offerings and try to match the specs to what level of functionality you require.

Sorry not to be more help...

[cjd]

(Sorry for long post - I got personally interested in the answer)


Back in the 90s I was predicting (not at all uniquely) that ecommerce would disintermediate (remove the middle men) but it hasn't done that to anything like the extent I thought. I imagined that the major brand manufacturers like Black & Decker, Sony, Ford etc would sell direct – in fact they have done very little; the basic wholesale – retail channel is pretty much the same.

I underestimated the power of the retail channel and overestimated the manufacturers desire to retail to millions rather than wholesale to a few – a job that requires quite different marketing skills, processes and people. There is a lot more inertia in a market and industry than people would have you think.

I also thought that the biggest gains would be in ‘virtual’ services. I think that this is true; for example the travel industry, which basically sells a very expensive piece of paper known as a ticket. has been revolutionised and banking and insurance is going the same way.

But I also thought estate agents would disappear – nowhere near correct - yet. Buying and selling houses is a very obvious ecommerce sector to target - large margins - and is little more than a matchmaking service; perfect for an online business. But again I underestimated the power of the local, physical system.

Music, film, games and other software were/are obvious sectors as they can be delivered directly cutting out manufacture, packaging, distribution and retail infrastructure. But is again very slow to take off in practice and is actually only happening now because the major brands are subject to such high levels of piracy.

Retail of physical products is the least attractive of all ecommerce markets (I thought) because of inventory financing, delivery costs, the customer’s inability to touch and feel the goods, their actual love of shopping and the extremely low margins available. But it seems to be the biggest sector - albeit with terrible margins.

ecommerce's big advantage to us UKBF people is that it reduces the barriers to entry for small companies whilst offering a global market (at least in theory).

This means that businesses can be started from bedrooms in a way that wasn't possible before. The downside is that there are millions of them, they are invisible in the mass and they have no buying power, channels to market, funding or professional management. Enthusiasm isn't enough.

The major niches are now occupied - a further problem with ecommerce - once a sector has become dominated it can become a near monopoly. Auctions, books, search are obvious examples.

But there’s still plenty of space left for new niche products. The problem there being that they will remain niches, which is fine for pin money and to provide a small personal income whilst perusing a hobby – but they will never be big because most of them do not scale (there are obviously exceptions).

As far as Voipfone is concerned, we sell a virtual product (a telephone call or a telephone service and run it from a Virtual company (the company – Inet Telecoms - is very real but we have no offices and our people are scattered throughout the UK, Spain and Russia).

As others have said, the requirement to fully automate absolutely everything is vital in removing overhead.

Customer service is also vital but also a pita as it’s hard, expensive and does not scale – something we will be working on till we die.

On a 12 month rolling average we’re growing at a rate of 11% per month (revenue) – 19% in August, have been profitable since start-up, have no external debt and are self-funding.

Could I use £200k? – It’s a question I ask myself about once a week because we could easily find it if we needed to but I don’t think so, not profitably at any rate; I could always piss it up the wall with dumb marketing. (We currently have no marketing budget - growth is by word of mouth)

[lajlaj]

This is a really interesting thread, thank you for starting it, I have learned much from it and found it to be very thought provoking too.

We have had to take a good long look at our business practices this year and had a months "down time" earlier on. Time out of the business looking at it rather than frantically working in it, was a true gift.

We sell children's and medical identification products. We have three main routes to market.

The first is online and until this year, it was always my "dream" to find someone to successfully take over this side of the business as it is time consuming, frustrating to run - I hate the reliance on Royal Mail, they are terrible and it is our reputation that is being damaged by their inability to deliver and then of course you have the customer service element too(!) However, during the review we have realised that this is the one true area for growth - and increase in profits as well as turnover due to the difference in margins. Realistically, we are number one in the search engines for all our key search terms and so we have always found selling to other online retailers quite difficult because obviously if we achieve higher rankings than them, there is little incentive for them to take the products on.

Our second route to market is what we class as "bulk" purchases - schools, councils, surestarts, police forces, etc - we have started to put these online and have actually noticed a very big increase in sales because we have done this - in the past, customers used to have to telephone for pricing and of course there are two issues with that - firstly the call to immediate action cannot always be met especially in this evolving 24/7 culture we have and secondly people just don't want to speak to people anymore! Our reluctance in the past has been that we didn't want our "competitors" to see our pricing however if someone is going to ring round for the best quote then we can always see what we can do, some you win, some you lose and we have always had that attitude.

Our third route to market is through the major retail accounts and whilst of course this is fabulous for turnover, it is where the least profit is made (no great secret in that!).

I do believe for now it is vital to have several routes to market and not be reliant on just one.

When I first set up a very wise man gave me some great advice which was:

"just because you upload a website into the great world wide web don't think anybody will just find you as there are millions of sites out there, the only way to get people to your site is to tell them about it, online and off".

They were very very wise words.

In summary, I have no doubts that it is possible to make a decent living out of e-commerce but like off-line businesses, you have to be clever and one step ahead of the game. Innovation is key.

I definately agree with the earlier poster about "me too" businesses, I have read many threads on forums where people have pointed out what we do and decided to set up too. Do these people bother me? Nah, it just makes me try harder - although I have to say I get irritated somewhat by them asking me for my supplier details and my national account contacts!!

Oh and finally - what would I invest £200K in - without a doubt advertising, marketing and pr because you may have the best website in the world selling the most desirable products but if nobody knows it is there, then it is a futile exercise, so if there was any spare cash going and if there wasn't a restriction on what it would be used for then that is it - although I have to say it probably wouldn't go very far.

[sirearl]

Excellent post CJD very interesting .

I was told at school that people would only need to work 20 hours a week by 1980 and the major problem would be what to do with our leisure time.

just shows how little we can predict the future.:)

Earl

[RayB]

Another thought is to take something that tradionally "cannot" be sold online and make it "irresistable" to buy online...............

This links back to USP's and marketing.

Many miss the plot - you can "make it" online - but not by ignoring established business "best practice"

[Wiggy]

First day on the forum and I'm loving this thread. . .To answer the original question; Turnover at present is about £550k/year and I expect to pay about £20k corporate tax for 2006. . .
I fear that I could integrate another £200k into my cashflow and not have any earth-shattering effect. I have some leftover profit from 2005 [Not loads, about £40k] which I stuck in a high interest account as part of an experiment. The experiment was to see what would be the effect of leaving my bills till they were due before paying them and I now know the answer. [I'm an Engineer and have been learning business the hard way for 8 years]
So I could plough the money back into the business but I find that I'm not sure what will be the best use of it. I'm torn between, launching a new product line [new, as in, I don't sell anything like it yet] Launching a select high quality own-brand line of the stuff we already sell or putting a deposit down on commercial property and changing warehouse rent into mortgage payments.
I'm reading 'Guerrilla Marketing' to see if I might find a better way to invest the money
CPC advertising spend is open-ended but controlled by strictly culling anything that doesn't convert, so I can't really blow any more money there. Also I like being profitable, I'm more interested in slow growth with increased profitability than mad leaps in turnover with no profit.
I'm in a small comfort zone where one 'Customer Care Manager' and one 'Packer' can keep us ticking along at the current pace and up to another 25% or so before we need another packer. These leaves me free to work on growing the business [or go fishing]. This is a lot harder than I thought it would be. . .
One last thing, I'm blessed by the number of rude and uncommunicative people in my industry. Despite not being the cheapest [by far] we do well because of our customer service. . .Route to success; Offer service with a smile in an unpleasant industry. . .