Is there any money in eCommerce?

Log in to reply
C

Chris Kaday

  • #1
    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

    awebapart.com

    Free Member
    Dec 21, 2006
    2,534
    696
    Wellingborough, Northants
  • #2
    Upvote 0
    R

    RayB

  • #3
    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 margin
    In 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
     
    Upvote 0
    R

    RayB

  • #4
    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
     
    Upvote 0
    C

    Chris Kaday

  • #5
    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
     
    Upvote 0
    awebapart.com

    awebapart.com

    Free Member
    Dec 21, 2006
    2,534
    696
    Wellingborough, Northants
  • #6
    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/

    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.
     
    Upvote 0
    DuaneJackson

    DuaneJackson

    Free Member
    Jul 14, 2005
    8,642
    1,100
    Brighton / London
  • #8
    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.
     
    Upvote 0

  • #9
    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
     
    Upvote 0
    C

    ChrisMono

  • #10
    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!
     
    Upvote 0
    An Oasis

    An Oasis

    Free Member
    Oct 3, 2006
    9,876
    1,682
    Weaverham, Northwich, Cheshire
  • #11
    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.
     
    Upvote 0
    DuaneJackson

    DuaneJackson

    Free Member
    Jul 14, 2005
    8,642
    1,100
    Brighton / London
  • #12
    An Oasis said:
    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?
    Click to expand...

    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.
     
    Upvote 0

  • #17
    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..... :)
     
    Upvote 0
    C

    Chris Kaday

  • #18
    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
     
    Upvote 0
    R

    RayB

  • #19
    Just to clear up the "what is ecommerce" question - to me it simply means an online stor that sells stuff

    Chris Kaday said:
    Is it really possible to build a million pound plus web based ecommerce business with no other route to market?
    Click to expand...

    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
     
    Upvote 0
    P

    Page

  • #20
    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.
     
    Upvote 0

  • #21
    Page said:
    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.
    Click to expand...

    good thought provoking post page:)

    Earl
     
    Upvote 0
    R

    RayB

  • #27
    sirearl said:
    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
    Click to expand...
    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
     
    Upvote 0
    A

    amaze

    Free Member
    Oct 16, 2006
    353
    3
    UK
  • #28
    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!
     
    Upvote 0
    C

    Chris Kaday

  • #30
    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
     
    Upvote 0

  • #31
    RayB said:
    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
    Click to expand...

    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
     
    Upvote 0
    DuaneJackson

    DuaneJackson

    Free Member
    Jul 14, 2005
    8,642
    1,100
    Brighton / London
  • #35
    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.
     
    Upvote 0
    C

    Chris Kaday

  • #36
    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
     
    Upvote 0
    DuaneJackson

    DuaneJackson

    Free Member
    Jul 14, 2005
    8,642
    1,100
    Brighton / London
  • #37
    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.
     
    Upvote 0
    A

    Alice3537

  • #38
    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!)
     
    Upvote 0
    A

    amaze

    Free Member
    Oct 16, 2006
    353
    3
    UK
  • #40
    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
     
    Upvote 0
    Log in to reply

    Latest Articles

    Join UK Business Forums for free business advice
    Top Bottom
    Community
    Articles
    Menu