Are there any IT component resellers here?

[midiman]

Hi,

I am in the process of starting my own business selling IT Components online.

I will be selling bespoke/custom machines and components.

The problem I have at the moment is finding a supplier that can provide decent trade prices.

I have registered with the major ones, but the avg discount is in the pounds!!!

Eg.

The typical margin after vat and delivery on most parts is around £4!!!

Then factor in my profit and the possibility that I will have to charge VAT to the customer.

Meaning I can't get near the prices of other companies like Scan, Novatech, Overclockers etc.

But when your discount is around £4 on all of your purchases, it makes it extremely difficult to make any money on parts.

I know someone that works for a Plumbers merchant and they buy parts from the manufacturer at 50% of the value they sell them to the shops for. Then the shops put a 50% mark up on those items to the customer.

Or maybe I'm doing something wrong???

How can you work with this? Surely IT manufacturers can't sell their products to the distributors at these prices.

 

[Posilan]

Hi Midiman,

You are really up against it if you are trying to compete on price. There is little or no margin in computer components. You have to play the numbers game shifting a LOT of stock to make a decent amount.

The companies you mention will import from overseas, and unless you are buying serious numbers, it's just not worth it.

You can't compare the PC component industry with plumbers merchants - they are completely different. You will however find you can gain a greater markup on cables and other accessories etc.

That's not to say there isn't a place for you in the market, but you need to concentrate on service - it's the only way you can compete.

Steve

 

[midiman]

Hi Midiman,

You are really up against it if you are trying to compete on price. There is little or no margin in computer components. You have to play the numbers game shifting a LOT of stock to make a decent amount.

The companies you mention will import from overseas, and unless you are buying serious numbers, it's just not worth it.

You can't compare the PC component industry with plumbers merchants - they are completely different. You will however find you can gain a greater markup on cables and other accessories etc.

That's not to say there isn't a place for you in the market, but you need to concentrate on service - it's the only way you can compete.

Steve

That's what I was thinking.

I can't afford to buy in the thousands so I have no chance of getting any discounts.

All I want to be able to do is build some nice PCs and sell them on.

But why would anyone want to purchase an item from me, when I,m far more expensive than everyone else.

VAT don't help the cause either.

 

[stugster]

But why would anyone want to purchase an item from me, when I,m far more expensive than everyone else.

Are the alarm bells ringing in your head yet? This might not be a very good market to get into.

 

[Posilan]

That's what I was thinking.

I can't afford to buy in the thousands so I have no chance of getting any discounts.

All I want to be able to do is build some nice PCs and sell them on.

But why would anyone want to purchase an item from me, when I,m far more expensive than everyone else.

VAT don't help the cause either.

If you are not VAT registered, you don't charge VAT, so that can give you a slight end for home users (until you reach threshold).

It is quite easy to put together a PC and sell it for a half decent profit, you just need to buy carefully.

You will however find that after sales support/warranty claims can easily kill any profit you make on the machine if there are problems - so make sure you are prepared for that.

Selling high spec customisable PC's is probably the best way to make a decent markup - top end gaming PC's etc where the client can contact you for advice and you can make complete bespoke machines. Otherwise, you will spend your days chasing a tenner profit on a £300 pc

Steve

 

[midiman]

Are the alarm bells ringing in your head yet? This might not be a very good market to get into.

Yep i,m starting to think that.

 

[midiman]

If you are not VAT registered, you don't charge VAT, so that can give you a slight end for home users (until you reach threshold).

It is quite easy to put together a PC and sell it for a half decent profit, you just need to buy carefully.

You will however find that after sales support/warranty claims can easily kill any profit you make on the machine if there are problems - so make sure you are prepared for that.

Selling high spec customisable PC's is probably the best way to make a decent markup - top end gaming PC's etc where the client can contact you for advice and you can make complete bespoke machines. Otherwise, you will spend your days chasing a tenner profit on a £300 pc

Steve

Your right.

What little profit I will make could soon be eaten by support/claims.

I,m looking through Computer Shopper now. And I can't beleive how some of these outfits can provide a 3yr RTB on their machines and still make a profit on the parts.

 

[darren atkinson]

I have an ecommerce site in the computer industry and it's very tough!

I have accounts with Ingram Micro, Computer 2000 and Micro-P and for many items it's cheaper to purchase the parts of eBuyer!!!

I would strongly recommend you look at other ideas, there is no margin at all in computer components, and you will never compete on price with the likes of Scan or eBuyer.

Even selling complete computers, simply price up the components and then compare to the cheapest ones on Scan and eBuyer and you will find there is little if any profit to be made here.

We manage to do okay because we are in a very specific niche area however its a lot of hardware, hassle and stress for tiny margins.

I think this might be a good read for you: http://www.ecommerceblog.co.uk/starting-up-bad-product-selection/

If you need any further advice (or discouragement!) just let me know.

Darren

 

[midiman]

I have an ecommerce site in the computer industry and it's very tough!

I have accounts with Ingram Micro, Computer 2000 and Micro-P and for many items it's cheaper to purchase the parts of eBuyer!!!

I would strongly recommend you look at other ideas, there is no margin at all in computer components, and you will never compete on price with the likes of Scan or eBuyer.

Even selling complete computers, simply price up the components and then compare to the cheapest ones on Scan and eBuyer and you will find there is little if any profit to be made here.

We manage to do okay because we are in a very specific niche area however its a lot of hardware, hassle and stress for tiny margins.

I think this might be a good read for you: http://www.ecommerceblog.co.uk/starting-up-bad-product-selection/

If you need any further advice (or discouragement!) just let me know.

Darren

I know what you mean.

I could sell a lot of things but as I work in IT that's all I know.

I wouldnt know where to find suppliers for Aftershave or Clothing and I know nothing about them.

The markup may be better on items like that but it's not my area.

I could sell my repair and support services on there, but I wouldnt be making anything on the parts or the PCs.

 

[mit74]

unless you import direct from china you won't be able to compete. I looked into this a few years ago and the profit margins are so small it's a waste of time. Once you factor in commission for paypal, warranty claims and fraud it's a waste of time.

 

[midiman]

unless you import direct from china you won't be able to compete. I looked into this a few years ago and the profit margins are so small it's a waste of time. Once you factor in commission for paypal, warranty claims and fraud it's a waste of time.

I know all about that. I couldnt afford to accept PayPal or sell on ebay.

So what could sell then that has decent margins?

 

[mit74]

I know all about that. I couldnt afford to accept PayPal or sell on ebay.

So what could sell then that has decent margins?

apparently high end PC market can make money - custom towers and gaming rigs. Also an ex customer used to trawl ebay looking for extremely cheap 2nd hand equipment eg laptop shells, desktop parts (ones that didnt get bid on), rebuild them and setup a 'reburbished' ecommerce shop. The profit margins were pretty good actually but you had to spend every day looking for bargins.

 

[midiman]

Yeah.

I need to work out my prices.

I,m hoping to sell in the £500 to £1200 range.

It's more of a extra income stream for now, as I like building PC's. So why not sell the specs I build to people online.

As long as I make a profit I will be happy.

In my daytime job, I fix, repair and provide support for computers users.

So I come into contact with a lot of users.

I could make more money by offering my services than selling PCs.

But I would like to be able to sell components and PCs at part of my overall business.

 

[darren atkinson]

Another thing you seem to be missing (sorry if you already have this covered) is your marketing plan, it's okay having a website but how are people going to find you.

To SEO a new site highly into the computer related rankings would take ages and cost a fortune, adwords would work but would also have a substantial ongoing cost which when you're working with low margin items could kill you.

Sorry to be negative again but you really need to think long and hard about this before investing any time or money into it.

Darren

 

[mit74]

Another thing you seem to be missing (sorry if you already have this covered) is your marketing plan, it's okay having a website but how are people going to find you.

To SEO a new site highly into the computer related rankings would take ages and cost a fortune, adwords would work but would also have a substantial ongoing cost which when you're working with low margin items could kill you.

Sorry to be negative again but you really need to think long and hard about this before investing any time or money into it.

Darren

yes factoring in advertising is another important issues but as mentioned it's going to be a side business so word of mouth will be more important. Another issue is how quickly components age and unless sold within say 3-6 months you've lost your profit on depreciation.

 

[midiman]

yes factoring in advertising is another important issues but as mentioned it's going to be a side business so word of mouth will be more important. Another issue is how quickly components age and unless sold within say 3-6 months you've lost your profit on depreciation.

This is a second line thing to start with and I may not be ordering a great deal of stock to start with.

I would probably build on an order by order basis. i.e 5-10 days.

I have thought about advertising and it would be by word or mouth and by flyers.

As soon as I get established I will look to other areas.

Ebay and Gum Tree are good places to sell items and spread my name about.

I,m working on low startup costs and no VAT to get me up and running.

 

[Alfa Amore]

I had an IT business from 1989 - 2010 - sorry there is no money in it at all - building PCs is a waste of time - gave up in 2003. use any available cash you have to re-skill and either get into offering services or get out of IT and learn another skill

 

[midiman]

I had an IT business from 1989 - 2010 - sorry there is no money in it at all - building PCs is a waste of time - gave up in 2003. use any available cash you have to re-skill and either get into offering services or get out of IT and learn another skill

I know what you mean.

I am also offering repair and support services.

As for re-training what else can I do at 36?

Thanks

 

[Alfa Amore]

I dont know you but you are only 36 - I got out of the IT business at 51 - look at the skills you have, your interests and dreams - then go from there - if you are in any doubt google danny devito buggy whip speach and then decide if you want a share in a decreasing market

 

[TickledPink]

What you've discovered is the reason I bailed out years ago. Margins kept getting squeezed. There were a couple of companies I used to use for the cheap end of the market.

TBH, to do it online is an absolute nono. If you can set up a small retailer in a town that has no computer retailer then you might be able to succeed.

If you can repair computers, you can also repair mobile phones and game consoles. If you need any help sourcing parts, drop me a PM and we'll talk.

 

[darren atkinson]

As for re-training what else can I do at 36?

There is so much that you could do, you just need to get out there and actively find some ideas that interest you.

I'm 30 and have loads of ideas for things that I want to do, my problem is having the time to do them all. I have to literally discipline myself to just focus on 1 or 2 projects at a time however that doesn't stop me having ideas of what I'd like to do at some point in the future.

At the minute I run an ecommerce website which could be classed as my main 'job', I'm then working on another major project to try and add another more passive revenue scheme to my income, and then I've started the blog listed in my signature which I have quite a few plans for over the longer term.

If you took away my ecommerce site and the other major project I'd still have more than enough to work on to fill up my time.

Thing is, I'm not a particularly creative type of person, I just keep my eyes open and read a lot about things that interest me which often leads to business ideas. Like I already said, I shelve most of them due to lack of time however I still have a good list of things which could be decent ideas.

What I have found, and it might sound like a cliché but is true in my opinion, is that ideas are easy to come across, it's the implementation which is difficult and where most things fail.

If you have a fairly decent idea that can be realistically implemented by you with your current skills and resources (money), and you commit to it then it will have a very good chance of succeeding.

I know I'm just repeating what many people before me have said but I genuinely believe it to be true, the key is finding an idea that interests you enough to stick with it when it gets tough and the commitment to follow through on it.

Don't sit there and think 'god I'm 36, what could I do?', think 'I have (god willing) another 30 years + of working life left in me, what do I really want to do with it?'.

Darren

 

[midiman]

I dont know you but you are only 36 - I got out of the IT business at 51 - look at the skills you have, your interests and dreams - then go from there - if you are in any doubt google danny devito buggy whip speach and then decide if you want a share in a decreasing market

I,m looking at doing to to build a bit of extra income.

I work full time in IT and we are being squeezed to death. My pay is frozen and life not getting any easier.

I spend the best part of my day building PC,s so why not, start selling my own.

 

[Alfa Amore]

If you really think there is a future in selling computers you will be betteroff buying and refurbishing second hand ones. The margins are higher and the demand probably greater 2nd hand laptops sell well

 

[internetspaceships]

Yeah the margins are certainly higher BUT sourcing the right ones is even harder.

The big boys have the supply lines tucked up tighter than a gnat's chuff.

I wouldn't recommend it unless you have proper money to spend because without the wad of money you will find it hard to be taken seriously in that market.

Purchasing is key if you're going to play in that arena.

 

[Alfa Amore]

Yes the big boys have the supply lines tight but a lot of them off load product in pallets and that is where the margins are - dont forget ebay particularly non working items which can be brought cheaply and in worst case used for spares.
If the OP is insistant on getting involved in the pc market I am only trying to help him get the maximum margin, It may also be possible to source some machines from his employers (obviously paying for them) I have been able to do this in the past.

Agree sourcing is more difficult but it is not impossible, but business is never easy