Forecasting sales for a brand new E-Commerce website?

[Knit&Stitch]

I feel very daft posting this as my first post, but here goes.

I am getting towards the end of finalising my business plan and I'm really struggling with how to realistically forecast my sales.

I'm launching an online craft boutique, I know my customer really well, I know the average spend I just don't know how many sales I will make a day, a week, a month. Seriously how long is a piece of string!

Im conservatively estimating my average sale will be £25. I am having a website built which will be search engine friendly from the go. I will be doing a soft launch a month before I go full time, to give google time to find the website. I will be advertising in two prominent magazines aimed at my target market on the launch and I have planned a social media launch campaign to build awareness of the business.

So can anyone with experience of launching an online business from scratch offer any sort of guidance on how many sales per day they made in their first month, three months, six months, year?

Its the final piece of the puzzle for me and crucial to forecasting my cash-flow in the first two years. I know every single business is different but any insight as to how it worked for you on launching your online offering would be appreciated!

Thank you!

 

[degadar]

How much of that £25 can you afford to spend on your marketing?

 

[Ninja Commerce]

Hi Knit&Stitch.

This will sound pretty pessimistic to be honest, but in my experience there's practically no point in trying to forecast sales. They could be much lower than you expect, or much higher.

Instead, it is probably more useful to:

Come up with a solid marketing plan (figure out how you are going to get sales) and on that basis, do your best to figure out how many sales you need to make to actually break-even/make a profit.

*Targets are more helpful than forecasts because they help to motivate you.

Don't expect to get much if any traffic from Google within the first 3 months though (it's possible, but if it happens just consider it a bonus).

If you know what you're doing Twitter is probably the quickest way to get traffic (outside of paying for traffic via Adwords and such like), although SEO is worth investing in, you might find SEO traffic converts better, but it takes longer to get.

After 2-3 months you will have a much better idea of your starting point, and you can try to forecast growth from there.

 

[cheathcote]

I agree this is a bit of a how long is a piece of string kind of question. In my experience just having an SEO friendly website may not bring you much traffic especially in the first few months and will need quite a bit of work on a monthly basis in order to bring in any siginificant traffic. It will also depend on how much competition you have and how competitive the keywords you are targeting are so it is well worth doing a bit of research.

I would agree with the above that in the early stages, you would be better spending time thinking about how you are going to get sales.

In the market that you are in I think there are lots of online craft communities that you can get involved in that could help to drive traffic/ sales, Twitter, Facebook, Pinterest are also good possibilities. YouTube tutorials could also work well for you.

Hope this helps.

 

[Alan]

Getting visitors to the site is one thing and needs a balanced marketing plan (ranging from online - SEO, PCC, email etc - through to traditional - leaflets, magazines, exhibitions, direct mail etc)

There are many factors that determine the number of sales (conversion rate)
1. number of competitors in that market segment
2. number of buyers
3. your price point compared to your competitors
4. website factors (ease of use, trust)
to name a few

So as above, close to impossible to give an indicator, I have seen small business sites make less than 1 sale a day through to more than 50 a days.

Some one above said 'how much' of the £25 can you afford to spend on marketing? That is a very good question, in my opinion and limited experience is you can't afford to/not prepared to/ spend at least 20% (i.e. £5 per sale) then you need to revisit your plan.

 

[dolphinformations]

I feel very daft posting this as my first post, but here goes.

Im conservatively estimating my average sale will be £25.

to give google time to find the website.

advertising in two prominent magazines aimed at my target market on the launch.
a social media launch campaign to build awareness of the business.

how many sales per day they made in their first month, three months, six months, year?

Thank you!

Dont' feel daft! That's what this forum is here for!

Don't estimate the average spend - look at the competition and even ask them, there's a trick I use but you'll have to PM me for it (No catch!)

Stuff giving google TIME to find the website, give yourself a weekly/monthly marketing budget and send traffic to your site using PPC/Adwords from day one! No waiting around for traffic and sales then.
And as others have said twitter can be really good too.
IMHO Awareness although great, is for big companies/brands who have budgets to spend on potential customers remembering them.
What I would suggest would be to get direct sales and that should/could hopefully get your target market talking about your business, especially if there are special offers/discounts on.

If you can get average conversion rates of your market (how many people buy from those that visit your site, could use 1% conversion), and potential traffic to your site (google adwords keyword tool - free, just make sure you choose exact match), you can work out how many sales you're likely to make.

Or even better run a ppc/adwords campaign using your target keywords for a week and you'll have exact real time traffic stats. Be careful with this by the way, you can spend a fortune!

I've heard of new businesses using Groupon to generate initial sales, and get their 'brand' out there. Even if it's to break even if you sell 500 of your products that's 500 customers you didnt have and 500 people who might tell others or buy again, plus you'll have 500 odd customer details to remarket to

Hope all this helps
Matt

 

[Edward Ashton]

Hi Knit&Stitch,

It's pretty impossible to accurately forecast your sales without you being 'live'.

I agree with a lot of the other comments regarding the focus on marketing and SEO. Try to make sure a lot of your SEO is organic rather than putting all your money into Pay-Per-Click. However, PPC can be a good starting point. SEOmoz has a great blog about SEO, it is something that is constantly changing you it is something that you should allocate a bit of your time to.

If you start promoting the site through social media and Google then you can start looking at the Google Analytics results to analyse your traffic. Here you can see the number of visits, how they got there, how long they stayed for, whether they clicked off straight away (bounce-back). This can give you a good estimate to the sort of sales your looking at.

If you have any questions about merchant accounts and accepting payments online feel free to drop me a message.

Good Luck and I hope it all goes well for you!

Edward

 

[antropy]

I agree that it's almost impossible to forecast, there are just way to many variables. You'll have to just try it and see.

 

[Philip Hoyle]

When sales are hard for forecast, I think it's more important for your business plan to demonstrate the scalability of the business, i.e. how the business performs if you make 1 sale per day as opposed to how it can cope with 50 sales per day. You'd need to identify each cost/overhead as either fixed or variable (and variable against what) and the step changes of the fixed costs, i.e. at what level of business you'd have to get bigger premises, or increase staffing, or upgrade your web-hosting etc. That way, you can plan ahead and have a kind of contingency plan ready for when things take off. Nothing worse than being behind the curve and constantly struggling to keep on top of things.

Whatever the marketing gurus say, you simply can't come to any realistic approximations of sales. There are too many variables. Nor can you guarantee sales based on your marketing spending. I've had a client in a similar "home/craft" type of e-commerce business, who went from a zero start to £1.5m of turnover in just five years, spending virtually nothing on their website, advertising, marketing, nor SEO - just doing it all themselves from learning as they go and free/cheap software. But, another client spent tens of thousands on professional website, top of the range hosting, SEO, the works - everything the marketing gurus tell you to do and the business just never took off at all - losing all his money.

 

[Chris Ashdown]

When we started our e-commerce shop it took about 9 months to get £500 turnover, so be honest with your expectations especially if a limited budget

One way you can find out sales potential is to pick a middle of your range e-commerce seller and buy a small item, then do the same after one month and again after 2 months The difference in serial numbers of the invoice will tell you how many sales they have made during that time (simple but not many think of it).

Using adwords if only £10 per day from the start will bring in some interest and sales just limit your click cost to between £0.20 and £0.40 and then see where your adverts are placed, if in the top 5-7 then keep at that rate untill you have a slight idea of how it works. Google Adwords for begginers is a good £18 spend to get the basics

With your mag ads write a brief history about yourself and what your aims are etc and send to the editor also all your local papers

Take time over doing your product descriptions and images, dont forget the customer cannot touch and feel so rely's on you to describe what they want

Read and fully understand the Distant Selling Regs and then search this forum for the answers you want, they should all be already covered

Good Luck

 

[Knit&Stitch]

Thank you so much for all your feedback, its much appreciated.

In light of your views I will be bolstering my marketing budget, not to mention my savings so I can cover my living expenses for the next 18 months!

PPC is certainly something I will definitely look into in more detail, as well as the scalability which Philip mentioned.

Chris thank you so much for your tips they are really useful. In particular I love your tip on buying twice from a competitor to assess their sales numbers, brilliant idea!!