Online Store Profit

[Tigris]

Hi,

i'm currently trying to source tech related products for my online store. I have signed up with a few distributors but just can't sell at a competitive rate if I was to purchase from them.

I'm wondering if people selling on Amazon/eBay/Facebook etc must be sourcing there stock direct from the brand/manufacturer to actually make a profit?

 

[fisicx]

I'm wondering if people selling on Amazon/eBay/Facebook etc must be sourcing there stock direct from the brand/manufacturer to actually make a profit?

They often buy in bulk to get lower prices.

Or (more often than you think) are making a loss.

 

[Tigris]

They often buy in bulk to get lower prices.

Or (more often than you think) are making a loss.

How are they running the business/staying open then?

I have seen a few where they offer discount for ordering more than 10-50 units for example but the savings are 10p less per item etc.

Only other thing I thought is maybe auction sites where it's liquidated stock etc?

 

[Nicola78]

They buy in bulk to get the best deals and are also known to buy when you buy.

 

[fisicx]

How are they running the business/staying open then?

Chinese sellers who get free postage in the UK.

Or people who haven’t got a clue.

 

[Mark T Jones]

There are a few people who will sell at a gross loss, telling themselves they are gaining profile or market share.

There are many more that will sell at a net loss, simply because they don't understand business.

It's relatively unusual for a small business to have a genuine buying advantage, unless they have taken considerable time and effort to go to source.

 

[MBE2017]

When I used to sell on eBay several years ago, it was not uncommon for many businesses to be selling at a loss, from sheer stupidity and not understanding their numbers. Many think all you have to do is sell cheaper than everyone else, they are never the people making real money.

Nothing like watching busy fools losing money, it normally takes 1-2 years for them to realise.

Larger companies are not making those mistakes, normally they are the manufacturer selling through another company, others are looking to build market share etc. For most businesses, it is better to concentrate on selling profitably, your market of choice OP is highly competitive, there is very little to be made at your size.

 

[WebshopMechanic]

Some businesses sell the hardware at a loss in order to follow up with accessories where the margins are higher.

Printers, for example, are a loss-making product. The manufacturers make their money on the cartridges, which only fit that device.

It's the same with Nespresso coffee pod machines that now have a barcode on the pods that the machines need to read to make the coffee. It's so other manufacturers can't replicate the pods.

 

[antropy]

I'm wondering if people selling on Amazon/eBay/Facebook etc must be sourcing there stock direct from the brand/manufacturer to actually make a profit?

Most likely.

Paul.

 

[WaveJumper]

Some businesses sell the hardware at a loss in order to follow up with accessories where the margins are higher.

Printers, for example, are a loss-making product. The manufacturers make their money on the cartridges, which only fit that device.

It's the same with Nespresso coffee pod machines that now have a barcode on the pods that the machines need to read to make the coffee. It's so other manufacturers can't replicate the pods.

And the hope you're going to fall for buying their extended warranty.

 

[Ray272]

Couple of resellers in US send drop sgip orders to us. Charging almost $200 for US domestic overnight shipping. Making more from shipping.

Tech products associated with IT resellers/ distributors have little margin but unique or hard to find tech products have great margins.

 

[MOIC]

There are a few reasons . . .

1. Chinese are prepared to work on much lower margins than businesses in the west, as well as their overheads being much cheaper.

2. They get support from factories they work with.

3. Some factories sell direct on Amazon & eBay and this is a growing trend.

 

[Mister B]

3. Some factories sell direct on Amazon & eBay and this is a growing trend.

Absolutely. We sell on Amazon and around 70/80% of the products in the top 100 best sellers of the categories that we sell in, are sold by Chinese factories (or close associates,) who are selling direct.

 

[makeusvisible]

They often buy in bulk to get lower prices.

Or (more often than you think) are making a loss.

This is a really good point.

On more than one occasion I have seen business owners struggling to compete on certain platforms (eg eBay). Knowing the cost price it's often almost impossible to establish why someone is able to sell so cheap when taking into account fees, shipping costs etc. It often boils down to a seller who hasn't done their maths properly, operating at a net loss.

The issue with this of course, is that whilst joe-blogs is running their business at a loss, it's taking away potential customers from your would-be profitable business.

 

[Mikeson23]

Hi
I myself worked for 10 years in ecomers and I can say that there are only 3 keys to success:
1) business scheme, here I advise dropshipping, so as not to get caught with the freezing of your products in your warehouse
2) the engine of the online store, professionals should be involved here, I have a site on Magento, according to magento e-commerce solutions, I advise these guys Barweenock
3) traffic, here you need a link building specialist to boost targeted traffic to your site and convert it into money.
Successful sales!

 

[japancool]

1) business scheme, here I advise dropshipping, so as not to get caught with the freezing of your products in your warehouse

wtf?

2) the engine of the online store, professionals should be involved here, I have a site on Magento, according to magento e-commerce solutions, I advise these guys Barweenock

Anyone can put together a good-looking online shop in less than a day. Unless you have a specific need, getting external agencies involved is likely to cost you ££££.

here you need a link building specialist

No, you don't. You need a good marketing strategy, which includes SEO, paid for advertising as well as a thorough understanding of your customer base, who your products appeal to and where they hang out.

 

[WebshopMechanic]

Hi
I myself worked for 10 years in ecomers and I can say that there are only 3 keys to success:
1) business scheme, here I advise dropshipping, so as not to get caught with the freezing of your products in your warehouse
2) the engine of the online store, professionals should be involved here, I have a site on Magento, according to magento e-commerce solutions, I advise these guys Barweenock
3) traffic, here you need a link building specialist to boost targeted traffic to your site and convert it into money.
Successful sales!

Oh dear. Looks like the office junior at the spammy agency has been let loose.

Let me guess @Mikeson23, you're a very bad link building spammer and Barweenock (who's name you've actually spelt wrong) is a new Magento agency who has hired you on Fiverr.

Am I close?