Payment methods

[Adi81]

Hi
I'm going to start small business in Oxfordshire.One of the few things I would like to focus are new and sealed games.I was looking for a supplier and came across wholesale web pages that didn't gain my trust.Then I've decided to learn more about about frauds and found some advice on internet that made me very cautious.
Eventualy I've found a supplier who seams to be worth of trust.I've checked them on "Companies House" web site and seems to be ok.However what concernes me is when I've asked about payment methods and if I can pay by cash and pick up order by myself I've get this answer:
"Unfortunately we don't accept cash, pay-pal or payment on delivery, what we would do is send you a pro-forma invoice, along with our bank account details, which you pay via bank transfer, you then e-mail us the transaction reference number and we will pick and deliver your order, usually in 2-3 working days."
As I'm being rookie in a business I would like to ask You about opinion of this payment method(is that normal and safe) ?Can I retrive money if something go wrong
Thank You very much for your help

Best regards

 

[Alan]

Hi
I'm going to start small business in Oxfordshire.One of the few things I would like to focus are new and sealed games.I was looking for a supplier and came across wholesale web pages that didn't gain my trust.Then I've decided to learn more about about frauds and found some advice on internet that made me very cautious.
Eventualy I've found a supplier who seams to be worth of trust.I've checked them on "Companies House" web site and seems to be ok.However what concernes me is when I've asked about payment methods and if I can pay by cash and pick up order by myself I've get this answer:
"Unfortunately we don't accept cash, pay-pal or payment on delivery, what we would do is send you a pro-forma invoice, along with our bank account details, which you pay via bank transfer, you then e-mail us the transaction reference number and we will pick and deliver your order, usually in 2-3 working days."
As I'm being rookie in a business I would like to ask You about opinion off this payment method(is that normal and safe) ?Can I retrive money if something go wrong
Thank You very much for your help

Best regards

Before you are credit worthy this is typical pro-forma process. Once you have proven your trading worth a wholesaler would normally give you 14 or 30 days credit.

In terms of trust, if they are not well known to you, then try and take some references or go visit them if that is feasible. If they are a legit company and you say to them straight, sorry but I don't know you so can you provide some clients of your I can talk to, they won't mind.

That said, no matter how legit they are you will always have a risk that they go bust sometime between you paying a pro-forma and getting the goods. This applies to every company. The only thing you can do is start of with small orders in amounts that won't bankrupt you if they go bankrupt.

 

[Adi81]

Thank You for reply
The thing is for them small order is £1000 with is quite a bit of money to loose.They've sent me scaned certificate of incorporation of a private limited company as well as VAT certificate but with modern technology You can do it in photoshop.
I'll ask for references as You advised.
Is there any way to verify their bank account?

Regards

 

[Manishp100]

Hi,

just a heads up.

if you are talking about Video Games - unfortunately you will find it extremely hard to be competitive and make margins from that.

video games might sell for £40 but distributors supply for a large amount on that.. which only leaves you with a few quid profit .. then you have to factor in other costs which can eat into your profit margin.

just thought i would feed back some information that i have known due to my working in ecommerce and when i used to work for GAME

 

[Adi81]

hehe...thanks for heads up.at least I'll gain access to cheap games

I know that's very hard but this apply to everything these days.games is just a start.I do have a plans for more.there is no pressure as well becouse I'm still working for the local company.I'll give myself year time and see how it goes.if I manage to reach 60-70% of my sallary working part time as a sole trader I'll quit from my current job and focus only on business

regards

 

[csaba]

hehe...thanks for heads up.at least I'll gain access to cheap games

I know that's very hard but this apply to everything these days.games is just a start.I do have a plans for more.there is no pressure as well becouse I'm still working for the local company.I'll give myself year time and see how it goes.if I manage to reach 60-70% of my sallary working part time as a sole trader I'll quit from my current job and focus only on business

regards

Let's talk unit economics for a sec.
Let's say your target profit is 2 grands. Your margin (revenues - unit expenses) on each £40 unit is, charitably, £5. Not having any other costs would mean, you'd have to move ~400 units per month (or ~13 per day, including weekends) to reach your target profit.

But these are not the only costs you have.
In order to move your units, you have to do marketing. Sales. Managing stock. Taking orders. Let's say you DIY most of these, without employees (welcome to planet hell). This leaves marketing & distribution.

So you start with a DIY webshop, and Google Adwords. Most keywords are SEOd to hell, and the field is extremely competative: single clicks for a qualified lead searching for "buy video games" going around £1. This is not your Customer Acqusition Cost.
The user comes to your website; prototypical conversion rates for e-commerce sites go around 1-3%, but you nail it at 5%. This means, you'll need 20 customers to come to your site for every 1 purchase, putting your Customer Acqusition Cost at around £20.
Hence, on each £40 unit you buy, your profit is: £5 - £20 = -£15.
Negative unit economics is a business killer.

On a different angle: game distribution is majorly trending towards online distributors -even for physical goods (saw the south park episode on DVD rentals? that's where it's heading); gamers are consistently voting with their wallets on immediate gratification, and monthly installments.

So while doing this as a hobby might seem interesting, if a grand is a significant investment to your wallet, I'd caution you to start much smaller, run a handful of limited experiments, and see where those goes.

 

[Adi81]

Hi
I'm sorry for a late reply.I was pretty busy last week.
I agree.I've done the math and I know it doesn't look great.However I've got few ideas that might work.But even when I won't make any profit or lose some money that's fine.I'll get something more important intead-an experience.I'll learn how to find and negotiate with supplier,how to cut a costs and maximise profits and so on.I've got nobody to show me how to do that so I have to learn on my own mistakes