Setting Up A Gift Store

[boliver228]

Hey Guys, I am currently in the planning stages for an online gift store aimed at males and females between the ages of 18-50.

The site will sell a wide variety of products. For men it well sell:

Gadgets and Gizmos
Boys Toys
Accessories (Watches, Wallets e.t.c)
Sports Related Gifts
Experiences

For women it will sell:

Jewellery
Accessories
Health And Beauty
Girly Gadgets
Cute Gifts (Teddies, Photo Frames e.t.c)
Teddies

I have already been in discussion with a top web development firm who have a massive portfolio of some of the most stunning, successful ecommerce stores i have ever seen. The entire web development package will cost £5000, and I understand this is a lot but it is definitely worth it for the stunning design and the amazing functionality offered.

At this point, I will be ready to purchase stock and begin marketing the website.

However, I am completely new to ecommerce and have a few questions which I would appreciate some answers too.

1.) How do new ecommerce stores source stock. This is probably what is confusing me most. How many suppliers do online gift stores usually have? How many products should I have on my site to begin with, whats a good amount? How many of each product should you purchase to begin with (assuming im going down the wholesale route). I have very little idea of how sourcing the products works, and how many of each product you should get to ensure you can meet demand.

2.) Secondly, would you recommend handling packaging and deliveries myself, or outsourcing it to a local product fulfilment warehouse so that i can free up time to market the business and focus on sales. I do not have that much space where im living to store stock, and also I imagine the product fulfilment warehouses do a very professional job and are very efficient. What would you recommend for my situation.

3.) How hard is it to make a sale? I would like to hear from people with experience in ecommerce stores. Considering my store will be top of the range functionality and design, and I truly mean it is stunning visually, looks unbelievably professional and has amazingly simple functionality (In other words it wont be one of these rubbish little online stores which are extremely ugly and difficult to use). Taking this into account, how many sales do you think I would get per 1000 visitors, considering it was targeted traffic?

I would also appreciate any other advice people have to offer to me. I look forward to launching my store in the near future.

 

[kulture]

1, go to the london toy fair this month, and the NEC spring fair.

2, I would suggest that if you are considering investing £5,000 on web development ALONE you should sit back, stop for a few months, and draw up a decent business plan which includes a costing of fulfilment vs having a unit and employees who package and send your stock.

3 First you need to get the visitors. No matter how amazing your store is you need visitors. Second you have a lot of competition and not just from small online stores. Look at AMAZON. Third customers tend to buy if the price is right AND the online store looks professional enough to re-assure them that they will get their goods and that they will get their money back if things go wrong.

Nothing would put me off more than a web site that did not also have a physical commercial address. So a site, no matter how "stunning" in design also need good content, good prices, and NOT run from a bedroom in a residential house.

 

[BrightIdeas]

Who are you targeting (other than males and females between 18-50)? Your target market, from what you've described, is probably too general. If you are thinking competely mass market, which is what you seem to suggest, then why would people visit and buy from your site instead of another one that exists already?

To be successful, I think that you will need to develop a strong idea of what market segments/niches you are going to tap into, and then develop the business plan and marketing from there.

If you are targeting the more luxury end of the market, then that will define the kind of product you will need to source, and who you will contact. For my ecommerce business, I went to trade shows and contacted designers directly initially.

Regarding the number of products, why not start off with a reasonable number, that you then expand upon when you have tested what works? Unless you are planning to simply dropship (and use manufacturer's photos, etc.), then there is a cost associated with each product that you buy in. I started off with approx 100-120 products when I launched my site. Then, if you are selling gifts, there are many selling opportunities throughout the calendar, e.g. Valentines, Mother's Day, etc. etc. etc. These will need new lines. In terms of stock quantities per product, I would keep it low to begin with. You won't know what's going to sell until you've actually started trading.

Re: how hard is it to make a sale.... well, how long is a piece of string? It depends very much on how much in demand your product is, your market, your competition, your pricing, availability, perceived trust, delivery timescales.... a whole host of things! I work off 1% for my planning etc. but different industries will have different conversion rates.

 

[Optegris]

I'm curious to know who this amazing eCommerce development firm is?

 

[boliver228]

Hi BrightIdeas, Thanks a lot for the reply, a lot of useful information there.

I see what you mean about the target market being too general. The idea was that it was just a gift store that would offer gifts for a range of recipients, including partners, friends, siblings, co-workers e.t.c

However, at one point i was considering aiming it at the partner market. This would mean i would specialise the site towards providing gifts for husbands, wives, boyfriends and girlfriends. Do you think this would work better, or I shoud stick with a more general gift store?

Thanks again for the reply.

 

[Drpepper]

How many £10,000's do you have for getting traffic to your website? No point spending £5,000 on a website if, after buying stock (allow at least another £10k minimum unless your drop shipping) you are can't get the people to your website.

Not being mean or personal, as with a budget of £5,000 for the website I trust you have this other money to one side, more just raising the issue for others who may be reading this

 

[sysops]

You won't like my advice, but I'll give it anyway in the hope that it saves you some pain.

My company runs a bunch of retail sites, in different sectors. One of them is in the exact same sector you are taking about. The site is 4.5 years old, and turns over a little over £1m. Over the past few years, this market has become harder and harder to make money in. Margins are constantly shrinking, and competition from the big boys is always increasing.

We launch a few new sites every year, exploring new niches. Some of our niche sites launched much later than the gift site have already overtaken it in profitability. There are many niches with far better margins than gifts & gadgets, and a lot less competition.

If you need more convincing, download the accounts of some of the big players. You will quickly realise that several of the big names haven't made a profit in several years. One particular site, which was recently sold, has consistently lost money for 7 years.

If I was setting up a business from scratch, I wouldn't touch online retail today.

 

[BrightIdeas]

Well, if you're looking to sell gifts, then you need to decide where there is greater opportunity:-

e.g. handmade gifts, designer gifts, fashionable gifts, cheap gifts, etc.
There are so many websites already out there that sell 'gifts', I really think that you need to think hard about your niche. Have you done much research into competitors? Do you know where there's gaps in the market? Do you know what the latest trends are? Don't forget, gifts are hugely affected by consumer trends.

Please ensure that you have a decent budget for marketing the website too. I absolutely agree with the earlier comment from kulture that not matter how aesthetically wonderful your website is, you will need to have visitors. This honestly takes time and money to build up.

I urge you to take the time to do a bit more planning before you sign the contract with your web agency. You should have a firmer idea of your marketing goals before you get to the design/build. Your web agency will not care as much about the project as you, and it's so important for you to understand what your business-to-be is all about before briefing them.
　
I'm offering you constructive advice - hopefully you will listen. Just so you know, I previously worked for a web agency and have been a professional marketer, before setting up my own website last year. 　
　

 

[BrightIdeas]

Sysops has also offered some solid advice above....

 

[oldeagleeye]

I must admit that I am lost when I see a post like this. It is a bit like saying I want a store like Harrods. Where and how many suppliers will I need to make a profit and where do I get them from.

Pray tel me Boliver. How much profit on a mans fragrance like Hugo Boss In Motion RRP about £33 quid incl vat. What say £10. What happens then when Superdrug sell it Christmas the prime market for £14.95 and there is you asking where to find suppliers.

Before you even start thinking about web sites you need to look at the market. Research and Find suppliers and understand the margins. What sort of volume will attract discounts. Who the competition are. What are your unique selling points. Only then can you hope to start putting a business plan together and thinking about web sites but hold on a moment.

USPs in the fragrance market and gizmos for the boys. Without years of experience in the business you won't be able to compete on price. A brilliant web site. Well that is in the mind and you asked a question. How many customers would you get from 1,000 visitors. From what I gather a 1-2% conversion rate is regarded as quite good. That is about 10-20 if your lucky. We have quite a lot of members on here with quite good gift web sites only get 10 sales at an average £10 a month.

In short the market is satuated. Your at least 5 years too late and now you have to compete with the likes of Ebay too.

Incidentally I have seen 3 threads in the last couple of days where newbee's plan to set up gift sites. Not one it seems has the slightest idea what USP means.

Well unless you can come up with a few Boliver this venture is a no-brainer. I mean even Dancing with Poodles has 2 usps. His toy chocolate factory sells small bars at £6 quid each and they make you vomit. Ideal if you have had a bad curry.

 

[boliver228]

Thanks for all the information guys, not nice to hear but all true im sure.

So you think even the gift store specialising in gifts for partners is a bad idea. I mean, recently when searching the internet for a gift for my partner, i could not find one nice site that specialised in gifts for partners. I found lots of generalised gift stores, but i would have loved to find one really nice gift store that provides some great gifts for a partner. As for the big boys, its harder to find gifts for a partner on these sites cause they have so many items that you have to think of really good search terms and then spend ages sifting through items to find nice gifts.

I do appreciate all the advice thought, and understand the market is maybe saturated. I am in the very early stages of planning at the moment, its simply an idea in my head. I haven't spent any money yet or anything like that. I cant say I agree that online retail is a bad idea however, just like you said you need to find a good niche.

What are some other good ideas for online stores. I am really passionate about creating an online store, is it really that much of a bad idea?

Thanks

 

[Optegris]

Could I ask again who the web development company are?

 

[boliver228]

VisualSoft

 

[Ondra]

'a top web development firm who have a massive portfolio of some of the most stunning, successful ecommerce stores i have ever seen. The entire web development package will cost £5000'

No offense, but there are just two possible options - either you have not seen much so far or the successful ecommerce stores are not 'the most stunning' :]]

£5000 is maybe a price at which you can get a proper design with user accessibility test but surely not a whole ecommerce engine

 

[sysops]

So you think even the gift store specialising in gifts for partners is a bad idea. I mean, recently when searching the internet for a gift for my partner, i could not find one nice site that specialised in gifts for partners. I found lots of generalised gift stores, but i would have loved to find one really nice gift store that provides some great gifts for a partner. As for the big boys, its harder to find gifts for a partner on these sites cause they have so many items that you have to think of really good search terms and then spend ages sifting through items to find nice gifts.

Just because you didn't find a website that offered exactly what you wanted does not mean there are others like you. Anecdotes like this are the worst data to base your decision on.

When I set out to buy gifts for my partner, I think about what kind of things she likes, then search for those things. I don't expect a website to offer a neat list of possibilities.

What are some other good ideas for online stores.

This is not a question you will ever receive a useful answer for. I spend around 25% of my working time searching for such niches. Do you think that having found one, I would openly share this information?

I am really passionate about creating an online store, is it really that much of a bad idea?

Why are you really passionate about an online shop?

 

[Ondra]

'Do you think that having found one, I would openly share this information?'

An idea or niche on its own has no value at all :] Just a realization makes it so valuable. So that would not matter if you shared it

 

[sysops]

'Do you think that having found one, I would openly share this information?'

An idea or niche on its own has no value at all :] Just a realization makes it so valuable. So that would not matter if you shared it

While you are correct of course that the execution is what matters, it takes a huge amount of work to identify a really profitable niche. It's not about coming up with an idea, it's about coming up with a few dozen ideas and then spending time researching each one to assess viability.

 

[boliver228]

I just really want to start up an online store. I have always wanted to start up a business and the idea of having my own online store is so exiting. I know your not going to share your niches, that would be silly, but maybe offer me some advice or point me in the right direction. I mean, do you think its a bad idea going down the ecommerce route? How do you find profitable niches, I would have no idea where to start. I just really want to start up a nice ecommerce store, and clearly its a lot more difficult than I anticipated. Are there any non-niche product ranges which you think I have a chance of successfully selling?

 

[sysops]

I just really want to start up an online store. I have always wanted to start up a business and the idea of having my own online store is so exiting. I know your not going to share your niches, that would be silly, but maybe offer me some advice or point me in the right direction. I mean, do you think its a bad idea going down the ecommerce route? How do you find profitable niches, I would have no idea where to start. I just really want to start up a nice ecommerce store, and clearly its a lot more difficult than I anticipated. Are there any non-niche product ranges which you think I have a chance of successfully selling?

It really depends on what you want to achieve. How much do you want to be able to pay yourself in say 3 years time?

In order to make enough money to live on, you will need to put in around £50k-£100k over the next couple of years.

Anyone can sell stuff online, that's easy. Making a living out of it is much harder than most people think.

 

[boliver228]

I dont care how much im making in 3 years time, as long as my business is growing, and im enjoying waking up every morning and trying to market and develop my business. Im not just in it for the money, I just love the independence and exitement that business brings. I know the stress it can cause, and the financial requirement, and I would be willing to put in as much of the profits back into the business, taking only enough to live off. Determination is not my problem. I really am passionate about starting a gift store. Do you honestly all think this is a really bad idea? Maybe not such a general gift store, but maybe gifts aimed at a certain group of people. I mean, if i create a really nice looking store, with reasonable prices, great functionality, fast delivery and good customer service, then why wont people use it. Just cause theres a hundreds of other gift stores online doesn't mean consumers cant change to mine. I mean, if when i typed gift related keywords into google i was presented with lots of very nice professional looking websites, then i would steer clear of this market. However i don't, in fact when i type in gift related keywords i get presented with lots of large generalised gift stores with ugly designs.

Obviously if what some people have been saying is true, and these sort of websites are all losing money, then i will steer clear, but i just don't see how this is possible.

 

[jamieclick]

Do you mind sharing what your background is?

 

[sysops]

I dont care how much im making in 3 years time, as long as my business is growing, and im enjoying waking up every morning and trying to market and develop my business. Im not just in it for the money, I just love the independence and exitement that business brings. I know the stress it can cause, and the financial requirement, and I would be willing to put in as much of the profits back into the business, taking only enough to live off. Determination is not my problem. I really am passionate about starting a gift store. Do you honestly all think this is a really bad idea? Maybe not such a general gift store, but maybe gifts aimed at a certain group of people. I mean, if i create a really nice looking store, with reasonable prices, great functionality, fast delivery and good customer service, then why wont people use it. Just cause theres a hundreds of other gift stores online doesn't mean consumers cant change to mine. I mean, if when i typed gift related keywords into google i was presented with lots of very nice professional looking websites, then i would steer clear of this market. However i don't, in fact when i type in gift related keywords i get presented with lots of large generalised gift stores with ugly designs.

Obviously if what some people have been saying is true, and these sort of websites are all losing money, then i will steer clear, but i just don't see how this is possible.

You make me feel very old.

Go for it, good luck.

 

[boliver228]

You make me feel very old.

Go for it, good luck.

Haha, Thankyou, I think i will. Obviously I will have to look a lot more into the market, and see if what some members have said is true, but i dont see why its not possible if i put enough hard work in. Thanks for all the advice.

Do you mind sharing what your background is?

Of course, I am fresh out of college! I have no practical business experience. Having said that, i have achieved A* Business GCSE and A in Business A Level, and have lost count of the number of business books I have read. The only way you can learn for real though is to get out there and give it a try. Even if i do fail, you learn from failures, and it will put me on the next stepping stone to success.

 

[Ondra]

Even if i do fail, you learn from failures, and it will put me on the next stepping stone to success.

Nice one, nearly as it was copied from one of yours book you have read :]]] Well, hopefully you will act like that when it comes to it


Btw, my favorite one is: "First they ignore you, then they laugh at you, then they fight you, then you win." -Mahatma Gandhi (used in Delivering Happiness: A Path to Profits, Passion, and Purpose by Tony Hsieh - founder of Zappos.com) definitely worth reading if you are into online business :]]

 

[boliver228]

Nice one, nearly as it was copied from one of yours book you have read

haha almost! Its actually from a poster in my old business studies classroom, never forgot that one! That sounds like a great book, i will have to check it out, cheers

 

[oldeagleeye]

Don't get me wrong. The Internet is great for sourcing many goods and services and there are many that can manipulate its search engines to take profit from that trade. Have you not considered however that there are at least 3 fundamental flaws with on-line shopping. One of them I mention earlier.

The sheer number of domain registrations over the last 5 years is mind boggling as more and more especially youngsters and others wanting to work from home try to jump on the bandwagon and every market is becoming saturated to the extent that most Net users never go beyond the top 10 on Google. Even with relatively good SEO then the rest are left floating in cyberspace hoping the odd fishing trawler will pass by. In many ways then as it expands the Internet is also imploding in on itself for those below the skyline.

Fundamental problem no 2. The Internet started as a cold war information provider and then turned into a promotional medium where the message could get through no matter what. This is completely at odd with security and on-line shopping. The banks won't admit this of course despite the fact a 13 year old lad was able to steal £3 million fairly recently. Not once but twice. The fact is on-line shopping is dangerous and we have already seen 2 merchants crash in the last year. What would happen if 20,000 students were to carry out a cyber attack on the banks they blame are the reason their fees have gone on. Make no mistake a big crash is on the way and the only good news I see is the coming if the pre-paid visa card.

The 3rd flaw with the Internet really does go back to basics and that is that we as humans are social animals. We love getting out there into the community and enjoy the activities we like most and one of them is shopping. The pundits of course are saying the high street is doomed. That may well be but for every branch of Next or Primark that closes in the local high street another 1 - 2 -3 will open in a major out of town shopping centre.

Boliver was talking about gifts. we have dozens of jewellers in my local shopping centre - why. Because buying an engagement ring or a bracelet is a personal and social event. As for other gifts. I have to wonder if he walked around with his eyes closed this Christmas.

Everyone from Boots - thru W H Smith to Argos & Maplin have 1,000s of gifts all lined up in nice little rows. For Her - For Him. BTW. I understand from a friend who works at Maplin that these little RC helicopters that you can fly around the living room chasing the budgie are still a good seller. Mind you the profit margin on the has gone from about £10 a pop to £2.50p In reals terms then you would need around 10,000 visitors a week and package 100 of them gizmos to earn £50 quid a day.

The point that I am trying to make is that there is life away from the Internet. If you have £20K to invest a mobile vending unit in a shopping mall or even a market stall could be a far more viable biz.

 

[JMRidley]

Hi, we set up our website last year selling products for children. Based on our experience my advice would be:

It sounds a little as though you have been seduced by the software and the stock is an afterthought. What you want to sell should be your starting point, the website is just a vehicle to do that.

In answer to your last question - it is very hard to make a sale. Effectively your site is invisible unless you do some good Search engine optimisation (and that takes time), google adwords or other marketing activity - you very quickly start to see the advantage of having a physical shop with people walking past. Our conversion rate is generally between 3 and 5%, however, that can equate to an OK day or a really good day depending on the size of the orders!

As others have said there are trade fairs you could attend to get ideas and, of course, the internet is also great for research. If you are new to e-commerce then you need to be cautious with stock. It's incredibly difficult to predict what will sell well on line so I would advise buying small quantities to begin with. We supplement our stock with some ranges which are shipped direct to the customer by our supplier. This means we can have a wider range on our site and also we can try out products to see if they suit our customer base before investing in stock.

You need to think about why people would buy from you rather than someone else. This was one of the reasons for us choosing to do the fulfilment ourselves. We get a lot of positive comments from our customers about our customer service. Because we are a small business we appreciate every single order and make a lot of effort to keep our customers up to date with their order and package it really well. Often our customer tell us how frustrated they get with larger companies who give poor service, for example, not telling them that an item is out of stock until a couple of weeks after they have placed an order.

Hope this is helpful.

 

[oldeagleeye]

UPDATE on my previous post.

It has just been announced that last year alone 28% of people in Britain were subjected to credit card fraud. These figures were released by the banks and you can bet a penny to a pound that they have been massaged. We are probably talking about 45% then or almost half the population with plastic.

That is frightening. Should there be a major confidence scare I would advise anyone with an on-line store to try to mitigate the effects of a six month slump.

Rob

 

[Curious]

@OP - Have you sat down and written a business plan? You sound like you're rushing into this site without a huge amount of thought for what you're actually going to sell.

About 12 months ago I was in similar position to yours and I'm just giving you my opinion based on the last years experience.

Firstly, it's hard work. Very hard. You'll know within 12 months whether you're passionate about it or not! My attitude has certainly changed over the last few months and there are times when you need to dig deep and keep going and believing it will work (christ I sound like a self help guide!).

Secondly, have you written a business plan? If not, do one. Writing this was invaluable to me when I was starting; it brings up all kinds of things that you might not have thought about. It also gives you an idea of the kind of finance you are going to need. I was astonished how quickly a few hundred for this and a thousand for that and then the stock added up too. You initially sounded like you wanted to open a 'general' gift shop, and then you've said perhaps focus on one particular area. Personally I would say the more refined you can be towards one area the better. You asked a fulfilment warehouse, what is the cost involved with this for the business?

When you do the plan you'll have a section for finance and by the sounds of it you don't really know what you want to sell. In my opinion product picking is VITAL, we spent months narrowing down a huge list of items and I'm still not convinced we got it right!

If you've got an idea of what you want to sell get in touch with the brand, ask who their distributors are and then contact them. Find out trade prices, minimum order quantities and availabilities and if they are willing to deal with you if you're online only. We've got loads of suppliers that we deal with because of the range of products we picked, and another list that I want to work with but they won't currently because we're online only.

Put all this together and see what the costs are and if it's still viable to start a general shop. Why not, as sysops I think it was, look at perhaps focusing on a smaller site highly targeted towards a couple of products/single range? Then if that works start another, and another.

Anyhow, learn from everything you can and best of luck with it!

 

[strikingedge]

It sounds a little as though you have been seduced by the software and the stock is an afterthought. What you want to sell should be your starting point, the website is just a vehicle to do that.

I second that. The only thing that will really make your site stand out is the products which you need to display with amazing photographs and fantastic copy.

I was still at college when I set up my first website - it cost £150 all in. That same website was generating £50K per month within a year. Shame there wasn't any profit....but that's another story ;-)

You're really excited about being an entrepreneur and running a website that looks good - and it is great to have that enthusiasm, but you do need to take the advice that you're concentrating on the wrong things.

If you are going into gifts, you need to have a massive passion for the area - you'll want to live and breath the sector.

The website is a means to an end - and personally I'd suggest doing something cheap with opensource (zen cart if you have the skills) or a hosted solution (I think Shopify is the best one out there). Now loads of people will jump in with other suggestions and slag off mine - that's just part of the joys of forums!

That £5K you've got should go into sourcing amazing products and marketing.

Since you don't appear to have much of a clue about products.....yet....I'd suggest working out who the site is designed to serve.

The guys who started up Firebox were passionate about boys toys. And their site was for people like them. For the first year they had 8 products and their basic website barely changed - but they built a loyal following.

You have occasion sites which I find are usually pretty crap and uninspiring. You have event sites - like the one Kate Middleton's parents run.

If you're launching a website without a clear idea of who it is for then you won't know what you want to stock and no-one visiting your site will understand why they should buy from you. You'll end up with a load of stock, making no money, will look around at other sites selling the same stock, and decide...right, well I'll just sell it a bit cheaper than them....and that way madness lies!

 

[martin10]

Hi,

You have a lot of good advice here. I have been running an e commerce site alongside my ebay shop,Amazon business and other sites I sell on. One thing that comes out of all these is that it is tough !

I make more money out of ebay because the traffic through ebay is so good. You will never be able to match the traffic which ebay generates. I know this is offset with ebays costs but how much would you have to spend in time and money to generate the same volume of traffic.

So why not open a shop on ebay for £50 a month ( thats what mine costs). I have about 1800 different items for sale on there, a lot are multiples. This way you can see what products are generating profit and then maybe narrow the niche for an e commerce shop. You can also use your ebay sales to promote your e commerce shop by sending out flyers. Do the same for Amazon and look out for other platforms to sell on.
As for margins, don,t expect a lot because consumers today are out for bargains. Generate your profits by volume rather than price. That is the way , you only have to look at who the most successful high street shops are ....... pound shops !