Tag Archives: online business
Costs of Starting an Online Retail Business
Online retail businesses are a popular option for entrepreneurs with minimal capital to invest up front. What’s more, online retail is a great business to run as a home-based, solo, parent or part-time entrepreneur. It can also be a fantastic outlet for your creative talent or hobby. So you’re asking yourself—what does it actually cost to start an online retail business? We’ve got a real-life example for you: Amy Weaver, corporate refugee and owner of a new online greeting card company. Amy took her creative ideas about a tried-and-true product—greeting cards—and launched her own online retail business. “Your words, not ours” is the humble tag line that sums up the unique niche of Amy’s Whoopzie Daizie Cardz. “I’m a card addict,” Amy explains. “But for me, greeting cards always seemed a little over the top—the glitter and the butterflies and everything else. I just want them to be simple. Maybe start a thought or give a good impression of what the card will be about on the front, and then let me fill in the words.” Amy, a 32-year-old Dallas resident, began thinking about starting her own business more than a year and a half before she taxied down the runway. Her career as an airline property manager left her feeling confined. “Both my parents had their own companies, and I always felt claustrophobic working for someone else,” Amy admits. “So I’ve been attracted to the entrepreneurial lifestyle through experience.” “I was drawn to the card industry because it’s a low-risk industry,” she continues. “Other than printing cards and the other basics, it’s pretty low cost—it’s not like I’m building superconductors.” To finance her startup venture, Amy secured a $30,000 line of credit from a Texas bank and tapped into personal savings to keep up with her regular living expenses. While securing a line of credit is not typical for a startup that has been in business less than two years, many entrepreneurs are able to leverage personal savings, credit cards, friends and family or home equity loans to get started. Amy then mapped out three critical areas on which to focus her financial resources in the initial startup phase: designing a dynamic website creating a top-quality product implementing a strategic marketing program. Let’s take a look at these priorities one by one. Designing a dynamic website “First, I had to have a wonderful website because essentially [...]
E-Commerce Companies Bypass the Middlemen – NY Times
When the founders of a start-up that sells eyeglasses online, Warby Parker, began investigating why designer glasses cost several hundred dollars, they discovered that everyone in the process was taking a cut: designers, manufacturers, brands, wholesalers and retailers. Warby Parker’s Manhattan headquarters includes a showroom. The company plans to open a stand-alone store soon. But what if they left out most of those people? “I had been to the factories and knew what it costs to manufacture glasses and knew the cost didn’t warrant a $700 price tag,” said Neil Blumenthal, a founder of the company. Inspired by glasses they found in their grandparents’ attics, the founders sketched a few frames, hired the same Chinese factories that make designer glasses and started selling directly to consumers online. By doing so, they eliminated enough of the cost to charge customers just $95 a pair. Warby Parker is part of a wave of e-commerce companies that are trying to build premium brands at discount prices by cutting out middlemen and going straight to manufacturers. They make everything from bedding (Crane and Canopy), to office supplies (Poppin), nail polish (Julep), tech accessories (Monoprice), men’s shoes (Beckett Simonon) and shaving supplies (Harry’s). The result is generally cheaper products for consumers and higher profit margins for the companies. Big retailers discovered long ago that controlling the supply chain benefited their bottom lines, which is why companies like Wal-Mart and Whole Foods sell many products under their own brands. At Macy’s and Kohl’s, such “private label” brands make up almost half of their sales. Start-ups have traditionally struggled to match those efforts. They do not have as much brand recognition as big retailers, and persuading consumers to take a chance on, say, Warby Parker eyeglasses instead of Prada’s can be difficult. “The challenge is, if you’ve never heard of the brand, you wonder, ‘Should I buy it when it’s 20 percent cheaper?’ ” said Raj Kumar, a supply chain consultant at A. T. Kearney. “Or should I buy a brand I trust?” What is empowering the upstarts now is the Web’s ability to reach lots of consumers without the costs of operating physical stores as well as a change in manufacturers’ willingness to work with small brands. The founders of Deal Décor, whose model was to sell furniture directly to customers, worked at Target and Home Depot Direct before starting their company. They said they saw an [...]
4 Good Reasons to Sell Online
Ecommerce sales are growing. Online sales topped $1 trillion worldwide for the first time last year and there are good reasons you should consider selling online now to start getting your share. There are really two kinds of businesses or entrepreneurs that should be considering ecommerce opportunities right now. Small, successful brick-and-mortar retailers that want to see their company grow. Individuals with a passion or interest that translate well into a niche or specialty online store. What follows are four good reasons for these folks — small brick-and-mortar retailers or inspired entrepreneurs — to consider opening an online retail business now. 1. You Can Make Money Selling Online Ecommerce sales for retail goods are growing faster than offline sales for brick-and-mortar stores. comScore, the trend-tracking firm, said that in spite of “continued economic uncertainty, 2012 was a strong year for retail ecommerce. Throughout the year, growth rates versus the prior year were in the mid-teens to outpace growth at brick-and-mortar retail by a factor of approximately 4x.” Separately, comScore noted that online retail sales grew 14 percent year-over-year in the fourth quarter of 2012, reaching $56.8 billion in the U.S. alone. The fourth quarter also represented the 13th consecutive quarter of positive ecommerce growth and the 9th consecutive quarter of double-digit growth. “It is clear that the online channel has won over the American consumer and will increasingly be relied upon to deliver on the dimensions of lower price, convenience, and selection,” said Gian Fulgoni, comScore chairman, in a release. Finally, U.S. retail ecommerce sales represented 10 percent of American retail spending, excluding food, gas, and automobiles, in the fourth quarter of 2012. This is the first quarter in U.S. economic history that electronic commerce represented such a significant part of the total available market for retail consumer goods. The fact that ecommerce is growing will not guarantee success for new online retail ventures. But is does offer an opportunity to make money selling online. Where opportunity exists, entrepreneurs can excel. 2. Shoppers Are Online Already In 2012, Google worked with Ipsos OTX, a market research firm, to survey potential holiday shoppers about their 2012 holiday shopping intentions. One of the key findings was that 80 percent of the 1,500 shoppers queried would research products and prices online before they would make a purchase. Clearly the Internet is the engine driving retail. Consider [...]
