A website that sells real stuff, not AIS
So I decided I might like to start up in a "real" business. I had a good brainstorming session and came up with a good idea of what to sell.
I checked online and can find no websites selling the product here in the UK. I checked eBay UK and found 1 seller who sells the product at £9.00 including postage and packing.
Good stuff so far! I then spent a day researching suppliers of the product and found 2. One of which actually replied to my email, and gave me some costings…
I can buy 100 products for $500, including postage from America to UK. Great! So I can buy the products in at $5 each.
Product Liability
However, because the product could (and I mean could, in very extreme circumstances) cause injury, I need Product Liability Insurance. The quote for this was just over £2000 (UK Pounds) per annum.
More Costs
I then visited my local print shop, as the product needs to have an instruction sheet printed up. This cost was minimal at just £100 pounds for a double sided, laminated instruction sheet. I would put this together myself as I used to be a graphic designer/printer many years ago.
The Selling Price
My initial thought was to undercut the eBay seller (who sells 5 or 6 products daily), by charging £6 including postage.
Breaking Even
Taking all costs into account, and assuming sales of 10 products per week I would need to charge £4.53 per product to break even. Consider that postage and packing on each product would cost at least £1.50, that brings the price up to £6.03. I then want to make at least £4 profit per product, bringing the price upto £10.03..
My options are as follows:
- Bin the whole idea.
- Find a less expensive provider for Product Liability Insurance
- Decrease my profit margin
I will go with #2 for the time being - if I can get that down to a more realistic level, I probably will take the plunge. Could I get away without any Liability Insurance? Of course, but I wouldn't want to.
Comment by Oli Allen — May 24, 2006 @ 2:48 pm
Assuming you're going to be selling from an actual website, rather than a 100% eBay business, is it really necessary to undercut the eBay guy?
People on eBay will pick the lowest priced item every time, but not everyone uses eBay, and if the competition is as low as you say, and this guy can sell his products on eBay, you shouldn't have a problem selling at a higher price from your own site…
If it's important to beat the eBay guy, why not find something low cost to package with the product and increase it's value?
In the case of selling car exhausts, you could find some relevant PLR articles/a ready made PLR ebook and offer a free ebook about car maintainence with every purchase. Maybe have it printed on some cheap paper depending on cost and offer a physical "book".
Comment by Will — May 24, 2006 @ 3:54 pm
I'd be interested in why you've decided you want to go back into the 'real' world anyway.
Comment by burt — May 24, 2006 @ 3:58 pm
Oli, that's a great idea - add value to the offering. Nice one.
Will, I wrote an article about it - I get really bored of just doing AIS stuff. I need some more interaction…of course, earning money is all well and great - but it's not really a motivator for me. What does motivate me is thinking up weird plans and ideas, then making them reality, if I get paid for it, then that's a bonus
Comment by Dave G — May 24, 2006 @ 5:21 pm
This is great news, and slightly odd timing as I just did exactly the same myself. The only difference is that I am using a drop shipper. They are responsible for the product, postage etc so I simply set up an online store, filled it, and am just starting on the marketing to sell the goods.
I too love the AIS stuff but wanted something that could also grow into a business. Something that I could easily let a family member manage for me and give them a cut, or, repeat the business model and give them one of their own etc
I would love to know what the product is that you are interested in marketing, of course I don't expect you to say on here
If you fancy giving me a mail or a PM over at the BV Forums that would be cool 
Eitherway, good luck as usual!
Dave
Comment by Chance — May 24, 2006 @ 6:52 pm
I wouldn't worry about competing with ebay- that's a completely different class of buyer than one that shops at ecommerce sites.
Waging a pricing war is a really hard way for a small ecommerce site to run an operation- the suggestion that you add value with "freebies" is a great alternative.
Did you build marketing costs into your price consideration? Did you include 15% general administrative overhead (office supplies, accounting, your time)? Also, do you have to pay any tariffs or duties to import the product?
Comment by burt — May 24, 2006 @ 7:01 pm
I'm only interested in selling on eBay. Running a website is too much like hard work, I'd need to find someone who knows osCommerce etc etc
No, eBay is the way to go. The opening is there, but the cost of getting the product to market is too high to be viable (unless I can find a better rate on the liability insurance). Other costs have been factored in already…
Comment by Oli Allen — May 24, 2006 @ 10:56 pm
Ever sold on eBay before?
Running your own site is probably a lot less hassle in the long run.
Comment by burt — May 24, 2006 @ 10:57 pm
Many times me old mucker. I think I have well over 500 feedback
Comment by Oli Allen — May 25, 2006 @ 12:06 am
"Many times"
You must have a lot more patience than me
Comment by Joe — May 26, 2006 @ 5:35 am
As a former Ebay power seller, I found Ebay's fees to be ridiculous. Add PayPal fees onto that, and selling on your own website makes a lot more sense from a profit point-of-view.
Comment by Myspace Man — June 1, 2006 @ 11:55 pm
How come you'd need insurance? Surely as you don't manufactuer the product the liability wouldn't fall on yourself. I doubt the ebay guys has it anyway
bloody hell, Im curious now.. what you gonna sell?!
Comment by burt — June 2, 2006 @ 8:26 am
I suspect that the ebay seller does not have insurance. The manufacturer does offer free insurance but only in the USA - if outside they explicitly state that their is no insurance cover whatsoever.
I'm still considering going forward with this - going to take a product to some insurance places (the town next to me is basically "insurance capital of the UK")…