Yeah I've got a couple of ideas for e-commerce websites, but just the thought of picking up the phone to ring a manufacturer makes me tremble! What are your experiences with securing products for an e-commerce website?
Have you ever dealt with a manufacturer before? What is expected of you / what will they most likely ask?
In Australia if it's a cash account they normally want to know references and how much turnover you are going to produce. Then if it's a 30 day account they get into all the specifics, business registrations, directors name addresses and so on and want some kind of personal guarantor.
If you are looking for a sole distributorship that normally requires a set amount of sales and/or a sole distributorship licence fee.
In China I have found they just want to sell quantity and cash up front. Most I have found don't like doing anything less than a container load. Some will mix the products up so it's can be easier to fill a containers up but not all offer that. I have yet to find a drop shipper that I can trust from china.
I got out of bed today staring at a ghost. Who forgot to float away, didnt have all that much to say. Wouldn't even tell me his own name.
Non ducor, duco
What they will ask depends on the business sector.
Even though you intend to deal with them on a "cash up front" basis, they might ask to see your premises. That is rational, to protect their trade mark / business name they would want to see that their goods were not being stored under a tarpaulin outdoors and/or sold from a garden shed.
They might want to see how you intend to deliver the goods - depends on the nature of the goods, but you have to be ready for that question, even if you just intend to post things.
In this day and age, they would almost certainly want to inspect your website - so you will need a corporate style five pager to give the right impression of "serious business", as well as business address and contact numbers on the site (hint: a cheap mobile/cell phone costs about £15 from Tesco, if you need to separate business from everything else).
If you're looking to sell any "designer goods", you really need a bricks and mortar outlet before those kind of companies will look at you. It can be easier to approach someone who is already selling those goods and buy from them. It does make it hard to compete, because you have to lose a slice to your "wholesaler", but he can sometimes get a better quantity discount because of the increased sales volume you bring.
You call up, you ask for the Trade Sales dept, and you outline your ideas to the salesman. If he suggests buying volumes of goods that are way beyond your reach, ask about wholesalers he can put you on to, or dealers that might be prepared to wholesale to you. He wants business, he's a salesman, he will be patient if you have a serious offer of new business. If you say something that he obviously doesn't like (eg. you find out the company dislikes web sales, that's why they don't do them), you can leave it for a week, invent a corporate sounding trading style, and get someone else to make a solid call that dodges that issue.
LOL if the whole thing sounds too daunting, you call and find out the name of the sales manager, then write him a letter - snail mail. How he responds will actually tell you how interested they are - a letter may just contain further advice, a phone call says "you sound interesting".
Don't try to make an initial approach by email, even if there is an enquiry form on the corporate website, unless the company is in another country. You're trying to appear "businesslike".
At the end of the day, these are other human beings trying to sell something, and you want to buy. Keep that in mind.
Haha, thanks for all this. Yeah it does all look a bit daunting! Especially things regarding premises inspections and whatnot. Hrrmm!
Really appreciate the advice and insight though.
Kiada
I have been through the trenches a bit on ecommerce sites and am now an advisor to many small and medium sized ecommerce companies. I have lost so much money on different aspects of ecommerce over the years it is scary to even think about it. But I have had some home runs too. With that in mind - here is my advice for what it is worth.
Don't ring the manufacturers. Proceed with the following as a rough outline of a process for getting started. Not all of these steps will work for all niches but if it is a consumer niche then the process is roughly OK.
You have an idea or two great. You need to first establish the demand before you do anything - i.e. can you make money, and pay the bills.
Assess demand using some very simple but effective methods:
1) Ebay - look at the category your ideas will fall in. Are there sellers? How much are they selling (volume based roughly on feedback score)? How many similar products are listed? How many sellers - use tools like terapeak if you want to mine the data further - but rough indications are all you need at this stage. You are looking for some relatively good activity in your chosen niche.
2) Amazon - repeat the above process but now on Amazon
3) Keep notes as you go.
4) Go to the Google adwords keyword tool - research keywords for your niche - look at demand on generic niche related terms and brand specific terms. How much demand is there? Compare it with another niche see how the volumes compare. How much is the average CPC (the tool is way out but gives you an order of magnitude ratio). Keep notes. Look at Google trends and google insights for search - is there seasonality - (if you test (as below) in August but demand is in November your test result will not be valid)
4) Dependant on your chosen niche and cost of the item budget £200 roughly or the equivalent in $ AUD$ etc. This may appear to be a lot for research but it will save you thousands later.
5) Buy products from your future competitors. How good is their service, what are their prices like, how good is the packaging, was it free delivery - keep notes.
6) Importantly - KEEP boxes and outer wrapping from the deliveries. You will need them in a bit.
7) Is there a range of products you can offer in this niche (i.e. more than a couple of products, different brands etc)? Do the sellers on ebay and amazon have those ranges. The bigger the range the more positive - it allows for growth.
8) Are the products consumable? Do you need to repeat buy them as a consumer - do they wear out? Repeat business is a massive plus.
9) Take the research you have done to date and your notes and move to Google. Do some searches for product names, brand names, generic names.
10) Note down top 10 PPC advertisers and top 20 organic results for each keyword search - this is a lot of work - but will save you thousands long term.
11) Go to each of the sites from your search results above - choose 5 (different from the ebay / amazon purchases above) and buy product again.
12) Also note down if they have 'brand' pages if they do write down every brand on those pages.
13) Note the good and bad points of the purchase - keep the packaging.
14) Take all the packaging you have gathered and outer boxes. Look on each one for - manufacturerd by, imported by, distributed by labels etc. Note down the names of the companies.
15) Is there more than one supplier? More is good.
16) Take your knowledge and go to offline stores that may stock your products - pick up the boxes and look for the manufacturerd by, imported by, distributed by labels etc - you will look a bit crazy doing this but it works. Look for brown boxes lying around the shop / store - the type that the products arrive to the store in. They will have stmaps on them detailing supplier / manufacturer. They will also have courier labels - make notes - take pictures with your phone.
17) Search Google for [product name] + supplier, [product name] + distributor, [product name] + wholesaler, [product name] + importer - repeat this with brand name, and a few generic terms too.
18) You should be building a picture of the key suppliers for your products in your country. Find their websites.
19) get to know the suppliers, their ranges, who they supply etc.
20) Really dig hard into the data - do those importers / manufacturers etc retail on the internet too - do they have ecommerce sites that are not branded as their manufacturer name (i.e. are they pretending to be retailers while also being manufacturers / distributors etc) - dig hard on this point - check addresses, whois domain information etc.
21) Get to know the products really well.
22) Manufacturers often have a terms of supply on their website - read and prepare ready.
23) Don't ring the manufacturers yet.
24) Throw up a 10 page website with some of your products on it. Make it look good and make it all work ok - you don't need checkout pages just 'enquire here'. Throw some PPC traffic at it. How much did it cost you? measure enegagement with your website using google analytics. You are trying to judge cost of traffic and engagement with your website. Stop the test after a few days or after a set budget amount - write this money off.
25) Work out what are the key brands in your niche. You will almost certainly have to have all the key brands in order to compete even if they make you little or no money.
26) Use ebay, amazon, google keyword tool to work out what the top brands are - you can do this with 90% accuracy using those tools.
27) Don't ring the manufacturers yet.
28) Work out who supplies the top brands.
29) Now tweak the website you built above - hide the pages you did for your test and make the site more informational with good info on the niche, the products, the benefits, how to information.
30) Get your business info sorted - business name, email, tel number. etc.
31) Start contacting lower end manufacturers / distributors / wholesalers - some of these may drop ship. make sure you keep your notes with you - ask questions, make sure you appear knowledgable about products, ranges, industry as a whole etc. You are after - 'trade terms and conditions and trade price lists' at this stage. Nothing else.
32) Some companies will dismiss you, some will gladly supply the information. Do not discount the ones that dismiss you - just put them on the list to come back to later.
33) With price lists in hand and an idea of how much you had to pay for PPC traffic in your test above you will know if you can turn a profit.
34) If you have a non consumable product or a non repeat purchase product and can't make a profit utilising PPC traffic - STOP and start again with another idea unless you have big pockets that will support your paid traffic until organic rankings start to work.
35) If you have a consumable product, that is part of a wide range, or is needed on a repeat basis and you are making a better than break even margin with PPC traffic - then you MAY be ok. It is VERY, VERY hard to turn a profit on many low value consumer items on the first sale utilising PPC traffic. Call it a customer acquisition cost or whatever. You need those customers to come back to turn a profit.
36) If the numbers work (spend a lot of time on the numbers) and make sure you are aware of - delivery costs, distribution models, time for delivery, etc from your wholesaler / supplier - then take it to the next step.
37) Get started with the suppliers that were accomodating. You may have to be a little bit creative with the actual status of your business.
38) Build your ecommerce website
39) Send some traffic via PPC.
40) Did you make some sales? Yes great - expand - more suppliers, more pages on ecommerce site etc. Drive more traffic, get more sales.
41) The more sales you make the more you will have a chance of getting supplied by the big brands - it may take you a year to get there - but it will be worth it.
42) Repeat customers are the absolute key difference to 'getting by' with ecommerce and making serious coin. Email marketing is your best friend. Do not under estimate the power of an existing customer.
43) Expand - website, traffic sources, suppliers, geographies etc.
44) Expand - marketplaces, Amazon, ebay etc. (you could do this to test the market too if you wished and the supply agreement allowed it).
Anyway - the point of all this is research up front will save you a small fortune BEFORE you take in stocks, build out ecommerce sites, setup credit card processing, pay for packingaging, setup courier accounts, setup bank accounts, buy software for accounting, bridges between systems etc. It is easy to do the research all of the tools are right in front of you and most are free.
You would be truly amazed how many people have come to us with everything ready - stock, ecommerce platform, etc etc - and they have not even assessed demand for their product online. We have literally seen £100K+ go down the pan.
Clearly this is very rough and I have typed it up in less than 10 minutes, and is designed to be a guiding process add your own twists and turns.
Hope this helps and wish you all the best with your endeavours.
Clinton (November 16th, 2011), crabfoot (November 16th, 2011), Fish (November 17th, 2011), grynge (November 16th, 2011), KenW3 (November 21st, 2011), Kiada (November 16th, 2011), kmander (November 24th, 2011), leadegroot (November 22nd, 2011), moshthepitt (June 25th, 2012), TheodoreK (November 26th, 2011), WannaBeGeekster (November 19th, 2011)
^^amazing information there. Much more than I expected - thanks loads for that!
My main idea is a bit difficult in terms of research though, as theres a similar e-commerce site in the US but none in the UK! Also hrrrmm, I think I might have to deal with red-tape as the items are food items.
Think I need to do a bit more digging, but again - thanks for taking the time to give me (and anyone who reads) all this useful information!
You are welcome hope it helps.Originally Posted by Kiada
^^
My main idea is a bit difficult in terms of research though, as theres a similar e-commerce site in the US but none in the UK! Also hrrrmm, I think I might have to deal with red-tape as the items are food items.
Think I need to do a bit more digging, but again - thanks for taking the time to give me (and anyone who reads) all this useful information!
No competitors in the UK would be a red flag for me. No competitors = probably no demand.
It is MUCH easier to fulfil demand on the internet than try to create demand. Unless of course you have VERY deep pockets.
All the best anyway.
No competitors in UK might mean other things - European food regs are a lot different from the US, so there are ingredients in US that are not permitted in the EU. You can't sell that US hormone-fed beef in EU, but there are subtler things, and you might not realise they are in there.
I have a memory of a consignment of marshmallows that was held up in the warehouse of a UK freight forwarder I used to collect from. The marshmallows had been dusted with corn starch, and the corn was a GM strain, so the consignment had to go back to the states. Unfortunately, some of the cartons were damaged in the warehouse, so only about 80% of the consignment was available to be returned. That warehouse manager looked like the original pie-eater before he met the marshmallows!
Hey crabfoot, I've been watching the forums this morning and I'm unsure how I missed your reply! I never considered the differing food regulations actually. I seem to have access to the VIP forum and was planning to outline my idea a bit further in there. What you said is probably very applicable! Thanks for that
It could also mean that it's a niche waiting to be exploited.
It would be interesting if there were easy ways to tell whether the lack of competitors is because of no demand or because there are some snags that competitors couldn't get around but which may not apply today or are easily resolved.
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Chabrenas (January 14th, 2012)
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