The Planet Express

Having set up my own small online business “The Planet Express”
(the name comes from the fictional delivery company of US TV show "Futurama" - http://futurama.wikia.com/wiki/Planet_Express) I thought it would be good to highlight some of the key challenges and opportunities when starting up as an online retailer.

• Selecting the correct sales channels.

This could be Amazon, Ebay, your own retail site or some of the lesser known companies such as Play.com. It’s worth calculating before you buy your stock the pros and cons of selling through each of the different channels and which websites or which mix of websites will suit your products best. The two largest websites and the ones I use most in my own business are Ebay and Amazon.

Ebay vs. Amazon


Cost

If you are selling a small number of items Ebay is often the cheaper option. You can list individual items on Ebay for only 40p, this includes either setting a starting price for bids or a “buy it now” option. Although technically it is possible to list items on Amazon for free, Amazon fees are very high for this option (about 35% of the item sale price). To make your profit margins competitive on Amazon it is necessary to become a professional seller for a £30 per month subscription. Ebay however has comparatively low seller fees for its 40p option (about 15% of the item sale price) and therefore much better profit margins. So if you only have a few products to sell opt for Ebay. If you have a significant amount of products that can justify a £30 a month subscription fee then Amazon is the best option.


Flexibility

There is a big difference between the two sites in what products you can sell and how you advertise your product. Amazon is very uniform in its design, Ebay allows for more creativity. For example, Ebay lets any individual seller (even someone selling one item) to give the item its own selling page. This page can include pictures of the item taken by the seller themselves and a large amount of space to provide information about the item utilising full colours fonts, pictures and graphics. Amazon collates identical items into one page allowing the customer to easily compare each of the sellers of the same item. This is better for the customer but makes it more difficult for the sellers to differentiate themselves. If you have a professional seller account with Amazon it is possible to create your own pages for items (even if an identical item already has a page) but you must follow Amazons page format, rules about uploading item images are a lot stricter than on Ebay and your new page is likely to be at the bottom of all searches for the item even if you use all the key search terms.


Ease Of Listing Items

I have found that Amazons format does have some advantages when it comes to listing new items. It is much easier to add your product to an existing page with Amazon than to create a whole new page on Ebay. Ebay sales require a lot more supervision by the seller. You need to time the sale, add your own pictures, description and several other elements. On Amazon you simply find the existing listing, set your price and add a short description. The ability to list items quickly is another reason that Amazon is a better platform for selling a large quantity of goods whereas Ebay is more suited to fewer higher price goods.   

Amazon is better than Ebay for listing a large number of different items quickly.

My best advice is to experiment with both Ebay and Amazon, research some of the smaller sites and don’t be afraid to sell your goods (at least to start with) across a diverse range of different websites.

• Work out which unique selling points (USPs) are going to differentiate you from the competition.

This is particularly important if you are aiming to enter a high sales, highly competitive and crowded market. In my own business DVDs represent the most sales as well as the lowest profit margins. I also sell DVDs mostly through Amazon.co.uk which is possibly the most competitive market for DVDs on the net.

When a customer browses an item page on Amazon with many different sellers the product is essentially identical (with the exception of item condition on used items) across all retailers. If the buyer wants to purchase the item they will decide who to buy from based on a number of different factors.

These include;

- Price (Including Delivery Cost).
- Reputation (Seller Rating). 
- Speed of Delivery.
- Condition of the Item (For Used and Refurbished Goods).

In my own business I was able to differentiate myself from the competition by offering mint condition “like new” DVDs in a market of DVDs in “very good” and “good” condition. It may have taken a little more effort to source used DVDs of this quality but it gave me a significant edge over my competitors. Selling used items of a higher quality that the rest of the market also enabled me to charge a premium of around 30% for each item. So for example, an extra 39p on Amazons minimum DVD price of £1.27. That may not seem like a lot, but as your online business grows it can be very significant. This tactic also enabled me to secure sales in extremely competitive markets where up to 50 established sellers could all be offering the same DVD at the minimum £1.27 price – In these cases the quality of the item became a vital differential.

Product Page: 66 used items from 1p (plus £1.26 delivery).

Another USP of my business is a promise to despatch items within 24 hours. I advertise this clearly in all of the product descriptions. Although there is no requirement by Amazon for me to despatch items within 24 hours, I made this a key element of my marketing strategy due to my own experience of becoming frustrated when products I bought online sometimes took weeks and weeks to arrive. I thought that customers would appreciate a seller who promised to despatch items quickly and that this would encourage them to choose my business over the competition.

When selling products online it is very important to scrutinise the market for each item. It can be helpful to start by asking yourself – what USPs would encourage me to buy this item from my own business instead of all the other competitors?

• Sourcing goods from a reliable wholesaler.

Once you have identified the best markets for your products and what the unique selling points of your products and business are going to be the next step is to source a reliable wholesaler.

From my own experience finding good wholesalers accounted for around 70% - 80% of the work involved in starting my business. Plenty of time, effort and hard work are required to source suppliers but it is paramount to the success of the business. There are many different types of wholesalers on the internet. I would recommend esources (www.esources.co.uk) as a good starting point for researching the wholesale market.

Online wholesalers can vary from companies offering a huge range of different goods such as ATS Distribution (www.atsdistribution.co.uk) to smaller niche and specialist suppliers. For example, Gift House International (www.gifthouseinternational.com) is a good supplier of unique and novelty items.

An interesting source of goods is Ebay. I will often buy as well sell from Ebay. I sometimes buy bulk lots of items from Ebay then retail the products individually on Amazon and smaller sites. It is even possible to buy an item for a great price on Ebay and resell the same item on Ebay for a profit - it all depends on how variable the market for that item is.

However, it is usually better to buy from smaller sites. The less well known the company is the lower the price they are usually willing to sell products for. Buying goods from large sites such as Ebay requires the skill to identify a bargain and the intuition to take a chance on products that may or may not resell.


• Put some effort into building a good reputation.

Finally, reputation is critical in the online retail market. Many of the large online retail sites have some sort of seller rating system where potential customers can see how reputable a seller is based on customer feedback from previous orders. Ebay, Amazon and Play all use a seller rating system of one to five stars (five being the best) and a percentage total (100% is the best). 

From my own experience there are methods of persuading customers to record positive feedback on your profile. Personally, I send out this insert with Amazon orders, politely encouraging customers to give feedback: 

Notice the use of "us" and “we” instead of “I” on the insert suggesting I run a business with multiple employees, the logo, brand colours and business email address. Small details like this can help to cultivate a professional image for your company. 
Before I included an insert with orders I didn't receive any feedback at all. Since, I have started to include them customers are now starting to leave feedback.


Conclusion

There are many important challenges and opportunities to consider when starting an online retail business. It is certainly worth thoroughly researching these before you start your company. Although there is no guarantee of success, the more knowledge you have about selling online the more likely you are to succeed. I hope that some of the tips and tricks I have given in this blog have helped you.

Ultimately your success will depend upon the same factors when growing any business – the time and effort you are willing to put into it, your business strategy, ability to innovate and the determination to succeed.

Thanks for reading and I wish you good luck if you do start an online business.



A couple of articles that helped me:

http://www.marketingdonut.co.uk/marketing/internet-marketing/e-commerce/selling-on-ebay-and-amazon

http://www.shopify.co.uk/blog/6399562-the-pros-and-cons-of-selling-on-amazon-and-ebay#axzz2ZP0zPgdY

A range of articles on esources.co.uk:

http://articles.esources.co.uk/category/2/


Selling on Amazon:

http://services.amazon.co.uk/services/sell-online/how-it-works.html


Selling on Ebay:

http://pages.ebay.co.uk/help/sell/sell-getstarted.html