Increasing profits

[suityou01]

New Year and I'm thinking about how to make my business more profitable, as we all should.

My chosen course of action is to open an e-commerce web site, selling IT related products. Local focus at first, leaflets in the local rag etc etc. The thinking is that the slow burn of orders will turn over some extra cash, and will open new opportunities to provide IT consultancy.

So, being the IT guru that I am I am already massively down track with the site. Ok so far. And I have even contacted my first wholesale supplier. Keep it simple I thought, focus on blank media. They also do IT kit. Great I think. Send me the wholesale pricelist.

Verbatim external HDD 250GB, £42. Mmmmm. Go to google shopping and low and behold the lowest price is £44.

Down but not yet out. I would have thought there would be more margin than £2 flaming quid. Imagine processing 100 orders in a day and then collapsing in a heap a mere £200 richer.

So, while fully admitting I am a complete numpty and know very little about the retail sector, I have two questions.

1) What is a reasonable margin for shipping something online? 1%, 5%, 10%, 50%?

2) How the heck does anyone make a go of it?

Go gently please.

[AtW]

Low end hardware is very competitive and margins are tulip.

A lot of people would go with established brands like Dabs who ship in large volumes and can make some money with tulip margin.

Services is a better area for margins but it might be hard to scale (ie: if you offer to install hard disk for local buyers).

[Tingles]

1) What is a reasonable margin for shipping something online? 1%, 5%, 10%, 50%?

2) How the heck does anyone make a go of it?

1) Depends on a number factors.

2) Knowing how to source, negotiate, sell - all at the right price AND not giving up at the first hurdle.

[suityou01]

Low end hardware is very competitive and margins are tulip.

A lot of people would go with established brands like Dabs who ship in large volumes and can make some money with tulip margin.

Services is a better area for margins but it might be hard to scale (ie: if you offer to install hard disk for local buyers).

Fair comment Atw. Given that there are other e-commerce sites not as big as Dabs making a go of it, please refer to question 2.

TIA

[suityou01]

1) Depends on a number factors.

2) Knowing how to source, negotiate, sell - all at the right price AND not giving up at the first hurdle.

This is where I am deficient.

I will not give up.

[AtW]

Fair comment Atw. Given that there are other e-commerce sites not as big as Dabs making a go of it, please refer to question 2.

Other sites have some historical custom and none of the sites we buy from are anywhere near local operation that you talking about.

Margins for hard drives are tulip (which is good for us as we buy a lot of them) - there is currency risk also, if you think of Plan B as a local hardware store then you are going to struggle. Better write some small but useful software that has got big appeal and sell it online - this way your market will be bigger and you'll get most of your margin.

[Paddy]

[QUOTE=suityou01;1037522]New Year and I'm thinking about how to make my business more profitable, as we all should.

QUOTE]

Spilt hardware ownership from Consulting. Your hardware department will then charge your consulting department for use of hardware.

You car will be owned and run from by you Transport Department. They will charge you for the use of your car.

Ah, and a shipping department.

You will need to create an HR department, HR will look after your contracts and outsource payroll.

You may then find out that your consulting department goes out to competitive tender for its shipping, transport and hardware requirements thus saving money.

The downside is that falling revenues from Transport and Hardware supplies and spiralling HR costs makes it uneconomical to carry on contracting.

[suityou01]

Other sites have some historical custom and none of the sites we buy from are anywhere near local operation that you talking about.

Margins for hard drives are tulip (which is good for us as we buy a lot of them) - there is currency risk also, if you think of Plan B as a local hardware store then you are going to struggle. Better write some small but useful software that has got big appeal and sell it online - this way your market will be bigger and you'll get most of your margin.

Hactually this is plan C. Plan B is to write some software and market it online, and I am two years down track with that project and not even half way.

Others are making a go of it, so for all your negativity I think there must be a way. Praps this wholesaler is a cheeky fecker and is just dear, and there will be other wholesalers with keener prices where 25% margin is not uncommon.

[AtW]

Hactually this is plan C. Plan B is to write some software and market it online, and I am two years down track with that project and not even half way.

It's too long - best to write quick fairly easy software that does not cost too much but solves real problem, then sell it online: it is a viable Plan B - write it when in-between contracts, but stay away from small scale retail business - it is only worthwhile if it supports your high margin consulting efforts.

[suityou01]

It's too long - best to write quick fairly easy software that does not cost too much but solves real problem, then sell it online: it is a viable Plan B - write it when in-between contracts, but stay away from small scale retail business - it is only worthwhile if it supports your high margin consulting efforts.

You talk a good talk me old son. The only thing that stands between me and doing this is the idea in the first place. I had one idea, went with it and am still writing the flaming thing.

So there we are. Dedicated programmer, bags of enthusiam, time to invest and no idea. That probably about sums about 90% of programmers on here.

I am not a greedy person, and have 3 wonderful kids and a 3 bed semi. That will do for me thanks very much. Content. I just want to move my business into a more local one and be able to work less to maintain the same lifestyle. That way I get so see more of my family rather than contracing all over the country.