Lost with ecommerce startup

Was expecting a bit of advice.

Sure, but we have a very different perspective. Yes, most of these guides are to generate writer income not actually income for the other side - otherwise they would be just running a business themselves - there are some exceptions but few and far between.

The problem is simply this, efficiency. Small business are lucky if they generate 50-200% efficiency gains using technology, usually the lower end. Everything has changed in the past couple of years, you could do virtually nothing and still make money to survive - the problem now is that you have to know what you are doing and do it with less effort – it is contrary to the basis most work from.

There are two types of making money, to survive and to live. So the guides and advice will generally be the former, very few know how to do the latter. An example, Amazon work on a gross profit of 30%, net profit of 0-5%. They have 1,100% efficiency meaning one employee at Amazon generates 11x a single person business working flat out with limited or inefficient technology. So if you are lucky you will generate 10% of the revenue as income on a 50% margin, so for $50k income you need to generate $500k revenue - but that is surviving - to live you need $150k and that requires $1.5m plus revenue - which you can't do as an individual with 100-200% efficiency – you need 700-1,000%.

Now - Google and customers are looking for higher efficiency than the small business providers can supply, basically 300% or more as it conveys trust. This is where we come in, we work with some consultants via via who design solutions using tools such as SAP which is designed to provide 1,000% efficiency increases out of the box - that box of tech costing $10s millions.

The technology has been downscaled to small business - long story but look at Rocket Internet as the architecture was designed to do the same. So when we come along and say do x or y - on one side you have the existing retailers jumping up and down as we can do the same thing 800-950% faster - and the service providers on the other side throwing their toys out of the pram as it bypasses 80-95% of what they do - sell time.

Last year we persuaded the implementation consultants to package it up for small business and work as resellers, what we didn't realise is that anything above 200% efficiency small businesses just become confused as 99% are saying - no don't do it that way do it the hard way.

So we dropped out of the reseller side but because we knew them allowed us to use the platforms, it means we have time to work on the forex market as we don’t need to spend 40hrs per week persuading Google and visitors to come to the site and another 40hrs maintaining the thing.

One of the problems of being more efficient though is that you lose the personal touch, it then comes down to personal style whether customer interaction is more or less important than revenue and profits. Then you have niche which generates much less revenue than mass market corporate - and have to take in to account high margin low volume versus low margin high volume approaches.

So it all comes down to one simple fact – efficiency – Amazon are 1,100% but work on a breakeven model, Net-A-Porter are only 500% with €24m loss (-5%), Asos are 1,600% with £45m profit (+4.5%). It’s really that simple!

Generating income is all about having a solid strategy and understanding that web is just another or one single channel out of several to be established for your business. most books wont tell you that they will inspire you to believe you can make a ton of money by simply selling stuff online, which is not the case for 99& of the retailers I know but yes for most Big brands why? Because apart from the web they work a lot on having a big presence offline. Even Ebay and Google promote their sites on magazines, movies, commercials etc So the web is not the only source of income for most companies even those being 100% digitally based they still depend on one side or the other from the offline world.
If you plan to start an e-commerce site I suggest to look at some already established portals like, DX, Ahappydeal or TK5.biz among others.

all the best

Maurice