Increasing profits

[NickFitz]

How the heck does anyone make a go of it?

I do know one of the ways Amazon make money from selling goods at cost. (I can't remember the exact numbers of days involved, but these are close enough.)

They get their goods from their suppliers on 30 day payment terms. However, they rotate the stock in their warehouses something like every 15 days. This means that for about 15 days they have the money from the customer, earning interest, before they have to pay it to the supplier.

This isn't going to make much difference to the state of your finances if you get to play the markets with £200 for a couple of weeks, but when you're taking money on the scale Amazon does it becomes very easy to make large amounts of cash without having any profit margin at all on the actual goods.

Given that you aren't looking to operate on Amazon's scale, you could do worse than to consider a very niche market. A former client of mine, which only employs about thirty people, set up a separate business primarily as an experiment and learning exercise: they wanted to be sure they had the expertise in-house to deal with online payment handling, order fulfilment, and so forth, so they could offer such services to their clients.

They have a brief case study about the resulting TV stand business on their site, but what that doesn't tell you is that, with no full-time staff and minimal stock kept on hand (they pretty much order stock when they have an order to fulfil), that sideline/experiment turned over something like sixty grand in its first year

[NickFitz]

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.

As Jeff Atwood says, Version 1 Sucks, But Ship It Anyway. (When you read that, be sure to follow the link to If you aren’t embarrassed by v1.0 you didn’t release it early enough.)

[Platypus]

Verbatim external HDD 250GB, £42

Who provided you the quote? A distributor? How many other distributors did you try? How many were you attempting to buy?

These days it's probably better to buy direct from abroad.

If this is anything to go by, margins are very tight.

[NickFitz]

Verbatim external HDD 250GB, £42.

Who provided you the quote?

From the preceding paragraph:

And I have even contacted my first wholesale supplier.

[coultog]

Why not read the Long Tail? That should give you some product ideas.

[MPwannadecentincome]

I do know one of the ways Amazon make money from selling goods at cost. (I can't remember the exact numbers of days involved, but these are close enough.)

They get their goods from their suppliers on 30 day payment terms. However, they rotate the stock in their warehouses something like every 15 days. This means that for about 15 days they have the money from the customer, earning interest, before they have to pay it to the supplier.

even at today's paltry interest rates?

[MPwannadecentincome]

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.

Good on you for trying.

I too am looking to see how to get some cashola rollin' in.

I've been thinking of something to sell maybe on Amazon or Ebay that has a fairly high margin but is something in demand, a kind of ship and forget type of thing. I've been reading Oliver Goehler's material - not sure what I'm gonna do yet though.

[NickFitz]

even at today's paltry interest rates?

Smart people moving huge sums of money around rapidly can still make money on the markets. It's not as if they leave a billion dollars in a high street deposit account for a fortnight. Remember, this is a rolling process, so they constantly have vast (though fluctuating) tranches of cash on hand.

[AtW]

You talk a good talk me old son.

I am know what I am talking about because:

1) I've spent over 5 years developing
2) working on very complex project with a lot of separate very complex tasks
3) no obvious route to earn money

Aye - basically don't try it at home!

But I found a solution

So, the conslusions are (unless you are well funded and can manage 5+ years without revenues)

1) only work on software/service that takes 2-3 months till you launch - improve while you go
2) have a business model from start - research market very well, don't do it after development takes place
3) keep eyes open on other things - contracting in theory is perfect for this sort of stuff as you get time between contract to work on Plan B.

More in my future book with working name "Legends of SKA" - I'll have a big chapter dedicated to CUK

[Numpty]

Remember, this is a rolling process, so they constantly have vast (though fluctuating) tranches of cash on hand.

Presumably there are venture capitalists involved with the likes of Amazon who know how to get a return on [ 1 million orders per day x $20 per order x 20 days ] $400m of spare capital.

But it does seem sad all the world's dusty and cosey bookshops and all those bookshop chains get closed down and replaced by one online business which doesn't actually make any money.

If Amazon catches a cold, an entire millennia-old global industry is likely to be destroyed: publishing.