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EXECUTION Step 1: Open a shop. Step 2: Start selling. Where's the catch?

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zaez

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Hi fellow entrepreneurs!

As announced in my intro thread I am starting my Progress/Execution thread about my e-commerce business. Took me almost a month and you'll soon know why...

This is my very first entrepreneurial endeavour. Since I am still working on my day job, I wanted to try out something with limited risk, even if that means limited reward. I have chosen e-commerce. To make things at the start easier, I decided to try out dropshipping, even though this further limits profitability. But, so I think, even if dropshipping turns out to be unprofitable, most of the things I will have learned are anyway required skills if I decide to start an online shop without dropshipping further down the road.

My BIG PLAN at the beginning was simple:
Step 1: Open a shop.
Step 2: Run ads.
Step 3: Start selling, measuring, and improving.

I estimated each step should take not much more than a day or two. Let's see, how it worked out so far... :p

A quick note before I start: Being a beginner, I am absolutely thankful to any input from you. Also, I hope I can show to those who haven't started yet which questions can arise along the way and what kind of problems need to be solved.

The sad truth right from the start: I am working already for about 4 weeks on this project and acting (almost) daily. And I still have no shop online that anyone could visit. It turns out there are lots of formalities you need to go through, especially in the EU (and in Germany, as in my case). So that's where I currently am: just finished lots of formal stuff. Well, at least I also decided on the kind of products I'd like to sell. Let me give you a few details...

I. The fun part

Choice of product to sell.
Brainstorming gave rise to lots of ideas. Repetition gives rise to even more. Browsing categories of Amazon, eBay and similar shops yields yet more ideas. Further, I read a series of posts by Shopify. They are a bit lengthy at times, but have many good ideas (at least, I think so). In the end, I chose a product that had a rising trend on Google Trends, for about 5-6 years already. After that, I had another, related product idea, which also had a rising trend much more recently, about 3 years. Both have different seasonality patterns and I think that's good. I actually might be too late this year to sell one of the products, depending how things work out.

Finding suppliers.
I found a few blog posts mentioning supplier catalogues and search engines. The free ones were of now use, since they contained far too many retail stores. I ended up using lieferanten.de (a German search engine to search for suppliers by goods and other terms) and dropshipping.de (a German search engine solely for suppliers that provide dropshipping). Both are paid services, but the cost is ok. Just using lieferanten.de would have been enough in my case, since I did not find any suppliers on dropshipping.de, which were not on lieferanten.de (but, obv there are much more on lieferanten.de, which does not focus solely on suppliers with dropshipping capability).
Unfortunately, I still don't have access to the price catalogues of the suppliers, since all of them require a verification that I am running a business. My company registration is still in progress (see below), so I have to wait 1-2 more weeks...

II. Now the boring formalities

I wanted to formally register a company since I did not want to run the business as a sole entrepreneur - to prevent personal liability issues, and to facilitate the sale of the business. There is significant overhead caused by this decision. First of all, the company needs a name :) and it takes some time to come up with something you think sounds nice. Further, less obvious, legal accounting rules apply which are far stricter (at least in Germany) than those for "single" entrepreneurs (double-entry accounting). I did not really know this before receiving a letter from the tax office requesting my opening balance sheet. Opening balance sheet? What the ...??? So I had another bullet on my todo list which cost me hours of additional reading. Being a "technical numbers person" the topic was quite interesting, so I ended up reading more than the minimum and spent more hours than strictly necessary to get the job done...

Lesson #1: To move fast, you need to focus! Don't spend your time reading news, random blogs and other superfluous stuff, even though it is interesting at times :).

Choice of online shop system

You have to decide which online shop system you want to use. Shopify is quite popular and I had a very quick try on it and also its dropshipping functionality "Oberlo". Did anyone try that out already? It turns out most suppliers connected to Oberlo are based in China or far east and have delivery times of several weeks. This wasn't exactly what I wanted, so I decided not to use Oberlo. Also, I wanted a more thorough comparison of available online shop systems and started reading "online shop reviews". My take on it? First of all, there are basically two kinds of systems:
  1. Online Shops as a service (e.g. Shopify), configured mostly via a web interface.
  2. Online shops you run and host yourself, most of them based on WordPress (e.g. xtCommerce).
For #1 you don't have to be a very technical person. If you can use Microsoft Word or create your own Facebook account, you can also use them. Also, setting them up is a task which can be done in a matter of hours (a beginner like me will take some more learning time, of course, but it is still very manageable). The drawback, of course, is that they are not very flexible. When you want to run a shop at the scale of Amazon, this is certainly not yours. But for a "simple shop" to begin Shopify offers all you need. For #2 you have to do lots of technical work or pay an agency to do it. This can be very time consuming and expensive. The advantage is you can do anything you can think of.

It was clear to me that I want to use a system like Shopify, but should it be Shopify? Another round of investigation started. Reading various comparisons etc. I realised that simply by reading blog posts it is difficult to get a good impression, but at least I could narrow it down to Shopify and VersaCommerce. The latter being very similar to Shopify, but a much newer (or less mature) product. Still, I gave VersaCommerce a try. Indeed, VersaCommerce kind of tries to replicate Shopify, but it is less mature. For me, it was difficult to create a nice looking shop. A shop created by Shopify somehow simply looks better, without any additional work from my side. Also, Shopify has a far larger community, so I decided to stop wasting my time on this decision and decided to go with Shopify for now. Also, the fact that I have read on this forum from several people using Shopify successfully (that's where I originally heard of it), made the decision quite easy.

Lesson #2: Don't overcomplicate things at the beginning. It makes sense to compare different solutions, but once you find a good solution, just go with it and don't waste time to find another one, which is just incrementally better. Anyway, it is difficult to know in advance, what the perfect solution should look like.

Having decided on Shopify, I remembered there are some legal regulations that apply across the EU if you are running on online shop. I started figuring this out and especially the new EU-wide "General Data Protection Regulation (GDPR)" is really a big hurdle. Want to track your customers? Yes, it is allowed, but you have to inform them via a "Data Protection Declaration" on your website on which data you are gathering, how you are using it. Further, give the customer a possibility to opt-out from this kind of tracking. You are using external services/providers which track the data for you? I.e., Google Analytics, Facebook pixel and the like... You have to inform your shop visitors on your data protection regulation that you are doing it and give them the possibilty to opt-out. And than, the most amazing thing: You have to sign a contract with every service provider you use which gets data about your customers, to ensure they are treating the data according to the EU General Data Protection Regulation! This is rather easy for Google Analytics and other big players - they all have onlinf-forms where you can do this with a couple clicks (if you know you need to do this). It gets trickier with other, smaller players, especially if they are outside the EU. E.g., according to my knowledge, many Shopify Apps have access to your customer data. So if you use some of them, you need to sign an appropriate contract first with the app developer. I haven't tried yet, but I think this could be difficult... You might argue that the EU authorities don't care about a new small online shop. And that's correct (for now they care more about Facebook and the like). BUT: Your competitors do and are allowed to sue you, in case you violate any of the above regulations. And this can become quite costly for a young business. Indeed, these regulations have facilitated a new whole business field for lawyers: there are those, focussing on suing as many companies as possible and other who focus on their protection. All this legal stuff took me the last couple of days and I am finally moving towards the more interesting part of the game...

TLDR:
For now that's where I am:
  1. I know what I want to sell.
  2. I have a list of suppliers I can contact once my company registration is finished (hopefully in 1-2 weeks).
  3. Decided to use Shopify as online shop system.
  4. Figured out most legal issues around launching an online shop and integrated them into my Shopify account (not publicly available yet).
Next steps:
  1. Choose nice design for the shop.
  2. Create a logo.
  3. Configure the shop (payment options).
  4. Start reading about marketing and related topics (Google Analytics, SEO, running Google Ads) - I know there are some good posts on this forum and have to dig them out.

Finally, if you have any comments - be it questions, suggestions, criticism or anything else - I am very open and thankful to any form of feedback.
 

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zaez

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Nov 10, 2017
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Wow, already a whole month passed since I opened this execution thread. Time is running so fast when you hustle every day. Once my business has been formally incorporated, I opened accounts with a few wholesalers and realised that the products I was interested in are very competitive. I could not source them for a price lower than on Amazon. I decided that having my own online shop and selling things which you can get cheaper on Amazon will be a tough business. I think it can work if I add extra value - the product is a bit complicated and if I could provide much better instructions on the setup, people might still buy from me. But since the product is also quite expensive, I prefer to start with something simpler.

Interestingly, just around the time I figured out that it will be hard to source my products at a competitive price, I was referred to the Facebook group MySilentTeam by Jim Cockrum and his ProvenAmazonCourse. It is all about ecommerce, with a very strong focus on selling on Amazon. After spending a couple of days at the Facebook group, asking some questions and reading other people's posts, I decided to buy the ProvenAmazonCourse (PAC) (@Walter Hay can give you an affiliate link with which you'll get his book on sourcing from China and other countries for free, if you buy PAC).
I finished two sub-courses within PAC and am totally motivated. Currently applying the gained knowledge to product research and sourcing.

Next steps:
- decide on products
- source products
- start selling on Amazon
 

Walter Hay

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Your research has been very thorough, and although some forum members might say you have been action faking, it is clear that you have been taking well thought out action.

Looking forward to seeing how you progress.

Walter
 
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zaez

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Nov 10, 2017
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Hi Walter,

thank you for your supporting words! I am totally motivated... just ordered the first products to experiment with. Will keep you posted!

Cheers
 

Raedrum

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After reading several articles on dropshipping, I think it's a quite overused method and in wich it seems difficult to compete. Maybe you already know this, but be informed that every customer reclamations (even about shipping/packaging errors from yours manufacturers) will be assumed by you (and there may be a lot of them). In addition, there is apparently some recurrents issues with stock synchronization between your shop and the manufacturer's, even with Oberlo (but I don't know enough of this business to be categorical about that...).

Anyway, it's really interesting for me as an European to follow a recent and updated attempt (especially in the EU law policy) about dropshipping and Ecommerce, from a beginner. You seem to be very applied, I wish you the best success in your venture and I have no doubt that the thread will be a good value for you and us in anycase.

Continue to learn and adjust, and keep us informed ! :D

Edit: maybe you should do some research to find the ecommerce experts on the forum and tag them in your thread they may help you very lot
 
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Ing

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@zaez ,
yes , european regulations are evil. They prevent any new entre from doing something.
Ive made a blog about bike tuning. Launching it seems to be nearly a suiside. Financally. I think everywhere in the world it is so much easier To launch a business.
I try to get the business permission since 2 months.
Germany sucks related to this.
 

MHP368

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Neil patel is solid for seo , his site even offers stuff that other offer as Saas.

@Andy Black has a solid google ads course.

Will keep tuned in
 
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zaez

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Nov 10, 2017
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Hi everyone,

I have the first few products on Amazon, but they don't sell or not for a worthwhile profit. So currently I am quite a few steps away from making a profit. I spent quite some time learning during summer and was not very active in actually building the business. My current main approach is sourcing products directly from manufacturers and selling them on Amazon. The reason I want to try going down this route is that it seems there is very limited risk: No upfront money to develop a product or minimum order quantities when ordering from China... Turns out this is not as easy as it sounds as you are always confronted with one of the following problems:

1) The price you get does not allow you to sell profitably on Amazon (due to other sellers selling them for a lower price on Amazon)

2) The products sell very rarely or are not on Amazon yet, so you don't know whether they will sell at all

3) The manufacturer will not let you open a wholesale account with them, because they want mainly brick&mortar clients (and only those are allowed to also sell online).

My plan to cope with these problems:

1) find more suppliers/manufacturers - maybe among 100 contacted suppliers there will be 1-2 whose products are worthwhile selling

2) test new products which are not on Amazon yet and see what happens; use Amazon sponsored ads to see quickly whether people like them or not


@MHP368 I know Andy Black's Google Ads course / posts. Have read them and they are very good indeed. Would definitely use that information once I open my own shop. Currently I try to sell on Amazon, so it is less applicable.

@Raedrum I am not trying to do dropshipping anymore. I do Amazon FBA (i.e., sending products to Amazon so they take care of the logistics if someone buys from me via their platform). Thanks for your wishes, I am still on this endeavor!

@The Autobahn thanks for reminding me to update this thread. I am too busy recently...
 

Raedrum

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@zaez I had a fortuitous contact with a professional sourcing manager yesterday, who is working with many Chineses manufacturers in order to buy raw material for paper industry. What came up of our discussion was 2 things:

1) They are indeed more likely to work with brick&mortar clients because they are part of consortiums who act like cartels in ordrer to make control over scarcity and prices, and they work preferably with similar European consortium who's trying to have more profitables outcomes from their buyings by union.

2)Culturally, it seems that Chineses have a very different working ethic about agreements. Indeed, in Europe or US, if you make a contract with someone and break it, you'll be seen as a piece of sh*t. But in China, only the face-to-face promises and handshakes really matters. It really overcomes the writted/remotes agreements. This explain why peoples who's actually dealing profitably with Chineses are actually moving their a**** to China, in ordrer to visit factories and shake hands. At least, they are working with well-established middlemans (which seems to be a very profitable job by there). Maybe you should search for one.
 
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Walter Hay

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@zaez I had a fortuitous contact with a professional sourcing manager yesterday, who is working with many Chineses manufacturers in order to buy raw material for paper industry. What came up of our discussion was 2 thinks:

1) They are indeed more likely to work with brick&mortar clients because they are part of consortiums who act like cartels in ordrer to make control over scarcity and prices, and they work preferably with similar European consortium who's trying to have more profitables outcomes from their buyings by union.

2)Culturally, it seems that Chineses have a very different working ethic about agreements. Indeed, in Europe or US, if you make a contract with someone and break it, you'll be seen as a piece of sh*t. But in China, only the face-to-face promises and handshakes really matters. It really overcomes the writted/remotes agreements. This explain why peoples who's actually dealing profitably with Chineses are actually moving their a**** to China, in ordrer to visit factories and shake hands. At least, they are working with well-established middlemans (which seems to be a very profitable job by there). Maybe you should search for one.
1. As a general rule, Chinese manufacturers could not care less whether or not you have a B & M store. What they care about is the order and the payment for the order. Like any suppliers in any country, they like to get repeat orders, but even B&M stores can't guarantee that.

2. My book readers are well aware of the cultural issues that affect dealings with Chinese suppliers. In Chinese culture, breaking a contract is in fact regarded far more seriously than it is in Western countries. It means substantial loss of face. Obligations in even verbal contractual arrangements are taken very seriously. Did your contact explain Guanxi?

Walter
 

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Taz

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Your research has been very thorough, and although some forum members might say you have been action faking, it is clear that you have been taking well thought out action.

Looking forward to seeing how you progress.

Walter
:rofl:the people on this forum can be very toxic, the internet gives people big balls. I normally take what they say with a grain of salt unless its actually constructive.
 
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zaez

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Hey all,

just a brief update, since I am pretty busy:

I finally found a manufacturer whose products I can source directly from them and many of them I can sell profitably on Amazon. I just hit EUR 5,000 in sales over the last 30 days. Profit margins are rather small though (about 10%), so my profits are just enough to cover my fixed costs and then some.

Even though the amount of work I currently have with these products is more than I aim for to be able to scale this into a much bigger business, it helped me to learn quite a few things about selling on Amazon. And, most importantly, it is great motivation to finally put much more energy into this business. (Even my spouse got convinced finally :p)

My main goal for the next 2 months (yes, I plan xmas holidays...) is to find a few more manufacturers with more profitable products. Additionally, I want to try out prep centers (companies which prepare your products and send them to Amazon, so you don't need to actually touch the products yourself - so far I have done it all myself from my home :) ). This will cut profits but give me more time for scaling the business. Also, I want to outsource some of the easier tasks to VAs. I have run a small experiment with this and probably want to give them more tasks in the future.
 

Ing

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Nice!!
Have you concentrated on manufacturers in EU or in China?
 
OP
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zaez

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Read Millionaire Fastlane
Nov 10, 2017
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In EU. I source already existing brand products (though not very well known brands) and re-sell them on Amazon. It is sometimes referred to as the "wholesale business model on Amazon". That is a relatively easy way to start compared to sourcing from China or other far-away countries. Sourcing from China and creating my own brand is sth I might try out in the future - depending on how this wholesale sourcing works out in the following months.
 

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