Mountainpeaks Blog - Business

What business model to use.

nospam@example.com (Kasey Eunice) — Sun, 18 May 2008 22:18:48 -0700

What do I mean business model. This is how you run your business in terms of products, revenue and overall operations. Listed below are the key models that web companies will use.

Affiliate – The affiliate business model is where the website links to another web site and a percentage ( 2-20+% ) of all sales generated from that link or visit is paid back to the affiliate. This is rather simple, just place a few links on your page to another web page and get paid. Sounds simple and actually is. The problem is that the visitors you send have to purchase something on the other website for you to get money. For good websites, the conversion ratio is 1 out of every 100 visitors will buy something. For less than optimal sites ( not well designed, not quality leads and many other reasons ), the ratio is more like 1 in 1000-2000 visits. This is not very good if you only send a few hundred to the site each month.

The good part about the affiliate model is that there is not customer service, no merchant accounts, no gateway accounts. This is a very simple model to use if you don’t want to worry about any customer service. You will need to generate a huge amount of traffic to make any money however.

Drop Shipper – This the most common form of a business model to use. The store owner ( you ) will essentially resell products from another business. Your store will take the order and send the order to the manufacture to ship directly to the customer. The benefit is that your store does not have to store any products. Simply send ( usually be email ) to the manufacturer and they will ship the products.

The drop shipper usually maintains their own ecommerce site where the store takes money ( credit cards, paypal, google checkout and more ) and maintains some sort of customer service with the customers. The customer actually communicates with the store owner and not the manufacturer. There is a lot more work to set up this type of model and a lot more time to run the store. The reason to choose this model is that they store owner can sell the products for a good margin, typically 30-50 or more. Compared to the affiliate program, the store owner can make a lot more money. The downside is the store owner will have to invest more time, resources during the setup and ongoing customer service.

Reseller – this is similar to the drop shipper except that the store owner maintains inventory in a warehouse or garage. The benefit in doing this is to prevent product shortages and to ensure prompt delivery. I would however recommend starting with the drop ship program first. This will allow the store owner to see how well the product will sell before investing in huge amounts of money into inventory.

Back to running an online store

Time requirements for a business owner

nospam@example.com (Kasey Eunice) — Mon, 21 Apr 2008 05:47:53 -0700

Another common misconception that many people have when starting an online business is the amount of time spent on starting the site. Staring a business takes time. The more you can put into the planning the better. Here is an example of the types of calls I would get from people wanting to use the drop ship services provided by my company.

The conversation would start out by the person asking about my drop ship program. I would ask them a few questions about how they would sell the items. I would ask them what marketing plans they had in place and what prices they would sell the items at. Most people indicated they would they would sell the items online and think the products would magically find their way into their stores.

It takes anywhere from 4-24 hours or more just to enter products into a store. Sure you can copy and paste descriptions and images but do you really want to be just like the next guy. Setting up the credit card processing, email and all the site content could easily take up 1-3 weeks of time. Most people are just not aware of the amount of time required to start a business.

Along with the initial time to start a company, the business owner must also send several hours a week running the site. This includes filling orders, searching for new drop shippers, answering phones and returning phone calls and emails. I would usually spend about 2-5 hours a week running the patio furniture business. This is low as a rule of thumb. I would estimate anywhere from 2-10 hours a week for a store that receives a good amount of traffic.

Next post is what business model to use.

Back to making the decision to start a web based business

What is your advantage in business

nospam@example.com (Kasey Eunice) — Fri, 18 Apr 2008 05:20:42 -0700

Getting started in a web based business is always the most difficult step. There are many decisions to consider when deciding to start a business. For web based businesses, I highly recommend that you start something that interests you. I you like cars for example, consider a car accessory site or a custom modifications/advice site. It is real easy to get caught up in trying to sell something that people end up selling something that they don’t have an interest in. This will quickly lead to boredom and you will loose interest.

The first decision criteria when deciding to start a business is what they have to offer. What makes them different, why are they special. There are thousands upon thousands of internet retailers out there. There are probably several hundred selling the exact items/services you are. You have to have some "edge" or advantage over the next guy or you simply won’t succeed. Here are common traits that you may have.

- I know how to create and maintain web pages.
- I manufacture my own products.
- I have a huge built in customer base that I can tap into.
- I have a unique product that nobody has.
- I have lots of money to throw away ( call me if this is your case!!, I will gladly take it. ).
- I know how to perform web, email other marketing, I have done it before.

These are just a few of the traits. If you don’t have any traits like this, it will cost you a minimum of $5,000 dollars to start. The reason for this figure is simple. If you don’t know how to market products and services on the internet, you will need to pay someone to perform you marketing for you. The biggest trap people fall into is the think they can build a website and people will automatically find them. Wrong….. Nobody will find you. In fact, nobody will find you for 4-6 months or more unless you are willing to pay.

To review, you will need to determine if you have an advantage that you can leverage or get ready to pay at least $5,000. Please feel free to reply to this post and see if your “edge” is a good one or one that won’t help.

Next, what are the time commitments to start and run an online business.

Back to starting an online business

How to start a web based business or ecommerce site

nospam@example.com (Kasey Eunice) — Wed, 16 Apr 2008 04:12:32 -0700

This post will function as the base for all discussions around how to start an online or ecommerce business. I start two companies in early 2000 that sold survival kits and patio furniture. These two sites where recently sold for a reasonable profit. This is not a hard thing to accomplish but it was not easy. The main reason for starting this blog is to provide individuals information on how to start and actually become successful starting and online ecommerce business.

One of the stores I started was a survival kit store. This store sold survival gear and other emergency related supplies. We offered an affiliate program to individuals that where interested in starting their own business where we would drop ship products or provide wholesale shipments. During this time, I must have spoken to over 300 or so people interested in starting their own business. I spent many hours on the phone with most of these people talking to them about how to set up an online ecommerce business. It is based on these conversations and my several years of running two successful stores that I provide this information to my readers.

Why am I providing this information you may ask? I was amazed how many people thought they could simply start an online ecommerce store and expect to make money overnight. The reality is that it takes a lot of work and time to make any business work. This includes any ecommerce site. The only people making any money where the ecommerce solution providers that sold services to these people. These companies are making lots of money taking advantage of good natured people by selling them services that will not work. I want to provide potential business owners with information about the challenges facing them and try to prevent them from spending their hard earned money on something that is very difficult.

Here is an outline of the steps to start an online ecommerce business. ( That actually make s money ). Each of these items will have a link to another blog page that goes into detail. These links will be filled in over time. This list will also change as the outline is completed.

The decision to start a business
Decide on a business model
Find drop shippers or manufactures
Creating the store
Credit cards and other payments
Marketing
Accounting
Legal
Fulfillment
Customer Service