Small business internet retail idea...

[iamtrout]

Ok, here it goes: Everyone has hobbies which they're willing to spend a lot of money on. I'm thinking I can turn mine into kind of a business venture. Let's just call the things that I'm going to be selling "hobby things." I have a lot of experience selling and buying these hobby things on an informal basis. I know what the people want, what models, which ones are in high demand, etc.

There are only a few manufacturors that make these hobby things.

My idea is to contact these manufacturors, and conduct the business woot style.

Buy one model of hobby item at a time, but a large quantity, and when this sells out, buy another different model at a high quantity, rinse, repeat. I can give my customers a "forecast" or a schedule of when their desired model will be in stock. I will rotate models.

The advantages are thus:

1. Easy to track the items. Only selling one item, I won't have to track a bajillion different items like conventional stores.

2. Buying a large quantity of one item (100+) from the manufacturor should get me a better bulk discount than buying 20 each of, say, 10 different items, meaning I can sell that one item for lower than anyone else. I could be wrong on this point.

3. Website will be simpler to maintain, like your own personally hosted eBay listing.

4. I have extra space to make the website... more personal, like woot. Message boards, customer feedback for each item (I'm a BIG supporter of consumer education), a blog, an item forecast, etc.

Starting Up:

1. Upfront costs? Get a business loan, pay it back over the course of a few years?

2. Warehouse space: Thankfully the hobby items are small.

3. Shipping: USPS Priority Insured baby! FedEx in the future, fvck Brown.

4. Open box returns: eBay, sold as used, mint condition.

5. Warranty returns: set up something with the manufacturor

Comments?

 

[iamtrout]

 

[Goosemaster]

sounds like a lot of work...a lot of risk invloved too

 

[junkerman123]

Most relevant question seems to be:

Would there be enough buyers to buy out a large stock of the same product as opposed to the current system of isolated buyers buying an isolated product (which is more feasible under supply+demand).

If you're sure you will be able to find enough people to sell to, I'd say its a good idea (if theres a good profit margin on the product of course).

 

[AgaBoogaBoo]

Do a trial run of some sort and see how it goes, don't make the initial setup very fancy or anything, just something to test the idea with. If it works well, put some more money into the website development and start contacting more manufacturers.

 

[Abel007]

What happens to damaged goods? What if I get the last "hobby thing" and its broken! Since its so rare monetary replacement will not suffice sir! I ordered a mint condition "hobby thing" and I got this broken "hobby thing" that is worthless!

Edit, I see ya covered warranties but I think my statement could still arise. If not then just ignore me and move on.

 

[iamtrout]

Originally posted by: Goosemaster
sounds like a lot of work...a lot of risk invloved too

Specifics? And yeah, business is risk...

Originally posted by: junkerman123
Most relevant question seems to be:

Would there be enough buyers to buy out a large stock of the same product as opposed to the current system of isolated buyers buying an isolated product (which is more feasible under supply+demand).

If you're sure you will be able to find enough people to sell to, I'd say its a good idea (if theres a good profit margin on the product of course).

I've been wondering the same thing. I would need to generate traffic before any products are sold, like a grand opening so that my first "hobby thing" doesn't just sit around for months while people begin to notice the website. This hobby is a pretty widespread, popular hobby, consisting of everything from professionals to amateurs, both of which are willing to pay a lot for their hobby. The problem is estimating demand for a particular model... I may have to conduct polls on my website to give me an idea of the numbers that people want.

Originally posted by: AgaBoogaBoo
Do a trial run of some sort and see how it goes, don't make the initial setup very fancy or anything, just something to test the idea with. If it works well, put some more money into the website development and start contacting more manufacturers.

Agreed.

Originally posted by: Abel007
What happens to damaged goods? What if I get the last "hobby thing" and its broken! Since its so rare monetary replacement will not suffice sir! I ordered a mint condition "hobby thing" and I got this broken "hobby thing" that is worthless!

Edit, I see ya covered warranties but I think my statement could still arise. If not then just ignore me and move on.

These hobby things aren't rare at all I'm just looking to underprice the competition.

 

[J0hnny]

LOL, I came up with this just recently and was about to start it until I did further research.

The risk vs profit ratio is very high if you buy the items and store it prior to selling it. It's easier to drop ship items but good luck finding distributors willing to do that.

 

[WildHorse]

1. Easy to track the items. Only selling one item, I won't have to track a bajillion different items like conventional stores.

Tracking is easy. You could do it with Quickbooks.

2. Buying a large quantity of one item (100+) from the manufacturor should get me a better bulk discount than buying 20 each of, say, 10 different items, meaning I can sell that one item for lower than anyone else. I could be wrong on this point.

I'll assume your manufacturers are big corporations.

It's difficult to get legitimate rights from a manufacturer to sell their products. Can take major bucks to buy the initial inventory most require of you, and that in turn requires a loan. And manufacturers will want to dictate what your inventory will contain. And requires a clear sales territory where no others are already granted sales rights.

Better initially to strike a deal where you sell their inventory on commission, they drop ship directly to your buyers. Your role becomes scouting customers, servicing old customers, resolving problems, feeding back innovations suggested by customers to manufacturer.

1. Upfront costs? Get a business loan, pay it back over the course of a few years?

Find out what nearby bank packages applications for SBA loan guarantees & visit their Small Business Administration loan officer. They have all sorts of good SBA planners & guides that help with this.

Warehouse space: Thankfully the hobby items are small.

But that inventory is just a different form of your cash, so need better security than your garage. Temp & humidity control? Fire / flood / earthquake insurance? Hazardous chemicals? you get my drift

Warranty returns: set up something with the manufacturor

Manufacturer will have a requirement you must step up to.

Comments?

Keep working your idea, ride over all the roadblocks like a Jeep, refine it, kindle your enthusiasm.

AgaBoogaBoo's suggestion of a trial run sounds excellent. First though, talk directly with your manufacturers to make sure they're receptive to your general plan.

 

[iamtrout]

Originally posted by: scott

2. Buying a large quantity of one item (100+) from the manufacturor should get me a better bulk discount than buying 20 each of, say, 10 different items, meaning I can sell that one item for lower than anyone else. I could be wrong on this point.

I'll assume your manufacturers are big corporations.

It's difficult to get legitimate rights from a manufacturer to sell their products. Can take major bucks to buy the initial inventory most require of you, and that in turn requires a loan. And manufacturers will want to dictate what your inventory will contain. And requires a clear sales territory where no others are already granted sales rights.

Better initially to strike a deal where you sell their inventory on commission, they drop ship directly to your buyers. Your role becomes scouting customers, servicing old customers, resolving problems, feeding back innovations suggested by customers to manufacturer.

1. Upfront costs? Get a business loan, pay it back over the course of a few years?

Find out what nearby bank packages applications for SBA loan guarantees & visit their Small Business Administration loan officer. They have all sorts of good SBA planners & guides that help with this.

Warehouse space: Thankfully the hobby items are small.

But that inventory is just a different form of your cash, so need better security than your garage. Temp & humidity control? Fire / flood / earthquake insurance? Hazardous chemicals? you get my drift

Comments?

Keep working your idea, ride over all the roadblocks like a Jeep, refine it, kindle your enthusiasm.

AgaBoogaBoo's suggestion of a trial run sounds excellent. First though, talk directly with your manufacturers to make sure they're receptive to your general plan.

Thanks for the pointers! Is there anywhere I can go for consultation on how to start up all of this? I figure the first thing to do is to contact the manufacturor and see their terms.

The first problem is this: My first manufacturor wants me to fill out a credit application. It's going to look rather lame IMO:

Number of Employees: 1
Name of Officers: iamtrout
Parent Company: Ummm...
Estimated Annual Sales this Year: Ummm...
Annual Sales Last Year: ZERO!
Premises Located: Rent

 

[AgaBoogaBoo]

Originally posted by: iamtrout
The first problem is this: My first manufacturor wants me to fill out a credit application. It's going to look rather lame IMO:

Number of Employees: 1
Name of Officers: iamtrout
Parent Company: Ummm...
Estimated Annual Sales this Year: Ummm...
Annual Sales Last Year: ZERO!
Premises Located: Rent

Well, don't lose hope at all, all businesses start somewhere. Successful landscaping ventures might have started with just a simple push mower and no funding to work with other than being a simple door to door salesman with that push mower.

I would contact that company and try to meet in person if possible. Sell your idea to them and tell them why they should work with you on this, tell them you want to do a trial run and that this could possibly lead to something else. Depending on other financial aspects of your life you might be able to mention things like owning your own home or past/current projects you've been a part of.

Maybe get in touch with a local hobby shop that would be interested in working something out? You might be able to partner with someone like that, there's an oppportunity in it for them. If you're going to be ordering in large quantities, the hobby shop can take advantage of those economies of scale and purchase their items at a lower cost as well. In that process you would get to work with their credit and already have established contacts at some of the companies you want to work with.

This will definitely take some time to prepare, dress nicely, go meet with these people, etc. but I think there's some potential. Consider the idea of a partner to work with on this operation, someone who is already in the industry will have a lot of experience and networking you could take advantage of.

As for the parent company field, once you decide if you're doing this alone or partnering with someone else, you need to establish an LLC or something similar with a proper structure between you and whoever else you do this with. Feel free to drop me a message if you want to discuss this more.