After my two years in taxi marketing I exited taxi websites and invested in a terminal idea; a touch screen terminal that would allow users to book a taxi at the touch of a button in up to 9 languages.
I had big plans; to offer restaurant bookings, tours and more, all from a little Android tablet. My employer (and friend) invested and we set about finding venues.
Within a few months I had signed up close to 100 venues, all whom wanted a tablet in their venue and in return would be paid a small commission for each booking. Using a leading Hackney taxi company in Edinburgh I then agreed a deal that they would pay for a year’s contract up front, which would part fund the overheards.
Things were setup nicely but it it fell at the first hurdle; Wifi in hotels is notorious for breaking/going down so I had to teach most venues how to reset the terminal. This was fine at first but then they forgot or just didn’t bother.
The second hurdle was getting the taxi operators to actually check another screen for independant bookings and service them quickly. The software companies responsible for leasing/selling dispatch software weren’t keen on giving me the api to their web backend (or wanted a BIG fee) so it had to be done separately.
The third hurdle was getting the taxi company to actually visit the venues and ensure the terminals were being used. I regularly visited hotels to find the terminal switched off and business cards from rival taxi companies on the desk.
To cut a long story short it didn’t work, and I was left with a hole in our accounts.
During this time I was, and still am, working. In our attempts to reduce cost in the business I began looking at our suppliers, in particular those that sold us ancillary items such as nails, screws, dust sheets, tarpaulins etc. I then used the company we had setup to go direct to manufacturers and buy the items in bulk, for cheaper. I couldn’t just sell to one client – my employer – so took to the web and began shifting items online.
At first I thought it would be easy. List your items cheaply, sell loads of them. But it doesn’t work like that. I was able to make a profit and have returned 70% of money invested in our previous venture but it was a LOT of effort for NOT A LOT of money and I figured my time could be better spent elsewhere.
I’m not going to go into the depths of trading online but will cover one or two bits that will make you think twice. And before I begin, not all customers / sales are like the below but I’m giving you an indication of what it can be like;
Feedback is really important.
My most popular items weigh 5-10kg per box, and shipping for that weight isn’t cheap. I offered myHermes at £6.99 inc VAT costing me £5.50 ex VAT or next day at £7.99 costing me £7.49.
myHermes takes 3-5 days to deliver and buyers are made aware of this, however I lost my “Top Rated Seller” status because those who paid for that delivery option would then mark me less than 5 stars because of the time it took to arrive.
Next Day delivery isn’t always next day. The courier business is worse than eBay and from speaking with drivers their vans are filled to the brim, sometimes meaning deliveries booked on for that day aren’t fulfilled. Now because couriers know this, they don’t offer your money back or compensation for late deliveries…but an eBay buyer expects you too.
Now say you do get the item to the customer on time and there’s a problem…how many customers are going to pay to return the item? Not many, so you risk negative feedback or do a deal.
Bear in mind all this time you’ve probably make a tiny amount on this item and the time taken to even try to resolve an issue is costing your business money.
Turnover is vanity, profit is sanity
I’ve had to sell things at a loss to capture sales and drive up the interest in my items. It is a common occurance, and I doubt you’ll be able to work differently..
If I sell one dust sheet I lose £1 but if someone orders two I profit as I save on the courier fee. It is a risk, and one you’ll generally lose as most people only want 1 x an item. Bear in mind the loss I am making is when buying direct from a manufacturr in pallet quantites. Oh yes, and then you need to add on the cost of storing the pallet!
I know one seller who makes no money selling dust sheets online but sells one pallet per month. By increasing the volume he buys from his manufacturer he gets the sheets cheaper and in turn makes more money off Joe Bloggs who walks in to his trade counter and buys the item at a regular retail price. He also benefits from reduced seller fees associated with selling on third party sites.
You will be undercut
I guarantee you that someone will undercut you unless you are selling one-of-a-kind items. Babz Media is infamous on eBay for being the cheapest seller on the site and I’m convinced they sell some items at a loss in order to beat down the competition. If they can absorb the losses in the long run it’ll force other sellers to abandon the site or certain lines, leaving Babz a biggar share of the market.
1. Economies of scale – sell more and the unit cost is less. This is great if you have a shop or online store where you sell at regular retail prices because you can make better margins
2. Keep staff busy – If you are selling on eBay/Amazon for no profit but moving 1,000 items a week you’ll keep your staff busy. This is good for morale at least!
3. Marketing – Selling 1,000 items per week will allow you to target 1,000 new customers per week with marketing material in the hope they’ll visit your shop / online store
4. Remaining current – Argos have recently agreed a deal with eBay to allow customers to “click and collect” – this could be the future of retail and you don’t want to be left behind
5. Instant business – Setup and sell on eBay / Amazon and you’re instantly in front of millions of people
My general advice would be; if another business can buy the item you are selling cheaper, or undercut you in any way, don’t bother.
If you can remain the cheapest, or sell items that are one-offs (e.g. second hand cars, bespoke furniture, personalised items) then go for it.
I would say more and more people want quality over price, but all markets are dominated by money right now and unfortunately the majority is your customer base, not the minority.