Selling stuff online

With the first batch of 10 medium-sized dragon fairies now fully accounted for, I find myself in a situation trying to get my head around the joys of e-commerce. This is a steep learning curve for someone institutionalised by the civil service and whose only previous experience of selling stuff was sitting/standing by a check out in a supermarket during my student days.

There are a whole host of things that have been flying across my mind in terms of how to manage all of this – which is essentially a sideline to other stuff that I want to do. I don’t have any plans to go into the business of selling soft toys full time. So what are the issues?

Demand

I have no idea what overall demand is beyond the 10 or so people who have already reserved. What will the “conversion rate” of twitter/blog followers to purchasers be? I had previously worked on the assumption that a 1% conversion rate would be more than splendid, but given that I am already nearly half way there with reservations from the first batch, is 1% an underestimate?

Price

Talking about money is not something I’m particularly comfortable with but ultimately I’ve spent a fair amount of money on designs and prototypes that I now need to recoup as what remains of my redundancy payout evaporates with time. There are a number of considerations here, ranging from how many ‘units’ I want/need to shift before I’ve recouped my original investment in the design and prototypes. At the same time I’m also mindful that a many people who follow simply cannot afford to spend that amount of money on what is essentially a cuddly toy. (Especially the big version).

Tax and benefits

In the next week or so I’m assuming that I will have to sign off JSA as money starts coming in – or will I? How does this work where I’m running a ‘micro-business’ where income is on an ad-hoc basis? Do I sign on for the weeks where I’m job hunting and am not making any sales and sign off for the weeks that I receive payments against sales?

Then there is the issue of tax – in a nutshell, how do I go about declaring what’s come in, what’s gone out, what is ‘profit’ and how much will I need to pay? Will I have to ‘register’ this sideline activity as a business in itself?

It’s one of the reasons I’m attempting to keep reasonably organised records of the orders I’m making and the sales that I am achieving. The complexities of this, paid employment and receipt of JSA is going to make calculating my final tax bill (or any rebate) interesting. Given that tax avoidance and tax evasion have been issues that I’ve been jumping up and down about for quite some time, I want to do this all above board. I know there are some who would say to do all of this cash in hand & off the record, but that’s not the way I roll.

Ordering and distribution – systems and processes

What is the best process for all of this? For this first batch I bought all of the items in bulk for me to distribute individually, whether by post or by hand through meeting up with those who’ve ordered. But it’s not the most efficient way because for a start there is a potential duplicated cost of postage – from the manufacturer to me and then from me to each individual. Would it not be better to set up an online portal/system that would allow people to purchase items electronically rather than having me sending each item through with an invoice asking for either a cheque or an electronic transfer where I have to give out bank details?

I’m also seriously considering setting up a completely separate bank account for this sideline – even though for now at least this is a micro-business. I want to keep transactions related to the buying of stock and receipts from the sale of items separate from my personal bank account. Does this constitute a normal current account or will I have to get a ‘business’ bank account? (Which tend to be more costly).

Personal information

Having cut my teeth on data protection amongst other things, I’m a little nervous about holding people’s personal information (even if it is a Twitter account or a home address) on my systems. I shouldn’t be, but I am. Is there a suitable “cloud computing” facility that would allow me to store documents securely without having to worry about worst case scenarios such as loss of hardware or messing up of software/documents?

Marketing

In a sense images of the dragon fairies seem to be having more than a splendid effect. There is a risk that I start ‘spamming’ people through twitter – something I will try to refrain from when it comes to promoting these little bundles of fun. Also, do I want to go beyond my core following and sell them to whoever, or restrict this entire activity to a micro-scale?

Safety standards

I’m lucky in that the manufacturer already manufactures the items to EU standards & complies with UK regulations on toys – because even though I’m selling them to adults, most reasonable people would say that these items are toys. Hence why using other materials to stiffen the wings is a non-starter. But are there any other things that I need to be aware of?

Refunds

What happens if someone is not happy with the little bundle of fun that arrives through the door? Who has what rights and what is the best system for ensuring refunds are paid and stock is returned undamaged? What if the item returns damaged? Who’s liable?

Online presence

This is where I need to get a number of things sorted on my part – in terms of setting up and launching a small number of other social and digital media accounts. As I said to my good friend Sarah Baskerville last week, ultimately what I’m aiming for in my entire social media presence is to have the various different accounts bouncing off and feeding off of each other so that their combined presence is greater than the sum of their parts. But I’m still nowhere near the level of competency that I’d like to be at on a number of different digital media and software packages. I got loads out of the Media Trust’s training on how to make a digital video on a shoe string. Less so with the Adobe Illustrator course, but the latter is very much a practice-makes-perfect challenge that requires a level of patience that I’m currently lacking.

The “vision”

On a number of things I’ve got pictures in my mind of where I would like to get to and what I would like to achieve. The big barriers I have at the moment are:

  • Fear: I’m more than a little out of my depth in all of this. As in my blogpost on middle class, I’ve played things fairly safe in terms of career path. But the world is going through one hell of an upheaval at the moment and I have no idea where I’ll end up once things (as I hope they will do) settle down
  • Procrastination: I need people to bounce ideas off and to help me get over some of the small but significant technical barriers. Sort of in the way Soph Warnes and Fi Douglas helped me out setting up this blog, or Steve, QofENatalia and friends with the setting up of Pufflescamp.
  • Finance: I’m not loaded – simple as.
  • Upskilling: Sort of linked to the above, there are a number of training courses that I would like to go on, but can no longer afford to. I also feel that I need to be in an environment where I am surrounded by dynamic enthusiastic motivated collaborative types (on a regular basis) whose energy I can feed off and contribute towards too.
  • Location/place to be during the day: The lack of a desk has had a surprisingly debilitating impact on my productivity. Yes I need to be out of the house – Parliament TV is too much of a distraction. As above, the environment I feel I need to be in is one conducive to innovative working & forming sound working relationships with other people around me.
There are others, but off the top of my head those are the many things on my mind as this ex-public sector tries his hand at doing something he has felt for years he’s never been cut out for doing: Selling stuff. 

 

 

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3 Responses to Selling stuff online

  1. I was involved in running many aspects of a fairly large mail order business for some years as well as some work for a small operation. So some thoughts from me, I can probably expand on most of the points if any particular queries.

    Anything involving enterprise can be very exciting – and at the same time potentially disappointing. You invest in a new product you think will work – and it doesn’t so you are left with stock to dispose of, probably at a loss.

    Demand – very much depends on the particular area. If the audience is well targeted and there is a “need” that can be met then I’d think you are probably looking at more like 5%, but will depend on price.

    Price – Cheaper does not always mean better sales. People will pay for quality, but they will also shop around. If the product is unique – as you currently have – then you have a more captive market. Work out your costs carefully including time, you don’t want to be subsidising in the long term. If you can build “the brand” then demand can build. But don’t fool yourself either.
    Tax and benefits – far from simple and JCP are unlikely to be geared up to being able to understand. You have to satisfy their requirements. If in the long-term, you are only looking at this as a “side-line”, is it to make money for yourself or not. If not, then perhaps looking at a social enterprise model would be better. There is (before it disappears) some useful info on Business Link websites – and there may well be an advisor available. If you think there is some real business opportunity in this then there may be a JCP scheme available which might assist (there has been in the past, I’m not sure if there still is).

    Ordering and distribution – systems and processes
    Unfortunately no easy answer – but I don’t think you thought there was! There is a system called “drop shipping” whereby the order is taken (whether by phone, post, email or web) and fulfilled directly from by a company holding the goods, which may be the original manufacturer. If the manufacturer you have does this then that is one option.

    Dealing with shipping is one of the most difficult things you have. Expectation is high. The initial customers you’ve got will be keen and willing to accept rough edges. But as this develops there will be less sympathy if anything goes wrong. But yet you are in others hands to ensure that something ordered actually gets delivered. Just because you “posted” it does not mean it gets delivered. But in law it remains your responsibility. Unless items are custom made, then there is an automatic right of return for “distance selling” which has to be complied with.

    As an example of the negative – if you send something and someone is not in when it is to be delivered, then it will often be seen as “your fault” – one of the negatives of “customer service”.
    Royal Mail is not necessarily the best option, but a lot will depend on how much you are shipping. You need to bear in mind bulk as well as weight and shipping light but large cuddly toys can be costly. Something I’m happy to advice on later with more specifics.

    Compared with when I was involved with starting out online, things can be much easier now with the likes of Amazon and eBay – that provide “shop” facilities including payment without too much outlay. Do some looking at some eBay/Amazon shops and what they do.
    For other payment options there is PayPal and Google’s similar offering, both of which include some consumer protection measures.

    Setting up an online shop yourself is now relatively simple and there are payment processing companies that can be used without the need for you to have a direct relationship with a bank for this. The cost will be higher per transaction, but the set-up easier, faster and more possible.
    It is probably a good idea to have a separate bank account – but as you say it will depend on what if anything you may need to be. Try speaking to your bank manager – you never know, if the TV ads are to be believed they may be helpful!

    Personal information – you are right to be worried, but you are also probably being far more worried than many others would be. If you are simply dealing with a few friends then I doubt ICO would be concerned. Registering as a data controller is straightforward (£35 a year I think) and then at least you can legally store data within the terms you’ve registered. In many ways I’d say don’t think computing as far as data security. As long as you can be sure you’ve taken care, keep backups and paper documents you are not going to have any problem.

    All sorts of “backup” are available but better to KISS that go complex. A copy of your data on a USB stick can do the job in many cases.

    Marketing – check out Twitters rules and I’m sure you wouldn’t spam. If you are just going to do as a side-line interest without thought of making money then stick to core following, but if more of a business then it points to a need to do (even more) to build your following and from that the business. For example a simple move of acknowledging a follow by a DM with a link to a website where – amongst other things various products are available. As well as cuddly toys there could be all sorts of other branded products and in sufficient quantities the cost per unit can be very cheap and you end up with an end-product that can sell for a price that gives you a good return. But you have the risk in the first place as to how many to order. As an example only, have a look at the products offered by http://www.emcadgifts.co.uk/

    Safety standards – almost certainly yes. I’d hope your local Trading Standards dept at @CambsCC will be helpful with advice on this, but if not let me know and I’ll advice further.

    Refunds – for any direct selling (mail, phone, email, web, twitter presumably as well) then there are automatic safeguards for consumers. There does not need to be any “reason” to return, there is an automatic right to do so. See http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698.pdf

    In many ways the answer is to assume that if anything goes wrong the seller is at fault. Whilst that is simplistic, it sets the scene for what can be.

    In terms of payments a lot depends on how payments are made. Generally think about it as reversing the method used to make the payments.

    There is some significant case law on liability – you don’t want to be thinking about this!

    Online presence – a lot in this. My suggestion is you need to think more what you want to achieve, what you are strong at and what you think you need to learn more about. Don’t think you can do everything you want to be done. So if you are not good at design, don’t struggle to do it , get someone else to do so if you can.

    The “vision”
    • Fear: – go for it but be prepared to get it wrong, to fail but to rise and conquer.
    • Procrastination: – yes!
    • Finance: – so keep in KISS – simple as.
    • Upskilling: – exactly as you say –sharing skills can better all concerned. I point particularly to social enterprise as one option.
    • Location/place to be during the day: – again I think you’ve got it. The hardest part when you’ve not got anything else to do is not doing anything – and I know what you mean about watching Parliament TV being too much of a distraction. One thing you could look at is getting involved with some volunteer project where you’ve the opportunity to do some of that upskilling you want to do.

    Finally as far as not being cut out for selling stuff: think about what you had to do to “sell” to ministers.

    Mike

  2. Pingback: Qualifications vs portfolios | A dragon's best friend

  3. Hilary Campbell says:

    It wasn’t a problem, Puffles was perfect. Hope you like the photos so far! A padded jiffy bag might be better, but that will add to the cost. It’s fun finding out who the other new bestest buddies are!

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