Can I make a decent living by setting up an e-commerce business? And what are the critical success factors I should look out for?
posted by Hartham's Hugging Robots to Work & Money (11 answers total) 9 users marked this as a favorite
Firstly, the background.
I have children, and I have bills. As such, I need to make a living.
I'm currently an independent SEO consultant. I'm fortunate enough to be pretty experienced, and work for some large well known e-commerce businesses, which makes it relatively rewarding, both financially and intellectually. But it has downsides, and the bottom line is that I just don't want to do it forever. (That's a separate subject, and not what I'm asking about here).
I know this might sound self indulgent, especially at a time when not everyone has a job, but hey, we're all different... but a full time salaried job isn't what I want to do forever, either. Lots of reasons there - commuting (and seeing less of children), making someone else wealthier instead of me, I'm approaching middle age and I've done my fair share of working for the man, etc.
And so, after lots of careful reflection, I've decided to try and start a business myself. I'm thinking seriously about trying online retail. I know very well how competitive much of it is, but over the years I've built up so many skills around customer acquisition, user experience, conversion etc. that I really want to try using those skills on something of my own.
A central part of my current thinking is that I want to start with low risk and low capital, primarily because I can: I'll be doing most of the planning, design and build work. I want to build something organically, starting fairly small, and see how far I can go. Things like selecting a suitable e-commerce platform, looking after legal, stock, fulfilment etc. - these are all things I can either manage personally, or I'm comfortable I can oversee the development of correctly.
But there are some things that I'm not so sure about.
1) Can I make a reasonable living by doing this?
This might sound like a dumb question, but it's really not.
My search skills mean that I've been able to look at search volumes in particular categories, estimate what proportion of traffic (based on experience) I might be able to win after a period of time, estimate what proportion of that I might be able to convert, estimate what margin per transaction I might make, etc.... but it's all highly approximate and theoretical.
What I'm wondering is: can anyone actually tell me from experience that this type of small, organically grown e-commerce business can realistically produce a reasonable living?
(By reasonable living I mean something roughly comparable with a web professional's income - not great wealth, Cristal for breakfast, etc. )
FWIW, I have looked - hard - to see if I can find research or data on this. But in the UK (which is where I am, and where I want to sell to), this information just is not really available. If you are anything other than a large company, the financial information that you are obliged to report tells one almost nothing, frankly, about whether those companies are profitable or not, or by how much. (I've bought reports from Companies House and looked at this carefully). Sure, I can see how much profit XYZ mammoth e-commerce company with 5000 employes makes... but that's just not relevant, either. I've worked for several e-commerce businesses, but again they're all just too big to be comparable to what I want to do.
2) Does anyone have experience of critical success factors for this sort of venture?
Although capital risk might be low, if I'm going to invest a lot of time into this, I want to give myself the best possible chance of achieving my goal. And I know how many start up businesses fail.
Clearly product selection is vital. I could write paragraphs more on this, but I don't want to make this longer than it already is! I'm looking at markets where at least some of the current players aren't particularly big, so I have a chance of taking them on (in terms of the sophistication of their offering, and economies of scale), and I've heard what seems to me to be very good advice about ultimately choosing a product you care about (at least a bit!) The problem, of course, is that finding something I'm interested in, where there's some hope of competing, and where there are reasonable levels of demand, seems to be very, very tough. FWIW, the best thing I've found so far is a sub category within Toys, but I do worry about whether I might end up in too small a niche.
What are others' thoughts about products selection in this sort of circumstance?
And has anyone got any experience they can share on any other critical success factors for this type of project?
In summary: I'm not saying (or I hope I don't seem to be saying) please give me the magic formula to setting up a successful business! I'm saying, can others give me some reassurance that such a plan can work, according to my success criteria? And what, from experience, must I get right?
I'm sure that I can and will learn lots of things the hard way - e.g. when actually doing this - but as I've said, I just want to give myself the best chance of success.
Thanks very much for reading this all - and thanks in advance for any advice.