Wading into eCommerce: head scratching starts

shopping cartIt's been a while since I've checked in on this topic of ecommerce.  A quick Google search turns up a lot of sites that want me to sell using their platform.  I see some new names I'm not familiar with.  Great.  Even more stuff to wade through these days. 

Before getting into all that, I took a moment to refresh my memory concerning exactly what it is I want to do so I don't waste a lot of time poking around in a bunch of unnecessary stuff.

The way I see it, the plan is:

  1. pick something to sell online
  2. figure out where potential buyers for that item are hanging out on the Internet
  3. figure out how to stick an electronic offer in front of those potential buyers
  4. come up with a way to accept $ online from those wanna be buyers
  5. get the product to the buyers

1. Picking something to sell

Ideally, I could find something that's in high demand that's available at wholesale/bargain prices and can be resold for a tidy profit.  Still looking for that gem(s).  I hear good things about using terapeak and eBay, but I'm looking for a lower-key entry point to start with.

So, to start this ball rolling, I'm going to see if I can sell some 'kits' for a Made with Magic controller that I've been working on for another website of mine - https://bringmagichome.com Those kits won't be much of a money maker but they are something I want to get out there soon and will be a good way to dip a toe into the marketplace.

2. Market research - where are the potential buyers?

searching for customersAt this point, it's tempting to rush out and start shopping for one of those ecommerce platforms that pop up on the first page of an ecommerce Google search and promise the moon and quick riches.  But I know that's not always a good idea.  It's better to pause a moment and try to figure out where the potential buyers are hanging out and THEN see which ecommerce platform best accesses those potential buyers.  That sounds about right, doesn't it?

Off to Google to do a search.  Plunking in the keywords "made with magic controller" and hitting the search button gives hits for an instructables.com page, several pages that have nothing to do with Made with Magic products and then a couple of hits for bringmagichome.com. OK.  So my own site would be one place to offer this product.  Good to know. The problem with that is that the site doesn't get a lot of traffic (yet).   So let's broaden the search to just "made with magic" and see what that returns.  Got a few more hits.  Now the first page of the search results include:

  • Disney sites
  • independent, Disney-centric blogs
  • YouTube videos
  • etsy.com
  • amazon.com

Of all those options, the ones I'm most likely to be able to get my kit in front of viewers would be:

  • bringmagichome.com
  • youtube.com
  • etsy.com
  • instructables.com

There's little chance of getting mentioned/listed on an actual Disney site and probably not on amazon.com, either.  Posting to instructables.com might leech traffic from bringmagichome.com, which is exactly what I'm trying NOT to do, so that may not be a preferred starting point.  I might be able to work mention of the kit into one of the Disney-oriented blogs - if it's done somewhat humbly and within the proper context of a suitable thread on one of their forums.  Maybe.

Based upon what's turned up so far, looks like the initial focus may need to be on bringmagichome.com, youtube.com and etsy.com.  So how does that get done?

3. Figure out how to stick an electronic offer in front of those potential buyers & 4. Come up with a way to accept $ online from those wanna be buyers

Starting with Etsy.com

Etsy logoThe two steps in that title are pretty much inseparable, so we kind of have to consider both of them at the same time.  Now, of the choices that have been defined so far, the no-brainer would be Etsy.com.  It's an established marketplace where people buy and sell all the time.  A natural. 

But first, a sanity check.  Looking at the kind of things for sale on Etsy, most of the things for sale there are more on the order of finished crafts.  So, can I find anything that's like my kit that's forsale on Etsy.com?  Whew!  Did a quick search and found a couple similar items.  But only a couple.  One in particular is similar in concept - WiFi soil sensor DIY kit. I'll admit, it is a bit worrisome that there aren't MANY similar items.  Clearly, it wouldn't be a good idea to sink a lot of $ into giving this a try on Etsy.

Well then, what are the costs of selling products on Etsy? 

The hostile jungles of commissions, sales tax and shipping

Figuring out the costs of doing business using the different services that are available is often the most inscrutable aspect of getting into ecommerce.  There are lots of middle men.  Each one needs to get their 'cut'.  And each service handles the costs a little differently and each offers differing amounts of support.  It takes more than a little patience to wade through all of it.

Getting back to Etsy, specifically, here's their terms:

  • No start up fee.
  • No monthly fee.
  • $0.20 @ to list an item for up to 4 months
  • An additional 3.5% commission for Etsy when a sale is made  (excludes tax and shipping)
  • *Plus 3% + $0.25 to pay the gateway, bank, etc. (includes tax and shipping)

* - The ACTUAL fees charged varies by country.  Example: Hong Kong 4.4% + 2.00 HKD  If a significant portion of sales are likely to be to customers in another country, the average gateway cost will trend to somewhere between 3% and 4%.

Calculating the damage

receiving the billOK.  It looks like the minimum amount that will be dinged from the sale would be 6.5% + $0.45 per sale.  I say minimum cuz the costs go up if tax is collected and with how much the shipping costs.  If the customer chooses expedited shipping, that eats further into the net returned.  And, if the customer is outside the USA, the costs will be higher.  Based upon what's been given to work with, I can't really predict maximum costs ahead of time to help me price my product.  I guess the best solution is to figure out what is likely to be an average cost, price the product based on that estimate and hope that the transactions even out in the end.

I need to net $25 on each sale.  Doing the calculations, I come up with a required sales price of $27.50 if sold to a customer in Seattle where there's a sales tax rate of 10% and assuming a $3 shipping charge.  The customer's cost would be over $30.  That's stretching it for this kind of product.  Dang.  That's one strike.

Automated shipping and sales tax calculations?

Other features that make a service worthwhile include handling of shipping and sales tax calculations.  Etsy looks like it will handle the shipping calculations and even access cheaper shipping costs that available online.  That's good.   The sales tax handling is not so good.  Their platform will perform the necessary calculations using values that you provide it for use.  Yikes.  The reason for saying that has to do with this tidbit from the Washington State DOR:

The correct retail sales tax rate to charge customers is generally based on where in Washington the customer receives the product (e.g. shipping address).  link.

Googling for info on the multitude of tax rates that have to be calculated for the state of Washington, I found a download on the Avalara site in csv format.  700 entries.  Not looking forward to entering all that by hand.  Washington State DOR wants us to use zip+4 codes because the shorter zip codes may overlap different tax zones.  Downloading their file, I get over 1.2 million records!!!  Strike two.  If your state takes a saner approach, consider yourself lucky.  Maybe the smartest thing to do is to move to Oregon.

Moving on

Etsy isn't completely out of the running yet, but I'm gonna stick it on the shelf while I check out the other options.  As for the other options, YouTube isn't a third person commerce platform and sticking a buy button on other people's blogs just isn't done.  It is acceptable to mention a product on either of those alternatives and provide a link back to the product page somewhere else.  Guess that somewhere else might have to be my own website

In part 2, I'll let you know what I find out about getting that done and if it works any better than the Etsy solution for my situation.  Your needs are likely to be different from mine, but I hope that some of the info shared during my journey will help you recognize your own jumping off point.  Can't ask for more than that.