How to Launch E-Commerce On a Shoestring
Can you launch an online tea retailer for $10,000 or less? The answer depends on an accurate measure of available resources and your definition of success:
1. Success is a profitable business from which you can draw a salary, and that, when you are ready to retire, can be sold for a profit.
2. Success is a self-sustaining hobby. While you can't draw a competitive salary, it covers its own expenses and at times, gives you a little spending money.
3. Success is a hobby that allows you to express creativity, meet interesting people, and gain a sense of accomplishment regardless of the financial results. In other words, you don't need to work.
If your goal is scenario #3, then the only danger of failure is that the sales and/or customer feedback will be so lacking that you feel worse after investing your time and money. Under this scenario, you have a 90% chance of "success" with a $10K investment or less.
If your goal is scenario #2, you must do a good job with web and packaging design, but you really should be able to build a part-time side business that covers its expenses and kicks a little back into your pocket. Let's say 70% chance of success.
If your goal is scenario #1, you have less than $10K to invest, and you expect to draw a competitive salary from your business in the first year, your chances for success are less than 10%. We estimate that less than 10% of the tea websites out there are paying their owners $50,000 a year (and most of these invested a lot more than $10K). It's also safe to say that less than half of all tea websites are paying their owners minimum wage for their time.
Be realistic about the investment that you can make. It's not just about cash, though that certainly helps. If you can work for a year for free and have solid technical skills, that's a significant investment. If you know someone who can build the site for you, that counts too. In all honesty, if you have less than $10,000 in cash to invest and need your operation to cover your living expenses in the first six months, your odds are a lot better in Las Vegas. Play roulette and you have a 47.37% chance of doubling your money. (Since 2/3 of small businesses fail in the US, maybe Vegas isn't such a bad idea.)
Most new tea websites that are launched with solid designs, typical e-commerce functionality, average tea prices, and backed by strong word-of-mouth advertising and aggressive community involvement deliver a couple of transactions a day. Average sales of $30 and 2 sales a day come out to $1,860 in sales per month. At a 50% margin (after packaging, shipping, etc.), the site makes $930 per month to cover initial investment, your labor, and all overhead.
A hobby that pays for itself is a great hobby, but turning that hobby into a paying full-time job will require a pile of cash and a good marketing strategy.
1. Success is a profitable business from which you can draw a salary, and that, when you are ready to retire, can be sold for a profit.
2. Success is a self-sustaining hobby. While you can't draw a competitive salary, it covers its own expenses and at times, gives you a little spending money.
3. Success is a hobby that allows you to express creativity, meet interesting people, and gain a sense of accomplishment regardless of the financial results. In other words, you don't need to work.
If your goal is scenario #3, then the only danger of failure is that the sales and/or customer feedback will be so lacking that you feel worse after investing your time and money. Under this scenario, you have a 90% chance of "success" with a $10K investment or less.
If your goal is scenario #2, you must do a good job with web and packaging design, but you really should be able to build a part-time side business that covers its expenses and kicks a little back into your pocket. Let's say 70% chance of success.
If your goal is scenario #1, you have less than $10K to invest, and you expect to draw a competitive salary from your business in the first year, your chances for success are less than 10%. We estimate that less than 10% of the tea websites out there are paying their owners $50,000 a year (and most of these invested a lot more than $10K). It's also safe to say that less than half of all tea websites are paying their owners minimum wage for their time.
Be realistic about the investment that you can make. It's not just about cash, though that certainly helps. If you can work for a year for free and have solid technical skills, that's a significant investment. If you know someone who can build the site for you, that counts too. In all honesty, if you have less than $10,000 in cash to invest and need your operation to cover your living expenses in the first six months, your odds are a lot better in Las Vegas. Play roulette and you have a 47.37% chance of doubling your money. (Since 2/3 of small businesses fail in the US, maybe Vegas isn't such a bad idea.)
Most new tea websites that are launched with solid designs, typical e-commerce functionality, average tea prices, and backed by strong word-of-mouth advertising and aggressive community involvement deliver a couple of transactions a day. Average sales of $30 and 2 sales a day come out to $1,860 in sales per month. At a 50% margin (after packaging, shipping, etc.), the site makes $930 per month to cover initial investment, your labor, and all overhead.
A hobby that pays for itself is a great hobby, but turning that hobby into a paying full-time job will require a pile of cash and a good marketing strategy.