Indie's main headache: how to make sales before you go bust
In the modern realities of the free market, competition and the struggle for the buyer, the vendor is not always in comfortable conditions for themselves. Yes, there are a number of companies on the market that once created this market for themselves and now feel great. However, for most manufacturers, the sale of their products is a headache, sometimes larger than the manufacture of the product itself. In our previous publication, we told where we are going to attract vendors to our site. But Indiegogo and Kickstarter are not the only channels that will increase the number of sellers on the Hamster Marketplace. We are sure that many will come to us on their own.
Typical environment in which the indie-maker is trying to organize sales of his product
You must understand that all sales channels for products can be divided into two categories:
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Each manufacturer somehow tries both approaches. Many large enterprises and brands have their own chain of stores and websites for selling their products in local markets, others choose a model of cooperation with retail. It is important to note that the larger and more popular the manufacturer is, the easier it is for him to organize his own retail sales scheme: the brand, name, and popularity among consumers work for him. The reverse side of the coin: the survival of new, unpopular or just small producers. If behind the conditional CompanyName there is no multimillion (and sometimes billion) capital, then the work of the own retail system is most often doomed to failure. Moreover, this failure is influenced by many factors: from the banal impossibility of the vendor and the buyer to meet at the “patch” of his company store, to the lack of confidence in a new brand.
Also, the type of products manufactured and subsequently sold by the vendor has a huge impact on sales. People will always do three things: being born, eat and die. For this reason, you can find grocery stores at every corner where toilet paper and diapers for babies will be sold. Also, there are no problems with finding a funeral home in order to send a relative to the last journey: funeral services will always be popular. The occupancy of the conditional square kilometer by all other stores and retail chains depends solely on the amount of free money among the population and the service cycle of the goods sold by these outlets.
The service life of a product, along with its value, has the greatest impact on the occupancy of retail outlets. Conventionally, you will not see AvtoVAZ dealership in every district of the city N due to the high cost of their products relative to the milk package (and not only that). For the same reason, microwave ovens, vacuum cleaners, or televisions do not sell at every step. Electronics is generally on the list of basic needs of the average consumer somewhere outside the brackets and is a blessing of civilization, and not a commodity, if judged objectively. You can always warm up the food on the stove, and not in the microwave or, if there is no free money, refrain from buying a smartphone and walk around with your “grandmother's call” for a month or two. Of course, the quality of life will not increase due to this, but no one will get to the funeral services bureau mentioned earlier.
The implementation of electrical products in general can be called the cornerstone of modern commerce. On the one hand, these are excesses and life bonuses in a developing state. On the other - they are too expensive to not looking to order them from the catalog without visual inspection and other "fittings". In order for a consumer to use the services of an Internet site for the acquisition of a conditional electrical product, he must:
Any small vendor stumbles, if not on the second point, as now the systems of reviews and exchange of experience are extremely popular, then certainly the third. It often happens that a conditional manufacturer of electrical goods creates something extremely specific, niche. Example: Numerous startups on Kickstarter, who collected thousands of dollars to produce the next automatic carriage of the back. As a result, the lion's share of the starting capital of the newly-minted vendor already lies either in the production line or in the products.
It would seem that you can turn to a large retailer and “hand over” the product at a price slightly higher than the cost price, in order to roll the money and invest it in the next batch of goods. But then there is a conflict: many networks do not buy goods in bulk.
Yes Yes. If you do not have top-level agreements with the management, or your product is not a new local “bomb,” about which is carried from every iron, then most likely the retailer will agree to take only 3-5 copies for a trial implementation. In this case, the “commission” model will be used: you will see the money only in the case of the sale of either individual copies or the entire lot. A similar approach in retail works in all areas. Large networks are extremely wary of new positions and manufacturers-nouneym. At the same time, the more saturated the market and the higher the competition and selling price, the less willingly the vendor’s products will be sold.
It would seem that here it is: Amazon, AliExpress and other large local trading platforms. But here the problem is that local players work on the principle of “bulletin board”, that is, they simply “cut” the seller through the subscription system for the right to use the site, no longer contributing to the distribution of goods. Amazon and other giants do not differ from offline retail networks, like M-VIDEO. Although there is a slight difference: Amazon is a global player and he doesn’t care more about the fate of a small producer than conditional M-VIDEO.
There is still an option with its own retail. Initially, we talked about the fact that initially the personal retail chain is most likely doomed to failure if you do not have multi-million dollar budgets. It is not always so. For example, you can opt out of the services of large retail and try to launch your own Internet platform for the focal realization and support of the goods. However, this will work if you specifically know your target audience and can conduct a focus advertising campaign targeting potential consumers.
In this case, everything will help the manufacturer: starting with publications in the media and on specialized sites, ending with the resource “Answers@Mail.ru”, which, by the way, is very well indexed. In the case of Hamster Marketplace, the founder Denis Bulavin, began with the production of children's PlayPad tablets and its target audience was determined: these are parents who want to buy a tablet for their children. So here, simply and unpretentiously. Based on this information, we were able to promote our specific, in fact, product, suggesting not only competitive solutions for conventional tablets, but also the corresponding information background. That is, we initially managed to tell about our existence, relying on the popularity of ordinary tablets.
But if your audience is not so specific, for example, this is “a man of 25–45 years old”, you may have serious problems. We were lucky, because our product was, in fact, an improved version of what the consumer has long been familiar with. If the manufacturer creates something so specific that in the chain “own store - information about the product / knowledge of the presence of such a product - the buyer” falls the middle link, then everything does not look so rosy. And the less people will potentially look for your product on the Internet, the greater the budget needed for promotion to the "masses".
The entire text above is the rationale for the very existence of the Hamster Marketplace concept. We, as the creators of the project, set a goal to ensure not only the survival, but also the development of DIY and indie electronics manufacturers who have no place in offline networks or in Amazon catalogs and who are not able to tell about themselves to the world.
The main problem of any small producer is the initial reluctance on the part of a major player to work with him on equal terms. Amazon-level sites are interested in direct deliveries from, for example, Samsung or Apple, but certainly not from nameless enthusiasts. Hence the standardization policy for “everyone who is below” the level of interest of the site. This averaged image of the vendor leads to the fact that it is not the one who has the best or interesting product that survives, but the one who has the most advertising budget: after all, the only product that yesterday’s start-up found in the catalog from hundreds of thousands of positions is close to impossible .
The problems of organizing your own retail business were also discussed, and this is without taking into account multiple bureaucratic procedures: obtaining permission to trade, sales, drawing up reports and paying taxes in one more direction. It is likely that this option is generally not suitable for products with low margins: the salaries of employees serving this line of business can “eat” all the profits with a low market capacity.
We believe that the best solution is a consensus between our own retail and a large market. The manufacturer must be able to influence the seller’s “party policy” if he has the money for it. On the other hand, the collective retail option cuts off the possibility of establishing a “dictatorship of the giants”: situations where the site adjusts to two or three major manufacturers, whose products constitute only a small part of the general catalog. The possibility of the collective influence of small vendors on the Hamster Marketplace policy will allow to maintain a certain balance, which the existing retail networks lack.
Typical environment in which the indie-maker is trying to organize sales of his product
You must understand that all sales channels for products can be divided into two categories:
')
- Cooperation with retailers;
- Own retail (wholesale) network.
Each manufacturer somehow tries both approaches. Many large enterprises and brands have their own chain of stores and websites for selling their products in local markets, others choose a model of cooperation with retail. It is important to note that the larger and more popular the manufacturer is, the easier it is for him to organize his own retail sales scheme: the brand, name, and popularity among consumers work for him. The reverse side of the coin: the survival of new, unpopular or just small producers. If behind the conditional CompanyName there is no multimillion (and sometimes billion) capital, then the work of the own retail system is most often doomed to failure. Moreover, this failure is influenced by many factors: from the banal impossibility of the vendor and the buyer to meet at the “patch” of his company store, to the lack of confidence in a new brand.
Also, the type of products manufactured and subsequently sold by the vendor has a huge impact on sales. People will always do three things: being born, eat and die. For this reason, you can find grocery stores at every corner where toilet paper and diapers for babies will be sold. Also, there are no problems with finding a funeral home in order to send a relative to the last journey: funeral services will always be popular. The occupancy of the conditional square kilometer by all other stores and retail chains depends solely on the amount of free money among the population and the service cycle of the goods sold by these outlets.
The service life of a product, along with its value, has the greatest impact on the occupancy of retail outlets. Conventionally, you will not see AvtoVAZ dealership in every district of the city N due to the high cost of their products relative to the milk package (and not only that). For the same reason, microwave ovens, vacuum cleaners, or televisions do not sell at every step. Electronics is generally on the list of basic needs of the average consumer somewhere outside the brackets and is a blessing of civilization, and not a commodity, if judged objectively. You can always warm up the food on the stove, and not in the microwave or, if there is no free money, refrain from buying a smartphone and walk around with your “grandmother's call” for a month or two. Of course, the quality of life will not increase due to this, but no one will get to the funeral services bureau mentioned earlier.
The implementation of electrical products in general can be called the cornerstone of modern commerce. On the one hand, these are excesses and life bonuses in a developing state. On the other - they are too expensive to not looking to order them from the catalog without visual inspection and other "fittings". In order for a consumer to use the services of an Internet site for the acquisition of a conditional electrical product, he must:
- Be familiar with the product or really want to get it;
- Be confident in the reputation of the Internet resource;
- Know about the existence of an Internet resource.
Any small vendor stumbles, if not on the second point, as now the systems of reviews and exchange of experience are extremely popular, then certainly the third. It often happens that a conditional manufacturer of electrical goods creates something extremely specific, niche. Example: Numerous startups on Kickstarter, who collected thousands of dollars to produce the next automatic carriage of the back. As a result, the lion's share of the starting capital of the newly-minted vendor already lies either in the production line or in the products.
It would seem that you can turn to a large retailer and “hand over” the product at a price slightly higher than the cost price, in order to roll the money and invest it in the next batch of goods. But then there is a conflict: many networks do not buy goods in bulk.
Yes Yes. If you do not have top-level agreements with the management, or your product is not a new local “bomb,” about which is carried from every iron, then most likely the retailer will agree to take only 3-5 copies for a trial implementation. In this case, the “commission” model will be used: you will see the money only in the case of the sale of either individual copies or the entire lot. A similar approach in retail works in all areas. Large networks are extremely wary of new positions and manufacturers-nouneym. At the same time, the more saturated the market and the higher the competition and selling price, the less willingly the vendor’s products will be sold.
It would seem that here it is: Amazon, AliExpress and other large local trading platforms. But here the problem is that local players work on the principle of “bulletin board”, that is, they simply “cut” the seller through the subscription system for the right to use the site, no longer contributing to the distribution of goods. Amazon and other giants do not differ from offline retail networks, like M-VIDEO. Although there is a slight difference: Amazon is a global player and he doesn’t care more about the fate of a small producer than conditional M-VIDEO.
There is still an option with its own retail. Initially, we talked about the fact that initially the personal retail chain is most likely doomed to failure if you do not have multi-million dollar budgets. It is not always so. For example, you can opt out of the services of large retail and try to launch your own Internet platform for the focal realization and support of the goods. However, this will work if you specifically know your target audience and can conduct a focus advertising campaign targeting potential consumers.
In this case, everything will help the manufacturer: starting with publications in the media and on specialized sites, ending with the resource “Answers@Mail.ru”, which, by the way, is very well indexed. In the case of Hamster Marketplace, the founder Denis Bulavin, began with the production of children's PlayPad tablets and its target audience was determined: these are parents who want to buy a tablet for their children. So here, simply and unpretentiously. Based on this information, we were able to promote our specific, in fact, product, suggesting not only competitive solutions for conventional tablets, but also the corresponding information background. That is, we initially managed to tell about our existence, relying on the popularity of ordinary tablets.
But if your audience is not so specific, for example, this is “a man of 25–45 years old”, you may have serious problems. We were lucky, because our product was, in fact, an improved version of what the consumer has long been familiar with. If the manufacturer creates something so specific that in the chain “own store - information about the product / knowledge of the presence of such a product - the buyer” falls the middle link, then everything does not look so rosy. And the less people will potentially look for your product on the Internet, the greater the budget needed for promotion to the "masses".
What does Hamster Marketplace offer?
The entire text above is the rationale for the very existence of the Hamster Marketplace concept. We, as the creators of the project, set a goal to ensure not only the survival, but also the development of DIY and indie electronics manufacturers who have no place in offline networks or in Amazon catalogs and who are not able to tell about themselves to the world.
The main problem of any small producer is the initial reluctance on the part of a major player to work with him on equal terms. Amazon-level sites are interested in direct deliveries from, for example, Samsung or Apple, but certainly not from nameless enthusiasts. Hence the standardization policy for “everyone who is below” the level of interest of the site. This averaged image of the vendor leads to the fact that it is not the one who has the best or interesting product that survives, but the one who has the most advertising budget: after all, the only product that yesterday’s start-up found in the catalog from hundreds of thousands of positions is close to impossible .
The problems of organizing your own retail business were also discussed, and this is without taking into account multiple bureaucratic procedures: obtaining permission to trade, sales, drawing up reports and paying taxes in one more direction. It is likely that this option is generally not suitable for products with low margins: the salaries of employees serving this line of business can “eat” all the profits with a low market capacity.
We believe that the best solution is a consensus between our own retail and a large market. The manufacturer must be able to influence the seller’s “party policy” if he has the money for it. On the other hand, the collective retail option cuts off the possibility of establishing a “dictatorship of the giants”: situations where the site adjusts to two or three major manufacturers, whose products constitute only a small part of the general catalog. The possibility of the collective influence of small vendors on the Hamster Marketplace policy will allow to maintain a certain balance, which the existing retail networks lack.
If you want to get more information about Hamster Marketplace first hand, welcome to our Russian-language channel in Telegram .
Source: https://habr.com/ru/post/339730/
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