Impassable wilds of business, part 1
Disclaimer: the article turned out to be long, so I beat it in two parts.
This is the second note on how we did the shop www.Smart-Masses.ru . Many habra users who read this topic remember our article “Maturity of danger” , which was aimed primarily at spreading information about the existence of our store and stir up interest in it. That is, to experience the so-called habraeffekt on yourself. It's nice that he touched not only us, but also our friends, including the resource Dvice.ru . We will make the analysis of habraeffect in one of the following notes, and now I would like to satisfy the interest of those readers who, in the comments to “Maturity of Danger”, expressed their wishes to learn more about the project start, business processes, capital and difficulties that we faced starting and developing the project. Well, their curiosity is understandable and deserves satisfaction. We believe in openness and believe that information worthy of dissemination should be disseminated. If one of the readers wants to do what we have done, it will be useful for him to learn some things, and, moreover, our example can be good motivation and support for someone in moments of despair :)
')
So let's start over. In the previous article, we talked about how we came to the idea of ​​opening this store and started, full of pride and prejudice, to create it. Here we will reveal some technical details regarding the process of starting and running a business.
Before doing anything at all, it was necessary to outline the scheme of work. In general, the choice we had was small: either to work on pre-orders, or to contain a full-fledged warehouse. We chose the option with the warehouse. The reason for this is that, as it seems to us, the main driving forces of our sales are the w00t effect (and he lives very briefly) and gifts that are bought shortly before the holiday. Preorders are very bad because they have to wait for three weeks, and for 80% + of our customers this is unacceptable. Therefore, they would never have given a serious sales flow. The warehouse option is obviously more complicated: firstly, this implies the existence of serious working capital, and secondly, high risks.
Risks are generated, first of all, by two things: the delivery scheme and the commodity balance. In the case of work on pre-orders, there is no commodity balance in principle, since there are no stocks of products, and the risk of the delivery scheme is small due to small quantities of imported goods. If something “leaves”, it will be non-lethal. It is known from trade theory that risks are especially great at the very beginning of activity: when schemes are not worked out, the nature of partners, customer preferences, etc. are unknown. Well, we took the risk of the delivery scheme completely, and hit it pretty well: when delivering the first batch of goods, our delivery scheme cracked and we waited for the goods instead of the expected 3 weeks for more than two months. This risk could have been mitigated by conducting test tests of the delivery scheme before the actual work began, but we were too lazy and got what we received. As a result, we lost a solid / for us / amount on the rental office, which actually stood idle while we waited for the goods.
We have successfully reduced the risk of commodity balance to a minimum. We simply bought the entire range, which were going to sell in quantities of 1 pc. each thing and tried on the first month of sales to understand what is better and what is worse. From the first week of work, it became clear that this approach does not give a complete picture of what products are being sold, because the thing, once purchased, was already shown as missing on the site, and we did not receive any further feedback on it. But on the other hand, we have identified absolute champions of sales - by the number of pre-orders and questions on these products, and absolute outsiders - some goods lie with us after the first purchase to this day. They are the most terrible commodity balance that older comrades frightened me with, but it turned out to be insignificant here. After this first wave of sales and its analysis, there were three groups of products: hits podivka, outsiders and it is unclear what :) With this it is unclear how we continued to work / and continue to this day /, gradually figuring out the demand for products in this category. What is the disadvantage of this approach? In spite of the fact that we propagandize and follow the principle of “everything for the client,” the minus is that the client suffers. That is, when applying this approach, things that are necessary for buyers regularly disappear from our warehouse - since we are ordering a deliberately small quantity so as not to run into the formation of a large balance of goods. But here we have to choose the least of the two evils for ourselves: either to give people what they want on an ongoing basis, and inevitably get into the formation of commodity balances on outsider products, or “feed” the client a little bit and accumulate statistics , actively and rationally distributing working capital. Certainly, from the point of view of marketing, it is much better when the store is littered with goods and the visitor is attracted by the knowledge of the fact that in this place he can always get what he needs. Albeit at the expense of the rationality of the use of resources, the store wins on the turnover of those goods that sell well. But in our case, the working capital factor outweighed: we still have a catastrophic shortage to this day, so that in order not to die in the first month of existence, we had to come to its rational use. However, on working capital - below in more detail.
Goods for today we buy in the United States. To get around some restrictions on the direct export of goods from the States, we had to resort to the services of an intermediary. What are the functions of the mediator and why is it needed? The product is purchased in a store in the United States. Delivery is made to the address of the intermediary. Since ThinkGeek and other stores use courier services for delivery, it would be expensive to deliver goods from them immediately to Russia: in our case, speed is not as important as the cost of shipping. Therefore, the mediator takes the goods in his home in the States, repacks it in a large container and sends it to us by the State Post. In parallel, it helps to circumvent the ban on the export of certain goods from the United States. Actually, this is all why we need a mediator. Taking this opportunity, I want to send a bluff towards the intermediary company RuAmerica , whose services we used in the first purchase. As it turned out later, the company consists of one person, and thanks to his efforts, or rather the complete absence of them, we waited for the product three times as long as it was due. The amount of purchase of this product was quite serious / for us /, and we spent the two months of waiting, gnawing at our fingernails and toes. Later, through friends, a more reliable intermediary was found.
Sometimes they ask why we do not use container shipping. This is due to a lack of turnover: the orders we make are not enough to fill a 20-foot chest. In general, container transportation is certainly much cheaper than airmail (which is understandable), even if it is about twice as long. Now we are working on increasing the turnover, and as soon as it reaches the figure necessary and sufficient for organizing container delivery, we will immediately switch to it. This will greatly increase our profitability :)
The burning topics of the second part: working capital and advertising . Expect soon.
This is the second note on how we did the shop www.Smart-Masses.ru . Many habra users who read this topic remember our article “Maturity of danger” , which was aimed primarily at spreading information about the existence of our store and stir up interest in it. That is, to experience the so-called habraeffekt on yourself. It's nice that he touched not only us, but also our friends, including the resource Dvice.ru . We will make the analysis of habraeffect in one of the following notes, and now I would like to satisfy the interest of those readers who, in the comments to “Maturity of Danger”, expressed their wishes to learn more about the project start, business processes, capital and difficulties that we faced starting and developing the project. Well, their curiosity is understandable and deserves satisfaction. We believe in openness and believe that information worthy of dissemination should be disseminated. If one of the readers wants to do what we have done, it will be useful for him to learn some things, and, moreover, our example can be good motivation and support for someone in moments of despair :)
')
Start
So let's start over. In the previous article, we talked about how we came to the idea of ​​opening this store and started, full of pride and prejudice, to create it. Here we will reveal some technical details regarding the process of starting and running a business.
Scheme of work
Before doing anything at all, it was necessary to outline the scheme of work. In general, the choice we had was small: either to work on pre-orders, or to contain a full-fledged warehouse. We chose the option with the warehouse. The reason for this is that, as it seems to us, the main driving forces of our sales are the w00t effect (and he lives very briefly) and gifts that are bought shortly before the holiday. Preorders are very bad because they have to wait for three weeks, and for 80% + of our customers this is unacceptable. Therefore, they would never have given a serious sales flow. The warehouse option is obviously more complicated: firstly, this implies the existence of serious working capital, and secondly, high risks.
Risks are generated, first of all, by two things: the delivery scheme and the commodity balance. In the case of work on pre-orders, there is no commodity balance in principle, since there are no stocks of products, and the risk of the delivery scheme is small due to small quantities of imported goods. If something “leaves”, it will be non-lethal. It is known from trade theory that risks are especially great at the very beginning of activity: when schemes are not worked out, the nature of partners, customer preferences, etc. are unknown. Well, we took the risk of the delivery scheme completely, and hit it pretty well: when delivering the first batch of goods, our delivery scheme cracked and we waited for the goods instead of the expected 3 weeks for more than two months. This risk could have been mitigated by conducting test tests of the delivery scheme before the actual work began, but we were too lazy and got what we received. As a result, we lost a solid / for us / amount on the rental office, which actually stood idle while we waited for the goods.
We have successfully reduced the risk of commodity balance to a minimum. We simply bought the entire range, which were going to sell in quantities of 1 pc. each thing and tried on the first month of sales to understand what is better and what is worse. From the first week of work, it became clear that this approach does not give a complete picture of what products are being sold, because the thing, once purchased, was already shown as missing on the site, and we did not receive any further feedback on it. But on the other hand, we have identified absolute champions of sales - by the number of pre-orders and questions on these products, and absolute outsiders - some goods lie with us after the first purchase to this day. They are the most terrible commodity balance that older comrades frightened me with, but it turned out to be insignificant here. After this first wave of sales and its analysis, there were three groups of products: hits podivka, outsiders and it is unclear what :) With this it is unclear how we continued to work / and continue to this day /, gradually figuring out the demand for products in this category. What is the disadvantage of this approach? In spite of the fact that we propagandize and follow the principle of “everything for the client,” the minus is that the client suffers. That is, when applying this approach, things that are necessary for buyers regularly disappear from our warehouse - since we are ordering a deliberately small quantity so as not to run into the formation of a large balance of goods. But here we have to choose the least of the two evils for ourselves: either to give people what they want on an ongoing basis, and inevitably get into the formation of commodity balances on outsider products, or “feed” the client a little bit and accumulate statistics , actively and rationally distributing working capital. Certainly, from the point of view of marketing, it is much better when the store is littered with goods and the visitor is attracted by the knowledge of the fact that in this place he can always get what he needs. Albeit at the expense of the rationality of the use of resources, the store wins on the turnover of those goods that sell well. But in our case, the working capital factor outweighed: we still have a catastrophic shortage to this day, so that in order not to die in the first month of existence, we had to come to its rational use. However, on working capital - below in more detail.
Delivery scheme
Goods for today we buy in the United States. To get around some restrictions on the direct export of goods from the States, we had to resort to the services of an intermediary. What are the functions of the mediator and why is it needed? The product is purchased in a store in the United States. Delivery is made to the address of the intermediary. Since ThinkGeek and other stores use courier services for delivery, it would be expensive to deliver goods from them immediately to Russia: in our case, speed is not as important as the cost of shipping. Therefore, the mediator takes the goods in his home in the States, repacks it in a large container and sends it to us by the State Post. In parallel, it helps to circumvent the ban on the export of certain goods from the United States. Actually, this is all why we need a mediator. Taking this opportunity, I want to send a bluff towards the intermediary company RuAmerica , whose services we used in the first purchase. As it turned out later, the company consists of one person, and thanks to his efforts, or rather the complete absence of them, we waited for the product three times as long as it was due. The amount of purchase of this product was quite serious / for us /, and we spent the two months of waiting, gnawing at our fingernails and toes. Later, through friends, a more reliable intermediary was found.
Sometimes they ask why we do not use container shipping. This is due to a lack of turnover: the orders we make are not enough to fill a 20-foot chest. In general, container transportation is certainly much cheaper than airmail (which is understandable), even if it is about twice as long. Now we are working on increasing the turnover, and as soon as it reaches the figure necessary and sufficient for organizing container delivery, we will immediately switch to it. This will greatly increase our profitability :)
The burning topics of the second part: working capital and advertising . Expect soon.
Source: https://habr.com/ru/post/40757/
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