competing with uk online companies

gnxx

In some ways this is related to the thread on postage started by LadyUmbrella. I decided that this probably is more a general query and decided a new thread would be appropriate.

I've recently discovered a niche market in the UK. Without going into detail, there are competitors, but generally they don't offer a good online buying experience.

Shipping product from Ireland into the UK is my only concern. If I was based in the UK, I would have already grasped this venture with both hands :-)

Purchases would range from €20-00 up to €2000-00 and shipping weights could vary from 1KG upto 20KG.

UK competitors generally offer free shipping on higher value orders.

As I see it, I have the following options:

1) Ship products from Ireland. Hope that my volumes are higher than competitors and I can absorb the increased shipping costs

2) Consider warehousing and shipping product in the UK to avoid transit costs

3) Do (1) first and consider (2) later :-)

4) Do nothing

I would appreciate your comments. I know I'm very vague in terms of the product and I apologise for this.

Thanks in advance.

J_Wholesale

We sell primarily to the UK and have not had many problems. We use a .com domain hosted on a server in the UK and many of our customers do not even realise we're based in Ireland until they might need to telephone us.

As for shipping costs, we use DHL and impose a flat shipping rate of £9.95 + VAT, with free shipping on larger orders. We still have to subsidize this ourselves, but factor this into the cost of each item. It really comes down to how many orders you expect to handle a month, and whether your customers will accept your shipping costs. Outside cheap items (DVDs, etc.), customers will usually accept shipping costs without complaint. This is especially true if you're selling to business customers. You should also be able to negotiate a good rate with a courier company if your volumes are sufficient.

One piece of advice: do not use An Post for shipping to the UK. We did at first, but had to stop about 2 years ago as Fedex seemed to take over the UK leg of An Post package deliveries in place of Royal Mail. They lost as many packages as they delivered and accepted no responsibility for them.

Also, unless it's a uniquely Irish product, don't play up or even mention your location beyond your contact page. List prices in Sterling first, Euro second. And watch out for the UK VAT threshold: if UK sales are above £70,000 (I think) per annum, you need to register for VAT in the UK as well as Ireland. A .com domain is better than a .ie or a .co.uk one, and it's also more honest and up front - you're not lying or misrepresenting to anyone about where you are.

I wouldn't even consider trying to ship from the UK as it sounds like a logistical nightmare. Misrepresenting your location would make handling returns very difficult, and would probably come back and bite you later on, not to mention the employee and tax situation with running an operation spread across two countries.

antoinolachtnai

Competing with a UK firm which pays UK shipping and UK VAT is tough! The 6 percent difference in VAT makes a big difference to profitability. Another 2 euros extra for shipping on a 100 euro item makes the difference 8 percent.

Personally, if I were looking at an opportunity like that, I would see if there were some way to establish it in Northern Ireland. Just a thought.

Mickk

You could use a fulfillment house in the north to look after that side of things and let you concentrate on selling. If you register your business up there you could charge UK vat as thats where your base is.

www.thedistributionsolution.co.uk
http://www.mailroomltd.com/

BarryM3

I can help with this, I run a Irish based fulfillment company that ships into the UK

www.storageplus.ie

Mickk

Mickk wrote: »

You could use a fulfillment house in the north to look after that side of things and let you concentrate on selling. If you register your business up there you could charge UK vat as thats where your base is.

www.thedistributionsolution.co.uk
http://www.mailroomltd.com/

Super advice.

gnxx

Really great advice on this thread. Particularly interesting from my viewpoint, is the idea of outsourcing the entire warehouse function, since this is an area in which I have no expertise.

I will look at the plan again and consider launching this business in 2010 !!

Beers on me if we have a E&BM meeting in the future !!

Thanks again.