Advice on new e-commerce website

Shasty

Hi everybody,
I'm looking to start a new website, based in Galway, which would sell computer hardware and accessories to the Irish and UK market at first, eventually expanding to the European market. I plan to eventually have a website, much like dabs and komplett, only better, and more customer friendly. In your opinion, before I start any business plan or market research, do you think there is a room for another one of these sites or is this a poor venture?

Regards,
Shasty

TheCostumeShop.ie: Ronan

Shasty, Whats your proposed USP?

The big danger in this industry is that people expect quick delivery, however holding stock is dangerous as the stock becomes obsolete very quickly because new models or improvements come out every few months. Also a lot of big players mean that margins are very tight. There is a lot of money to be made, but not for a "me too" business, you need something to make you stand out from the crowd.

TheWaterboy

I would agree with Ronan's point above..You will need some sort of USP to compete with the bigger guys.

I think if you have top class customer service then you could build a small niche market and take it from there. Alot of people buying laptops or computers have not a notion about what type / brand etc to buy. If you can offer them the advice about which product to buy in their price range you are offering someting that that bigger boys aren't. To do this you will need to communicate with them via email or phone.

Shasty

Well I suppose I am going to try and sell medium end products at little profit, cost price, or possibly even a small loss to try and attract potential customers and though effective deals and psychology, convert them into actual customers, much like the way supermarkets would operate. But I realise that a website is not a physical shop and more research would need to be done to see if this type of plan would work.

@TheWaterboy: I do plan to be able to be contacted by phone of email alright, and basily work with the customer and try to tailer for their needs and wants, and make them be more envolved with the purchase, but I've yet to research how effective this will be

@TheCostumeShop.ie: Ronan, your right, I had never thought of the stock being absolete after a short time. I had planned to set up a 'trial website', to order a few popular items at first, and order other products on demand until the business grew enough to start ordering sufficent stock. I see this probably wont work now...hmm, back to the drawing board.

Edit: thanks for your input

BostonB

I know nothing about this business. So this is pretty much wild guessing on my part. I've always wondered how many Irish hardware shops survive.

I would expect the margins on hardware are quite slim. Considering so there's so little between the big retailer's prices. Thus the local shops tend to be more expensive and carry less stock. I assume because they don't do the volume, and thus need to make a bigger margain.

So they focus on the people who want to buy in store, who don't want to wait online, or just don't want to buy online. Someone in an emergency might by a part like a HD etc. I assume people would buy online from that shop as they see it less of a risk than a bigger online retailer with no store or not in the country. Of course many such shops have professional servers or other non IT product lines to increase income if the IT hardware side isn't enough on its own. Which I guess is who they make themselves different. Bring customers to the website for something else, and if its a related area, they are likely to get hardware aswell.

I dunno, Just my 2 cents. Maybe you've already thought this yourself.

Kinetic^

There is not a lot of loyalty in online purchasing imo. There are too many vendors readily available at the simple click of a mouse.

The 3 main online hardware suppliers to the consumer market in Ireland who are based here (elara, memoryc & komplett), all are are based in Dublin or close to it and offer a collection service. By being based in Galway, you're effectively cutting off a lot of business from a collection point of view. Amazon.co.uk are also a threat, there's always a thread on some special offer on a component in the bargain alerts forum. They may

As Ronan has pointed out, people want their products yesterday. Bad logistics setup can leave your customers fuming and 1 bad online review will be enough to put people off. Read Komplett's interactive forum for the past 12 months and see how bad customer service can affect an online business. I can't see myself buying anything from them for a long long time.

mneylon

Computer hardware has really really tight margins and is highly competitive.
Unless you can find a market niche that is underserved you're going to have a hard time

TheCostumeShop.ie: Ronan

Shasty wrote: »

sell medium end products at little profit, cost price, or possibly even a small loss to try and attract potential customers

This is a really bad business model - loosing money in business is rarely a good idea for a start up unless you have buckets of funding. If your way of attracting customers is to loose money, you'll attract the most price sensitive customer, who will then leave when the next bigger fool comes along and is willing to loose more money while you're try to turn your customers into profitable ones.

Remember if your buying small quantities (a few pallets), the guys that are buying by the containers are always going to have been room to make margins. It's like trying to start an solo off license and compete with Tesco on prices. They can sell profitability for less than you can buy.