Taking Orders without before wholesale order

Test Plan

Hi,

I want to set up an online technology parts store. I have 2 wholesalers and I am going to list their products on my site. My plan is to dispatch every 5 days. So that I receive enough orders to fulfill my minimum order requirements with my wholesalers. I will place all orders with my wholesalers on say a Monday (next day shipping) and then ship to my customers.

Somebody who doesn't know a lot about business told me it is illegal to take orders and payment from customers when you don't actually have the inventory. Is this true?

Any advice on this method of carrying out my work would be great. Thanks.

Nuttzz

Test Plan wrote: »

Hi,



Somebody who doesn't know a lot about business told me it is illegal to take orders and payment from customers when you don't actually have the inventory. Is this true?

Nope, that is rubbish. these guys http://www.huntoffice.ie say they have 20,000 products, do you think they are sitting in a warehouse in newcastle west? Not at all, they buy it from their suppliers as they need it

So long as you can honestly fulfil the orders you have taken you have nothing to worry about

Test Plan

Nuttzz wrote: »

Nope, that is rubbish. these guys http://www.huntoffice.ie say they have 20,000 products, do you think they are sitting in a warehouse in newcastle west? Not at all, they buy it from their suppliers as they need it

So long as you can honestly fulfil the orders you have taken you have nothing to worry about

That's what I was thinking, Yeah my supplier notifies me if something is out of stock by email regularly. I was thinking if someone ordered something that was sold out and I hadn't update the stock status, I could mail them suggesting an alternative or give them an estimated delivery date.

Compton

not having the goods in stock is crap in my books, you will be chasing out of stock items til you fail. Realistically, you should have most of the stuff in stock, and the unpopular items available to be ordered in.

TheWaterboy

I know where you are coming from, especially with a new business so it is very difficult to keep alot of stock and hence cash tied up.

If you are shipping every 5 days it means that some orders will take 5-6 days before the customer gets it. Because of the business you are in i.e. technology parts I would assume most customers would need it quicker than that and expect it within 1-2 days.

Once you build up a relationship with your Wholesaler maybe they will not require a minimum order and can ship products daily to you.

Test Plan

TheWaterboy wrote: »

I know where you are coming from, especially with a new business so it is very difficult to keep alot of stock and hence cash tied up.

If you are shipping every 5 days it means that some orders will take 5-6 days before the customer gets it. Because of the business you are in i.e. technology parts I would assume most customers would need it quicker than that and expect it within 1-2 days.

Once you build up a relationship with your Wholesaler maybe they will not require a minimum order and can ship products daily to you.

Yeah, I know customers would ideally want it quicker, and I know this might affect the number of customers shopping with me. But once cash flow is built we can build up inventory accordingly.

hardCopy

Will you have to deal with minimum order quantities on each item?

In my own experience a lot of electronic components aren't available in 1's and 2's from large suppliers.

smash

In all honesty, it would annoy me to order a part and not have it shipped for up to a week...

yesno1234

Test Plan wrote: »

Hi,

I want to set up an online technology parts store. I have 2 wholesalers and I am going to list their products on my site. My plan is to dispatch every 5 days. So that I receive enough orders to fulfill my minimum order requirements with my wholesalers. I will place all orders with my wholesalers on say a Monday (next day shipping) and then ship to my customers.

Somebody who doesn't know a lot about business told me it is illegal to take orders and payment from customers when you don't actually have the inventory. Is this true?

Any advice on this method of carrying out my work would be great. Thanks.

I don't mean to put your idea down but I think you'll seriously struggle. You're entering a market with a lot of competition and you've no USP, in fact quite the difference, you'll be offering delivery probably 6 days slower than the competition. Even if you're offering products 10% cheaper, I'd still be going with the competition, unless I happened to be coincidentally ordering on the same day as you get you're stock.

Peterdalkey

I would have thought that fast delivery was the key element of any type of a parts supply business. But hey ya gotta start somewhere. Once you are happy with your products and market, as the business grows you can start to stock the most popular items yourself for immediate delivery. This is how most new distribution businesses get started and grow!

Once you have a great relationship established with your wholesalers, you could get them to dropship your orders ( or at least the ones you have no stock for) using your labels and delivery notes to your customers. We do it for our trade customers all the time, no issue, it is good business for both of us.


Cheers
Peter

Test Plan

yesno1234 wrote: »

I don't mean to put your idea down but I think you'll seriously struggle. You're entering a market with a lot of competition and you've no USP, in fact quite the difference, you'll be offering delivery probably 6 days slower than the competition. Even if you're offering products 10% cheaper, I'd still be going with the competition, unless I happened to be coincidentally ordering on the same day as you get you're stock.

Thanks for your opinion. I have 3 independent stores here in Ireland, but don't carry the same inventory I want to offer online. When a customer comes in store and we don't have what they want, we order it and give them a date to collect it. What I hope will make us different from the competition is that we are seriously cheaper in areas, our products are while label with our own brand. I have exclusivity with certain products from our wholesaler and I am trying to build a brand around them.

Test Plan

Peterdalkey wrote: »

I would have thought that fast delivery was the key element of any type of a parts supply business. But hey ya gotta start somewhere. Once you are happy with your products and market, as the business grows you can start to stock the most popular items yourself for immediate delivery. This is how most new distribution businesses get started and grow!

Once you have a great relationship established with your wholesalers, you could get them to dropship your orders ( or at least the ones you have no stock for) using your labels and delivery notes to your customers. We do it for our trade customers all the time, no issue, it is good business for both of us.


Cheers
Peter

That's a great idea, thanks! Hopefully this might be achievable down the line.


I know next day delivery is the name of the game, but I'm thinking, what if for say 4 weeks when we launch, I have message on the delivery page stating that we currently dispatch all orders each Monday (Next day delivery coming soon). Then I would be able to to gather data over the month on the top selling products and build my inventory on those lines.

Any opinions?

SeanSouth

Guys, Don't be so naive......

Nobody carries stocks of EVERYTHING and especially not in Ireland.

The way businesses survive in Ireland is through knowledge of their own industry and especially of other players in their own industry. In other words, when an order comes in, you need to know where to get the product and you need to know how long its going to take to get it. That's how it works.

I have around 500 products listed on my website. I stock around 50 products.
Everyone in my Industry knows which products I stock and likewise i know where to go for my other 450 items when I need to get them. So as well as selling to end users in the industry, we also sell to other distributors in our own industry and everyone is happy to do it that way.

The barriers to entry for someone coming in from the outside is that they don't really know where to source the different products from and where to source them at the best price and nobody industry will help them with that kind of information.

Its a very natural thing for young entrepreneurs to think that they will go into business by selling "stuff" from China and the 1st thing they do is start ordering a big load of stock from somewhere. That is completely the wrong approach. Its all about satisfying customer demands. The customer side is the challenging side of business and that's where the emphasis needs to be.
With advanced IT systems and better transport networks, less and less orders are being fulfilled from stock. Stock is a bad word for small business. It sucks up cash flow and ideally should be either eliminated entirely or kept to the bare minimum.If you're a multi million euro operation, well thats a different story.

Fr_Dougal

Test Plan wrote: »

That's a great idea, thanks! Hopefully this might be achievable down the line.


I know next day delivery is the name of the game, but I'm thinking, what if for say 4 weeks when we launch, I have message on the delivery page stating that we currently dispatch all orders each Monday (Next day delivery coming soon). Then I would be able to to gather data over the month on the top selling products and build my inventory on those lines.

Any opinions?

Your lead time isn't great to be honest so you had better make sure your customers know in advance(and not just hidden away in your delivery terms) that you only deliver once each week. Otherwise you'll get a bad reputation and will suffer chargebacks. Too many chargebacks for a new business and you might have your payment processing facilities withdrawn.