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  • #968968
    megsaletta
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    Hi, I am setting up a online website to sell sports equipment. I have sent emails to suppliers and they said they would supply me with products, but I need to be a retail store or shop. What is involved to do this, is it as simple as registered business name and ABN number. Any advice would help. Thanks Jason.

    #1036072
    JohnW
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    • Total posts: 2,642
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    Hi Megs,

    The entitiy that makes the most money out of online stores is Google.

    That is because the VAST majority of online stores can’t attract any customers so they end up buying Google sponsored links until they run out of cash.

    The last person I tried to talk out of opening an online shop had $20,000 to invest and there was no way I could run the numbers to suggest she could ever break even.

    Do your research!

    Here are some starting numbers. They should scare you.

    There are 973,000 Australian pages that match the search phrase, “sports equipment”. Here are the top 3.

    Site # 1 = 3,890 pages hypertext links = 2,206
    ” # 2 = 90,100 pages hypertext links = 9,184
    ” # 3 = 892 pages hypertext links = 1,695

    How will your site knock them out of the top 10 list?

    You will probably need to spend about $1.50 per click on Google Adwords in your market.

    Click fraud = 13% to 30% (Depending on whose figures you believe.)

    Abandoned shopping carts = 89% (percentage of people who start an order but don’t complete it.)

    Do your home work very, very carefully.

    Regs,

    JohnW

    #1036073
    kbrookes
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    • Total posts: 265
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    I’m curious now, JohnW. Do you recommend against ecommerce ventures entirely or just against using AdWords to promote them?

    #1036074
    JohnW
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    kbrookes, post: 43648 wrote:
    I’m curious now, JohnW. Do you recommend against ecommerce ventures entirely or just against using AdWords to promote them?
    Hi Kelsey,
    All I am advocating is careful analysis & research before opening any online shop. There are a whole bunch of issues that need to be assessed and how to attract customers and what that will cost is just one of them. In competitive markets, the only way a new online store may be able to attract customers is via Adwords. The prospective shop owner needs to assess this cost and whether there will be a realistic return on it. The numbers I threw out were intended to help make some calculations and assessments with a bit more realism. If the shop owner bases their calculation on the assumption that 50% of the people who search on a Google keyword are going to buy something from them, they will lose their investment in a flash.

    Other issues that can kill an online business are freight costs and perceived security.

    Too many preople think all you have to do is bung up some shopping cart and wait for the $s to roll in. NEVER happens like that.

    I magine you’ve seen your share of people with shopping cart failures.

    Regs,

    JohnW

    #1036075
    kbrookes
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    • Total posts: 265
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    Thanks John,

    A great explanation. Valuable for any online venture, I think, not just commerce.

    Let’s face it, every website is selling something – but legal tender isn’t necessarily their currency.

    As you say, so many people expect to simply throw up a static site and expect visitors to roll on in. “Build it and they will come” no longer holds weight, if it ever did!

    #1036076
    Aidan
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    There are still so many who have the notion of “build it and they will come…” and I cannot see where it ever arose, I mean if you write a book or print a brochure or even open a store does that mean you’ll have readers or visitors magically appear?

    As for click fraud – sheesh John are you sure those figs were not for attempted click fraud? Big difference! We just don’t see it as much of an issue with Adwords now, maybe some of the also-rans but not Adwords.

    Cheers
    Aidan

    #1036077
    mexham
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    • Total posts: 302
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    Well put John. I’m sure there are so many people in that boat that don’t throughly think through what it takes to start and successfully run an online business.

    People see the wholesale product rates, compare them to existing retail and then just see dollar signs. Not quite that easy, especially when you are jumping into an already super competitive market.

    I will admit to a bit of internet naivety when I started my first e-commerce store around 3 years ago. I thought it was pretty much as simple as making a website and people would come. Then the money would follow.

    Luckily I learnt the basics quick and since then have read the internet twice so know a little bit more about what I’m doing.

    #1036078
    megsaletta
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    • Total posts: 6
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    Hi Mexham, I like your website, who done your website and how much did it cost? Also what did you mean when you said you read the internet twice? Thanks, Jason.

    #1036079
    megsaletta
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    Thanks everyone, you have given me a lot to think about. I contacted my suppliers and they said they would supply me with products. They said I need a registered retail store outlet, retail shop? so what does this man? Thanks, Jason.

    #1036080
    JohnW
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    • Total posts: 2,642
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    Aidan, post: 43676 wrote:
    As for click fraud – sheesh John are you sure those figs were not for attempted click fraud? Big difference! We just don’t see it as much of an issue with Adwords now, maybe some of the also-rans but not Adwords.

    Cheers
    Aidan
    Hi Aiden,
    Error well spotted. My only excuse – I was throwing the reply out pretty late. Here are some references:

    Click fraud rate soared in fourth quarter
    http://www.ecommerce-journal.com/news/26532_click-fraud-rate-soared-fourth-quarter
    “According to a new report from Anchor Intelligence, click fraud rate surged during the fourth quarter of 2009.

    Thus, it was found the average attempted click fraud rate increased from 18.6% in the third quarter of 2009, to 25.7% in the fourth quarter.

    In Q4 2009, the attempted click fraud rate peaked at 25.7%…

    Anchor predicts that click fraud attempts will increase in 2010 as cybercriminals increasingly exploit the growth and adoption of social networks such as Facebook and tools such as Twitter.”

    Click Fraud Rises in Q1 2010
    http://www.marketingcharts.com/direct/click-fraud-rises-in-q1-2010-12972/

    “The ClickForensics Click Fraud Index shows that the overall rate of click fraud of online pay-per-click advertisements in Q1 2010 was 17.4%. This represents an increase from both 15.3% in Q4 2009 and 13.8% in Q1 2009. The proportion of click fraud attributed to botnets and malware has grown each quarter for the past three years and now accounts for almost half of all invalid clicks.”

    Regs,
    JohnW

    #1036081
    JohnSheppard
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    PPC click fraud is irrelevant to anyone but the consumers of a particular PPC market. In regards to Google adwords anyway. (I don’t know how the other PPC stuff works);

    It’s a market that self adjust’s like any other. For example; If Jimmy’s Webdesign and Hando’s Webdesign are both paying $5 per click and 20% of it is click fraud. Both still have to make a profit at $5 and both pay the same amount of click fraud.

    If their conversions went down, they would both be willing to pay less per click, if conversions went up, they would both be willing to pay more per click. So the PPC price self regulates.

    Weather click fraud is 20% or 80% it doesn’t matter, because both Jimmy and Hando are only willing to pay a certain amount per conversion and as such will adjust their bid’s accordingly.

    It only makes a different when the click fraud is perpetuated by those in the same market. For example Hando’s Webdesign click frauding Jimmy’s web design.

    Or maybe I’m wrong…it’s highly probably…(I read an economics book once)

    #1036082
    mexham
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    • Total posts: 302
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    Hi Jason,

    Thanks for your comment on my website. I got the basic theme from a friend, and then just adjusted it to suit my purposes. So didn’t cost me anything. Glad you like it.

    I was just kidding around when I said I read the internet twice. But I do spend often spend hours a day reading up and learning about anything to do with my business.

    Good luck with yours.

    #1036083
    JohnW
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    • Total posts: 2,642
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    Hi Megs,

    Some more info to help you with your ROI calculations and important issues to address when chosing your cart, designing your site and its content:

    (May 10) Study: PayPal Reveals Why Consumers Abandon Sites During Checkout
    http://internetmarketing.site-reference.com/2010/05/06/paypal-checkout-online-buyers/

    Here’s an earlier one, also from Paypal…

    (Jul 09) Why Online Shoppers Abandon Purchases
    https://cms.paypal.com/us/cgi-bin/?&cmd=_render-content&content_ID=brc/why_online_shoppers_abandon_purchases

    “Nearly half (45%) of online shoppers abandoned their carts multiple times over a three week period due to high shipping costs, security concerns and lack of convenience, according to a recent survey conducted by PayPal”

    I’m not saying don’t go online, I’m saying do your home work first.

    I’d also be checking out my online competition very carefully. Have you done that?

    Regs,

    JohnW

    #1036084
    zhenjie
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    • Total posts: 78
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    megsaletta, post: 43687 wrote:
    Thanks everyone, you have given me a lot to think about. I contacted my suppliers and they said they would supply me with products. They said I need a registered retail store outlet, retail shop? so what does this man? Thanks, Jason.

    It seems like they want you to have a bricks and mortar store? A lot of suppliers/distributors don’t like dealing with internet only stores and want the security and branding from a bricks and mortar store.

    #1036085
    John Debrincat
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    • Total posts: 963
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    megsaletta, post: 43586 wrote:
    Hi, I am setting up a online website to sell sports equipment. I have sent emails to suppliers and they said they would supply me with products, but I need to be a retail store or shop. What is involved to do this, is it as simple as registered business name and ABN number. Any advice would help. Thanks Jason.

    Hi Jason,

    Well you have had a few responses but no answers.

    I wouldn’t say that it was as simple as just registering a business and getting an ABN. Those are steps in the implementation.

    There are a few issues that you need to understand when starting an online business. I covered them in a blog about starting online. You can download from Google Documents a copy of the eCommerce Handbook for SMEs which has been developed to help explain some of the issues around starting an online store.

    Selling online is not hard but you need to do your homework. The first recommendation is to write a business plan and strategy. If you are in competitive area then it might be worthwhile focusing on the ‘long-tail’. If your not familiar with the term it was first used by Chris Anderson back in 2004 and basically it points out that you can do very well in a market by not focusing on the high volume popular products but by looking at small volumes of hard to find items.

    The online retail landscape is gowing and changing so if you establish a business then make part of the plan a capability to quickly change and adapt to trends.

    Good luck

    John

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