For a startup e-commerce or online trading business, the first word that typically comes to mind is dropshipping. If the word dropshipping is new to you: it means that you sell an item without keeping any stock and the dropshipper sends them directly to your customer.
Dropshipping is a good move for new businesses with low capital as it frees up your capital from carrying too much stock at the beginning, after all in my earlier postings I stressed that cash flow is vital for a business.This method also saves your time in packing and shipping.
The main advantage is that you can offer a wide range of products to sell quickly!
However, there are several drawbacks to dropshipping. Firstly is that you cannot be certain what your supplier has sent out, whether it was in a complete package, damaged or sent wrongly. It can lead to a customer service nightmare... Aside from this the margins are typically very low, usually less than 10% and over time this low margin might restrict your future business expansion or to even provide discounts for returning customers.
Low margins means it is also less motivating for you to put more effort into selling, unless you have a wide audience to target.
And let's get real, dropshippers aren't going to rely on just you, they have many others working for them so it is very likely there's more than 100 others selling a steam iron exactly like yours. You will have difficulty keeping loyal customers too as many other online sellers are offering the same product(s)... unless everyone sells them at the same price (yea right!).
The key point here is to be ready to stock up when the time is right. Earlier in my business, I started with dropshipping but as business picked up I took the opportunity to stock up in advance, for a much higher margin and was able send them items immediately upon payment. The margins I received were much higher (at least 4x more than the usual) allowing me to focus more on selling and marketing the product.
So, it's good to start off dropshipping but it's not the best solution in the long run.
Wednesday, February 27, 2013
Tuesday, February 26, 2013
Candy Crush Saga: Sweetness to Success
This has no relation with e-commerce, but because I've been reading and researching on gamification I decided to see what was all the rage with Candy Crush Saga, the latest casual & social game.
CSS: in short is a Bejeweled clone, but with some minor differences that make the game more interesting.
Here's what I think made CSS a success today:
1. The game has a limited number of moves imposed, so players must complete the objective within the set number of moves. This makes the game much shorter to play than the Classic Bejeweled, which can either have a time limit or no limit at all. While there's a limited number of moves, it requires the player to think strategically and harder so that each move is more efficient, which is not so evident in Classic Bejeweled where you can just swipe as you please until the game is over.
2. Imposing a limited number of lives mean you can only play a maximum of 5 games each time you login. During the 80s and 90s, arcade games gave you a fixed number of lives to play with so the arcade vendors could milk more money from you and the implementation here forces you to stop playing every 2-3 hours (shorter if you have a lot of friends giving you lives). As a casual game, it was meant to be played for less than 15 minutes and CSS here forces you to quit so you don't play too much. This creates a desire to play it again as soon as possible.
3. And to help you play the game as soon as possible.... here comes the annoying friend request! Nearly every social game requires you to ask for help from a friend, yes it's annoying but when it becomes very frequent on your news feed, curiosity will intervene.
"What is Candy Crush Saga?"
"Why is everyone spamming me with all theses requests?"
The list goes on, but these annoying friend request in effect has helped advertise the CSS on every news feed everywhere.
4. The colours in game are very, very striking. CSS's primary appeal is with women. It's no rocket science that women are now the major audience on the Internet. Guys are too hardcore when it comes to hobbies, but women on the other hand are simpler to please. Not that women are simple minded creatures, they are just easier to predict, no, I mean forecast! As CSS targeted the female market and because there are only a handful of games that attract them, the developers hit the jackpot.
So in short, the key success factors for Candy Crush Saga lies in:
1. Limited moves = require strategic thinking and improve play skill.
2. Limited lives = limited play time keeping the game's lifespan and demand longer .
3. It's social = help is required to play the game further but not necessary.
4. Target market = females, as there are not enough femalely games.
Anyone need Lives?
CSS: in short is a Bejeweled clone, but with some minor differences that make the game more interesting.
Here's what I think made CSS a success today:
1. The game has a limited number of moves imposed, so players must complete the objective within the set number of moves. This makes the game much shorter to play than the Classic Bejeweled, which can either have a time limit or no limit at all. While there's a limited number of moves, it requires the player to think strategically and harder so that each move is more efficient, which is not so evident in Classic Bejeweled where you can just swipe as you please until the game is over.
2. Imposing a limited number of lives mean you can only play a maximum of 5 games each time you login. During the 80s and 90s, arcade games gave you a fixed number of lives to play with so the arcade vendors could milk more money from you and the implementation here forces you to stop playing every 2-3 hours (shorter if you have a lot of friends giving you lives). As a casual game, it was meant to be played for less than 15 minutes and CSS here forces you to quit so you don't play too much. This creates a desire to play it again as soon as possible.
3. And to help you play the game as soon as possible.... here comes the annoying friend request! Nearly every social game requires you to ask for help from a friend, yes it's annoying but when it becomes very frequent on your news feed, curiosity will intervene.
"What is Candy Crush Saga?"
"Why is everyone spamming me with all theses requests?"
The list goes on, but these annoying friend request in effect has helped advertise the CSS on every news feed everywhere.
4. The colours in game are very, very striking. CSS's primary appeal is with women. It's no rocket science that women are now the major audience on the Internet. Guys are too hardcore when it comes to hobbies, but women on the other hand are simpler to please. Not that women are simple minded creatures, they are just easier to predict, no, I mean forecast! As CSS targeted the female market and because there are only a handful of games that attract them, the developers hit the jackpot.
So in short, the key success factors for Candy Crush Saga lies in:
1. Limited moves = require strategic thinking and improve play skill.
2. Limited lives = limited play time keeping the game's lifespan and demand longer .
3. It's social = help is required to play the game further but not necessary.
4. Target market = females, as there are not enough femalely games.
Anyone need Lives?
Monday, February 11, 2013
E-Commerce Bootcamp
It was 0500am earlier this morning when i decided to get up a run. I planned to run at 630am later today, but i couldn't sleep so i decided to ditch the shut eye and went running instead.
During my run and it is during this peace, tranquility and fresh air I get a lot of ideas that lead me to the decision to focus more on this blog. The blog has been dormant for sometime due to lack of direction but after some reading a few days earlier and adding the ideas I conjured while running this morning, I've decided to rename E-commerce 101 to E-commerce Bootcamp!
In E-commerce Bootcamp, I will be sharing basic e-commerce do and don'ts that most entrepreneurs often overlook. In some cases its just having lack of common sense.... and it's forgivable because we're often so excited with our new found love! Furthermore, the world of e-commerce is continuously expanding that it is easy to get lost...
I'm renaming it to E-commerce Bootcamp because this blog will also share my hobby: running and how it relates very closely to entrepreneurship. Running isn't just a sport, it's a passion and I'm putting the two of them together to get more people to run and run a business too.
So what's to look forward to? Lots and you best get a pair of running shoes while I update the blog!
During my run and it is during this peace, tranquility and fresh air I get a lot of ideas that lead me to the decision to focus more on this blog. The blog has been dormant for sometime due to lack of direction but after some reading a few days earlier and adding the ideas I conjured while running this morning, I've decided to rename E-commerce 101 to E-commerce Bootcamp!
In E-commerce Bootcamp, I will be sharing basic e-commerce do and don'ts that most entrepreneurs often overlook. In some cases its just having lack of common sense.... and it's forgivable because we're often so excited with our new found love! Furthermore, the world of e-commerce is continuously expanding that it is easy to get lost...
I'm renaming it to E-commerce Bootcamp because this blog will also share my hobby: running and how it relates very closely to entrepreneurship. Running isn't just a sport, it's a passion and I'm putting the two of them together to get more people to run and run a business too.
So what's to look forward to? Lots and you best get a pair of running shoes while I update the blog!
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