Starting A Mail Order Shop

fleshtuxedo

Well I'm a bit sick of working for other people, and the missus is settled with a decent career so, it might be time for me to realise a long held ambition to start my own cycling/triathlon/outdoor online business.

I've a good broad base of business knowledge from large and small businesses, but I know very little of the inside track on the cycling biz. Can anyone with sector experience offer me their top tips or insights?

My plan for getting started is to contact distributors and get an overview of what brands and products offer the best opportunities i.e. prices/terms/order quantities. I'm thinking to do this I'll need to get set up and demonstrate I'm serious.

Any help much appreciated - please pm me or post on here.

Ta

SmellTheGlove

My experience is mostly as a consumer.
I think cycle clothing has become overpriced lately and it seems there's not a huge amount made in the UK. Square that circle (or those two circles?), you might be on to something.
Good luck anyway - it's often said that the best time to start up a business is during a recession.

Percy Vera

What will be your USP?

Monty Dog

If you really want to understand the bike biz, go and work in retail and get someone to pay you for the experience and get to know the key distributors, products lines and margins rather than the hard way.

fleshtuxedo

PV, I plan to start small (alongside day job) gaining experience and making a few quid. I don't want to limit myself before I find out where I think the opportunity is. So I'm starting without an idea of positioning, and I don't know what my USP will be yet.

ynyswen24

a problem will be convincing suppliers that you are serious and not just setting up a 'business' to get some kit for yourself at trade price. This can be a problem for people setting up full time business'es, not jut in the cycling sector. If you're doing it as a sideline can you really give it the full attention that the suppliers would demand and that any customers would expect?

inkyfingers

The problem I foresee in "starting small" is that you will not be able to carry enough stock to satisfy the demands of the typical online shopper, they want a wide choice and they want it in stock and available to be despatched the same day they order. In starting small you will also be less able to get the volume discounts from your suppliers that your bigger competitors can get from them.

The only ways that I can see into what is a frankly crowded market is either to offer something fairly unique, say for example handbuilt frames made in Britain, or to occupy a niche in the market like perhaps sourcing and supplying "classic" parts like old school Campag bits etc.

Whatever you do you will need quite a big lump of cash to start up, buy stock, build your website and market yourself. Even to start small you will be talking tens of thousands just to cover the basics. Guys like Evans and Wiggle probably spend a million quid or more a year just on marketing so getting your message out in front of them will be hard.

I'm sorry to come across as negative, just trying to pass on some hard learnt business advice! I'd also suggest you follow the advice of the other poster and try and get some experience of working within the sector, at least that way you'll gain an understanding of how it works and who the go to people are. Good luck in whatever you decide to do.

OffTheBackAdam

Why do people buy online?
It's either something you can't get in a shop or it's saving money.
What are you going to sell? Look online to see what it's going for.
Then find out what you'll pay for that wholesale, what your packaging & postage costs will be, what profit you'll be wanting to make, then how much the taxman will screw you for and thus work out your selling price.
Undercutting Evans etc & ebay shops?
If not, why should we buy from you, an unknown with no reputation?

Yossie

I used to have a pretty succesful sideline in selling motorbike parts but only dealing in pretty rare stuff (the used m/bike parts market is much like the pushie clothing & spares market - ie flooded with mainstream).

I ran it as a sideline to the day job.

Essentially, if you have the time to do it properly (by which I mean fit it in around your normal life, family, kids, advertise in a coherent and literate way, answer emails in the time scales that you would want them answered yourself - ie same day, if not sooner, clean everything up to a standard that you would expect, take pictures, download pictures, up load pictures, email pictures, buy packaging, package, monitor receipt of money, deal with stupid questions, go to post office, queue up to find out postage costs, email postage costs, go back to post office to post, queue up again, send things off, deal with more random comments, etc etc) then fine - I gave up because I just didn't have the time to do it to the standards I would expect if I was the consumer.

Also, re stock: its not just the initial outlay but its where do you keep it? Ok, stripping down a load of m/bikes is one thing, but 200 tops, 200 shorts, 50 sets of wheels, groupsets, handlebars, etc: all this stuff is bulky and takes up lots of space - and because you're selling it, you can't risk any of it getting damaged at all (even the boxes). Then you have to store boxes, bubble wrap, customs declaration forms, rolls and rolls of parcel tape, etc, etc. And fund this as well.

Also remember the formal side of things: setting up your company, bank accounts, VAT registration, prep of annual accounts warranties, registered office, provision of directors, control of stock, etc etc etc. All the statutory stuff costs time and money as well.

Sorry to sound negative, but that's the experience I've had: if you can get it running its and excellent way of making money (and put it this way, I was making something like 500% profit on a bike), but it can be a right pain.

HTH

Y

Gizmodo

Don't forget to factor in returns. Distance selling regulations say that if we buy on-line or over the phone we have 2 weeks to return goods to the seller for a full refund, no reason required.

So now you have the problem of - has the packet been torn when opened? Can you sell it as "brand new" now that the original packaging looks like a return? This will affect your bottom line.

Argos have got specific shops and a website just to sell their "returns" - http://www.argos.co.uk/static/ArgosClearance
You could try contacting Wiggle, Evans et al and see what they do with their returns, perhaps that could be a niche for you.

But generally I agree with Monty Dog - get a job in the industry and see how they do it first.

Yossie

Also don't forget the long and painful drawn out arguments with people about returns

" I want to return these shorts as they don't fit. I haven't worn them"
"Yes you have. You can't have your money back as I can't do anything with them"
"No I haven't. I want my money back"
"Yes you have so no you can't"
"No I haven't. Give me back my money"
"Yes you have - they have skid maks down them"
"No I haven't - they were like that when I got them"
"No. You've worn them and put skidders down them. You can't have your money back"
"You're a feckin' idiot and your shop is rubbish. I'm off to put a post on Bike Radar slagging you off to the world"

Etc, etc, etc ad infinitum

Its only when you try and run something like this do you realise the amount of rude, ignorant try it on faaackwits in the world

ex-pat scot

I remember the old adage:

"how to get a small fortune from the cycle industry? Start with a large one".

Niche products.
eBay store front? (works well alongside p/t working)
Perhaps chinese carbon imports?

TheStone

If I was you, I'd start with just a few products and use an ebay shop.

The prices on there are not that cheap anymore, so I'm sure there's money to be made. (i.e. buy a job lot of 2010 helmets etc and sell at a discount)

GiantMike

As an avid online shopper (i.e. I only buy online)

Whatever you sell:

a. needs to be the cheapest or I'll go elsewhere
b. needs to be in stock
c. must be able to be purchased via debit/credit card and paypal
d. needs to be able to be returned (CRC has a 12 month return policy)
e. needs to use a decent delivery mechanism (pref Royal Mail)

i.e.

you are competing with the big boys unless you go really niche, and then you have a small market.

GiantMike

Double post.

stuyd

i had a shop up until a few years ago when the crunch hit.

If you want to sell lines of products from people such as madison and hotlines you must have a retail outlet. They wont allow online only, this is to keep it fair to all traders.

so really the trick would be to decide a ratio between on line and retail. If you want to be be mainly on line then keep your shop over heads to an absolute minimum and use it more as a wharehouse rather than retail outlet.

Next thing is capital, you have to buy large amounts of stock to get discounts, and you need those discounts if your going to be competive.

let me know how you get on.

Pizzarepairman

I work in a trade sales company and there is a lot of debate about whether distributors should even supply part timers/ebayers as some of the long established dealers feel that as they have invested in premises, building reputations etc they don't want to be undercut by "Johnny Come Latelys" that aren't paying for staff, marketing, tax and so on.

There is also the theory that there is always someone ready to set up an ebay/amazon shop and sell cheaply, and as they fail and go out of business due to lack of profit the next one comes along and has a go. Thus there is a constant stream of competition. One wonders what effect this has on mainstream dealers?

GiantMike

Pizzarepairman wrote:

There is also the theory that there is always someone ready to set up an ebay/amazon shop and sell cheaply, and as they fail and go out of business due to lack of profit the next one comes along and has a go. Thus there is a constant stream of competition. One wonders what effect this has on mainstream dealers?

Today's mainstream dealers were the 'start-ups' of yesteryear. Amazon/eBay just offers opportunities to a different type of person.

Here's an idea. Why don't manufacturers offer products to the general public via the internet at prices 10% above what they get from retailers? The manufacturer wins, the consumer wins. The shops lose, but they're just the unnecessary middleman in modern commerce.

Monkeypump

As a comsumer, I'm not sure I'd want to buy from someone who has no experience, little knowledge, no USP and is just dipping their toe in the water to see if their career choice is viable.

Sorry, but my money will always go to the well-known, well-regarded (on the whole) online retailers where I know stock levels and delivery times will be reasonable, there's a fair chance any problems will be sorted and price is likely to be one of the lowest around.

I'm not sure you could provide all (if any) of these as a start-up, unless you're offering a service/product I can't get elsewhere.

inkyfingers

GiantMike wrote:

Pizzarepairman wrote:

There is also the theory that there is always someone ready to set up an ebay/amazon shop and sell cheaply, and as they fail and go out of business due to lack of profit the next one comes along and has a go. Thus there is a constant stream of competition. One wonders what effect this has on mainstream dealers?

Here's an idea. Why don't manufacturers offer products to the general public via the internet at prices 10% above what they get from retailers? The manufacturer wins, the consumer wins. The shops lose, but they're just the unnecessary middleman in modern commerce.

If only it was that simple. Imagine that Shimano suddenly decided to do this then all the retailers would be annoyed and would simply start selling SRAM or Campag products instead,meaning that Shimano would lose all their sales in the hope that they can replace all of that with their webshop. The 10% uplift wouldn't come close to covering the additional costs of marketing their service, processing and fulfilling orders etc. People think that retailers must be making huge profits because they sell at double the wholesale cost, but that's rarely true as their are so many costs associated in selling the product to the end consumer.

GiantMike

Er no.

Imagine a full Shimano groupset direct from Shimano for £350 and the equivalent groupset from SRAM (via an intermediary) for £500. I know which I'd go for.

OK then, if not 10%, what about 20% uplift?

Slow1972

The difference is though whilst it may be okay for you, it doesnt suit everyone. Shimano are shipping via their distributors who then pass to retailers. Imagine how much shipping would be involved for Shimano if they were selling direct to you, they could not sell for the same low price as they do to distributors.

Then couple that with all the lbs's turning round to customers coming in wanting shimano kit fettled with and saying "sorry, we don't stock or service Shimano only Campag and SRAM" because all of a sudden it is in their interests to promote the kit they are competitive on.

There are already lbs's with workshops busy enough to have a policy of only servicing bikes they sold or manufactured by the key brands they stock. Makes the locals think twice about buying a Baordman from halfords and then expecting the good mechanic in lbs to look after it, no reason why the same couldn't happen with Shimano kit

inkyfingers

GiantMike wrote:

Er no.

Imagine a full Shimano groupset direct from Shimano for £350 and the equivalent groupset from SRAM (via an intermediary) for £500. I know which I'd go for.

OK then, if not 10%, what about 20% uplift?

Not even close.

If Shimano start selling direct then they will incur the same costs as the internet retailers like Wiggle or CRC (i.e marketing, website costs, warehousing, lots of staff) so you''d probably find they'd have to sell their stuff for a very similar price to make enough profit to make it worthwhile. They may be able to slightly undercut them as the manufacturer will also be getting the added value from the manufacturing process but in real terms it won't be much and it would involve a huge initial set up cost and destroying many years of long standing business relationships and would be a gamble that no sane company would take.

cooldad

I blame Wiggle

GiantMike

Slow1972 wrote:

Then couple that with all the lbs's turning round to customers coming in wanting shimano kit fettled with and saying "sorry, we don't stock or service Shimano only Campag and SRAM" because all of a sudden it is in their interests to promote the kit they are competitive on.

You've got a point there. I forgot that a lot of bike owners are too stupid/lazy to work on a bike.

inkyfingers

GiantMike wrote:

Slow1972 wrote:

Then couple that with all the lbs's turning round to customers coming in wanting shimano kit fettled with and saying "sorry, we don't stock or service Shimano only Campag and SRAM" because all of a sudden it is in their interests to promote the kit they are competitive on.

You've got a point there. I forgot that a lot of bike owners are too stupid/lazy to work on a bike.

I would imagine that a large amount of bike shops time is spent fixing the mistakes that people have made when trying to fix their own bikes. I can fix my own bike and if I had to i'd be able to build a bike from it's component parts, but I also have a full time job, a young baby and many other commitments. I'd rather spend my weekends riding my bike than fixing it and the mechanic that i've used for years gets my bike running much sweeter than I ever would, so it's £60 well spent in my view.

The other problem with having no cycle shops on the high street is how do you ever get the chance to look at things or test them before you buy them. A good bike shop will demonstrate products, check sizing etc, answer your questions and give advice, they are much more than just a shop that sells bike parts.

natrix

What about retro cycling shorts? There's lots of places selling retro jerseys but I've not seen retro shorts (black woolen ones with a shammy)

fleshtuxedo

Thanks for the many responses - lots to digest...

I absolutely take the point that mainline brands and products especially in components will be difficult to get into - I intend to target the smaller manufacturers that don't seem well marketed IMO (not naming names here). I think that there's space for a retailer that makes the case for some of the lesser known brands.

One example I will throw in is Prendas - they sell 2 major clothing brands that are bizarrely under represented elsewhere in the UK (Santini and Etxe Ondo) and also source their own retro stuff. Great service too.

I'm not under illusions that it'll be easy

mouth

Gotta be niche mate. You might be better off buying an old duffer and re-furbing it to sell to start with. Either that or get to Cycleshow this weekend and find someone that needs a distributor.

If you wanna take on Wiggle/CRC/Evans I hope you've got some big big pockets and long arms to reach the bottom of then.

fleshtuxedo

Mouth wrote:

If you wanna take on Wiggle/CRC/Evans I hope you've got some big big pockets and long arms to reach the bottom of then.

No, and no

ynyswen24

Mouth wrote:

Either that or get to Cycleshow this weekend and find someone that needs a distributor.

What distribution network could he provide? What stock holding would he have to provide distribution on a business to business or retail basis? How would he provide a service that the business that 'needs' a distributor couldn't do themselves just as well? The people who now run distribution agencies in the bike trade have generally worked their way through the trade in the past.

No niche, no USP - very difficult.