Forums: Discussions for entrepreneurs and small business.

I am starting up a drop shipping e-tail business. I plan on selling various consumer electronics. I am debating whether or not to gather consumer data and if it would be worth doing before I get my business going. This is my first attempt at an online business/e-tail store and I was wondering if it would be worth it to gather as much information about my potential consumers before I started, or get the word out about my business and gather information about potential consumers as they come to visit my site and sign up after it`s up and running. I am also faced with the challenge of how to gather consumer data before I get my business website up and running. Any suggestions appreciated! Thanks in advance.

Will you be utilizing the site to gather demographic data, etc. rather than consummating a sale? Or will you actually be offering products for sale and then gathering information? Establishing the business and then trying to figure out who is your customer, is a recipe for disaster.

 

What kind of consumer electronics are you talking about? The landscape is littered with former electronics retailers – Silo, CircuitCity, Crazy Eddie (although in the case of Crazy Eddie, it didn’t help that Eddie Antar was charged by the SEC with securities fraud and eventually served 8 years in prison). Granted they were bricks and mortar big box retailers, but it was never an easy business even before the advent of e-commerce. Margins aren’t great and it is easy for a customer to go online and comparison shop today.

 

You talk about getting the word out and driving people to your site. This raises several questions:

• Who is your customer?
• What benefits will your customer realize by coming to your site and not the other guy’s?
• You indicate that you are drop shipping. What is stopping the customer from going directly to the manufacturer?
• Are the manufacturers (or distributors) that you are targeting willing to drop ship to your customers?
• How are you going to communicate those benefits to your customer? If you are going after a younger demographic, viral campaigns may work. If your products are such that they will appeal to 40 and 50 year olds, will you need to go more traditional routes? You might try getting demographic data from trade associations. It ultimately comes down to driving traffic to your site and then giving the customer a reason to purchase.

I’m not saying that you won’t succeed but as it has been said in many other threads in here – if it was so easy, everyone would be doing it.

 

Good luck.

Ed Baloga, CPA / MBA
Principal CFO
Baloga Associates
ebaloga@baloga-associates.com
www.twitter.com/edbaloga

• Who is your customer?

This, is what I am trying to determine, for the most part it is more than likely going to be someone who more than likely is going to be between the ages of 18-24 and 25-34. I do not believe I will attempt to attract anyone in the older categories, mainly because I believe there is a trust barrier that needs to be broken down in regards to providing Credit Card, Address and other information to an online retailer when you can go to a brick an mortar store and not have to worry about someone intercepting your information and stealing your identitiy, the younger generations do not worry about this so much.

• What benefits will your customer realize by coming to your site and not the other guy’s?

I am still putting together the details of this particular aspect and am hoping that user data will provide me with an idea (or two) of what I can do/provide that will offer the customer an incentive to shop my site and not the competitors. I am also still trying to figure out how to tackle this challenge, because more often than not I get the feeling I am not looking at it from the right angle.

• You indicate that you are drop shipping. What is stopping the customer from going directly to the manufacturer? 

Manufacturer`s by nature work on B2B models and, to my knowledge, won`t deal with individuals wanting to buy a single item because they do not have the means or interest to buy large amounts of the product that the manufacturer is looking to sell in largequantities. They would much rather move tons of inventory to distribution centers who then will move smaller quantities of the product to a business and let them deal with moving the product one item at a time to the customer. 

• Are the manufacturers (or distributors) that you are targeting willing to drop ship to your customers?

Yes, that is wha the service was designed for.

• How are you going to communicate those benefits to your customer? 

I am working on getting assistance in conveying this very thing! SCORE offers mentors to aid you in answering questions regarding such matters, and I am taking advantage of their free service.

• If you are going after a younger demographic, viral campaigns may work. If your products are such that they will appeal to 40 and 50 year olds, will you need to go more traditional routes? 

Please refer to "Who is your customer?" question at top.

• You might try getting demographic data from trade associations. It ultimately comes down to driving traffic to your site and then giving the customer a reason to purchase.

This is one area I am 100% confident in success. I have done web development / programming as a serious hobby for the past 10 years and have run several sucessfull online campaigns in driving traffic to my websites over the years. My most memorable campaign was back in 2003 when I ran advertisements on various gaming forums for a particular game I was building a tip site for. I advertised an armageddon of sorts that was unstoppable and coming very soon to the game that was the subject of the site. After a few months and several various "signs" later we launched the website and simultaneously posted the final story a paragraph long that ended with a link to the website.

In one hour the website had been visited over one-hundred-thousand times by over a thousand unique visitors, and grew eventually to generate over two million hits a month on a regular basis hiting three million on good months. Now, an e-tail store is very different from a tip site for a game however; the first half of the fight for me at this point I believe is just getting the word out that I exist and have something to offer. I plan on running full blitz campaigns for the first month or two aggressively advertising my business and cutting back to planned figures once a steady stream of traffic is established. Then the REAL fight begins in getting those visitors to buy my products... 

If I am flawed on any of my points, I would appreciate having them pointed out and corrected. I am not trying to act like I know what I am doing, because I DONT. However, I am trying to explain the way I am thinking at this point, and would appreciate it if I start to vear off the road a little if you would kindly reel me back and slap me with the reality stick.

You need to get the exact demographics of your clientele before you can be truly successful.

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Thanks for the post anyways!