This new case study goes so deeply into the detail how to run and market dropship business that it can be applied as a sort of dropship manual.
a. Choose your products to dropship
b. Test the market for sales potential
c. Develop a fully automated profitable online dropship business
Electronics Ecommerce Website for Sale.. Over $300,000 in sales in 8months. 100% DropShip. Very Easy to Run.
Averages $13,000 in sales per month. 30 Distributors, 100% Dropship, Minimal Work.. Fast Growth.. 100% Natural Traffic..
• URL: starmarkelectronics.com/
• Established: 29 Apr 2007
• Uniques/ Month: 6,000
• Page views/ month: 331,975
• Monthly Revenue: 13,000
• PageRank: 2
• BIN: $75,000
This website sells consumer electronics, plasma tvs, computer components, home audio and cctv cameras, accessories and equipment. There are currently approx 22,000 products in the store and approx. 30,000 images. It is based on a VERY popular open-source shopping cart. However it has been extensively upgraded and all upgrades were documented. It can be upgraded even more. There are INCREDIBLE possibilities and growth with this site.
* It has not been seo’d
* I have only paid for about $100.00 in Google Adwords..
* There are approx. 10 different shopping comparison sites that the site could be advertised on that would literally make it a $3,000,000 Million business within 6 months with a moderate marketing budget.
All potential bidders please re-read the last sentence. I have already done very extensive research into marketing the site. With a very moderate budget. This business will do $3,000,000 Million plus before the end of the year.
We are not getting a ton of traffic, however we maximize each visitor with a clean site, fast loading pages, live chat, toll free numbers and a vast selection. On some days we are doing 4% and 5% conversion rates… Which for online retail and especially for consumer electronics is a very high percentage?
All Distributors will be provided… Getting accounts is very easy and the sales reps are great. I have approx. 30 distributors that are all multi-billion dollar distributors. They inventory on average approx 50,000 products each. There is MINIMAL product knowledge needed because most customers have already researched the products prior to coming to the website. They usually call to see how many you have in stock… Inventory levels are controlled by distributor’s inventory levels and are updated daily. Same distributors for Amazon, buy.com, walmart,bestbuy, tigerdirect and newegg.
The plus to having multiple distributors is that you have lots of product availability and you can ship out of warehouses that are close to your customer.
Prices are very competitive to competition but there is still a comfortable net profit on products. Average net profit is 20% per product.
Not many customers call. Maybe a handful. Most email and chat or just buy directly. I have included some detailed monthly financials stats are included..
* Please remember that it is not often that electronics websites are sold..
Reason #1- The barrier to entry is not easy.. Distributors are hard to locate initially, inventory feeds are nearly impossible to hand-input. Site-design for electronics websites is fairly complicated.. Its better to buy an existing electronics web-business that is already growing.
Reason #2 – Profitable electronics websites are bread and butter.. They keep making money on their own and they grow really fast..
Reason #3 - Not many electronics websites are profitable because they focus on low-prices and low margins.. I focused on product know-how and having a great selection. There is an opportunity to expand to 100,000 skus but I will leave it the new owner.
Notice on the financials that we did over $300,000 in sales.. However if you notice.. We only authorized and charged $116,000 in sales. Reason*** Some days there were so many orders coming in that I could not handle them all because I had other obligations (work, family). Not to mention a new marriage and the birth of a child… The new owner would be able to increase revenues just by processing the orders.
The total of $300,000+ is the total number of Transactions.
$116,000+ is the total number of transactions that were processed and shipped..
There are so many areas to expand the site for free (eBay, Amazon, buy.com marketplace ect.)
Growth is not difficult.. Many times corporate customer order thousands of dollars on an initial order and then return for additional order of larger volume.
Why am I selling.. I was offered a position w/ a fortune 500 company that would leave me no time to even operate the business.. So its forcing me to sale..
Uploading products is very easy..
- On a shared server you can upload approx. 2000 products at a time
- On a Dedicated server approx 25,000 at a time.
Editing products is very easy. You can upload online from the backend or download a csv file, edit , then re-upload. A good seo could take this site very very far. There has been no linking, or adds to directory.
I will transfer:
Domain name, emails, list, customers, website, data feeds, list of distributors.
Fraudalent Credit cards are a minimum. maybe 1-2% per month. There is a script in the backend that shows if an order is fraudulent
I am starting bidding at $65,000 which is a reasonable price considering the rapid growth that it has had, documented revenue, free search engine placement and the continued revenue and growth it will continue to have. Also, site has had zero paid marketing. I will show buyer where I advertise for free that generates sales. I will show buyer where to advertise for paid placement to explode sales.
The site handles uploads to datafeeds automatically.
It would cost more than $65,000 to start this business before your first sale.
Also I will provide the buyer where I purchase the datafeeds for about $300.00 per month. This information alone is worth $10,000.
Cnet channel (owned by cnet.com) is the company that provides walmart, tigerdirect.com and a few other heavyweights with their data, images, and specs for products. They charge $85,000 just for 1 year of datafeeds and images. We only spend a fraction of this per month
This is a real business and an opportunity to take over a thriving business that has not even seen 1% of its potential. Please keep in mind that we only processed $116,000 in sales out of a possible $300,000.00
Below is the sales breakdown for Online Sales Only. Does not Include Phone orders.
Actual Processed Website Sales BreakDown:
June 2007 – $5163
July 2007- $8261
August 2007- $1265
Sept 2007- $15380
Oct 2007- $9992
Nov. 2007 – $7804
Dec. 2007 – $19934
Jan 2008 – $19741
Feb 2008 – $3995
Second Profit. Margings are on average about between 18%-20% of monthly sales … On more high ticket items ($500+) .. profit is approx. 20%-23%.. The reason that the site enjoys such healthy profit margins is because I negotiated very good prices with my distributors, plus we specialize in some harder to find items so we can make more on them…. There is Minimal Fraud on the site just because the system flags any suspicious orders. I would account less than 1% total monthly sales to fraud.
Tax Id for distributors. Yes its required. But they are easy to get. And free. You can go to irs.gov to get one..
Approx. 90 percent of the orders are online orders and the rest are telephone orders.. Revenue is increasing on its own. All it needs is some paid marketing to see the full potential..
Revenue has statisticly been on average 20% of monthly sales. I will post actual monthly sales in a few.
Hosting is $15.00 with Hostgator.com (very reliable, with tons of bandwith left)
Marketing. ZERO. I havent paid for marketing in over 70 days…
800 Number – $25.00 per month
live chat – $10.00 per month
Individual Monthly Profits for transactions that we processed…
February.. Not finished yet..
UnProcessed Documented Monthly Sales
August $ 11,026.70
Sept. $ 42,239
October $ 8,866.50
November $ 6,090.39
December $ 84,198.35
google, yahoo, msn ect.