How much inventory for startup? - Mothering Forums

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#1 of 16 Old 05-12-2007, 12:31 PM - Thread Starter
 
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My site won't be open until probably July or August, but I'm in the registration and looking for vendors phase. How much inventory do you think would be needed to start up an online shop? I'm going to be selling dipes and supplies.

Or, should I ask, how much inventory you started with and if you think it was too much/too little? TIA

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#2 of 16 Old 05-12-2007, 01:05 PM
 
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I could be way off, since I don't do dipes, but my experience with ecommerce is that it's very slow in the beginning. Search engines need to find you, word of mouth needs to get around, even with paid advertising you might only move a dozen dipes your first month in the game. I guess it depends greatly on how much paid advertising you do.

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#3 of 16 Old 05-13-2007, 01:28 AM
 
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My advice is probably the polar oposite. I guess it depends how big you want to be and how many product lines you want on board when you open. Plus diapers have so many sizes that just selling that hypotheticla first dozen would require you to have had a couple dozen in each size available for that first customer to choose from, and that's just the one product, not to mention the other diapers, the covers, the accessories, etc.

After meeting some minimum threshold to be viable (which IMO is higher than you'd think), it's probably better to have too little product and scramble to add it then to have bought too much and scramble to get rid of it.
It certinatly feels better to urgently need more of something then to look at full shelves that just won't move! the regret is diferent

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#4 of 16 Old 05-13-2007, 11:42 AM - Thread Starter
 
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PP, that's sort of what my gut told me. That I'd rather have too little than too much. I've been getting the impression that anywhere from 8K to 10K would give me a great initial inventory.

Is there a resource out there somewhere to find out what products sell the most and which ones saturate the market? Or is it sort of trial and error, learn as you go?

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#5 of 16 Old 05-13-2007, 12:36 PM
 
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The lowest risk way to do this is have NO INVENTORY, and have the manufacturer drop ship (to your customer) or overnight the product to you. $8-10K is a lot to spend on diapers.
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#6 of 16 Old 05-13-2007, 12:47 PM
 
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My work deals with business accounting and this is exactly what I have seen start-up internet businesses doing when it comes to initial inventory.

My understanding is most manufacturers have minimum amounts on wholesale orders. So you could wait until you had an order for a particular product, then go ahead and buy the minimum from that manufacturer (have it overnighted as the PP suggested). The leftover between what your customer ordered, versus what your manufacturer shipped to you, you would keep in inventory at that point. You could slowly build up your inventory that way based on actual orders, which would minimize your upfront investment and also help a bit to ensure that you're building up inventory of products that will sell for you.

If you really have 10K to put into this up front, I think your priorities at this point should be a truly polished, attractive, easy-to-use website, and really good marketing. Those will take you a lot farther than inventory sitting on a shelf.

Good luck!
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#7 of 16 Old 05-13-2007, 04:19 PM - Thread Starter
 
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Don't let me make you think I have 8-10K to put into inventory....eek! Dh just about crapped out his liver when I told him that it's going to cost us several thousand to get good inventory built up. He about put the brakes on everything just now!

PP, that is an excellent idea that I would never have come up with on my own....to offer product and order from the manufacturer as the need arises. I just assumed it would be best to have the stuff physically in your posession. But I guess that isn't necessary.

I think I'm going to go ahead and register my business (with state and fed), get my domain name, and start working on my site so I can start seriously inquiring to manufacturers. I see that most of them want a tax ID no before they'll talk to you.

You mamas are awesome, you wouldn't believe how much better I feel already! THANK YOU!!!!

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#8 of 16 Old 05-13-2007, 05:18 PM
 
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I'm doing the exact same thing as you... (I hope the market still has room for me ) The only issue I have run into is that some applications require that first purchase in order to complete the app, so I would be afraid that I'd offer the product and then my app wouldn't go through and I'd look really bad to the client.
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#9 of 16 Old 05-13-2007, 05:30 PM
 
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It does take a lot of time to get a website going. You could develop that, get product pages up, and schedule a launch date some three months or more out (maybe later than you've planned). Use the time to get links from other people. It's all time consuming and your inventory will sit there as you build your site. That's basically what I've done with my site. It's six months old and I'm still not selling any products, but I've had over 3000 people this month so far. When I do have the book done, maybe someone other than my mother will buy it.

Amanda Rose, author, Rebuild From Depression: A Nutrient Guide. Don't miss this opportunity to build a business telling friends about probiotic foods and grass fed meats: Beyond Organic Review.

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#10 of 16 Old 05-13-2007, 06:01 PM
 
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One thing I haven't seen anyone mention is a business plan. Have you sat down and thought out what your business plan is, and put it down on paper? You need to know at least decent estimates of who your customers are going to be, how you're going to reach them, what your keep-the-lights-on costs are, what your plans are for the future, and more. You also need to figure out whether you're targetting the online market, the local market, or both.

I would get an EIN and start getting wholesale quotes from manufacturers now. It may shock and surprise you how little you actually make on certain products and how much you'll need to move to stay open, be able to pay your costs, re-order, etc.

You can get an EIN for free and a domain name for very cheap. I would get those first before putting a lot of time and money into registering at the state level or putting money into a website. You need to have a very clear direction of where you're going so you don't waste time and money down the road.

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#11 of 16 Old 05-13-2007, 09:33 PM
 
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One thing to consider ... how do you get traffic to the web site? You will get about 1-2 orders per hundred visitors.

One way to get visitors is to use sponsored search marketing. Cost per click will be 10-50 cents. It adds up quickly!

For some data about how much traffic there is for cloth diapers, check here: http://www.alexa.com/search?q=cloth+diaper&x=0&y=0

Have you checked out diapers sales on Amazon? (really easy to sell on A and lots of traffic) Here is one store to look at: http://www.amazon.com/b/103-2400909-...A3IHV2GL6E4GW8

Do you have a method to recruit middle class or affluent disposable diaper users to cloth diaper use? Hint: most new Moms are not on the internet all day like I am. Are most cloth diaper users SAHM? Where will you find new SAHM Moms with some disposable income?

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#12 of 16 Old 05-13-2007, 10:20 PM - Thread Starter
 
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Good points. I'm trying really hard to do as much research as possible before I do something that gets me in way over my head. I know the cloth diaper market is oversaturated right now, that's why I need to put a unique twist on my marketing and products.

I was thinking, as pp mentioned, that I should get an EIN so I can start coming up with a realistic idea of how much my expenses are truly going to be.

Carrin Mama to Sawyer 4/06 and TTC #2 I am a WAHM!
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#13 of 16 Old 05-14-2007, 12:52 AM
 
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"to offer product and order from the manufacturer as the need arises."
I don't like this idea. why would anybody order from you when you won't even be able to ship until a week (or whatever) past their order? Even if the vendor were willing to rush your doer, they've got to process and pack it, and then your margins are eaten away by high shipping costs (rushed shipping on an opening, not just the ones you've sold). You'd wish you'd have just ordered it a week sooner.

I asgree that having no inventory is low risk / low investment. But it also seems likely to be low reward. IMO

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#14 of 16 Old 05-14-2007, 03:06 AM
 
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We have several retailers that are moms that ONLY carry products that can be drop shipped. We drop ship to many stores, and it works out very well. The customer gets their sling right away, the retailer has no risk of carrying our items, they have the benefit of carrying ALL our prints and sizes, which would be $$$. But, you make a smaller profit in most cases.
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#15 of 16 Old 05-14-2007, 03:08 AM
 
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BTW, that alexa.com site did not make any sense to me. Plus, how accurate could it really be? For example, we have more than one domain name that points to the same site. So, there are different stats on karmababy.com and mykarmababy.com. Plus, it said my stats have gone down in the last three months, and they have gone up according to my stats collector.

Does any one know of any other good web tools? I love to look at that stuff
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#16 of 16 Old 05-14-2007, 11:46 AM - Thread Starter
 
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Quote:
Originally Posted by Spring Sun View Post
BTW, that alexa.com site did not make any sense to me. Plus, how accurate could it really be? For example, we have more than one domain name that points to the same site. So, there are different stats on karmababy.com and mykarmababy.com. Plus, it said my stats have gone down in the last three months, and they have gone up according to my stats collector.

Does any one know of any other good web tools? I love to look at that stuff
I read on another board that you have to have the Alexa toolbar in order for them to have current stats on your website. I don't know much about Alexa, but I just recall reading that.

One thing, as far as minimum order amounts, that a friend pointed out to me is this....what if someone orders 5 items from 5 different wholesalers that have minimum order requirements (and you don't have current inventory of their product)? Then you have to all of a sudden come up with lots of cash. That sounds frightening...but I suppose that would only happen every once in a while.

Carrin Mama to Sawyer 4/06 and TTC #2 I am a WAHM!
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