Those of you who follow what I do will know I have a few projects on the go. One of these is my ECommerce business/brand that I started in mid-2015 (1st sale was on the 19th August 2015), and it is this business that I want to talk about here.
The title of this post is ‘My Roadmap to a £1 Million Pound Business’, and I want to go over how I am going to make this work.
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What is this ECommerce business?
Simply, I am selling on Amazon.co.uk. However, this is just a (sales) channel and the brand will be marketed over several channels including it’s own ECommerce website. For now though it is focused on Amazon.co.uk, and it is on Amazon that I want to grow sales to this £1 Million turnover level.
Why Amazon? Amazon is a massive marketplace where people come to buy. A small percentage of people may come to browse and read reviews but the vast majority come to Amazon with a buying mindset. This means if you can get people to see your products on Amazon then a good percentage will buy it (assuming you are presenting a good product well).
Millions of sales per day are made through Amazon and a lot of these sales are for 3rd party companies (i.e. not Amazon itself). There is no reason why you and me could not set ourselves up on Amazon and start selling. In fact this is exactly what I did.
Is £1,000,000 a dream?
When I say £1,000,000 I am talking about turnover per year and not profit, although I am looking at 30% to 40% profit margins here, so I want the business to make a profit of at least £300,000 per year.
This is still a large number, so how can I start something and grow it to a million in sales?
Lets break it down…
If I sell something for £14.99 I would need to sell 66711 units per year, or 183 units per day to turn over £,1000,000. So 183 sales per day, that is quite a lot. But what if I had 5 different products, this would mean 37 sales per day of each product. Now, what if I had 20 products in the range all selling at £14.99? If this was the case I’d need to sell around 9 units a day of each product.
Now that sounds like something that could be possible, right?
Well, I only have one product as I type this post (April 2016), although I have 4 more currently being manufactured. So I will have five products selling by the end of May if all goes well. Although one of these is a cheaper (around £4.99) product that I may use as a free giveaway to sell more of my other products.
So, sales go up and down but on Thursday 24th March 2016 I sold 25 units. So 218 days after my first sale (which is just over 7 months) I have ramped up sales to a level where I made 25 in one day.
One thing to note here. My sale price was £12.99, lower than the £14.99 I mentioned earlier. This was because I got a 3-star review and sales seemed to drop as a consequence, so I wanted to see if lowering the price would help up sales. It seemed to work. In fact it worked too well because my inventory levels are getting low and I am still a little while off my next re-stocking date.
I thought that might have been because Amazon had ranked my listing higher for a main keyword and therefore got my product page a lot more visitors. But when I looked at my stats this was not the case. Amazingly on the 24th March 2016 I had a conversion rate of 78%. That is huge. In simple terms for every 10 people that saw my product listing 8 ended up buying. WOW!
Leading up to this day sales had been good. The previous 5 days I’d sold 10, 10, 12, 15 and 13 units, which was fantastic, right on what I want to do. The conversion rates for these days were 50%, 30%, 33%, 44% and 46%, which are all amazing. I had tweaked a couple of things on my listing, not least lowering the price from £14.99 to £12.99. I had also accumulated some more reviews (positive). Finally I’d included a new picture in my listing that may have had a positive impact. So I expect it is a combination of things that spiked my sales to 25 units in one day.
I have now settled at £14.99 again for my products. I did raise the price to £16.99 for one day and made 4 sales, which is OK, but I have opted for £14.99 now and the first day at this price I sold 7 units, which is right where I want to be until I get my new stock in.
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So where am I at and where do I go from here?
With my product number one I am just about where I want to be. Anywhere between 10 and 20 sales per day is perfect. So I want to grow my next four product to the same level. I feel I can do this within 6 month (after they come into stock), and this means before Christmas 2016 I want to be selling a combined 50 units per day. 40 of these will be selling at around the £14.99 mark and one of them will be at the £4.99 mark.
This will be daily sales of approximately £650 (about £230 profit). So scaled up this is equivalent to £240,000 annual turnover with £83,000 profit.
Whether I meet this target or not I am confident this is realistic. If I repeat what I have done for product number one then hopefully I will get close, but I also have a couple of other tactics to generate sales that are outside of Amazon, so these should help me out too.
2017 – what are the targets?
Well, if sales of the five products are going well by Christmas 2016 (this year) I will re-order plenty more of these to keep sales going, plus I will look to add five more new products.
The process will be the same. Get sales up to at least 10 per day for all products within 6 months. Finally add 5 more products to take the total for the brand to 20. By Christmas 2017 I will look to have 200 sales per day averaging £14.99 per sale. Some products will sell for more and some for less, but on average I will aim for £14.99.
200 sales at £14.99 is around £3000 per day and over £1 million per year. This is my target and whether I achieve this by the end of 2017 or whether it takes longer it does not really matter. This is however my target.
I started out to achieve success with an ECommerce business that started using Amazon.co.uk to makes sales, but I aim to evolve to something bigger. Things have started well and I will continue to pursue this aggressively to grow and scale it as much as possible.
Funds are the main limiting factor as well as making sure I do not run out of stock. Lead time from placing an order with my supplier to getting it into an Amazon warehouse ready to sell is over two months. I use sea shipment and this alone takes around a month, sometimes more. This means things can be slow at times and this is what I am experiencing right now. Actually, I am tempted to use air freight on this next order to speed things up, but this is over twice as expensive as sea freight.
Shipping from China to the UK is a story for another day…