Are you like me, in that you often look at a business (a shop, a restaurant, a barber) and wonder what’s their real business model, i.e. how do the business earn money?
Sometimes, I look at a hawker store and wonder how do they do it? How do they earn enough money to cover the rent and all its operation cost, just by selling low cost bowls of noodles and toppings.
My mind quickly goes into the math: rent will cost $X, staffing cost will be $Y, miscellaneous operational will cost $Z, then they would need to make $A for the whole month, and break that down by day and you need $B in revenue daily. With AOV of $C, the shop needs to sell #D bowls daily. (I’ve been trying to calculate an estimate cost analysis for a small business and hope to share it soon.)
The same equation works for fashion boutiques in shopping malls, electronic shops, speciality shops, service-related shops like hair saloon, photography, etc.
From running my own business, I begin to understand the complexity of the entire eco-system and how every part works individually and yet needs to comes together successfully for the entire business to run efficiently and profitably.
I am then thankful for the many service staff that serve us, the logistics personnel that move products around, the cleaners to help us clear up after. Every member of the entire business process matters, because every little details counts.
The zero waste movement gains momentum everyday, and I agree plastic waste are polluting our natural environment at a scale like never before and are causing harm on the natural eco-system, especially the oceans.
Yet, I like to call attention to other human practises that are destroying our natural resources, in my pov, at a faster rate than plastic pollution is.
Over fishing all over the world is causing the imbalance of the natural food chain. When humans takes more from the ocean than then nature can renew in time, it causes entire species of fishes and marine life to be at risk of extinction. Fisherman historically used nets to catch fishes, but with advancement in technology, entire school of fishes are sucked out of the ocean by powerful vacuum pumps.
This is to feed the ever increasing demand from humans, not just for food and fish oil but also for animal feed. Highly marketed fishes such as tuna, salmon, trout, etc are depleting extremely quickly.
There are many death zones in the oceans as a result of our over fishing. Death zones are areas in the oceans that do not have life, the corals, the fishes and marine life in those areas have all died and/or left because there is nothing left to feed on. Death zones are created when there is a gap in the food chain and one species of fish disappears and another species multiply beyond control and cause other life forms to die. In these death zones, schools of fishes are caught, living micro plankton to multiply uncontrollably and use up all the oxygen in the water, effectively suffocating the marine life in that area.
My personal opinion? Marine life will be gone faster due to over fishing than from plastic pollution.
Organic farming for food and for fabric to make clothing is increasing in demand. The idea was a lofty one. It was to provide quality products to market that did not have unsustainable practises like pesticides that pollute the environment, or harmful practises that affect humans health.
Yet, from my understanding of organic farming practises, more resources are used up in the process. For example to be organic, produce needs to be grown on land that has been allowed to rest and renew itself. Which means farm 2 years, rest the land for 1 year. Now, ask yourself this … what will farmers earn during the year of rest? Do they rest? Most simply clear more land to farm, you can’t expect farmers to stop earning a living just for the sake of going “organic”? So, more forest needs to be cleared to allow for land rotation. This depletes our natural rainforest and eats into the animals habitat and also destroys biodiversity in the forest.
To farm organically, more resources in terms of water and manpower is also needed. Water is already a scarce resource in many places, and diverting supply for organic farming when many regions don’t have clean water, seems extravagant to me.
My take? Buy responsibly, don’t just buy into the trending buzzwords, GOT, RSPO, etc. Take time to understand what that means to all the stakeholders, NOT just the shareholders.
As a small business, keeping cost down was always the 2nd most important priority, right after driving sales.
Like me, many small business start off from their homes, where we convert a small room into our warehouse for keeping stock. For the most part, if your product was small and light, that would have worked for a much longer time. For most other businesses that sold products of any heft, then a small room in your home quickly becomes too small.
Beyond your home, what are the options.
Again, I must emphasise the relative ease of doing business in this time and age that allows you access to an abundant options for storage.
Self storage has become increasingly popular in the recent few years. Self storage facilities are run by organisations that convert old industrial buildings into warehousing. The uniqueness of these warehouse is that they lease units of varying sizes out and you could get small or big entirely based on your requirement. They provide 24 hour access to the warehouse and this provides the flexibility for many small businesses to have access to their inventory. Many of these warehouses also have automated lockers, so you can pack goods and place them in the lockers to be picked up by the couriers for delivery.
My recommendation is to pick a location that is convenient, i.e. near where you live or work. If you drive this is probably a moat point, but if you don’t then location is very important.
Visit and see the actual unit
It is also very important to visit the store and ask to see the exact unit that you will be leasing. Make sure you are comfortable with not just the floor area of the unit, but the storage height limit. Ideally pick a storage facility that has higher height limit, that way you get more bang for your buck.
Contract Length vs Rental
You can always negotiate for a contract length that is longer to get a better monthly rate. Though, make sure that the length of contract makes sense for your business. If your business expands, make sure you are able to shift to a larger unit. If your business shrinks, what are the options? If you eventually scale up and need a more full service warehouse, how would you do that?
Treat Self Storage like Co-Working
Get to know the service staff and you will have access to the network. Many of these self storage warehouse have so many small businesses storing with them. Find out if they offer cross marketing or promotions opportunities. Find out about events they hold. Find out if they can introduce you to relevant partners.
Ask About Axillary Services
Are there trolleys provided? Pallet jack? Air-conditioning? Wifi? Automated lockers? Printing services? Every little thing matters, especially when you are a small business.
When we look at any business, it really is a transaction between the company and the customer. In this transaction there is an exchange of value and money (in most cases).
What is value?
Value is extremely difficult to quantify as a small encompassing figure. Value means different things to different people.
Some people value quality of product (looks good, lasts long, has brand, etc)
Some people value time (does the product save me time?)
Some people value ease of use (it just works without having to be a rocket scientist)
Some people value altogether something else (entertainment value, charitable value, etc)
In every one of the value mentioned above, you can go deeper and realise that by time, there is an infinite continuum and some might be satisfied with 1 min time saving, while others only value 1 hour or more saving as significant.
Before you start any business, its important to determine what the exact value you are providing to the consumer.
For some, a pair of Levi’s jeans is valuable because it has a brand heritage and it last for a really long time.
For others, a pair from H&M is valuable because it’s fashionable, wears well for a good 1 year, and at an affordable price.
For some, Mcdonalds is valuable because it fills me up fast, it taste good, convenient and affordable.
For others, a gourmet burger place is valuable because it’s delicious and has great ambience. It’s not that affordable and not convenient location wise.
You get the point.
So, the question begs to differ, what is you [product, company] value to the customer?
If you are selling the same as everyone else, then it would just be a combination of price and marketing budget that will trump.
If you are selling a differentiated product that is well suited for a segment of consumer, then you will be able to command a premium and you might even win more through “word-of-mouth”.
At this point, I like to thank you for reading. While this maybe just my view as I wade through my own business, I do hope it provides value to you, too.
Shopify is good, though not great, but it does a good job for you to start and run your online shop.
More on Shopify below, but first … WooCommerce.
I tried WooCommerce, after a brief start with Shopify. I was looking to save operation costs. What I found over the 6 months of using WooCommerce, was that it might seem cost efficient upfront, but it all adds up very quickly. You also need technical resources to run WooCommerce Store successfully.
WordPress and WooCommerce software are free to use, but you would need have your own web hosting. Note here that regular shared hosting might not cut it as there are limited computing resources (i.e. bandwidth and ram), and you might need to have a more powerful hosting and throw in CDN to ensure site availability. If you don’t, your shop might crash, which means customers can not access your site.
On top of the base WordPress and Woocommerce setup, you might end up installing a premium theme to have more customisation, SEO plugin, Bundles Plugin, Subscription plug-in, etc.
Beyond the monetary cost, there is also the time resource that needs to be invested. There is a significant setup time required as there more more customisation available. There is also an on-going time resource required for maintenance, when WordPress software upgrades, when plugin upgrades, when you reach bandwidth limits, when there are security breaches, etc.
If you are completely lost about what I just mentioned … my suggestion would be to simply go with Shopify.
Now, about Shopify …
Shopify is a total solution (one-stop shop) for your shop. It starts at a basic USD$29 per month. (Note: US dollars) After you register for an account, you could input your store details and upload your product information, and you could be online, ready to sell, in about an hour.
It includes all the basic features of an online store, product and inventory management. Basic sales reports. Blog. Basic SEO. Basic reviews(via a free app).
To enhance your online store with more advanced features, you would then go to the Shopify App Store to install 3rd party apps.
There are loads of 3rd party apps and you almost can find an app for the feature you are looking to enhance. At the end of it, it simply boils down to cost, as Shopify apps can get expensive quickly, as they charge tiered pricing for sales volume or Shopify tier plans.
Apps you might consider getting include a better reviews app, a better reporting app, a bundle app, an up-sell/cross-sell app, a currency converter app, a subscription app, etc.
The list goes on and here’s what I use for my online store.
In terms of cost, you would also have to factor in Shopify transaction fee, which is 1-2% for the standard plans. If you are at a huge scale, then things changes. This is over and above your payment gateway fees, for PayPal, Stripe, etc.
So, you can see the cost adding up very quickly.
The good news though is that, in most situations, everything just works, and you can spend more time selling, rather than maintaining your shop.
No worries about software upgrades.
No worries about fraud checks.
No worries about hacking.
No worries about downtime (to a certain extent).
Between Shopify & WooCommerce, I’ll pick Shopify if I lack technical expertise or a technical support team.
Are there other options?
Bigcommerce, Magento are alternatives which you can run and host yourself. *Think WooCommerce*
WIX, Squarespace, Strikingly are alternative, easy to build (WYSIWYG) platforms that you can register and use directly. *Think Shopify*
There really isn’t a one size fits all, so test drive the various platforms and find out which suits your needs best. Most of them have free trial periods from 2 weeks up to 30 days.
Final important note: plan for at least a year out, if you are looking to expand your product line, then it makes sense to get onto a platform that caters for your required volume in the future.
p.s. So the title would suggest that Shopify was David the little boy who overtook the mighty giant that is WooCommerce. In reality, the WooCommerce has not been defeated and still remains one of the largest e-commerce platform provider. Shopify, too, is no longer the little underdog from 10 years ago. It is a listed company and has massive operations around the world, powering a significant number of all online shops.
It’s much easier to start a business today than any other time in history.
With the advancement of technology, there are now tools that allow anyone to setup an online shop in 1 hours, there are marketplace platforms you can leverage that allows you to sell to anyone, there are logistics platform that allows you to book a courier on demand and send your goods to the customer, there are marketing platforms that allow you to reach millions who might be interested in your product or brand.
So, it’s never easier to start an online business or more precisely a product driven online store than now.
In the beginning of every business there was a desire to do something more than the mundane.
To be able to get out of the 9-6 job routine.
To be able to earn “exponentially” more money.
To be able to create something that is valuable and offer it to people.
To be able to bring something of value to the table
To change perception.
To change people’s life.
Here’s a story of how I stumbled into starting and running a business selling physical products online.
I had always been seeking out something more to do and accomplish, beyond my regular day job. I had toyed with many ideas and ran them as a side hustle.
There was a shop for you service, to provide a service to help customers buy from Taobao directly, not AliExpress. We had a few enquiries, but it never officially launched due to partnership issues.
There was also an idea for a recruitment referral program. Unfortunately, it wasn’t market tested, and our dev work never completed.
Then I went traditional and sold children clothing online. We were buying from Taobao and reselling then in Singapore, our home country. We sold only pieces that we loved and our children would wear. It was a good business, but it was limited in scale because we were not getting wholesale pricing from the supplier and our margins were thin. Logistic cost and returns added up and while it sold well, it was not making money. And, we stopped.
This final and current idea was something we stumbled upon. My Wife and I had our first daughter and we were looking for more natural products to use in the home. Just like everybody else, we started to switch the personal care products that we were using, then, we also started to switch to a natural cleaning product, because we found out (gasps!) how important that was too. We stumbled across the brand of natural soap because our daughters later went to same school. We loved the products and loved the family and decided to take and exclusive distribution for the product into this part of Asia.