startup-costsSuppose, I want to import product from China and sell it to the local market through an online business.
First, I establish an web-site. Then, I import product from China and keep it in my store hoping to sell.
What risks can I face?
I am concerted about possibility of low customers or low sales.
I could think about the following:
So:
The market is saturated. There are already thousands of stores and everyone wants to sell substitute goods. You need to do high investment into your marketing to gain market shares or have some niche products. Still success it is not guaranteed. It is a hard fight.
Especially when importing unknown brands, you may get big problems in terms of warranty. Same goes for own products. Selling existing brands, gets us back to the first problem: High competition.
Ok this is a tough topic. Of course you can sell things, but you need to stock up some goods. You have to invest into a lot of things, to implement some kind of distribution chain. Of course you can outsource it, but you still have to pay for such a service. Also you have to create a portal and IT-Infrastructure. Simple solutions may also work, but professional Online Stores are build up with complex software and lets just say: “There is a reason for that”. (exp. Magento)
Overall, there are many risks and uncertainties. May change the approach and realize some kind of affiliate concept, but this is also fiercely contested. There is a lot to think about.
Does this answer the question?
I recently invested in menswear fashion and the biggest risk we always face is wrong design.
You can mitigate it to some extent but there is always uncertainty whether it’s going to be a hit or miss.
Next risk you’ll face sooner or later (probably sooner) is risk of obsolete stock.
Fashion moves fast and tastes even faster. But your stock doesn’t necessarily follow this pattern especially when you have unknown brand. So you have to discount it or make loss. There is financial and brand risk. If you discount heavily and often customers take note of it. They may leave and don’t come back (brand risk) or wait and try to purchase only when you discount (financial).
Fashion business is a tricky one. It revolves around 2-4 seasons and long planning. At minimum you have to plan 6 months ahead.
We already finished working on autumn 2016 collection.
But apart from that it’s real fun.
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