What Are the Two Biggest Mistakes E-commerce Entrepreneurs Make?
We have helped hundreds of subscription box and e-commerce companies get started and work with many businesses, large and small, this is a question I am asked quite often. My answer never varies because we have witnessed many companies err in two critical areas:
- They grossly underestimate the impact of outbound shipping cost on their business.
- They place no monetary value on their own hard work and time.
The Importance of Shipping Cost
Unless you are shipping out something small, flat, and light weight (example – a gift certificate), your shipping costs may be the greatest single cost you will experience. I find it ironic that people will at times focus on saving a nickel on their box or tape, but totally ignore the additional $2.00 every box is costing to ship because they have exceeded 16 ounces.
A young entrepreneur called us late last year and had a great idea for a “popcorn of the month” club. In theory it was an excellent idea, especially for a family of popcorn lovers like mine, but when I asked about shipping cost, he admitted he had not done his homework. As you can imagine a large bucket of flavored (popped) popcorn is very bulky and lightweight so I knew dimensional rates for shipping were going to exceed the cost of his popcorn. I never heard back from him so I suspect that he discovered the same.
It is not unusual for start-up business owners to not pay themselves anything, especially in the beginning. I will admit that it was almost two years after we launched our business before I started drawing even a small salary. I found myself running errands and having meetings that could have been handled differently and more economically, if there had been an actual bottom line cost to my own labor. Cash flow was slow and after all my time was “free”.
The same can apply when I ask people about how they form and pack their boxes. The answer is usually that they, family, or friends get together and form boxes and fill them manually. There is typically no out of pocket cost, and it works great when you are only shipping out a few hundred boxes per month. It is not a great solution when you start shipping out thousands of boxes. Upon closer review most people realize the most tedious, time consuming part of the process is the actual box forming.
For that reason, we are now offering a compact, relatively inexpensive, Globe Guard® mailer box former that makes box erection almost effortless. The person forming boxes will love it because in most cases it more that quadruples their productivity (see video) so what used to take all day, can now be done in a couple of hours.
Combine this with a good internal packaging design including labor saving inserts, partitions and dividers (see first related post link below) and your monthly boxes can be produced with minimal cost and perhaps more importantly – on time!
For more information on the Globe Guard® Mailer Box Former, internal packaging or anything else related to your e-commerce or subscription box business, please contact us at Salazar Packaging or call us at 630-551-1700.