How you can keep up with your competition.

Being a retail entrepreneur, whether you choose e-commerce or brick and mortar, is not a passive business. Especially since the internet makes it so easy for potential customers to shop and compare.

To stay ahead of your competition you must continually study, research, and learn about your market, your chosen product categories, the market trends, and your competition. It is not an easy task.

Every major retailer like Walmart, Target, or Amazon, among all the others, have hundreds of employees whose job is to monitor their assigned product categories for new products, market trends,pricing, promotions, and competition so they can stay competitive. These employees go by many different names depending on the company. They could be called buyers, merchandisers, category managers, product managers, etc.

I suggest you limit your product offerings to a few categories to make it easier for you to keep up with what is going on with your industry. Just about every product category has a trade association. These trade associations sponsor trade fairs or shows to allow their members to exhibit their merchandise and give potential customers the opportunity to view many companies all in one place. The trade associations also produce newsletters to keep their members up to date. It is a great idea to subscribe to them for the latest industry news. Also, make regular shopping trips to major retailers to review what they are offering in your chosen product category. It’s ok to take advantage of their expertise.

Often, the first piece of advice given to new retailers is to sell products you already have knowledge about. Having an interest or prior knowledge about a product category makes your learning curve so much easier.

Can you make money selling items for $1.00 each?

The real answer is that no matter how much, or how little, you pay for that item you sell for a dollar, you are going to lose money if you only sell a single item. You must consider all of the other costs you must pay just to do business.

I will use the example that others have used. You pay $0.50 for an item that you sell for $1.00. You make $0.50 gross markup each. Not a bad markup in general.

If you have a brick and mortar store you pay rent and utilities. You pay employees. You have everyday business costs like advertising or marketing. If you have a dollar store and a customer walks in and buys one item for $1.00 you lose money. The cost to handle that transaction is just too high. Hopefully, your customer will buy 10 or 15 items at $1.00 each and allow you to make a little profit.

The same principle holds true for e-commerce stores. Your overhead may be lower but you still have to pay for someone to process the order, print the label, put the item in a box, and ship it. You need to pay shipping charges. You need customer service to notify the customer about tracking numbers, handle questions and returns. All this costs money.

Only you can determine how much it costs to process each order. Calculate how long it takes to process an order, print a label and pack and ship an item. Next calculate your labor rate and apply the cost of labor to the time spent to process an order. Add in credit card or Paypal processing fees, selling fees, advertising and marketing costs, and the allocation to overhead you charge for each order. All those business costs add up pretty fast. You will find there is not much left of the $0.50 “Profit” you think you may make.

I guess is you sell an item for $1.00 each, are completely automated in your order processing, and you sell thousands every month, you may be able to squeak out a little profit at the end of the month, but it will be really tough.

Good luck finding that item!