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How to Earn $1,000 a Month by Running a Blogshop (Part 2)

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Ryan Ong

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Turns out my Statues of Paris blogshop didn’t make $1,000. In fact, that was what I had to pay the fire department after they showed up. “Maybe because your blogshop sold nothing but half-melted candles in the supposed shapes of Paris Hilton?” It was a business strategy. I figured if her fans think she’s hot, their eyesight and judgement can’t be too good. But never mind, let’s consult a proper blogshop expert. Mia Tan’s back!

The Nitty Gritty Details

You know what makes a business work? Eye for detail.

It’s the nitty gritty details, not just ambitious visions, that build success. A business requires near obsessive management of a thousand discrete functions: Effective accounting, clever marketing, complaint management…the list goes on.

So while I can’t write you a whole book here, I can point out some key details. If you want your blogshop to last, you need to:

  • Be sufficiently capitalized
  • Brace for logistical costs
  • Know your break-even point
  • Use the right marketing

If you can manage these four elements, you should have something sustainable. You’ll still have major issues that take years to iron out (no one gets it perfect), but you won’t crash and burn on year one.

Helping me out is online retail expert Mia Tan. She runs the popular fashion and beauty portal Styleshoppes (Go have a look!)

 

Mia Tan, owner of fashion and beauty portal Styleshoppes, and online retail expert.
Mia Tan, owner of fashion and beauty portal Styleshoppes, and online retail expert.

 

1. Be Sufficiently Capitalized

With most start-ups, you need to be capitalized for at least one year. In other words, expect to make a full loss (operating costs with no revenue). This isn’t so bad for blogshops, since you have no shop rental. I asked Mia how much a typical fashion blogshop costs at start-up:

Ideally, a blogshop should start with a collection of 30 to 50 outfits for sale. There should be 5 to 10 pieces of each in various sizes.

Besides inventory, there is also the cost of photography, or at least stock photography. Then you need a good e-commerce site with all the bells and whistles. Overall, you’re facing an initial capital of around $10,000.

It may seem like a lot, but this business model actually has low capital outlays. If you compare it to the cost of a B&M (Brick and Mortar – Ed) shop in Orchard Road, every dollar definitely go a longer way than regular retail.

Mia gave me some ballpark figures:

Staff Pay – Let’s say it’s just you for now. The idea was to take $1,000 from it right? So that’s a start.

Stock – $5,000 – $7,000

Website – $3,000 – $5,000 (With a professional developer, SEO expert, etc.)

Marketing – $2,000

There are opportunity costs,” Mia says, “Significant manpower hours go into stock taking, packing, tracking and mailing. If you are handling everything on your own, you need to be very systematic and meticulous.

 

2. Brace for Logistical Costs

 

Of course we're reliable. No one's accidentally been mailed a body part for weeks now.
Of course we’re reliable. No one’s accidentally been mailed a body part for weeks now.

Blogshops escape the cost of store rental, but they’re as subject to logistical costs as any B&M store.

By my definition, logistical costs are the price of getting things shipped from suppliers, and to customers. It also includes the cost of warehousing, refunds for things lost or damaged during delivery, sourcing expeditions, and the psychiatrist’s bill after dealing with this for a year.

Sourcing for stock can be your largest logistical costs“, Mia says, “Because for a start, you may have to travel to other countries (Bangkok, Thailand, Seoul Korea, Guangzhou/Shenzhen in China are popular) to source for reliable wholesalers or manufacturers.”

So be prepared to take time off from work, and to spend your “vacation” doing even more work. And be prepared for skinflint, budget trips.

But how else do we keep costs down for shipping and sourcing?

Unfortunately, I think this is a cost that cannot be skimped on. With so much competition in online shopping, there is simply no shortcut for quality, variety and consumer confidence.

This is balanced out by the huge savings on rent and salary, by not having a physical store.

 

"And our 100% authentic Arabian silks are made by 100% authentic Chinese factory workers."
“And our 100% authentic Arabian silks are made by 100% authentic Chinese factory workers.”

 

Don’t worry, I also annoyed a veteran purchasing officer, Anthony Low, for a bit of advice. In his e-mail, he suggests you:

Set up a corporate account with UPS or some other major courier. Their salesman will actually make an appointment and work something out with you. No guarantees, but you might save more than if you try some kind of haphazard, one-piece-at-a-time shipping method.

Low warns that shipping things “as and when” can drive prices as high as $40 per kilogram. Always contact the courier service and see if you can work out a system. You can also follow us on Facebook, and we’ll discuss alternative courier services soon.

 

3. Know Your Break-Even Point

The break-even point is when you’re not making a profit, but not making a loss either. You’re just sort of stuck there, like Nicholas Cage’s movie career.

You need to plan two things:

1) When you should hit the break-even point, because you’ll cut your losses and quit if you don’t make that date.

2) How long before you move past the break-even point. For example, you might consider folding up if you can’t move past that point after six months.

 

I've TRIED looking at it from every angle. But the numbers don't change however I tilt this screen.
I’ve TRIED looking at it from every angle. But the numbers don’t change however I tilt this screen.

 

When should the break-even point be? Half a year it seems:

Some blogshops make a profit immediately,” Mia says, “But I would say it requires at least six months to gain recognition, trust and a client base.”

Ideally, you should start to turn a profit after two months at the break-even point. Otherwise, your business may never grow beyond providing that $1,000 a month.

 

4. Use the Right Marketing

Facebook is definitely a must, with its virality and cost effective ads,” Mia says “But you have deep pockets, do things with a big bang. Like in the case of Zalora; they blanketed the entire search engine ad landscape with on-the-ground PR stunts, and partnership with credit cards.

If you do this, be sure you can handle the volume of orders, as customer service and trust is of utmost importance!

For start-up blogshops, you’ll have to bootstrap a bit. Use sites like Pinterest to generate attention, and see whether friends will put up product pictures on their Facebook walls. You should also consider partnering with portal sites:

Partnering and advertising with online fashion directories like styleshoppes can boost your initial foray into the fashion scene,” Mia says, “We already have a huge database of female online shoppers, so you’ll find it easier to reach your target demographic.”

Our in-house writer, Jeff Cuellar, has more advice on this.

 

Do you run a blogshop? Comment and let us know how it’s going!

Image Credits:
IntelFreePressGlaxoSmithKlineWill Claytondumbledad

 

 

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.