I run an almost identical fabric shop online. 20k/month revenue is great but remember this is not a SaaS with unlimited scale and low costs. It's actually a very traditional business model, and margins here are only going to about 20-30%, potentially a lot less if you have to pay for your storage space.
You buy the fabric, typically you'll double the price when selling to customers. Then you take off additional postage fees/packaging (note the flat fees on postage), payment fees (3-4%), discounts, returns, shopify monthly fees, accounting software etc.
You'll spend about 50% of your day cutting & packing orders, taking them to the post office etc. (or you can employ someone to help) and the rest of the time taking shots for instagram, sourcing new suppliers, working on SEO/blogging and doing admin.
If you're good at marketing you can shift quite a lot of fabric, but it will take you about a year to get your stock levels up to a sustainable amount to pay yourself a wage. If you want a real shop front you will generate most of your profit from running classes as the costs for a high street store are significantly higher than shopify and you gain little in terms of footfall vs online traffic.
This isn't a get rich quick model but over time it works well and is replicable at scale.
Thanks for your insight. You're not too far off, but my margins are much higher - thank goodness. I've been at this for 5 years and also have an employee who helps with all the cutting, packaging and shipping. I offer a flat rate shipping fee for small price orders anything under $45. Sales above $45 ship with a Canada Post calculated shipping rate. Good luck with your business :)
Nice, thanks for the numbers! At a certain point you start competing with Home Depot, Michaels, Walmart, Amazon, whoever. You are in the product retail business, rather than the manufacturing or services business.
I think if you get really good at streamlining your marketing (Instagram photos and landing pages) as well as your pick/pack/ship operations (i.e running a warehouse), then you can expand into multiple niches. Fabrics, clothes, prints, whatever is super niche and high margin and can't be found on the shelves of a big box store.
One thing I've been wondering about wrt high-volume online shops: how do you protect your hands against the dryness of the cardboard boxes and papercuts? Is this an issue?
At what point do you decide that it is not worth your time? To me it seems taht at a certain point, once you've established the the margins, you grow the business to where you're no longer doing any work.......turning the business into an asset which has some nice cash flow and allows your employees to be happy.
Note that she did something good from the very start - Solved a problem: "People were tired of paying high shipping rates from online fabric shops in the US and wanted to shop Canadian."
Find a problem. Build a solution. Market it. Listen to your customers. It is fairly standard advice, but it works well.
Hi! It's Alanna Banks, found of Fridays Off. Thank you for reading my story and all the comments below. I haven't had a chance to read them yet, but I'm going to run through them now. Please feel free to reach out to me with questions. :)
Hey Alanna! LOVING your story. its so genuine and raw. it shows that it isn't easy and persistence + constantly learning are key.
I'd love to host you on a podcast series I've started specifically focused on bootstrapped founders, starting side-hustles, and their stories of the early days.
Even though your post answers most of them, hearing them from you would be fantastic.
let me know if that'd be of interest.
Sending lots of good vibes, and telling my north-of-the-border -mom-friends about FridaysOff!
I don't think that's true. If you have revenue from thousands of purchases, and lots of revenue, you have an avenue to reduce costs as your pipeline matures. It's not the only number you should care about, but it's hardly a who-cares item.
Agree. I work for a big healthcare company that likes to throw around the revenue numbers (pretty much all public companies do). Of course it's huge, cause healthcare is expensive (US). Our profit margin is like 2% cause COGS and labor is just as expensive and our top line revenue is basically just a made up number that we like to bill people, with no hopes of actually getting paid that amount, it's before the insurance companies "contractual adjustment", which is essentially a huge discount that we know invalidates top line.
Revenues are necessary but not sufficient for profits.
Personally as a sole operator i'd prefer 10k revenue and 5k a month in profits over 100k in revenue and 2k in profits. However the last is more preferable for expansion.
To expand if you have 2M in gross revenue and only 2k in net profits this surely means that there is demand for whatever you are selling and some sort of optimization/innovation would bring you greater profits.
If you have billions in revenues then profits matter even less as long as the company keeps getting external financing from the markets and there is perceived need/potential for company products. Look up on how AMD, MU etc has been operating for 30+ years.
Revenues show sales, profits show sales + costs + spending. Wayfair, for example, has large revenues, and is profitable for its businesses, but not after it's spending. The spending though is because they've found a weakness in their business model, and they're building assets fix the problem. In the long term, they'll be able to grow faster, it will be harder for competitors to enter, and they'll be able to get higher margins. Revenue tells a story that profit can't.
Depends on scale and runway. If you have 200k/month in revenue you can easily make (or lose) a boat load of money with a few small adjustments to your margins.
My wife runs a small little shop in the creative space too: the margins can be quite high for nice, high quality stuff and customers are easy to draw in for multiple purchases.
(also it helps I do the tech side of things and there is so much open source, free or cheap stuff available tech-wise)
A friend of mine's wife started a very high margin business selling scrapbook grabbags on eBay. She'd buy up clearance items and local craft/hobby stores, and bundle them up to sell on eBay. She made enough money that after two months, PayPal came along and froze her accounts, cutting her cashflow off, effectively killing the business.
The danger here is that it's easy to get sucked into doing tech stuff, and not focusing on directly revenue generating things. I see so many people spinning their wheels with "free" things when low cost subscriptions would save them hours and hours and hours of effort.
I am glad that the advice is not unusual and refers to the usual suspects: judicious A/B testing of SEO keywords, personalized correspondence with early customers, and leveraging media and coaches. It gives confidence that anyone can do this.
Thanks! I'm just a regular person trying to make a go at my own thing because the corporate world just wasn't for me. My goal is to help people realize that if they have a dream they should go for it, but also to realize that it doesn't come easy. It's A LOT of work!!
>After returning from a year long maternity leave I found it difficult to juggle my new life as a mom working in the confines of a 9-5, I also came to the realization that the corporate life just wasn’t for me and became very unhappy. I was tired of faking it and really just wanted to follow my forever dream of doing my own thing and being my own boss. So, I did what anyone would do in that situation and got pregnant again ;) ... Knowing I had another year-long maternity leave on the horizon, I started brainstorming e-comm business ideas.
This doesn't sound good, basically kickstarting a company on another company's money.
Maternity leave benefits in Canada are paid by the federal government through Employment Insurance (EI) program. New parents get 12-18 months of EI payments. Your employer is only required to hold a position for you, they are not obligated to pay your wage.
It’s not against the rules. I don’t see the problem. But even better, she’s growing the economy and everyone wins.
You gotta like people with grit and tenacity to strive all while playing by the rules.
Very cool story. One of my favorite stores is Britax in San Francisco, where you can see fabrics going north of $1,000/yard. She doesn't seem to use Pinterest, which seems like a natural fit.
So nobody can submit their own content unless it has a Show HN on it? Come on that’s ridiculous.
Also, “Show HN” is specifically for products we can play with after clicking the link. Please do not pollute Show HN with blogposts; I will flag them and I’m sure others will too.
This is a really ignorant thing to say. If you have a hearty revenue stream but no profit, you can tweak the model to make it profitable. Some profits aren't possible at small scales, so having revenue proves you have demand and can lead to safely risking big bucks to get to a profitable scale.
I got down to where he said he paid $10 for shipping and instantly clicked that it was a watch from Aliexpress and it was a classic dropshipping gig.
There were some people a few years ago that managed to sell off a few hundred Hawaiian shirts that were most likely drop shipped from China by using some well targeted FB (and probably Instagram) advertising, and giving the shirts funny names (named after local alcoholic drinks). They were probably making $20 or $30 per shirt.
An interesting take on the Aliexpress game is theive.co [1]. It's basically a curated list of stuff on Aliexpress with referral links. Since I last looked at the website they've apparently launched a product aimed at drop shippers, where you can get market insights. Morally it's murky, but it's clever.
This is different though - the gimlet podcast is about dropshipping, where you don't keep inventory and are literally just creating a sales pipeline for someone else, and absorbing all of the marketing costs (hint: why would a manufacturer / wholesaler let you do this for them if it was profitable?).
In this case you're entering the supply chain of a product (cut fabric), which end customers cannot do for themselves and wholesalers cannot scale.
[+] [-] fabricexpert|7 years ago|reply
You buy the fabric, typically you'll double the price when selling to customers. Then you take off additional postage fees/packaging (note the flat fees on postage), payment fees (3-4%), discounts, returns, shopify monthly fees, accounting software etc.
You'll spend about 50% of your day cutting & packing orders, taking them to the post office etc. (or you can employ someone to help) and the rest of the time taking shots for instagram, sourcing new suppliers, working on SEO/blogging and doing admin.
If you're good at marketing you can shift quite a lot of fabric, but it will take you about a year to get your stock levels up to a sustainable amount to pay yourself a wage. If you want a real shop front you will generate most of your profit from running classes as the costs for a high street store are significantly higher than shopify and you gain little in terms of footfall vs online traffic.
This isn't a get rich quick model but over time it works well and is replicable at scale.
[+] [-] fridaysoff|7 years ago|reply
[+] [-] justaskin134|7 years ago|reply
For me marketing is always the toughest part .
How do you do your marketing ?
What tips can you offer us that save the most time and money spent ?
[+] [-] anoncoward111|7 years ago|reply
I think if you get really good at streamlining your marketing (Instagram photos and landing pages) as well as your pick/pack/ship operations (i.e running a warehouse), then you can expand into multiple niches. Fabrics, clothes, prints, whatever is super niche and high margin and can't be found on the shelves of a big box store.
[+] [-] amelius|7 years ago|reply
[+] [-] blknmild|7 years ago|reply
[+] [-] codingdave|7 years ago|reply
Find a problem. Build a solution. Market it. Listen to your customers. It is fairly standard advice, but it works well.
[+] [-] fridaysoff|7 years ago|reply
[+] [-] ddevjani|7 years ago|reply
I'd love to host you on a podcast series I've started specifically focused on bootstrapped founders, starting side-hustles, and their stories of the early days.
Even though your post answers most of them, hearing them from you would be fantastic.
let me know if that'd be of interest.
Sending lots of good vibes, and telling my north-of-the-border -mom-friends about FridaysOff!
[+] [-] wordythebyrd|7 years ago|reply
[+] [-] Descartes1|7 years ago|reply
[+] [-] Afton|7 years ago|reply
[+] [-] conductr|7 years ago|reply
[+] [-] sireat|7 years ago|reply
Personally as a sole operator i'd prefer 10k revenue and 5k a month in profits over 100k in revenue and 2k in profits. However the last is more preferable for expansion.
To expand if you have 2M in gross revenue and only 2k in net profits this surely means that there is demand for whatever you are selling and some sort of optimization/innovation would bring you greater profits.
If you have billions in revenues then profits matter even less as long as the company keeps getting external financing from the markets and there is perceived need/potential for company products. Look up on how AMD, MU etc has been operating for 30+ years.
[+] [-] swalsh|7 years ago|reply
[+] [-] fabricexpert|7 years ago|reply
[+] [-] mkirklions|7 years ago|reply
[+] [-] joelhaasnoot|7 years ago|reply
(also it helps I do the tech side of things and there is so much open source, free or cheap stuff available tech-wise)
[+] [-] bluedino|7 years ago|reply
[+] [-] throwawaylalala|7 years ago|reply
[+] [-] robertk|7 years ago|reply
[+] [-] fridaysoff|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] emilfihlman|7 years ago|reply
This doesn't sound good, basically kickstarting a company on another company's money.
[+] [-] giarc|7 years ago|reply
[+] [-] mc32|7 years ago|reply
[+] [-] bluedino|7 years ago|reply
Can I work on my startup idea when I take 2 weeks vacation in the summer? What's the difference?
[+] [-] tomcam|7 years ago|reply
[+] [-] subpixel|7 years ago|reply
[+] [-] mkirklions|7 years ago|reply
Promotion of your blog should be clear to readers.
[+] [-] chatmasta|7 years ago|reply
Also, “Show HN” is specifically for products we can play with after clicking the link. Please do not pollute Show HN with blogposts; I will flag them and I’m sure others will too.
[+] [-] DoreenMichele|7 years ago|reply
https://news.ycombinator.com/showhn.html
[+] [-] ed|7 years ago|reply
[+] [-] patwalls|7 years ago|reply
[+] [-] Descartes1|7 years ago|reply
[+] [-] bjoerns|7 years ago|reply
[+] [-] patwalls|7 years ago|reply
If you read more into the many interviews I've done - you can find many founders talking about profits/margin.
[+] [-] mikec3010|7 years ago|reply
[+] [-] mkirklions|7 years ago|reply
I believe he has lots of accounts to upvote, otherwise this would be hidden.
[+] [-] profalseidol|7 years ago|reply
[+] [-] _salmon|7 years ago|reply
[+] [-] fridaysoff|7 years ago|reply
[deleted]
[+] [-] snarf21|7 years ago|reply
[+] [-] sdenton4|7 years ago|reply
https://www.gimletmedia.com/reply-all/117-the-worlds-most-ex...
[+] [-] toomanybeersies|7 years ago|reply
There were some people a few years ago that managed to sell off a few hundred Hawaiian shirts that were most likely drop shipped from China by using some well targeted FB (and probably Instagram) advertising, and giving the shirts funny names (named after local alcoholic drinks). They were probably making $20 or $30 per shirt.
An interesting take on the Aliexpress game is theive.co [1]. It's basically a curated list of stuff on Aliexpress with referral links. Since I last looked at the website they've apparently launched a product aimed at drop shippers, where you can get market insights. Morally it's murky, but it's clever.
[1] https://thieve.co/
[+] [-] fabricexpert|7 years ago|reply
In this case you're entering the supply chain of a product (cut fabric), which end customers cannot do for themselves and wholesalers cannot scale.
[+] [-] NinaJZapala|7 years ago|reply
[+] [-] MrRubbish|7 years ago|reply
[deleted]