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I am a (small) shareholder in a website that sells household appliances (washing machines, cloth dryers, fridges, etc) and TV sets.
Although the site attracts between 500 and 1000 visitors per day directly from Google, the conversion rate for these visitors is very low.
90% of the sales come from people (the other roughly 1500 daily visitors) who visit the site after checking prices on a price comparison website. So, the site has been positioned as a price fighter, since the initiator/entrepreneur is convinced that that is the only way to make money with this range of products. The consequence is that the gross margin is only approximately 5%.
After a loss in the first year the shop ended the years 2006 and 2007 around break-even.
As such a nice result for the entrepreneur and the 7 employees, but if the times get tough and consumer spending drops it only takes a proverbial minute to land in negative territory. Therefore, I am pushing the entrepreneur to expand his product line with products that are less price sensitive and if possible also a bit more recession proof.
I would appreciate your thoughts on products that would be a logical expansion for a website selling household appliances. Of course, the shop is already selling some add-ons such as special brackets for TV's etc. The margin on these brackets is around 15%.
But I hope to find higher-margin products that are unrelated to the present product range but that appeal to the type of visitor who comes to the site in the first place to look for a household appliance.
Thanks in advance for your views and suggestions.
Although the site attracts between 500 and 1000 visitors per day directly from Google, the conversion rate for these visitors is very low.
90% of the sales come from people (the other roughly 1500 daily visitors) who visit the site after checking prices on a price comparison website. So, the site has been positioned as a price fighter, since the initiator/entrepreneur is convinced that that is the only way to make money with this range of products. The consequence is that the gross margin is only approximately 5%.
After a loss in the first year the shop ended the years 2006 and 2007 around break-even.
As such a nice result for the entrepreneur and the 7 employees, but if the times get tough and consumer spending drops it only takes a proverbial minute to land in negative territory. Therefore, I am pushing the entrepreneur to expand his product line with products that are less price sensitive and if possible also a bit more recession proof.
I would appreciate your thoughts on products that would be a logical expansion for a website selling household appliances. Of course, the shop is already selling some add-ons such as special brackets for TV's etc. The margin on these brackets is around 15%.
But I hope to find higher-margin products that are unrelated to the present product range but that appeal to the type of visitor who comes to the site in the first place to look for a household appliance.
Thanks in advance for your views and suggestions.
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