Need a little help with a new business survey

Hi Folks,
I'm putting together a concept paper as part of starting a business, and I could use a little help with a market survey. If you have a couple of minutes to spare, please check it out below.
I am an electronics hobbyist myself and I know what I would want in a parts store, but if you could help me find out what you would want, then I can make it better for everyone.

Thank you in advance,
MrBill33


1) Where do you normally buy electronics parts?
a - online retailer
b - online wholesaler
c - local store

2) Is electronics your main hobby, or part of your main hobby such as:
a - Scale model R/C
b - Scale model trains
c - Electronics
d - Kinetic art (or similar)
e - Other __________________________________

3) How often do you buy parts:
a - Weekly
b - Monthly
c - Every few months
d - As needed

4) Do you normally buy parts...
a - all at once for a particular project.
b - for the component, and then chose a project that uses it.
c - as you come across a need for it.

5) Do you normally buy:
a - Finished products (ready to use)
b - Parts kits (needing assembly)
c - Individual parts (your own design or other)
d - Sub-assemblies (ie: radio links, motor controllers, etc)

6) What level would you say your ability is:
a - Beginner (I know what a capacitor is)
b - Intermediate (I know what a microcontroller is)
c - Advanced (I could build my own time machine if I could just get a flux capacitor)

7) Please rank the following in order of importance, with 1 as most important:
a - Customer service
b - Price of components
c - Ease of use of website
d - Projects and tutorials
e - Other ________________________________

8) Would you purchase products from a website in Canada? Y__ N__

9) What is your location:
a - Canada
b - USA
c - Europe
d - UK
e - South America
f - Other _____________________

10) What age range are you a part of:
a - Under 20
b - 20 to 30
c - 30 to 40
d - 40 to 50
e - Over 50

11) Which option below best describes you:
a - Student
b - College/University student
c - Working hobbyist
d - Retired

12) Are you: Male __ or Female __?

And finally...What would you like to see in an online electronics store?

Electronics sales are miniscule.
There are so many electronics stores in the world. Many of them have a web presence but the general sales are very small. It is not worth starting up a new business. You will lose everything.
Possibly the biggest sales are for model railway projects but you need to have your own projects.
Look in eBay to see what is available.
By the time you pay eBay costs, you will not make a sent.
I have watched sales plummet over the past 40 years.
I also started to organise Poptronics, not knowing it was in dire financial trouble, and the owner pulled the rug from under me and closed the magazine a few years ago.
It's sales were very small and when he offered a year's subscription for $18.00 he had to pay $6.00 to a subscription agent. This left $1.00 per issue to print the magazine and post it. Printing was 32 cents and postage was 50 cents. The only profit was from advertising and that's why the ads were so expensive. By the time you advertised in the magazine you made nothing. And sales for the magazine had been falling and falling over the past many years.
If a magazine like that cannot succeed, it shows the real situation.
I don't want to scare you but this is the reality of the situation.
I made my millions in electronics many years ago and when the business slowed down to a crawl I went into property development.
I only do it now as a favour to help budding new hobbyists but it has not even paid the website costs for the past 8 years.
You will never get the truth like this from anyone else. I don't want you to lose your money but these are the facts.
I can give you 5,000 email addresses and you can send out an email to see what response you get.
If you make 30 cents an hour, I will be surprised.
I have a stock of $80,000 in components and 2,500 hits per day on my website with 2.3GB of traffic. I have not sold $50.00 in components in the past 8 years.
All sales are kits and the only reason why I sell anything at all is because I have designed the 250 kits myself and they are not available anywhere else.
That's the way things have changed.

Hi MrBill,

I hope you are still positive about starting your business, I think Colin brought up a good piece of reality but keep in mind it's only a small piece. There are many ways to kill a chicken and some ways are better than other. Success is always based on ideas X efforts kind of like E=IR. You might get a good deal on components from Colin since his stock is high and sales are low which might even help both of you.

Just keep going and good luck.

Mike

Of course people will give you encouragement; but this is not putting a dollar in your pocket.
Ask them to give you $5,000 start-up costs and see what response you get.
My stock would cost you more in transport costs than recovery costs.
I can give you addresses of warehouses with millions of dollars of stock that you can buy for 5 cents in the dollar.
If they can't sell it, with all their exposure, how are you going to get rid of it?
I was going to supply PIC kits with Poptronics. Then I found that I could get the project fully assembled in surface-mount form for half the cost of putting a kit on the front of the magazine.
Look at Elektor. They put 120,000 PR4401 white LED driver kits on the front cover of their magazine and got 23 replies! Most of these were complaining that the inductor was damaged!
They got their fingers burnt and never did it again.
I was the first person in the world to put a PC board on the front cover with a full overlay so that you could build the project without having to resort to any other information. All the other magazines put cheap, rubbishy boards, on the cover that had no overlay and taught you nothing.
I sold 30,000 kits from one project alone.
But those days are gone.
I have dozens of people who thought they could sell kits like me and failed. They finished up with a room full of unsold parts to prove it.
All my stock is left over from a member of the family who thought he could continue with my electronics business and bought up big to fill a shop. It didn't work and now I have all the remains of the shop to prove it.
Encouragement is hollow. Facts are facts. Money is money and if you want to waste your hard-earned capital, do so. But don't say that I didn't warn you.
You would be better off working for McDonald's. At least the $5.60 per hour is in your pocket.

Mike:
Hi, and thanks for the support!

Colin:
Hi, and thanks for the reality check. (Seriously, no sarcasm) I'm still in the planning stages, so it's invaluable to get advice like this, especially from someone who has been in the trenches.

All things considered, I still think my idea for a business has merit. I've been thinking about this idea for a couple of years, and time and circumstances seem to have come together recently. Believe me, I'm not one of those people who wakes up one morning and goes "Oh! I think I'll start a business today!"

I got started in electronics the same way most people of my generation did, with a copy of Popular Electronics and a trip to Radio Shack. I ended up a computer technologist by training, a sysadmin by accident, and a programmer by necessity. A few years ago I got back into the hobby and found things had changed drastically. Poptronics is gone, Radio Shack is now The Source (at least here in Canada) and all they carry are cell phones.

The more I went looking for parts (especially basic parts), the more frustrated I got. The more frustrated I got, the more I started to think that there had to be an opportunity in this somewhere.

Am I expecting to make bags of cash overnight? No.
Could it all go horribly wrong? Possibly, a lot of businesses fail every year.
Does it beat working at McDonalds? Absolutely.

MrBill

Let me tell you about Radio Shack.
I know all their parts were sweepings off the floor, but going back some 30 years, their sales of components were very small part of the takings. But as time progressed it came to a point where their Tandy Computer failed and the components part of the business accounted for 25% of the takings. This gradually declined because they did not increase their range. The shops failed in Australia and were taken over by Dick Smith. Why do you think Tandy have stopped selling components? Simply because there is no demand. I can give you a list of 5 electronics shops in my area that have closed down.
Go to a Fry's store or any of the electronics outlets. They only sell a few fuses and other simple parts. Kits used to be the biggest sale and outstripped individual components 50:1 That's where we made our money. But schools don't even buy kits any more because if the kit doesn't work, the teacher doesn't know how to fix it. The older teachers used to be instrument servicemen from the war and they have all died now.
In fact I will give you the $80,000 worth of stock if you get someone to pack it into shipping cartons and pay the freight.
That is how worthless the stock is. The original cost of the stock was over 250,000. It has been devalued via tax rebates to $80,000. Plus left-over magazines and books to the value of $73,000
The fact is this: Everything is FREE on the web and that's why no-one pays for NOTHING anymore.

I have no business experience, but I frequently order from a small electronics place in canada www.dipmicro.com. they have a basic selection of parts for the electronic hobbyist and their service is excellent. Do they make money, I don't know. I siuspect it is a side business for the owner.

But I keep going back because of the fast and cheap shipping and very reasonable prices. I often order from them rather than pick up parts locally because the gas cost to drive and my time is more expensive than the postage that dipmicro charges.

Nothing ticks me off more than ordering online is the outrageous and often impractical shipping choices that retailers offer ie Ebay. If you can overcome that obstacle I think you will do well.

You may find this interesting reading:
Long Tail - Wikipedia, the free encyclopedia

MrBill,
I buy most of my parts from Mouser, a large distributor in the US. I use them mostly because I can get all the parts for a project from one place, they have a nice database to search parts, have a bill of material tool, and it avoids multiple shipping costs. I don't like waiting a week for a part I forgot so I will use radio shack if they have the part. It's those times I wish for a local store. The local store I had in Colorado bought from business failures, excess and obsolete etc..

Nothing ticks me off more than ordering online is the outrageous and often impractical shipping choices that retailers offer ie Ebay.

Click to expand...

I bought large quantities from eBay recently because the prices were less than half the wholesale price. And the postage costs from eBay were extremely low.

I buy most of my parts from Mouser, a large distributor in the US

Click to expand...

That's exactly right.
Small resellers just get the "left-over" from the large resellers.
Even so, how much do you think a reseller makes on a $50.00 parts order?
That's why I sell only kits. I make them up at 100 a time.

There is absolutely no profit in making up a single kit and that's exactly what a reseller is doing when he sells you parts.
It's just a SERVICE - waiting and hoping for a large order.
Of course a lot of the smaller companies try to keep going but starting up in this climate is GOING BACKWARDS.
The start-up costs are astronomical. Just getting Visa acceptance is expensive. That's why most are going for PayPal. But insurance, Registration, printing and postage set-up costs a lot of money as well as getting in a range of components to meet the general demands.
One thing you have never thought about is THEFT. It is considerable. Both from the staff and the customer.
The one area that gave us huge return was in Model Railways. Model Railways is 300% larger than hobby electronics. I never believed it was so large until I produced a range of 40 kits.
The only other huge area is MEDICAL but this is already covered by large manufacturers and most of the items are either subsidised or not affordable by the sick.
Our Subsidiary had a request for 120,000 - 30 second speech chips and mini speaker (piezo) to be paced on a spray can (for the nose) to tell the customer how to use the atomizer. The whole thing had to be done for less than 80 cents.
These were all put into a single batch and sold within 4 weeks - in Australia!
Of course there are niche markets but you have to know exactly what area you want to target BEFORE starting.

Hi MrBill33,

although I don't go along with colin55 in many respects I must admit he's on the right side this time.

Here's my story:

I established an electronic shop 1985 and did not buy cheap stuff from ebay (it didn't even exist). I studied very well what customers expect and my assortment was pretty small for the beginning (about 2,000 items, mostly semiconductors and passive components).

My shop was located directly at the main road of our small town (population of approximately 5,000 + surrounding villages to be about 30,000).

The monthly cost for the shop (rental and electricity) were close to the profit I made.

A rule of thumb says: You have to turn around your entire stock at least 8 to 12 times per month to gain profit for living. Any lower turn around means heavy losses.

I got the chance to work for a UK fan manufacturer to design air handling units which finally summed up to become 99% of my total business income, supporting the sales shop by the money I earned from designs.

As the demand for electronic devices around the air handling units increased I used the shop as work room to produce custom designed electronic circuits and closed down sales business completely, although my stock had grown to about 28,000 items in the meanwhile.

If you start on one leg you'll loose balance pretty quickly, as we use to say in Germany. (meaning bankrupt)

Please take colin's and my advise and think about a second leg before starting your business.

Radio and TV repair shops charge astronomically high prices on spare parts as I know of a friend of mine.

Their calculation looks like this example: buying price 1US$, shop administration + 50%, stock management + 100%, profit +100%, sales tax +19%.

Finally the part will cost the customer US$7.14 + repair expenses

Detailed calculation: 1 + 50% (1.5) +100% (3.0) + 100% (6.0) + 19% (7.14)

Better think twice. That's all I can suggest.

Kind regards

Boncuk