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Thinking about starting a harware site...

N

Nate53085

Limp Gawd
Joined
Oct 1, 2003
Messages
285
Okay, read the whole post before you descide its stupid and flame me.

I was trying to think of a way in which broke college students (like me) can buy new hardware without breaking the bank. This is what I came up with, if there is enough interest I will make the site:

Products on the site will be sold at 33% to 50% cheaper then retail. The catch is, not only does it cost money but it also costs "referals". Now before you scream illegal pyramid scheme, continue reading. Say a $100 item costs you $50 and 3 referals. All you need to do is get 3 people to make any purchase on the site, and put your name as the referer.

The reason its not a pyramid scheme is that you directly effect your purchase. Theres no weird trickle effect with percentages going to two people above you or whatever. Once you directly cause 3 referals, you get your product, regardless of how many other people are on the site, or how many other pruchases have been made.

If you are constantly upgrading your computer(s) you could even refer yourself to your own purchases. If a system could be put in place, members on the [H] could set up referal trades and such to help each other out. If you have a bunch of friends who are constantly making hardware pruchases then you could trade referals that way.

I'm also debating the idea that you wouldn't purchase a specific ..say video card. You would purchase what would be "mid level ati card". Then whenever you got your referals in, you would get what is considered a mid level card at that time. This would take care of people that take a LONG time to get there referals.

I know its a little confusing, but it works. I would hire [H]ardforum members to do most of he coding and site design.

Oh, and please, constructive critisicm only would be appreciated.
 
Okay, before you call me an idiot, keep in mind it's like 9:30AM and I haven't got to bed yet, so I'm not thinking very straight :p

But I have to admit, I don't really get it. Even if you get 100 referals per person that buys, how do you sell for less than retail? How do YOU make money off of it? If I buy a video card for, say, 40 bucks cheaper than it sells at newegg, and I refer 3 people for the same thing, haven't you just lost 40 * 4 = 160 dollars?

Sorry, I know there must be something I'm missing, but it seems to have gone over my head... :p
 
I don't think its a good idea like it is. So you say a $100 item could cost $50 plus 3 referrals. So Joe Blow comes along and gets a $100 item for $50 because 3 of his friends bought $2 fan cable extensions. Sounds to me like a recipe to get a large customer base quickly, and loose money as rapidly. If you want a perk to regular customers that works, give them say 5-10% off their next purchase with each person they refer that spends $50-100.
 
what i'd do is limit it to things that cost a certain amount. I wouldn't sell cables and stuff. Just stuff that costs $70+ ie. good hardware. Also, in order to not make the number of referals rediculous, I will have to make larger items have a less percentage discount.
 
Personally I wouldn't purchase anything that had a requirement like that. It just sounds kind of dumb. I wouldn't trust it.
 
Sounds good to me. Get it started. I want a RV420 for $100. Let me know when it's up and running and you have them in stock.
 
Okay, now that I'm back in my room, I can take some time and tell you how I make profit.

If you buy a product this is how it is payed for.

take what you payed, and subtract $50
take $50 from each referal you got.

THe 50 subtracted from your payment goes to the person that refered you's purchase.

This is what pays for your product. There is a chance, especially on small items, to recieve quite large profit, 50%+ while still giving a 33% to 50% discount.

Also, because of the amount of profit, I would give free shipping.
 
you need good spelling

anyways, i doubt you will have good profits because its already so hard to sell stuff at neweggs price and referals dont make any better business since you're already selling below the price you paid for it
 
Originally posted by matoch
Personally I wouldn't purchase anything that had a requirement like that. It just sounds kind of dumb. I wouldn't trust it.
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same here

it's gonna be hard for anyone to dethrone newegg, IMO
 
how are you going to start this buisness, you need a lot of money to buy ALL these products in bulk before you can start selling them, Newegg sells products like water so they can actually buy sooooooooo many of the product making it such a low price that they can then sell for a good price to the consumers.. since your in college and prolly already have student loans or whatever i dont think your gonna have $$ to do this.
 
Originally posted by slaya
how are you going to start this buisness, you need a lot of money to buy ALL these products in bulk before you can start selling them, Newegg sells products like water so they can actually buy sooooooooo many of the product making it such a low price that they can then sell for a good price to the consumers.. since your in college and prolly already have student loans or whatever i dont think your gonna have $$ to do this.
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Yep, this is true.

You'd have to dump a hellllllll of a lot of money into this, and banks aren't too keen on lending money to aspiring dotcom millionaires.

Volume purchasing usually starts at around 50 units depending on what you're buying. A motherboard for example.

If you wanted to go through a supplier, your prices would be significantly higher.

For example. I work at a small local computer store. We rarely (except for whole systems) order directly from the manufacturer. We have various suppliers who will send us just 1 or 2 items at a time (along with other items, usually the min purchase is $100-$500).

I looked at our prices compared to large online retailers and our COST prices were just above or below the costs of the online retailers. This is without applying OUR markup.

Here's an example, theorhetical mind you.

A WD 60GB hard drive is $120 (CDN) at vibecomputers.com (Cdn NewEgg).

The same HDD is $117 on our supplier's pricelist. We order the part from our supplier and get it in store. We then apply our markup, which, in this case would increase the price too approximately $139 or $149.

So, since the markup has been applied twice, the price that the customer sees is significantly higher. This is acceptable, however, since I live in a very small town where there is not tons of demand. We've lost a lot of sales because of online retailers, but this is expected. Our systems sales haven't declined though, because people want local service--- okay i'm kind of on a tangent here, sorry.

But you get the idea. Unless you can afford to make large purchases from the manufacturer for stock, you won't have a lot of luck starting your business.

A lot of money is required to make a lot more money.
 
You guys are making me share all my secrets...lol

Anyway, Newegg allows you to resell their products. I buy them from Newegg as orders come in. Then ship to you. I know, this delays shipping a tad. But I think it would be worth it for the savings.

Honestly, I know it looks like I can't do this. But a couple of friends of mine are in too. It won't be difficult especially once we get a descent system in place to sort orders and referals.

Thank you to all of you who have said that they would or wouldn't purchase from a service like this.

Also, sorry about the spelling errors, I'm running on 2 hours of sleep...was a rough night.

I also wish you would just trust me on the profit bit. It will work, i'll try to think of a better way to explain it
 
still not getting it

say you buy something from newegg that costs $100
instead of selling it just like that and making $0 profit and maybe losing money because of shipping, you sell it for $50 and 3 referals.

these referals have to buy something at your site. so unless you have some goofy restrictions, let's say they buy the same thing. that's $150 more dollars for you, plus 9 referals between them all.

but to buy that thing in a quantityx4 from newegg, you spend 4x$100=$400.
you make: $200 plus 3 referals who themselves have 9 other referals (12 referals total)

this is not Catch-22, you can't sell things for less than YOU pay for them and make money

so unless your price even after referals is still higher than neweggs, I don't see where you're going with this.
 
okay...lol let me try this another angle

run these numbers okay. Assume every purchase is a $50 purchase for a $75 item and each needs 3 referals. Remeber they only get a product if they get the 3 referals.

Now assume that I word it differently. And say that the Item is "free" in the fact that none of your money goes toward the purchase. That the 3 referals pay for your item. The $50 you spent goes toward paying the person who refered you's product. Therefore 3 referals pays $150 for a $75 item therefore $75 profit. If you add more layers but stay with this resoning you see that I am making 50% profit for these items.

Now for more expensive items it gets a it more complicated pricewise, but referals will be based on the minimum purchase so that I won't get screwed.

This confusion is the main issue with me starting this. If i can't get people to believe me, trust me, and do it, then I can't start the site.
 
Originally posted by Nate53085
okay...lol let me try this another angle

run these numbers okay. Assume every purchase is a $50 purchase for a $75 item and each needs 3 referals. Remeber they only get a product if they get the 3 referals.
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so people cant buy it if they dont have 3 people come to your store?
 
they can, what i'll do is keep record and will not ship it to them until they get 3 referals, with no time limit.

Also, if your thinking that eventually their product will not be worth as much if they take a long time to get their referals. I was thinking a system where they would buy say a mid level video card, and they would recieve what would be a mid level video card of similar value at the time of recieving the last referal.

The referal system is why it works. Earlier in the thread I talked about trading referals and stuff. Since people are ALWAYS upgrading their PC's there will always be referals to be had and if hardforum members trade....see where I'm going with this?
 
okay this just seems like a dumb idea there i said it, if you want to do anything with referals say a discount for referrals off of next purchase now theres an idea......which was stated already but oh well., in that case you win twice.
 
Referal programs never work because it always seems like a scam.

I wouldn't waste my time with it, honestly. I'd just buy at NewEgg and not worry about referals and crap.
 
:confused: .....Okay I think I understand now, it really does sound like a scam though. So if I have this right:
you buy something like a 120g HD (retail=$120) for ~$60ish BUT before you get it you have to refer three friends who can buy anything the want except that they have to refer ~three or so friends, etc, etc, before anyone gets anything?

I think it will only work if it was a group of friends that did it, people that you could trust; still not quite sure how you make a profit though.
I use to run..ah.."contraband"...when I was in High School by referals only and it was still rather hard to make much of a profit on popular items.
 
Okay, so you basically make money by delaying shipment until they can find 3 referals, so you just stay ahead of them and make money that way? I think I at least slightly understand now... :p
 
I don't know man. I get what you're saying, but I don't think the hassle/delay and trying to get friends to buy things from the site as well is the way I'd want to pay for something.

I'd rather just buy it and have it shipped asap. The egg is cheaper, and straight forward. And their customer service is beyond excellent. Thats what makes them the best. Their is nothing compared to such a company. They're a true rarity.

Basically, I wouldn't buy. But if you start this up, good luck man.


-Logiks
 
The problem with this whole idea is that Americans are inherintly lazy, and very few people are going to go through *all of that* just to receive a little discount... Not worth it in my book, plus you have no established rep... Which means, Newegg, here I come! :cool:
 
uh..

I think I don't understand what you mean properly but if you sell products for less than you bought them for, you will lose money, even if everyone brings 100 refferals, in fact, the more referrals, the more money you lose.
 
Originally posted by phatnadz
The problem with this whole idea is that Americans are inherintly lazy
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very true, and this affects their ability to spell as well ;)
 
i've read this thread 3 times and still dont see how you can make a profit. Most peopel wont shy away from newegg.
 
Originally posted by Nate53085
I was thinking a system where they would buy say a mid level video card, and they would recieve what would be a mid level video card of similar value at the time of recieving the last referal.
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The people who would utilize this system, if there are any, are not going to appreciate getting something they didn't order. Enthusiasts order specific models of things like video cards for a reason. Maybe they can soft mod it or it has great OC'ing potential and then you send them a similarly priced card but different model. That would piss a lot of people off.

All in all I don't see this scheme working. If it does I stand corrected but traditional retailers have enough problems creating a reliable, constant customer base so you're really going to have a challenge on your hands.

Edit: Oh yeah, you should talk to Morley about this. He's been involved with a major net retailer and now owns his own business doing the same thing.
 
Originally posted by Sole Conspirator
The people who would utilize this system, if there are any, are not going to appreciate getting something they didn't order. Enthusiasts order specific models of things like video cards for a reason. Maybe they can soft mod it or it has great OC'ing potential and then you send them a similarly priced card but different model. That would piss a lot of people off.

All in all I don't see this scheme working. If it does I stand corrected but traditional retailers have enough problems creating a reliable, constant customer base so you're really going to have a challenge on your hands.

Edit: Oh yeah, you should talk to Morley about this. He's been involved with a major net retailer and now owns his own business doing the same thing.
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Sold that business last year...now working with www.boxxtech.com

It's an interesting idea, but I think it would be very hard to implement, and harder to market and get it accepted. I'd have to see a business plan before passing judgement.

It almost sounds like the Columbia House of hardware.
 
thanx for trhe input. The questions everyone is rasing and the general distrust of the whole idea is kinda what I exspected. I was just seeing if there would be an interest in it, and that saving the % would be enough to bring people to it, and do the extra work of getting referals. I guess I'm going to have to just let this idea slip away. Thanx again.
 
Don't give up on it! You're thinking outside of the box, and that's good...just stew over it for a while and think it through some more...and WRITE STUFF DOWN! I have found that if I'm serious about something, I write all of my thoughts down...helps you keep track of where you are.
 
My main problem with your idea is that you don't appear to have any backup plans, and in order for ventures like this to succeed you need backup plans up the wazoo. Just look how many fuckers, even on this forum, will try to defraud a company just to save some money or get a free replacement. RMAs would be a pretty key concern with this community, but you don't seem to have any system worked out for that; it'd throw a kink in the system, a monkey in the ointment, a wrench in the fly, or something.
 
Originally posted by Morley
Don't give up on it! You're thinking outside of the box, and that's good...just stew over it for a while and think it through some more...and WRITE STUFF DOWN! I have found that if I'm serious about something, I write all of my thoughts down...helps you keep track of where you are.
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Your right, will do. Once I get something more solid down, I'll look for some more criticizm. Thanks.
 
Originally posted by Nate53085
Your right, will do. Once I get something more solid down, I'll look for some more criticizm. Thanks.
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Follow what Morley said and write everything down, the problem is I don't think your explaining it right seeing as how most people aren't understanding how you make a profit. So far it kind of sounds alot like this guy.
Stuff like this sounds like a scam and naturally people will try and stay away from it so what you need to do is to be completely transparent about this. You need to show that this is a good idea and you need to show us that we should take the time to use your services. Answer questions directly and truthfully and people will begin to trust you.
 
from reading all these posts. i thought it soundeed like a goofy idea myself. BUT now that i've though about it, it sound like you're CLOSE to a good idea..just needs some more thought put into it.

Someone mentioned Columbia house earlier. Now how about this idea. A computer parts subscription service! You buy your first part, say vid card.. at our prices, but you can then return it say 6-months later for another one at 33% off, or after a year for another one at 20% off.. you get the idea.

You then resell the returned hardware for profit.

It might be an incentive to enthuiasts who like to upgrade frequently.
 
Originally posted by maw

Someone mentioned Columbia house earlier. Now how about this idea. A computer parts subscription service! You buy your first part, say vid card.. at our prices, but you can then return it say 6-months later for another one at 33% off, or after a year for another one at 20% off.. you get the idea.
Click to expand...
Now that sounds like a great idea! Notice how nicely it is explain too. I wouldn't be adversed to using that, the only problem I can think of is wanting to use the older parts for a second computer or something like that but this is a minor point because sometimes enough is enough :D
Actually now that I think about it I have a few parts lying around that I haven't done anything with.
 
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