Questions

Should I partner with the e-commerce developer or should i purchase the website and pay for the monthly maintenance?

I am partnering with some intermediate-large outlet stores to make an online outlet store in Argentina which there are none with real stock as we will have. Plus, we will have the advantage of having all the items on consignation (from the brands) or/plus having a factory produce any best seller again (my factory). I am considering different developers which i will want to handle the SEO, social media, online marketing, email marketing, virality, a/b testing, logistics, picture taking, data entry, system and stock matching (retail and online), etc, so basically I am outsourcing everything to them. The options I am having range from 1000-6000 for the development of the e-commerce, and 500-2000 for the monthly maintenance. The most expensive ones are the most recommended ones but there is a great difference with the rest. He also is interested in being a part of the project, but he is offering me to still charge me 6000 for the site and 2000 for the monthly fee or 7%, whichever is greater. My question is, why should i partner with him if he is not absorbing any of the initial cost and he is not taking any risk on the monthly cost? (He is an open cart developer)

6answers

The partnership is not likely to pan out well for either of you. Sustainable partnerships need shared visions and goals for both parties, otherwise you are in it for material reasons that can easily dissipate with any sign of trouble.

Although it can be much easier and cheaper to partner while starting out, I would not recommend the one you described if they are not taking on costs and risk. For now, I would suggest outsourcing the development and maintenance. It looks like it would surprisingly cost less in the long-run (which normally would be the case for seeking a partnership).

Good luck.


Answered 6 years ago

Hey there,
Hopefully you are well. First off, I think that it's great that you didn't let cost fool you into getting into a partnership with the developer. Your project sounds huge and the tasks your team will have to perform definitely are taxing, NO WONDER THE COST.
However at this time when you haven't been able to make any income from the website and don't know with certainty when and if the website will pick up enough to be self-sustainable I would not take up more risk unless you are well-funded.
I would advise you to build a developer team slowly that genuinely believes in your product and does not look at you as a money box. That is the gut feeling I get when I read through your message.
How about partnering with someone / org that will pour money into the Website at low ROI ? Or raising money on Kickstarter if necessary ?
I wish you all the best as you decide what to do.

Smiles... :-)


Answered 6 years ago

In my world, a partnership is based on sharing expertise and resources between two or more entities in exchange for a share of something, whether it would be a % of revenue or % ownership NOT that plus a fee. It has to be a win-win situation or it is more of a one sided agreement which will potentially cost you a lot of money, especially if he is developing your sites.

To be productive and profitable you must be able to monitor and highly influence the development but more importantly you MUST have a clear, definitive, documented agreement of who owns rights to what. You can be held hostage if someone develops your site as part of a loosely defined partnership and they decide they want more money or worse yet they want to high-jack the site and cut you out of the picture. Now this may seem to be a dire situation but I have seen it take place.

If you are the owner, you must have clear control and title to all the collateral, IP and coding. The best way to protect yourself is a good contract with set fees or partnership agreements.

Hope this helps.


Answered 6 years ago

Great question.. First of all OpenCart is a great platform (personally my choice vs Magento)
Developing a site is easy - you just pay someone a set amount, follow some structural guidelines that work, and you have a website.

The hard part actually comes in when it comes to managing e-commerce process. It's similar to building a restaurant. You can hire a builder to make anything you want. The trick is how to get people to the restaurant that actually come in, come back, and refer other people.

From my experience (as a Director of E-commerce), if you were to partner with someone it should be E-commerce professional who knows how to measure key KPIs (key performance indicators) and effect of the KPIs to the brand and Sales. It's easy to outsource social media but it's hard to know if the social media is done properly. It's easy to outsource PPC, but it's hard to measure what works and what doesn't. It's easy to outsource product upload but it's hard to outsource understanding what product description should say.

Here are some examples

1) Anyone can post funny images on Facebook. Is that considered to be social media marketing? What is the ROI? How many people visit your website? How many people who came from Facebook buy?
2) Uploading 100 products is easy but what is the conversion rate for the product? Are people staying on the site, are product images optimized, are product descriptions written in the way to emphasize the benefits rather than just listing features? Are you driving targeted PPC and SEO traffic to that product and measure e-commerce conversions and page value?

3) E-mail marketing is easy. Understanding how to capture the leads, who to send e-mail, what kind of e-mail to send, and when to send e-mail - requires knowledge. Remember if you send an e-mail to people who are not interested or don't remember who you are, you're risking above 1% spam rate. Most e-mail providers would frown upon 1% and above spam rate and might even cancel your account. Another thing, if the e-mails goes out to people who are not qualified and/or not interested, you're risking a very high bounce rate- this is BAD for UX (user experience) which is ultimately bad for SEO.

So if you were to partner with someone, think about partnering with someone who knows how to put all the pieces together in order to drive quality traffic, generate SALES, and follow up to get more sales. Outsourcing and development is easy, understanding WHAT needs to be outsourced and what to look for - that's the important thing.

Let me know if you have more questions, I would be more than happy to answer them.


Answered 6 years ago

Your business needs a strong technical team working on your project consistently. So its natural to be tempted to partner with a technical person who you may be able to offload the demand of ensuring the technical details are adequately implemented and maintained. However, they must bear risk. In your case, the person you're considering seems to be demanding stake plus payment for his services. Your vision is to grow your business, his maybe to get rich. If you're confident in their ability to develop and maintain then I'd suggest keeping it that way. The worst thing you'd want in your startup is having partner disputes early on. Also, no one developer can realistically handle all the tasks you identified. For the social media, online marketing and email marketing I'd hire a tech savvy marketer with a proven track record. For the technical bits, you can build a team around the core developer according to how far your budget can stretch. You may be able to find junior or inexperienced talent to work along with your senior experienced core developer. Whatever you do though, ensure that you can consistently do marketing and sales.


Answered 6 years ago

First off, there is not enough information for a qualified expert to provide an expert opinion.

This is because these kind of developer partnerships are very complicated and full of unknowns.

The bottom line is that someone will get a bad deal if you do a partnership where the future efforts are unknowns. Many experts would recommend that you keep full control and figure out how to do this deal in a "transaction" relationship instead of equity.

The follow up questions are why OpenCart? Why pick a solution that requires a maintenance team? Why not purchase a pre-coordinated or hosted solution where the maintenance person comes with the hosting. Then hire developers on a transaction basis to make custom changes?


Answered 6 years ago

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