How much does each Revenue Stream contribute to overall revenues?
In this Business Plan we have outlined 4 revenue streams for each business unit.
They include: a) Amazon Affiliate Marketing activities
b) Kickstarter campaigns,
c) Sales on Amazon and e-Bay,
d) Sales to retail
accounts and finally
e) Sales to smaller
retail outlets through dealer pricing.
a) Amazon Affiliate Marketing Activities. Using the current reports on sales activity on Amazon, the top sales items are selling over 2,000 units per day. We estimate that we can grow to influence 20 sales per day to click through to the merchant’s website. We would be paid 4% on a $19.95 item or 79¢. If we grow to 20 sales per day over 5 days per week and 40 weeks per year we would receive $ 3,160 per year. As we add products to our Affiliate Marketing activities, we could grow to supporting 15 products with a total income of $47,400 per year.
This would pay for the person to do this work plus review the new Patent approvals and report on what new products we should be considering. They would also maintain and create content for our Social Media Activities, create video ads, and answer customer e-mails.
b)Kickstarter Campaigns. With Kickstarter's 20 million followers we hope to pre-sell between 5,000 and 10,000 units prior to production. The best retail price range would be under $99.95 for Amazon sales. If we offered a pre-sell discount of 40%, the customer’s price on a $99.95 item would be $ 59.95 a savings of $30. Our costs of production would be about ⅓ of the retail price so the $59.95 that we receive would pay for the production of 2 inventory units @ about $30. If we only attain a goal of 1,000 pre-sold units, we will receive $ 59,950 less the 3.5% Kickstarter fees for the net revenue of $57,851.75. (Our stated Kickstarter goal would be $15,000.)
c) Sales on Amazon and e-Bay. We would hope to build up to production of 50 units per day. With an average product price of under $80 and a net margin of 40%, this would amount to $ 1,600 per week toward our profit and over 48 weeks per year and annual profit of $64,000. Should we manage, with more employees, to reach production levels of 100 per day, our profits would be $128,000 per year.
Some products on Amazon reach sales of 2,000 units per day, but an average product would be 100 units per day. We can control the amount if volume by adjusting our advertising and reducing the size of our demographic area to match our production capabilities.
d) Sales to Retail Accounts Such as Canadian Tire, Wal-Mart Etc.
If we can increase our production so that we have surplus inventory, we can approach larger retail merchant chains and offer them a promotional price. In this way they can lace this sale price in their flyer and create great demand for that product.
There are 491 Canadian Tire's retail stores and 394 Wal-Mart stores in Canada. If each store bought 120 units of a product per year, or 10 per month, this would equal 106,200 units per year. A product retailing at $79.95 would probably cost the retailer 60% of that, leaving a 40% markup $ 31.98 per unit.
With our cost being about $30 would mean that we would see a contribution towards our profit of about $18 per unit. The sales volume growing eventually to 106,200 units per year would result in a contribution to profits of $1,911,600.
e) Sales to Smaller Retail Outlets Through Dealer Pricing. There are over 1,100,779 small retailers in Canada. By offering 33% discount on all our products and supporting the retailers with a listing on our website, we can drive regular demand for our products to some of these stores.
If we start with 10 stores in each of the Canadian Provinces and then increase that by 20 stores in the larger provinces (outside Atlantic Canada) we can grow a small retail dealer network of 220 stores across Canada. If we support the dealer network by sending out Facebook ads with coupons to those Facebook page holders that live near the retail stores (by postal code), we could see each store selling up to 4 units per month, or 48 per year.
This would total surrounding 10,560 units sold per year. Each unit would provide a $30 per unit contribution to our profit which would total $ 316,800 in additional profit
Annual Potential Profit Summary
a) Amazon Affiliate Marketing activities $ 47,400.00
b) Kickstarter Campaigns $ 57,851.75
c) Sales on Amazon and e-Bay $ 128,000.00
d) Sales to Large Retail Accounts $1,911,600.00
e) Sales to Smaller Retail Outlets $ 316,800.00
TOTAL $2,461,651.75
