Vatorx2
Location: 1 Hampton Hall Warminster Road, Bath, United Kingdom United Kingdom
Founded in: 2008
Stage: Post-launch
Number of employees: 1-5
Short URL: vator.co/eclector
Followers (3)
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Eclector

Build your own enormous bookshop and earn 50% of the profits
Startup/business
Bath, United Kingdom United Kingdom
http://www.eclector.com
  • About
Company description

Eclector provides its clients, free, with the tools for them to build shared-profit, online market places – initially with books – for their communities.

The business model is scalable to global proportions – it will work wherever drop-shipping suppliers operate. Initially it provides free, customisable, online bookshops for its charity, business, institute, voluntary group, blogger, school and university clients, sourcing the platform’s several million books from the largest UK wholesalers and publishers. Profits on all sales are shared fifty/fifty with clients.

Eclector 3.0, whose most important component is a Build-Your-Own-Shop facility, was launched in early July 2010. This makes it quick, intuitive and easy for anyone to build their own shop, thus opening up the huge market for smaller organisations, bloggers and social networkers. Eclector 3.0 has also added millions of second-hand books to the catalogue, while enabling shop owners to sell and fulfil their own titles.

As of July 19th, 60 clients have signed up, including small and large charities, the Ramblers, Vetstream (an international resource for vets), several SMEs including sites for toy collectors, model plane enthusiasts and horse owners, a couple of schools, Future Publishing (international magazine publisher) and the Institutes of Mechanical Engineering and Knowledge Transfer. 

Revenues started in November 2009. The Company owns the IP in the platform it continues to develop. The business is cash-positive and virtual: its orders are purchased after customers have paid for them and after they have been drop shipped by the Company’s suppliers.

Eclector exploits the strength of niche affiliate marketing methods within the broader book market. The Internet book market was worth £405m in 2007. Of the 28.5m people in the UK who bought an average of 12 books, 4.7m did so online. Addressable UK markets of potential clients in six different sectors have been identified, which at conservative estimates are worth £179m  per annum to the business.

The initial route to market uses a compelling sales proposition that ensures early penetration of the Company’s niche marketplaces. 1) Clients are supplied, free of charge, with an e-commerce bookshop, customised for their audience and filled with three million books. 2) Clients are then assisted to market this service to their supporters. 3) Clients are given 50% of the profits earned on every book sold through their shop (that’s £2 on an average £10 book) – not limited by cookies and as much as five times more than Amazon affiliates earn.

The founder, William Pryor, has built a management team that have extensive experience of the book trade, building and managing large scale web platforms, marketing and managing rapid growth. They recognise that as the business grows, they will need to augment their skills and experience with some key additions to the team, primarily in e-marketing and larger scale internet platforms.

£50,000 seed investment was made in 2008. Since then Management, founders and two angels have put in a further £112k. Investment of £200k is now sought to promote Eclector 3.0, further develop the platform and continue the marketing of those shops already in operation. The Company has already been granted EIS tax relief.


Team
Business model

Eclector sells books, not through its own shop, but through those it provides for its partner clients.  It provides the infrastructure, access to product metadata and e-commerce facilities so that website owners can build shops and link them to their own sites.  Eclector manages all transactions and customer service, while orders are fulfilled by its suppliers. Rather than spending significant sums to build a brand and attract traffic to a single destination site, as most ecommerce businesses have to, Eclector gets its partner shop ‘owners’ to present their choice of products precisely and pro-actively to their supporters, i.e. niche audiences that are most likely to buy them.

Clients choose how they use the 50% of the gross profit that Eclector gives them on every sale — all or part can be given to their customers as discount, retained as revenue or given to the organisation/charity by the customer.

To populate their shopfronts, partner ‘shop owners’ can choose from the entire Eclector catalogue (currently 1.8 million titles, soon to be augmented with 1.2 million second-hand books).  Their shopfronts display, in a variety of ways, whatever titles they feel are of interest to their users. Within the shopfront, their users are always able to access the full catalogue by search and browse - sales of any product in the catalogue earn the ‘owner’ their 50%.  Each shop has its owner’s branding and is linked to their website by a range of Eclector banners. In addition to the revenue generated from product sales, from Year Two onwards, the Company will benefit from niche advertising income and fees charged for shop management and marketing services.

Eclector is a low-overhead business in that all its physical activities are outsourced.  Title in the stock it sells remains with the Company’s suppliers until the precise moment of sale, thus eliminating stock risk.  Returns are handled by the Company’s fulfilment operators.

Competitive advantage

Amazon is the main competitor both as bookseller and affiliate marketer. As a bookseller, Eclector’s book list will soon be comparable to Amazon’s in size while the Company’s customer service is as good as theirs.  Since Eclector’s shops will reach people in the context of groups, charities, activities and enthusiasms with which they are involved and wish to support, any price comparison issue will be mitigated by their loyalty and goodwill.

 

specialist 

Eclector’s business model provides a number of advantages over traditional low-margin affiliate models, including Amazon’s, when competing for clients:

  • Elector’s typical clients sell niche books to their niche audiences, books that Amazon tends not to discount heavily, if at all.
  • Eclector provides its clients a far better deal than Amazon does its affiliates. They pay their affiliates 7% of their selling price: on the £10 book their commission is usually around 40 pence, compared to the £2 Eclector pays - five times as much.
  • Eclector commissions can be split and used in a variety of ways – all or part as discount, ‘contribution’ or revenue;
  • In the case of not-for-profits, Eclector’s customers, unlike those of Amazon and affiliate aggregators, always know what their purchases contribute;
  • No time-limited cookies determining which sales qualify for commission;
  • A branded shop that is always available – no leakage of traffic to anonymous ecommerce sites;
  • Eclector’s shop ‘owners’ have access, whenever they want, to full and detailed reporting of their sales and earnings.

Any company wanting to copy Eclector’s business model would have to invest significant sums to equal Eclector’s position, in particular:

  • The management team’s significant experience of book selling, publishing, Web development and the charity sector and Eclector’s ‘first mover’ advantage;
  • The relationships Eclector has developed with the major wholesalers, fulfilment companies and bibliographic data providers.