STARTING AN ONLINE MUSIC AND BOOKSTORE

 STARTING AN ONLINE MUSIC AND BOOKSTORE

Introduction

This is about setting up an online music and book store. Books and music will be sold in hard or digital downloadable versions. Clients will access the store, place orders and make payments online. The project cost is estimated at US$ 7,500 per year with a working Capital of USD 18,956 covering about 2months operational cost. This yields total revenue of US$309,192 for the first year of operation. The business has a payback period of 2 years and a net profit margin of 24%. The Sales of the business grows gradually with the aid of repetitive buyers, referrals and other loyal customers. It is a business that does not need one to be present in any selling points thus you can operate from wherever you are. The investment can be scaled in accordance with the Capital available.

Process Description and system Production Capacity

Online book and music stores are an established and proven business model currently globally dominated by Amazon. The internet has entered many households in Uganda and across the world.

A website is set up with a well programmed data base having encryptions of upgrade of new products in the system. The data base is expected to carry 50,000,000 GB capacity with 200 copies of books and music sold daily which translates into 62,400 copies respectively

Different textbooks are bought and listed on the business sight for different people to view and if interested, they register to buy online

The service charges are then paid by means of credit card facility ie Visa or Master card through an international or global bank such as Barclays.

 

Capital investment requirements in US$

Capital Item Qty Unit Cost Amount
Desktop Computer 2 650 1300
Laptop 1 500 500
Website 5000 5000
Internet Installation 200 200
Furniture & Fittings 300 300
Business bank account 200 200
Total 7500

 

Production and Operation Costs in US$

Cost Item Unit cost Qty per/day Pdn Cost/ day Pdn Cost/ month Pdn Cost/yr
Direct costs3:
Books (New) Novels 8 40 320 8320 99840
Books (Old) Novels 1.61 50 80.5 2093 25116
Text books 15 20 300 7800 93600
Music Singles and movies 0.12 180 21.6 561.6 6739.2
Empty CDs 0.19 0.24 0.0456 1.1856 14.2272
Subtotal 18776 225,309
General costs (Overheads)
Labour 50 600
Internet Charges 50 600
Administrative expenses (Calls, postage, etc) 50 600
Others 30 360
Subtotal 180 2,160
Total Operating Costs 18,956 228,195

4) Total monthly days assumed are 26-days.

Production costs assumed 312 days per year

Project Product Costs and Price Structure in US $

Item Qty/day Qty/yr Unit Cost Unit price Total cost/yr Total Revenue
Books (New) Novels 40 12480 8 10 100,565 124,800
Books (Old) 50 15600 2 3.5 25,841 54,600
Text books (New) 20 6240 15 19 94,325 118,560
Music Singles and movies 180 56160 0.09 0.2 7,464 11,232
TOTAL 228,195 309,192

Profitability Analysis Table

Profitability Item Per day Per month Per Year
Revenue 991 25,766 309,192
Less: Production and Operating Costs 729 18,956 228,195
Profits 262 6,810 81,723

Market analysis

There is a ready market of 120m English speaking people in the East African Community area. There is limited access to books across the region. This will be a good business opportunity that will exploit this gap. Orders can be placed and paid for online from any part of the region and fulfilled via post parcels.

Sources of materials

Books can be obtained from publishers such as Penguin. Music can be obtained from Music production and distribution companies such as Sony. Both are available in print hard copy of Digital versions

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