Building a successful e-commerce

feedback from Carlos Quintas, co-founder of LToys

How did you get into entrepreneurship?

My background is in electronics, which I pursued for 17 years. When I parted ways with my employer at the time, I teamed up with someone, and together we founded an online electronics store: Electronic Shop. We deliberately avoided having a physical store and instead rented a small 40m2 space for storage and offices.

Why an online store and not a physical one?

Because electronic components are the same everywhere, whether you buy them here, in Italy, or in Australia. It's the price that dictates the market. If you can find it cheaper by crossing a border, you'll buy it there. Staying online and thus reducing our costs gave us a fighting chance in this price war. However, a Luxembourgish e-retailer has 7-8% higher expenses compared to competitors across the border.

How do you navigate this situation in Luxembourg?

We tried to address the gaps through local partnerships. For instance, we were actively involved in schools and knew that teachers were in demand for educational products in robotics and electronics. We established partnerships with brands of these products to offer them to the educational sector. The market here isn't massive. Either you have to export, or you have to find other products that the market needs. We expanded into the education sector, as well as fiber optics, labeling, and even opened a Lego section since we were already supplying Lego education products to schools. This diversification allowed our business to grow.

So, you chose to fulfill these needs rather than focusing on exporting?

We also export Lego worldwide! Australia, New Zealand, Israel... Today, young people looking for a specific model buy it wherever they find it and don't care about its country of origin. We export to 50-60 countries every month. On the internet, two levers matter: price and availability. When the product is common, it's a matter of price. When it's a rare product, availability prevails, and the product becomes secondary.

How is the company's staff structured today?

We have 10 employees, including salespeople, logisticians, and IT specialists. We built the entire IT infrastructure around our business: the website, billing program, inventory management, etc. We aren't dependent on external service providers.

Can one venture into e-commerce alone?

Yes! But you need to limit the number of products you want to sell: managing 300-400 products is feasible, but 1000 or more becomes more challenging. The theoretical rule is that out of 100 products, 10 will succeed. You need to establish your company, create a logo, register your name, have a niche product, never neglect your website, and make use of all the platforms for selling your products, like marketplaces. Platforms are crucial—they make you more visible and give your brand a chance to build customer loyalty. However, if your website lacks appeal, it's a missed opportunity. The key is to be seen. For every platform you're not on, there's a competitor.

Ask for customer reviews: it reassures those who hesitate. Take the time to understand less favorable reviews to improve. Use the means at your disposal to launch! I've tested artificial intelligence, and it's quite useful. Of course, there are also social media to show that there's life and build a digital reputation. In short, it's a full-time job!

So, why have a physical store as well?

Because we were asked for it. And we listen to our customers! It wasn't a given, though. Supermarkets sell Lego, toy stores too. But on opening day, there was a long line waiting to enter the store. Today, we have the local store with the most Lego references. You have to understand the ingredients of success. If you're friendly, have the right price, and offer choices, you're on the right track!

Is the store profitable?

It has residual profitability. We don't make a lot from it, but we don't lose money either. It covers two salaries, rent, etc. We sell much more online than in the store, but the store allows human contact, direct feedback, etc. We do about 70% of our sales online and 30% in-store (including pickups).

Let's return to e-commerce. What are your best practices?

Our products are present on 17 sites. Two are our sites, and the others are platforms. Marketplace platforms are necessary to increase visibility, but be wary of hidden fees. On these sites, if you want to offer a product but there are already at least 5 sellers offering it, forget it. It's pointless, you won't be visible. We tried having Amazon store our products and abandoned it. The cost is high, and they tend to consider your stock as their potential stock.

To reassure the customer, we offer all local payment methods in the countries we deliver to, using a dedicated service provider. The current average cost to acquire a customer in e-commerce in Europe is 50 euros. Think carefully about where you allocate them.

And the next step, shipping packages?

It's not politically correct, but as long as your parcel volume allows it, the best way is to go to France or Germany to send your packages. After a certain volume, you can negotiate rates. However, we still have a storage warehouse in Germany. Initially, we let customers choose the carrier, but it resulted in less volume per carrier and less bargaining power. Now we have regular and premium shipping. For premium, it's DHL, and for regular, it's our choice based on the proposed price for the destination.

Fortunately, we have few returns. In the fashion industry, for example, it's around 30 to 40% of orders that are returned to e-retailers.

Any final advice for entrepreneurs looking to start?

Go for it! Find a product that people want and sell it to them. Don't spare your hours or efforts. With success comes money.