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A Selling Wine Online Financial Model

I’ve done a number of financial models looking at the ROI of a online wine store.

Here’s my top level calculations for you to put in your own spreadsheet.

Wine Revenue = Traffic Volume * Conversion% * Order Value

So the amount of revenue you get depends on the volume times the % who buy times the dollar value

Wine Online Cash flow = Net Revenue less Variable and Fixed Costs

Net Revenue: take out credit card fees, chargebacks and returns (perhaps 5% of revenue in total)

Variable Costs will be mainly PPC advertising. I’d suggest half of your traffic will come from this.

Fixed Costs will be mainly web hosting and web development fees, SEO service fees, and the content writer (you or someone else)

Web stores Traffic= Accessible Target Population * Market Share of Population * Website visits

Accessible Target Population: How many people are within 15-25 miles of your shop less half or more who will not buy alcohol (kids, teetotalers etc)

Market share of Population: how much competition do you have from supermarkets, chain stores and other specialty stores. Simple share would be 1/# of stores.

Website visits: how many times will your market visit your website per month? Once? Twice weekly?

Order Amount = Bottle average retail price * Bottles per order

Pretty obvious I reckon.

Repeat purchases = order amount * repeat buyer %

What % of your visitors will purchase from you again. As you’ll see this is a key variable. I usually build a churn factor into my repeat buyers as well. This will be about one third and is also very significant.

I was putting all these into a google spreadsheet but found the integration with the blog tiresome. However I’ll have another go if there is any demand, please let me know.

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