These include the need to comply with strict regulations when it comes to copyright, security, privacy and sales tax. We are wrapping up this post with some common things that are prohibited or illegal to sell online in some countries. All companies require a business license, whether they sell online or from a brick-and-mortar storefront. When you operate a business without the proper licenses, you risk heavy fines. In addition, the city or state may require you to cease operations until you complete the required paperwork.
If you have an online business, or are thinking about starting one, you should consider forming a limited liability company LLC. If your objective is to sell goods through online marketplaces or create your own web store, then consider for proprietorship while indulging in the retail business.
Get Barangay Clearance. How much does a boutique owner make? Of course, the actual amount may vary by location, products and individual facility. Income can also be generated through online advertising.
For example, Facebook generates revenue from the ads that companies display on their website that they want to sell to Facebook users. Business-to-consumer retail is the most common of all e-commerce businesses and the most familiar to most Internet users.
This group of retailers includes companies that sell goods or manufactured products to consumers online directly through their websites. One of the main requirements of a successful B2C retailer is maintaining good relationships with customers.
Business-to-business retail includes businesses that sell to other businesses. These retailers include consultants, software developers, freelancers, and wholesalers. Wholesalers sell their products in bulk from their manufacturing facilities to companies. These companies, in turn, sell these products to consumers.
In other words, a B2B company like a wholesaler can sell products to a B2C company. Amazon is the largest online retailer selling consumer products and subscriptions through its website. Other electronic retailers that work exclusively online and compete with Amazon are Overstock. Alibaba is the largest electronic retailer in China operating an online commerce business in China and internationally. Alibaba has introduced a business model that not only includes B2C and B2B trade. They connect Chinese exporters with companies around the world looking to buy their products.
If you can leverage this database to produce e-mail messages every few weeks, then you can build the relationship and encourage him to come back for additional purchases at a very low cost advertising cost. Larger businesses must invest hundreds of thousands of dollars in CRM customer relationship management software, but small e-tailers may be able to do this by downloading order information into a Microsoft Access database and then using queries to produce select lists to which targeted e-mails can be sent via an e-mail merge program according to type of product previously purchased, etc.
Several lower-cost systems are available. The lesson here is that e-tailers MUST retain their customers and sell to them again and again if they are to make a profit. Those that sell a few high margin products may not need repeat customers, but e-tail storeowners with average margins MUST retain customers and find inexpensive ways to market to them. But state governors have become increasingly restive when they see Internet companies locate in states without sales taxes or offshore tax havens and then sell to consumers in states with sales taxes.
Currently US law requires companies with a corporate or physical presence in a state or states to collect sales taxes from residents of those states only. I expect to see laws requiring Internet merchants to collect appropriate state sales taxes from each of their US customers, and remit that tax to the respective state government. This will have three effects: 1 tax calculation will increasingly be outsourced to companies like Taxware.
End-user prices on the Inter net will no longer look so attractive. After all, George W. Bush has been a state governor. The retail industry typically pays sales clerks low wages. E-tailers have the advantage of being able to locate in low wage areas, or outsource to virtual workers in low-wage areas. But virtual workers typically possess computer equipment and skills that allow them to demand higher wages, especially as contract workers in contrast to employees.
Customer service and fulfillment personnel are still needed, however. All but the smallest e-tailers will need to keep their staffs lean in order to stay competitive. Many of the larger dot-coms have spent millions on computer infrastructure, custom programming, and in-house servers.
Compared to a retail store, a Mom and Pop online store can be set up on a shoestring, and run very profitably as a family business. The differences between retail and e-tail are significant, and you must thoroughly understand them in order to stay in business. True, e-tailing can cut start-up investment, as well as some sales and marketing costs. But in the final analysis the basic business rules still apply. E-tailing NOT easy. To make a profit you must get several crucial elements right:. Ralph F.
Retail vs. Mail Order The retail model involves leasing a display room, ordering products into inventory which are stocked on display shelves. Shopping — Tactile vs. Non-Tactile Retail stores allow shoppers to see and touch the products, to make sure they are getting what they want. Market Scope and Competition The competition that retail stores face is mainly from other stores within driving distance.
Inventory and Real Estate Costs The typical retail store business model requires several thousand square feet for inventory displayed in a pleasing manner on shelves, a checkout stand, and a backroom for extra inventory. E-tailers meet this need in one of four ways: Warehouse Inventory.
A producer distributes a product to an e-tailer, which then offers it for sale to its customers on its website. Examples of e-tailers include Alibaba and Amazon. They have a number of advantages and disadvantages compared to retailers. Advantages of e-tailers:. Disadvantages of e-tailers:. E-commerce refers to the buying and selling of goods and services online.
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