Getting Started with E-Commerce - An Entrepreneur's Checklist
by Caron_Beesley, Community Moderator
- Created: March 23, 2010, 11:53 pm
- Updated: April 30, 2012, 6:59 pm
E-commerce is a very attractive option for entrepreneurs; not only does it lower traditional retail business costs it also offers a uniquely-stick- way for engaging with customers and building loyalty through'personalizatio' and other online value adds such as offers, social media interaction, permission-based email marketing, and so on.
And e-commerce continues to boom. Despite the recession, 2009 saw the heaviest-ever online shopping day (December 19) with $913 million in recorded sales. The U.S. Census Bureau also reports that e-commerce sales continue to grow by 23.1 percent per year compared with 5 percent for total retail sales.
But, as with all business ventures and channels to market, there is no guarantee of success for online sellers or'e-tailer'.
Taking your sales channel online, whether you choose to sell exclusively online or wish to supplement your store-front operations, is a whole different ball of wax than bricks'' mortar retailing' particularly when it comes to getting started, marketing your site, and observing the regulatory rules of the road.
Here are some'must have resources, tips and advice to help you make a successful and legal move to e-commerce.
Understanding E-Commerce in all its Forms - Dabblers, Affiliate Marketing, and Online Stores
In this article, Making Money Online - When Are You a Business?, my fellow blogger, Bob Keating, offers some invaluable insight into the fundamentals of making money online, from selling your old books on eBay to promoting products and services for online merchants, or becoming an online merchant yourself.
As Bob explains, e-commerce takes many forms, and different laws with different tax and regulatory implications govern each. So it's important to understand which model fits with your goals and what the associated business ramifications entail.
For example, e-commerce dabblers who sell a few items on eBay can quickly turn into prosperous entrepreneurs, but the IRS will want to know as soon as your online hobby becomes a business.
Affiliate marketing is another entry-point into e-commerce, particularly if you don't produce your own products or don't have established wholesale relationships. Affiliate marketing involves an arrangement where individual Web site owners receive a sales commission by promoting products and services of other companies (on their Web sites). As such, affiliate marketing, is considered by the IRS as a form of income, almost akin to being an independent contractor - and affiliate earnings must be reported.
The third and perhaps more traditional form of e-commerce involves opening an online store -this may entail building your own Web site and online store or using a market place like eBay, which supports thousands of small business accounts as well as individual sellers.
Getting Started - Observe the Rules of Offline and Online Business
Whatever form of e-commerce you engage in - if you intend to pursue a profit, you need to know that the government formally considers you a business. As such, there are some fundamentals of starting a business that you need to observe. Read 10 Steps to Starting a Business from SBA.gov to better understand and navigate the key planning, financial and regulatory factors involved in starting a business. (More here from the IRS on what constitutes a business, as opposed to a hobby).
Next, you will need to observe the steps needed to start your online business. Read this Start an Online Business guide from SBA.gov for guidance on registering a domain name, selecting a Web host, Web design, online marketing laws and business regulations.
Choosing a Business Name and Domain Name
Today, choosing a business name requires more thought and planning than ever. Not only do you need to choose a business that makes sense for your business you also need to choose a name that works on the Web and is not already trademarked by another company. Read How to Name a Business to learn more about getting your business name right, registered, Web-ready and trademarked.
Accepting Credit and Debit Cards - The Lowdown on Merchant Accounts
A merchant account acts as a clearing account for credit and debit card transactions, allowing your businesses to accept card payments directly from customers. To find out how merchant accounts work, the fees involved, and tips for setting up a merchant account read Merchant Accounts - Frequently Asked Questions about Accepting Credit and Debit Card Payments.
Each state has different laws about sales tax, but what happens when you sell products online from one state to a customer in another state? The rules that govern where and when that sales tax must be levied can be confusing. Read *E-Commerce - Understanding Your Sales Tax Obligations to understand when you need to collect sales taxes and when you don't.
Check Facts about E-Commerce Taxes , which discusses the Internet Tax Freedom Act and clears up rumors about how e-commerce is taxed.
Marketing your E-Commerce Venture
Marketing an online business is probably one of your biggest challenges - especially if you don't have an existing physical storefront or brand recognition. Given this, getting customer traffic to your site will require the right blend of online marketing including social media, blogging, search engine optimization (paid and organic) and email marketing. If your business is local in its focus don't forget to use offline marketing channels too.
Read Starting and Growing an Online Business: An Entrepreneur's Checklist which has a whole section on using online and offline channels to market your e-commerce business.
So after all these considerations, do you think you are ready to take the leap into e-commerce? Take this *quick quiz from SCORE to find out.
- Affiliate Marketing - Beware of drop shipping scams and other tips from small business owners and experts on theSBA.gov Community.
- Selling Imported Goods within the U.S. - Get Started with this Small Business Checklist
- Getting Started with Social Media Marketing
- Google AdWords Explained - Growing Your Small Business with this Cost Effective Marketing Tool
- How Small Businesses Can Protect and Secure Customer Information
- Federal Law Prohibits Showing Credit Card Numbers on Receipts
*Note: Hyperlink directs reader to non-government website.
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