How to Start Your Online Retail Business
The internet has opened up new opportunities for many people. It is a vast marketplace that can be a goldmine for enterprising and smart business people. The numbers are very promising.
In 2017, e-commerce was responsible for around $2.3 trillion in sales and is expected to hit $4.5 trillion by 2025. In the US alone, e-commerce represents almost 10% of retail sales and that number is expected to grow by nearly 15% each year.
It is tempting to want to jump into this very lucrative market, but how do you begin?
Always start with a business plan.
A business plan is a strategy that lays out all the important aspects of your company including goals, financing, and operations. Many online retailers mistake a lack of brick and mortar overhead as an excuse for not planning out the details of their business properly. In order for your online retail business to be taken seriously, you must treat it as a serious business.
Think of it this way, a good business plan should tell anyone who reads all the essential details of your company.
A solid business plan should contain some elements of the following:
- Executive Summary
- Company (who we are)
- Products and Services (what we sell)
- Market Analysis (who we sell to)
- Strategy (how we sell, who the competition is, what the roadmap is)
- Operations (how it is made)
- Financial Plan (what are the funding requirements, what is the expected return on investment)
A good business plan often makes a critical difference between failure and success. It provides a clear pathway on which your online retail business can navigate
Choosing the appropriate business structure and why it matters.
The type of business structure you choose has a great impact on very important matters like taxation and liability. You can choose from the following:
- Sole Proprietorships
- S Corporations
- Limited Liability Company (LLC)
Carefully research what is the best fit for your online retail business model. Each structure has its own pros and cons and makes sure you know what is right for you. Most online businesses are Limited Liability Companies as they often offer the liability protections of corporations without the personal liabilities of a partnership or sole proprietorship.
Decide what state that you want to form your business.
Most new online business retailers file their documents within the state that they are physically located. This helps avoid the cost of hiring an out of state registered agent in your home state. However, if your business is large in scope you might want to file your documents in Delaware. This state has advantages like laws that are generally favorable to businesses, and, unlike other states, it has a separate Court of Chancery that hears cases involving corporate law. It also does not collect corporate taxes if your Delaware Corporation actually does business in another state.
Build your inventory and make sure you get bar codes for all of your products.
To legally sell products to consumers through an online store, you will need UPC bar codes for each item you are selling, with separate bar codes for different patterns, styles, and combination of features. You can purchase barcodes easily online.
Make sure you have a decent size inventory to handle the demand. Online customer expects their orders to come through quickly.
Set up your Domain and design a great website.
Your domain name is your internet address. You want your domain name to be memorable and interesting. Many companies offer domain name registration. Set up an account and then you identify the name of your domain. There is usually an annual fee
You also want to design a pleasing website that offers customers a pleasing and simple to use interface. This includes setting up the theme, headers, and product lines. You will also need to organize your products into categories, and decide whether you want to include sections such as a FAQ page or blog. Do not forget important factors like a shopping cart and easy to pay options. This should not be difficult if you are using a typical e-commerce platform. You also want to make sure to constantly update and check your website to make sure there is no technical issue that could interfere with your sales.
Remember to get a Tax Resale Certificate.
As a savvy online business retailer, it is important that you are aware of how to utilize tax resale certificates to your best advantage. In short, a retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell such as wood for a cabinet. This is a significant saving and can save your business a ton of money if utilized properly. Our article Everything You Need to Know About Tax Resale Certificates will give you an in-depth rundown about how these types of certificates can help your business.
Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing. Our site makes the process as easy as possible. Just take advantage of these user-friendly options to help take the headache of applying for a tax resale certificate off your plate.
Launching and Marketing
Once you have worked out all the operational and technicals bugs it is time to launch your new online retail business. Make sure that you market to your customers on multi-levels including taking advantage of many types of social media. You should also be aware of search engine optimization to make sure that your customers can find you easily. It is a good idea to maintain an ongoing flow of content on the site to both attract and engage your core market.
You have now entered the lucrative world of online retail. Your careful planning has put you ahead of the game in regards to your competitors. Just remember that business is dynamic and you must always be proactive in improving your products and services.