While countless companies promoted their Cyber Monday deals, many small businesses missed the boat on the opportunity to leverage the largest online shopping day of the year. E-commerce enables small business owners to expand beyond their local markets and boosts sales production. Unfortunately, many small business owners are not savvy when it comes to setting up online sales systems.
Whether a firm is a start-up or an established business, there are many advantages to integrating a virtual presence. After all, customers are increasingly shopping online. In the third quarter of this year alone, e-commerce U.S. retail sales totaled more than $100 billion or 8.4 percent of total retail sales, according to the U.S. Census Bureau.
For entrepreneurs that are new to e-commerce, setting up the system may seem intimidating. However, a number of platforms help make the process quick and relatively easy:
Founded more than a decade ago, Squarespace provides an all-in-one platform that countless restaurants, artists and online retails stores have leveraged. The e-commerce company's intuitive software program allows users to create a new website or virtual store and offers dozens of templates for entrepreneurs to follow. The design-oriented web development site caters to a network of more than 1 million users.
CommerceHub is a multi-channel provider of services for small online and brick-and-mortar retailers, distributors and large suppliers including Costco and QVC. It works as the middle man on a platform that connects online retailers with large suppliers. Through a simple form, sellers can apply to list their products on a company's marketplace, including Wal*Mart, America's largest retail chain, and Dick's Sporting Goods, the leading sports equipment retailer. CommerceHub's partnerships allow companies to offer a broader range of goods online and deliver them to customers more efficiently.
Shopify offers a variety of support solutions ranging from customizing an online store to embedding purchasable products to a current website or on social media (Facebook, Twitter and Pinterest). Best of all, you don't have to be a tech geek to be able to leverage the services. It is a commonly used service on sites such as WordPress, Tumblr, and WIX.
Setting up online sales can be a lucrative, which is why many retailers test the waters in this space. However, getting into e-commerce brings additional legal and financial considerations with regards to privacy/security, taxation and shipping:
Companies that sell on the internet must understand the steps required to protect customers from identity theft and safeguard their personal information. Any business that collects personal or financial data through online sales, credit reports or applications must know the rules and regulations.
Like the legal process that businesses owners endure when they set up their companies, there are specific protocols involved relating to online business law. From protecting customer privacy and using consumer reports to selling online, companies must abide by regulations that may vary by state. The Small Business Administration (SBA) outlines some of those nuances.
2. Collecting Sales Tax
Collecting state and local sales tax is fairly simple for brick-and-mortar stores. Once a company starts selling products online, the rules may be different. If a business has a physical presence in a state (a store, office or warehouse), it must collect applicable state and local sales tax from customers. The SBA advises business owners who are uncertain about collecting taxes to visit their state's revenue agency. Firms that do not have a physical presence in a particular state are not required to collect sales taxes from customers in that state.
Perhaps the biggest hurdle for companies when adapting to online sales is the shipping process. For companies that have relied solely on in-store purchases, shipping products presents a new set of logistical challenges. After all, a company may not have the wherewithal to get the job done with its current team. The owner may need to hire new workers and expand its warehouse storage to accommodate the increase in demand. Fortunately, there are a number of shipping options to choose from: FedEx, UPS and the U.S. Postal Service. A service, such as Intershipper.com, can help automate the process. Getting the products to purchasers in a timely fashion is essential for retailers, and the learning curve is slim.
This year, Cyber Monday was expected to generate $3.39 billion in sales with 9.4 percent growth in a year-to-year comparison, according to Adobe Digital Insights. If retailers aren't leveraging online sales, they are missing the boat. With an increasing percentage of sales being generated via the internet, it is of the best interest for companies to integrate e-commerce technology in their businesses.