Starting a Business Online
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Before deciding on whether or not to engage in e-Commerce, a business must look at several factors in order to determine if they are ready and able to do everything needed in order to make it successful. Companies should initially perform a SWOT analysis in order to determine if selling products online would be beneficial to the overall company. They also need to make sure they understand they will be dealing with customers all over the world and are willing to take on the work involved to know all of the legalities involved. Taking a business online opens up a world of opportunities but also presents new challenges and difficulties. A company has to be able to spend the time and money in order to do the necessary research so that they are not subject to any legal problems or the victim of any online crimes. If a company can manage to properly run an e-Commerce website, they will have a much greater advantage over those who start selling products online before knowing all the different aspects which are involved.
There are several advantages and disadvantages of taking a small, local clothing store on the Jersey Shore boardwalk online. The advantages can be identified by strengths and opportunities while the disadvantages can be described as weaknesses and threats. Two strengths of expanding a business online are the ability to sell products 24 hours a day every day of the year and the low cost of expansion (Mokj). With an actual store, a business is limited to selling products only the hours they are able to keep the store open. When a store is not able to be open, there is the possibility that a customer might move on and spend their money elsewhere. However, if the customer knows they can make purchases online, they might go home and purchase the product rather than just go to another store and possibly spend any money they have at their disposal leaving nothing to come back later. A second strength of selling online is the low cost. There will be costs involved with setting up and maintaining a website that can process purchases, but these costs will be much lower than what it would be to set up and run just one more physical location.
When a company decides to take their business online, opportunities are created that do not exist when business is conducted solely in person. One opportunity is the ability to sell to anyone in the world (Mokj). Only having a storefront on the Jersey Shore boardwalk limits sales only to people who live in the area or visiting. It is highly unlikely that someone who does not live in the area or is visiting for other reasons will make a specific trip to the Jersey Shore only to purchase items from a local clothing store. Another opportunity of taking a local clothing store online would be the possibility of having the clothing line seen by another business that might like to invest and/or help expand the business even further. A local clothing store will not be seen by as many individuals and companies as one selling on the Internet. If another company sees the products being sold on the Internet as a threat, they might want to try and buy the business, invest in it for further expansion, or want to carry the products in their stores. All of these possibilities could help turn a local clothing into something much, much more. Of course when a company wants to venture into online sales, there will be weaknesses develop as well.
One weakness is that customers will not be able to actually see and try on the clothes before purchasing. Once the customer receives the item, they might not like it once they actually have it in hand or it may not fit. This will lead to a customer returning clothing which will involve costs to the business. Another weakness of selling online is that there are no sales people to help the store. Sometimes sales people can be the difference of someone purchasing something or walking out of the store with nothing. Without a sales pitch online, if someone is unsure of what they want to do, they will probably decide to not make the purchase (Tattrie). If the local clothing store is doing well because of excellent in-store customer service, that will not carry over to selling more clothing on the Internet to people who have never been in the store. Threats to the success of entering online sales that do not exist in a store are competition and fraud.
Once a store decides to sell online, they are competing against every other clothing store on the Internet (Tattrie). On the Jersey Shore boardwalk, the competition is limited to other store on the boardwalk and immediate area. Customers there are going to be in the mood to buy there and will buy what they like from the limited places that are there. However, when shopping online, customers will be able to choose from a countless number of stores. Selling clothing online will also open the company up to more fraud. When you sell something online, you have no idea who the customer actually is. Someone might place a large order online and it end up being credit card fraud. If this happens too many times, the losses might be so great that if forces the company out of business. International Business Issues
Once a business engages in e-Commerce it becomes connected to computers all over the world making it an international business in an instant. Key issues that a business faces when it conducts international commerce include trust, culture, language, government, and infrastructure. Each of these issues would need to be addressed in order for the business to succeed internationally. There are several ways that trust can be created in an online store. This can be done by designing a nice looking website (Webshaper). More people will buy from a nice, neat, organized website than from one that looks generic and cheap. Next, the company would need to make sure they are set up to process transactions using reputable payment systems (Webshaper). If a business can set these up in different countries in which they sell products then people will feel more comfortable. Another way to develop trust is to obtain online testimonials from happy customers (Webshaper).
The more positive reviews that can be obtained, the more likely people will put their trust in you. Lastly, if a business can obtain a secure link website and/or a 3rd party Trust Mark (Webshaper), that will go a long way in obtaining enough trust from people looking to make a purchase. There are many different cultures all over the world and it is extremely important to know that what the business might say or pictures it might place on the website don’t offend anyone. There are also many different languages and it is important to make sure everything said on the website can be translated to mean the same thing from English to whatever language potential customers might speak. In order to get address these issues, a company should do a lot of research on cultures around the world and possibly hire a consultant who knows what might be deemed offensive in different countries. After that, the business should try setting up websites specific to some countries so that they can leave out items they want to sell in other areas of the world. Another issue that could arise when selling products internationally is problems with governments. For example, China has very strict rules when it comes to running websites and one instance of something posted on a business website they find to violate their laws can get the website shut down (Schneider). In France, a business involved in advertising must make the entire advertisement in French (Schneider).
This could create numerous problems for a company trying to expand internationally. The best thing for a business to do in these instances is to again consult with someone who knows what needs to be done in each country and even do some research itself so that the websites will not be shut down or cause the business to be fined. One last issue arising from becoming an international business has to deal with infrastructure of processing transactions and shipping the products to the customers. Selling goods overseas might mean several banks and freight carriers become involved. In the United States, normally one money transaction and one shipment is all that is needed to complete the sale. Some customers may not want to pay for items until they arrive and the seller may not want to ship items until they receive the money. This is where brokers have to step in and help make sure everyone is covered as far as payment and shipment will be met (Schneider). This would probably not be so much the case for a small clothing store shipping items overseas but if large orders were involved, third parties who handle these types of transactions would have to be contacted. Additional Complicating Factors
Businesses that operate on the Web must comply with the same laws and regulations that govern the operations of all businesses, but they face two additional factors as they try to comply with the law. First, the Web extends a company’s reach beyond traditional boundaries. This means that companies must not only abide by the laws in their current state, but also every other state and possibly other countries. What might be considered legal in one state or country is not necessarily legal everywhere else. In order to comply with the law, companies must investigate what they can and cannot do when selling items to customers in other areas of the world. There might be limits on what can be sold and the ways in which they can be sold. A company must look into the laws of transactions they will be involved in and determine if they are in compliance and if not, figure out what they need to do to make sure they do not get sued or fined. The Web also increased the speed and efficiency of business communications.
This means that as soon as someone places an order for a product, they expect the item to be shipped to them as soon as possible. In order to satisfy customer orders, a company must make sure it has enough inventory on hand and sufficient staff ready to ship the order out. A company must also have a process set up so that they either get the packages to a carrier or have a carrier ready to pick up shipments as needed. If a company gets a reputation of always running out of inventory or being slow to ship packages, consumers will take their business elsewhere. A business must also respond to emails or other messages from customers in a timely fashion. If a customer asks a question and doesn’t get a response fairly quickly, they will assume the company does not care or lacks in customer service. Companies involved in e-Commerce cannot afford to let that happen. Having someone available to answer customer questions or concerns on at least a daily basis should help to avoid having that problem. Online Crime Prevention
Law enforcement agencies have a difficult time combating many types of online crime. Two types of online crimes that are prevalent in e-Commerce which would pertain to a clothing store include fraud and hacking. In order to help prevent fraud, it is best to know who you are dealing with. However, that is impossible when it comes to e-Commerce. A company must keep an eye on unusual transactions and be extremely careful when giving out bank information to anyone. If a small company notices unusually large orders being placed from someone who has never done business with them before, they might want to make sure it is legitimate before shipping the order. Someone who has a stolen credit card or bank information might try and take advantage of a small company who might just be happy to have a large order placed. A company will not know if it is fraud until after their items have left for delivery.
If a system is in place that flags unusual transactions, a company might be able to confirm the transaction with the customer or a bank before a loss occurs. Another problem a company involved in e-Commerce might be a victim of is computer hacking. Once there is a website online that is able to process transactions, there is a greater opportunity for someone to access the computer system. A company must make sure that they have all possible safeguards in place to avoid someone accessing, stealing, or changing information. Computer hacking could range anywhere from altering items on a website to shutting a site down completely to stealing or erasing all of a company’s data that is located on computers. In order to help prevent this, a company should put in the best security system it can afford and find ways to store information on computers that cannot be accessed by anyone outside the company. Computers that are constantly online have a higher change of being hacked; therefore, confidential information would be best kept on computers that are only connected to the Internet when information is being transferred. Doing those two things should help limit the loss of information to unauthorized individuals.
Mokj (n.d.) The Advantages of Expanding Your Small Business on the Internet. Retrieved from http://www.streetdirectory.com/travel_guide/21317/online_business/the_advantages_of_expanding_your_small_business_on_the_internet.html
Schneider, Gary (2011). Electronic commerce. USA.
Tattrie, G. (n.d.). Advantages & Disadvantages of Business on the Web. Retrieved from
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