5 Basics of an E-Commerce Business

What Is E-commerce?

Put simply, E-commerce means the exchange of goods and services over the World Wide Web. It can include any business transaction done between individuals and business, whether buying or selling of traditional or digital goods, or transmitting funds for services.

Is it right for me?

On the plus side, e-commerce businesses require minimal capital and effort while enabling you to reach a much wider audience. On the negative side, you need to be able to update your online business with the fast-changing demands of the e-commerce economy.

Before you consider jumping on the e-commerce bandwagon, you need to consider the following:

1. Niche:

With millions of web pages and more being added every minute, your online business can drown away into nothingness, unless you find a niche for yourself. Whether you are a musician, caterer, writer or an artist, there is demand for your services, but to be successful you need to concentrate your energies on your chosen niche.

2. Marketplace:

Once you have decided your niche product, you need to decide where to sell it. You can either choose to sell your products on an online marketplace (similar to your neighbourhood supermarket) or set up your own blog or web site to sell it (think of it as an independent store). Either way, you need to make sure that it is easy to browse and provides a smooth shopping experience.

3. Payment Process:

All of us have waited in long lines at a supermarket at some point of time. E-shoppers however lack the patience to do so, which is just one of the reasons why they shop online. If your payment process takes ages, or if it isn’t secure, you will lose customers, money and worse than that ‘trust’ and unlike the real world, you will never be able to mitigate the effects of even one negative review. If you decide to sell through an online marketplace like eBay, your worries about payment processing are taken care of by them, but if you are selling through your own blog or Web site, then you must invest in a reliable shopping cart software/vendor.

4. Customer Support and Delivery:

The cliche Customer is King applies much more to an e-commerce business model than to a traditional business model. Online shoppers are technology savvy and research thoroughly before buying products. One unsatisfied customer, one negative review is all it will take for you lose a lot of future business dollars.

5. Marketing:

Growing an E-commerce business takes an entirely different marketing approach. You will need to be savvy about Digital Marketing Techniques, Search Engine Optimization and keep up with online trends to drive traffic to your online store and convert them to customers.

Reasons to Consider Opening a Dollar Plus Store

For those examining the potential of starting a dollar store there are many, many strategic decisions to be made. Each of those decisions inevitably affects the final overall success of the business. Dollar store costs and ultimately dollar store profits ride in the balance as the final make-up of the business is determined. One of the most challenging decisions involves determining whether you are opening a dollar plus store or you will stay with the tradition everything is only one dollar format. In this article I will examine some of the reasons this might be the right time to open a dollar plus retail business.

Reason #1) As your dollar store costs continue to increase for everything from merchandise to freight, rent to payroll, and almost everything else, the tradition dollar only format doesn’t provide the room required for adjusting your retail prices to reflect the increases you are experiencing. It traps you into a set price and your dollar store profits are squeezed – potentially over time to the point where none remain.

Reason #2) Dollar plus format enables you to generate much higher average sales per item sold. In a dollar only format the sale price of a single item averages $1. Yet in the dollar plus format, your average sale can be much higher. Depending on your final decision regarding the types, brands and overall quality of items sold, your average sale price per item can amount to $2, $3, or even $5 or more.

Reason #3) If your average shopper purchases 6 items, your total sale is $6.00 in a dollar only format store. Yet in the dollar plus format, even if the average number of items purchased is reduced to 4 items with an average sale price of $3 your average sale is $12. In fact you could have a reduction to 2 items per sale and still sell exactly the same amount in gross sales. Imagine the reduction in dollar store costs associated with labor if you sold 1/3 less items through your store. Many of your other expenses will also drop based on less merchandise being handled.

Reason #4) In the dollar only format if your cost of goods sold is 60%, your gross profit is 40-cents per item sold. Maintaining the same 40% gross profit, but with dollar plus sales changes the number of items required to achieve the same total gross profits. In fact, your average gross profit per item on a $3 average sale becomes $1.20. Build sales in a dollar plus store and you have much greater leverage to build your dollar store profits as well.

All of these reasons combine to make opening a dollar plus store a viable format option worthy of consideration. There are no guarantees when you open a business. Do your research. Study the marketplace. Analyze the data. Make the decision that works best for you and your specific situation. Just remember to consider dollar plus as you go through the decision making process. Your dollar store costs and your dollar store profits ride in the balance.

To your dollar plus store success!

Small Business Line of Credit

A business line of credit is one of the most popular forms of business loans. For the business owner or operator, particularly for small businesses, a business line of credit can be a lifeline of financing that can allow them to pay their bills, meet their payroll and continue to operate even when times are tough or business is slower than usual. For banks and lending institutions it allows them to hold the business on a short credit lease while they determine their viability in the marketplace.

The good news about a business line of credit is that it usually easy to get, even for businesses that have not been in business for a long time. The bad news is that financial institutions like a bank or credit union often will want personal guarantees or co-signing arrangements before they hand over access to a business line of credit.

A bank or other lending institution usually requires a business to have been in operation for a minimum of two years before granting a business line of credit. That is because the likelihood of a business failing within the first two years is far greater than at any period in its term of operation. Once a business passes this threshold a bank is much more likely to consider a business as a candidate for loans or lines of credit.

A business line of credit can be used for short term cash flow management, to make special or seasonal purchases, to re-stock inventory or supplies or for just about any other reason that can satisfy the banks demand for its usefulness to the business. A business line of credit is not normally made available to pay for salaries or bonuses to the employees of a business or to repay creditors from other banking arrangements.

These funds can be made available to the business in a number of manners under a business line of credit. They are sometimes available in a revolving cash account that can be borrowed against up to a certain amount or even in the form of a credit card that can be used by the company to make purchases for the business as required. Some business lines of credit require minimum payments plus interest every month and others have interest payment only options.

To see if you qualify for a business line of credit it is best to approach a bank or credit union where you already do your business banking. They know you, not just from seeing your face as you make deposits or withdrawals but they also know your personal credit history and this becomes an important factor in granting a business line of credit. Banks are most comfortable lending money to customers that they already know than the off the street business. This will help you not only get the business line of credit that your business may need but also help you get the best possible interest rate for your hard earned business dollar.