Most of all, we have seen the Internet change the way in which consumers shop and buy the items they like. Online shopping has become increasingly popular since eCommerce first began and industry trends do not show any signs of this trend slowing down any time soon. There is a lot of opportunity to make money through selling Online. eBusinesses often have a better chance of success due to the low overhead and broad customer reach. It’s challenging to be successful selling Online as competition across nearly every major market has made top search engine rankings a necessity for successful eRetailers. In addition, more and more merchants are becoming familiar with search engine marketing and optimization techniques making it ever more difficult to compete within search engines. Knowing how the Internet and Online business works will be an integral part of starting your own eCommerce business.

The Internet & World Wide Web:

The Internet is basically a very complex network that links together other computer networks. This is the reason why often times it’s referred to as the Net, as it connects together similar to how an actual net is constructed. It is also referred to as the Web often times because it can best be described as a spiderweb where the cross sections would represent individual computers across a network (although the Net is not the same thing as the WWW).

The Net first began around 1996 when the U.S military created the ARPAnet (Advanced Research Project Agency Network), an advanced system that allowed the government to route messages in the event of outside breach into their protected networks. ARPAnet is the basis for the Net we know today, and although it is no longer exclusive to government agencies, it has become an important means by which individuals, companies and institutions communicate. Although the Net first began as a home for information, it has broadened into the world of commerce. Now we can even make transactions Online from any computer which has made life a lot easier for both business owners and consumers. In the past, if we wanted to buy something, we either had to physically enter a store or order from a catalog over the phone. Currently, all we need to have is a computer that has an Internet connection, making our next purchases just a few clicks away. It has basically become a new way of living for many people.

The World Wide Web (WWW) shouldn’t be confused with the Internet, they are not the same thing. The WWW is basically an interconnected number of Web sites linked together by a series of hyperlinks (a reference that points to another site and tells a browser where the site is located). The Internet is what connects your computer to the billions of sites that make u the WWW.

The WWW first began with an idea by Tim Berners-Lee, who built the first Web browser (software application that allows users to view and access Web pages. The idea basically resulted due to his job at the time with CERN, when he wanted to be able to access CERN’s directory quickly and easily. At the time, CERN has it’s information stored in separate databases, making it nearly impossible to access and retrieve the information easily. As a result, the first Web browser was born, quickly turning the WWW into what it is today. The WWW first became available to the public in 1991, but it didn’t quite gain world wide popularity until 1993 when CERN announced that the public would be granted access for free.

Search Engines & Web Surfing:

A search engine is basically a program that helps Internet users find information on the WWW. Searching has also changed the way we live and find information. Now anyone can research and browse for information just by using search engines like Google, Yahoo, MSN and Ask. Search engines are key when conducting Online research, especially for eBusiness owners and entrepreneurs. Search engines mostly do the work for you when it comes to finding information on any topic imaginable.

Search engines first began in about 1990 when Alan Emtage, a student at McGill University in Montreal, created the first Internet search engine, which he called “Archie.” Emtage originally created the Archie search engine to index directory listings in order to easily find information on file names.

Another individual, Mark McCahill, joined the University of Minnesota computer center as a programmer in Apple II and CDC Cyber programming. In 1991 McCahill led the development team that created another search engine, which they named “Gopher” (designed to index text files).

Since indexing text files is very similar to indexing of Web sites, this is considered the beginning of Web site search. Sites and files within the WWW are accessed by the crawlers of each search engine and are then evaluated for possible indexing. On the other end, a user types in a keyword or series of words and the search engine will look for relevant words within the indexed files and retrieve the most related or relevant results to display. The words they evaluate are located in many places, but typically they look for words within the page title, domain, description and content.

Jean Armour Polly, a librarian in Liverpool, England, coined the term “Surfing the Internet.” It was the title of an article she wrote in 1992. That article gained worldwide popularity and it has been translated into many languages.

Some of the search engine categories today are:

• General information search engines
• Meta crawler search engines
• Pay-per-click search engines
• Shopping search engines
• News search engines

The most popular general search engines today are:

• Google
• Yahoo
• MSN/Live
• Ask

You may be asking yourself how having knowledge about search engines can help you when opening an eBusiness. Well, the answer is consumers who buy Online tend to search for keywords related to the products they want to buy. After the search is performed, Web pages are ranked in each engine’s search results pages (SERP), and merchants should realize and understand that optimizing their pages and content will help their site rank higher in the search results.

There are also sometimes results that show sites that have paid a search engine so that their site ranks higher, or some sites pay an advertising fee. These advertisements are typically called sponsored links, pay per click ads or cost per click listings. Sponsored links are commercial or non-commercial sites that have paid a fee to advertise. These ads usually show up on the right side of search results or near the top and bottom of the page.

Try searching for something that interests you. Carefully analyze the results you see from the search engine you choose to use. Take a look at the first 10-20 results and study how site owners write their titles and descriptions. Ask yourself the following; Are the services written clearly? Does the site give too much information? Is the wording confusing? Is there a call to action? Is it just perfect? These are all things you should consider when designing your eCommerce site. Remember, knowing about search engines and how they work will help you during your site design processes and once the site is live.

Web Browsers:

Web browsers are what Internet surfers use to navigate from site to site or page to page on the Web. Browsers help to make the task of traveling from one area of the Net to the next easier. With browsers, users can gain access to information that has been published on Web pages or they can easily transmit information across the Web. There are several Web browsers currently available for download and use. Internet Explorer is the most popular Web browser followed by FireFox, Netscape, Safari and Opera.

The most popular Web browsers today are:

• Microsoft Internet Explorer
• Mozilla FireFox
• Netscape Navigator
• Apple Safari
• Google Opera

eCommerce:

We have a great introduction to eCommerce guide with a whole page dedicated to defining and explaining the three main elements to conducting business through an eCommerce enabled site; the business side, the marketing side and the site development side.

In simple terms, eCommerce is any type of transaction that occurs Online via the Web. Typical eCommerce transactions Online include buying products, buying services, filing taxes, making a reservation, buying stock, buying a house, paying for a download, hiring someone and much, much more. By far, the largest part of conducting business Online are the potential or existing customers. Establishing trust and loyalty among your customer base is a major factor for success, there’s some that really get it and there are some thay don’t. I recommend that all eCommerce sellers be aware that the customers are the most important thing. Let your users know they are buying securely and that their payment information will remain encrypted (a trust seal or banner can do the trick nicely).

Besides customers, the site itself, how it’s designed and the technology merchants put into place on it are all important aspects of selling Online. It’s important for merchants to know that keeping up on usability best practices or design guidelines, and keeping up on them, may help them to stand apart from the main competition. Make you site easy to use, easy to understand and easy to buy from, your customers will love you for it, your competitors will hate you for it.

Customers and design aren’t the only main factors of successful Online selling. Many other issues can arise during the planning, development and implementation stages, especially for startup or beginning merchants. Quite a few of the common eCommerce issues facing merchants today are similar to the same issues that have affected traditional brick-and-mortar retailers for years. Common issues include lack of proper planning, not understanding the competition and not researching target markets, which are just a few of the major ones.

Even with the issues that arise within the eCommerce space, it continues to grow each and every year and we are seeing many more sites pop up in places where there have never been Online sellers present. Sales continue to hit record highs and each holiday season brings on new records to break the following year. That said, there is still plenty of markets, customers and products out there that can be successfully sold and distributed through Online means. Up and coming merchants simply have to understand that success Online is no different than success in the brick-and-mortar retail space, other than the obvious differences of having a physical store and solely selling Online.

In the past, several analysts have predicted that eCommerce is on pace to change the way business transactions are completed. Even including the dot com crash in 2000, several eCommerce businesses continue to prosper, having learned their lessons about finances and proper budget planning. Many before 2000 were simply not aware that the same careful considerations have to be made when conducting business Online, just like a traditional retailer has to do before conducting business in a physical storefront.

eCommerce is now present across the world. Countries such as Germany, China, UK and many more have used the Web, eCommerce technology and Online selling best practices to make the most out of their location, limited resources and generally smaller budgets to break down physical borders and expand their businesses to places they normally wouldn’t be able to reach out to. With the power of the Web and technology, nearly anything is possible.

eRetail:

You may be asking yourself how eRetail is different than typical eCommerce. eRetail is different in that is it a particular type of eCommerce. It is generally defined as the selling of one product, or products, to a consumer, or group of consumers, via the Web. The ever growing competition within the eRetail space has made it more difficult for just anyone to become a successful seller Online. It can be hard to attract enough people via the Web to sell enough product to consumers. The competition levels and issues reaching a particular audience are two reasons why it is more important now than ever before to sell products or items within a particular niche, utilizing unique or innovative marketing strategies to get the word out and attract buyers Online.

These days, merchants can pick and choose all different types of products to sell. From furniture to stamps, products both large and small, heavy or light, they are all currently being sold Online. Typically, products with a very high value to weight ration, including books, CDs, DVDs, software, downloads, documents and small accessories are the best types of items to sell Online since shipping is next to nothing and price margins are usually higher. One of the biggest reasons why consumers today still balk at the thought of Online shopping is due to the cost of shipping. Although it is common sense to know that when you buy something Online, there will be shipping costs associated, there are still many consumers who complain or shy away at certain shipping amounts.

eRetail is not just for entrepreneurs or individuals looking to make a living selling products Online, it is also for established brick-and-mortar storefronts who hope to expand their business relations onto the Web in an attempt to boost sales, increase exposure and for better marketing deliverability. Traditionally physical stores including the GAP, Nordstrom’s, Macy’s, Target, Wal-Mart and Barnes and Noble are all examples of businesses who were once solely brick-and-mortar entities, but now, thanks to eCommerce, they are able to sell through multiple channels both Online and off.

One reason why these companies decided to expand Online is because they know how much opportunity there is and how much money is available to be made Online. In addition, many of them like that eCommerce doesn’t require as much labor/startup capital that physical storefronts generally demand. These days we are finding that more and more people are using the Web to shop for the things they want to buy. Brick-and-mortars realize this as well and know that business completion is not only about product, price and service, but also about capturing a new customer base that is attracted and managed using technology rather than their actual location.

Despite the growing popularity of Online shopping, and other than the cost of shipping, there are other reasons why consumers still have concerns about buying over the Internet. Common customer buying concerns include information security, trust factors and lack of human interaction. These concerns are very valid and if they are not dealt with from the beginning they will certainly weigh heavily on the business and staff down the road. Fortunately, these issues can be overcome easily by simply developing and implementing features, tools and technology into an eCommerce site designed with the customers in mind. Make your site usable, appealing and fun. Make a site that is easy to use and buy from. Give customers what they want (within reason).

Aesthetically pleasing designs that are easy to navigate and use are able to keep potential buyers shopping for longer periods of time. Imagine your site as if it were an actual storefront. Would you use a poor layout in a physical store? Would you setup and display your products in an unorganized manner? Would you overcharge on items and charge extra to ship? Generally, your answer should have been NO to all three questions. If it doesn’t make sense to do in the real world of shopping, generally you wouldn’t want to do it on your eCommerce site. If you wouldn’t buy anything, how can you expect others to. Consider how your store appeals to your customers and make any necessary changes in the beginning. Generally, poorly designed sites, with no appeal will not attract customers. Many successful eRetailers know that customers who return to a site will eventually buy. If you can successfully attract customers, they can click around easily and they stay on pages long enough, you may find yourself making sales in no time.

It used to be a lot easier to become a successful Online seller, now it is more difficult due to competition, saturation, limitations, lack of knowledge, poorly designed sites, poorly planned marketing campaigns, etc. These days it’s not enough to have an elegant, easy-to-use design. There are many more aspects to the Online selling equation such as a feeling of security while shopping Online. Consumers are becoming more savvy and demanding each year and as more and more eCommerce merchants make more attractive, easier to use, more secure sites with products that are in demand. Shoppers today expect to checkout in a secure environment with all the necessary security elements in place including an active SSL certificate and any other trust banners or security notices. They want reassurance that all their personal and private information is going to be kept secure and protected (it’s also currently against the law to be careless with your customers private data and payment information, there has to be standard encryption implemented and merchants should always include any policies related to security and privacy in a prominent place within the site design so shoppers can easily review such policies anytime while navigating the site). Having the necessary security and protection means in place will reassure your buyers that it is safe to purchase and gives them the needed trust and security they need before making an Online purchase.

In addition to site design and security, shipping is another common issue in eCommerce. Todays consumers feel they do not need to pay shipping and generally do not like to wait for an item to be shipped out and arrive at their location. Many merchants have implemented systems to overcome shipping issues in eRetail. Outline the potential savings for buyers who purchase from your site and include the various shipping methods, with prices, that you use. Generally, if shoppers believe that your site is the only source for a certain itemat an attractive price, then chances are they won’t mind paying for the cost to ship that item.

Finally, you are probably wondering about the last potential challenge in eRetail, lack of person-to-person communication. You are also probably wondering how merchants are able to overcome the lack of person-to-person interaction in Online retail? The way to overcome this challenge is through quality, unique page copy, product names, item descriptions and other content around the site (buying guides, videos, tutorials, training materials, etc). Let your website do all the talking and interaction for you, after all, that’s partly why it’s there to begin with. Your eCommerce site is the new face of your business for consumers who find you Online and it must be in a state where it can easily communicate with shoppers or buyers. Try to deliver the message that shopping on your site means that customers will be getting a quality product and a fair price, and any special savings they may reap as a result. Project a sense of safety and trust through page copy and paragraph descriptions. It’s important to communicate to customers that you are committed to safe guarding their financial information and privacy. Use your site and copy to your advantage, take writing it seriously. The most successful Online retailers take their business and the aspects of it that are challenging VERY seriously.

Using The Web To Research:

By now you should have a basic understanding of the differences between the Internet and the World Wide Web (WWW). In addition, we have covered other basic Internet processes such as search engines, surfing the Net, Web browsers, eCommerce and eRetail. These are the core pieces of any Online business and merchants must be aware of the different roles each aspect plays on their business and how to use the different aspects to their advantage. It’s also great to know about the challenges you will most likely face and way that some of the most successful merchants were able to overcome those challenges.

Now that we have covered some of those basic differences and challenges you may face, it is important to know how to use the Internet as a means to continue your knowledge and as a tool to find out answers you may need to know in the future, or as they arise during your time as a business owner. Remember, the Web is todays number one information source, even more so than encyclopedias or libraries. Now we have Online encyclopedias and Online repositories of information taken from more traditional sources such as book or papers. Not only is the Web our new tool for research and information, it’s currently the easiest way to retrieve the answers to nearly any question you could possibly have to ask.

Research online is much easier to conduct than traditional research, however there are some warnings and certain cons related to using the Web as an information source. Sometimes it can be challenging to find an authoritative, reliable source that can be trusted as an expert in the area in which you seek answers. It is best to use a redundancy method while researching topics of subjects Online. Redundancy methods are basically way to conduct a check and balance of the information you have gathered. Basically, through redundancy (seeking the same answer from multiple sources), you are seeing how many different sources say the exact same thing rather than researching one site and taking the authors word for it. I always recommend checking out three to five different sources relating to the subject you are researching, then compare the information gathered. Information that is repeated across multiple sources can give you an idea of related trends in information for the subjects you are researching.

Several different topics may require you to conduct research using the Web. Common research topics in eCommerce include product research, domain or business name research, web site design research, design firm research, credit company research or other service related research. when researching different products to sell on your site, try to use comparison shopping engines such as Google Product Search, PriceGrabber, Shopping.com and others. When conducting product research inquire about the following; general product information, price ranges and competitors. When researching other services such as domains or design firms, attempt to speak with company representatives after carefully narrowing them down.

Impacts Of The Web:

Since the birth of the Internet, World Wide Web, Browsers, Search Engines and other web-based technologies, we are now able to experience what is going on across the entire World simply by sitting at home in front of our computers. Who could have imagined that in the early 2000′s consumers would be we on their way to spending as much in products Online as they do in traditional retail shops? Who could have imagined that the Net would now be the best, most commonly used source for information?

The Web impact on education alone is changing the way in which we learn and experience the world. It is not likely that the Net will completely take over human learning and interaction in the classrooms, however it most certainly could if there weren’t so many benefits to having humans interact with us face to face in a structured learning environment. I get more and more impressed with how the Web is beginning to shape itself and its impact on my life personally has been tremendous. I look forward to seeing it continue to shape and mold, including new ways in which people begin using it to help in their day to day activities. As great as the Net is, behind all those wires, cables, firewalls and networks, it’s still just people like you and me. It reminds me that the Net doesn’t run itself, there still has to be that ever present human factor behind it.

This article is one of several within our Start to Finish eCommerce Guides.

Although there are a wide variety of factors that can help in the success or failure of an eCommerce business, most merchants fail due to either not selling the right items in the first place, or they do not have enough direct knowledge of their products marketability, availability, cost-effectiveness or transportability.

• Marketability – Is the product marketable Online?
• Availability – Is there a source available to obtain the product?
• Cost-Effectiveness – Is there profit potential for the product?
• Transportability – Is the product easy to ship or transport?

Many of the most successful Online sellers found their niche by conducting self-analysis or through passion for a pre-existing hobby, job, product or industry. Maybe you are an interior decorator and you want to begin by selling interior decorating supplies. Or perhaps you have a passion for ATVs and want to get started by selling ATV parts, accessories and gear. Or you might like to build radio-controlled vehicles like cars, trucks, planes or boats and decide to start selling hobby items for remote controlled vehicles. Whatever your interest, there’s certainly some type product or item that relates which can be sold Online. You simply have to know yourself, know your passions, understand your personal interests and decide on something. The advantage of being experienced in a certain niche field is that you already posses an abundance of knowledge surrounding the idea. This means that you most likely know a lot about what you plan on selling and that is important because it is better to sell what you know, especially if you are a beginner or are just beginning to sell Online for the first time.

As mentioned above, it’s important to know yourself and your personal interests or hobbies. One way to go about finding out what you should sell is by conducting a thorough self-analysis and asking yourself certain questions (it’s best to write out the questions so you can keep track of the answers).

Ask yourself the following questions to help you when finding a niche product or industry:

• What are your personal interests?
• What are some things you enjoy doing?
• What are some of your talents or skills?
• What products do you like to buy?

Once you can conduct a little self-analysis through brainstorming, you’ll have a better idea of what it is you want to sell. At the very least you will have a direction or course of action to begin exploring more in depth. Once you have explored some of your ideas you will need to decide on one and properly research the supply, demand and competition for that product, including an innovative way of marketing it through the Internet or possibly even offline.

Many successful Online sellers find their niche through thorough self-analysis, however not everyone finds it by analyzing their passions or hobbies. Some successful merchants simply saw a need for certain products or they noticed a high demand with very little supply Online. Some merchants stumble upon their niche completely by accident or by being on top of new product releases (right place at the right time). However you find your Online selling niche, one thing is for sure. You’ll be glad you decided on a niche product line or industry once you move on to the innovative marketing side of the business.

This article is one of several within our Start to Finish eCommerce Guides.

It is important, especially for new merchants, to start off slowly and really plan things out well when determining your product or niche market. Typically, finding your product niche begins with determining whether or not the product is a good fit for you personally. You may initially get into selling something solely for the profit that can potentially be made, but eventually you will need to know about the products inside and out. If they are not products that personally interest you it may cause issues later on during customer service and marketing processes. It is best to find a product that genuinely interest you or that you have passion for, that way you won’t have any issues spending the time it will take learning everything there is to know about what you sell, who you sell to and who is competing with you. The product should fit well with you, but at the same time you should fit well with the product or niche industry.

Some basic questions to ask yourself and consider when attempting to find products to sell…

• Do you posses skills surrounding any personal interests or hobbies that can easily be applied to an Online business idea?
• How much do you know about the personal interests or hobbies you are thinking of turning into a business idea?
• Are you a good researcher, capable of spending quality time and effort to adequately educate yourself about prospective products or industries?
• Is there anything about your current job or employer that might give you insights into certain products you may wish to sell?
• Do you already posses special knowledge about acquiring or sourcing a particular product that might help you to remain competitive in a niche market?
• What is the potential lifespan of the product or industry idea you are exploring (is it a trend or fad, will it be sell-able for months, years, decades, etc.)?
• Is the potential product or industry idea you are exploring seasonal, or will it be able to sell throughout the entire year?
• Can the potential products be dropshipped, stocked, handled, packaged and shipped easily, with as little extra hassle or extra expense as possible?
• What is the potential profit margin expected for the product ideas you are exploring and is there any room for future price negotiations?
• Who is your target consumer market and what are some of the different types of people that are most likely to buy the products you will potentially sell?
• How competitive is the potential product market or industry, is there already many people selling the same products or to the same consumer types?
• Are there unique and innovative ways to market the potential products or within the product industry, are there ways to market them that are different than current competitors?
• Is the potential product or industry something you truly feel passionate about, do you have a genuine interest in the products, market or consumers you are targeting?

Many of the earliest Online retailers found success in selling products that aren’t too much to ship (heavy, bulky, etc), such as CD’s, DVD’s, t-shirts, shoes, jewelry and other small, high-profit, easy to ship items. Although many of the most popular items with a high cost-to-shipping ratio are within saturated markets, there still are some very good product niches with great cost-to-shipping ratios.

Although there are markets for items such as large screen televisions, office equipment and furniture, they are bulky and cost more to ship, meaning there will be issues to overcome in these markets. Online retailers that sell items with low cost-to-shipping ratios have to overcome more than a merchant who doesn’t have to take as many planning steps or measures to get their products out to consumers. Either way, think about possible kinks before jumping into a niche head first, in the end, it’s going to be you who has to work out the issues in whatever product you decide to sell.

Some basic steps you’ll need to take when trying to find products to sell Online…

Learning About Products:

There are three main aspects to learning about the products you are going to sell. The first is knowledge you already posses surrounding the products, the second is knowledge you gain upon deciding what to sell and the last aspect involves continuing to learn more about what you sell. As a matter of credibility and in order to bring your business to it’s full success potential, it’s important to know your products inside and out. it will help you when dealing with customers and any vendors or distributors you may have to negotiate or network with (so you don’t get cheated on quality or talked into higher prices due to lack of product knowledge). Other than helping with customer relations and vendor negotiations, product knowledge should also help you to maintain your edge over competitors (once you establish an edge of course). That’s one reason why ongoing or continuing your education as your business grows is so important.

Use the Web as an information resource, read books, trade journals and print publications or white papers, learn as much as you can about your product and your market. There are also more traditional ways to increase product knowledge. You can attend school (college, university, online), take correspondence courses. You can use social networks and communities or blog and forums. The methods you use to acquire more product knowledge are up to you and depend on your personal time limitations or budget. It really doesn’t matter how you get your knowledge, just keep improving on what you learn and be sure that the sources you use are credible and can be trusted as a source for good information.

Determining Product Demand & Availability:

It is important to know whether or not your products are in demand and that you will be able to find sources for the products you intend on selling. Knowing about your intended products consumer demand and source availability can save you time, hassle and potentially keeps you from jumping into an industry that may end up failing due to source limitations or lack of consumer demand. Try to learn and understand anything you possibly can about who your intended consumer audience is and brainstorm possible sources for your product. In other words, think about who your target audience is and ways in which you can acquire the products you hope to sell. Knowing and understanding these two things can make the difference between success and failure, and will generally save time and money in the process.

If the intended products are something that is already manufactured, it may be easier to find sources and generally are in high demand, especially if they are products that have been made and sold for a longer period of time. If the product you hope to sell is an original idea or invention, you will still have to find sources for parts or other necessary goods required to make the products. You may possibly even wish to become your own manufacturer or establish a relationship overseas (both require more knowledge, budget and time).

The sources you research for products that already exist should offer the items at a price which will enable you to remain competitive with others who may sell the same or similar products. Find the best possible prices from as many different sources as possible and narrow you choices from there based on time in business, track record, customer service, shipping time, bulk discounts, etc.

You will also need to know information surrounding the consumers who may possibly be interest in the products you hope to sell. Generally, if you sell products that very few others are selling, you are limiting your competition, however there may be a much smaller demand for the items. This is why it’s so important to find out everything you can about your target audience and consumer demographic. Knowing your potential customers not only helps when finding products to sell, it also helps during site design processes and customer service interactions.

Once you have learned more about the products demand and availability it will allow you to dig deeper into the process in which your products are manufactured, distributed and sold to retailers like you. You should research your industry suppliers to find out who they regularly sell to and how the process works. Generally there is a chain starting from the manufacturer or distributor. They then sell the product to other wholesale suppliers or retailers. It is OK to buy from suppliers or wholesalers, especially at first and until you get a little time under your belt in eCommerce, but you should make it your goal to find out who the suppliers are buying from so you can purchase directly from the source. As mentioned, at first you may bot be able to get the prices you originally had hoped for, but you will establish certain relationships with vendors higher up the chain. Having these relationships is a great start to cutting out middle men and developing your own supplier relationships or lead sources.

Finding Product Sources:

One method for sourcing products is by using drop shippers. A drop ship relationship occurs when a merchant receives an order and then directs it to a wholesaler or distributor who then ships the item directly to the customer. By drop shipping products you can potentially avoid the hassle of handling, packaging and shipping the products yourself, however it may be more difficult to establish a niche using the drop shipper method. We have covered more on getting product drop shippers in a future article within this series.

Another method for product sourcing is by establishing manufacturer direct relationships. Relationships with manufacturers occur when a merchant has contacted and negotiated prices for items made by the manufacturer. Some manufacturers will drop ship, others require you to purchase and inventory the products yourself. It can be an extra hassle finding the warehouse space and getting the handling or shipping process down, but dealing with manufacturers does make it easier to establish an Online selling niche. We will discuss more about manufacturer relationships in a future article within this series.

Lastly, you can source products by manufacturing items yourself. This requires the most work, planning and knowledge to setup properly. Using a manufacturer of your own or becoming your own manufacturer occurs when you establish a manufacturing relationship overseas, within your country of origin or rent your own space and manufacturing plant. Manufacturing overseas can require you to overcome language barriers, setting up your own shop can require pre-existing capital or funding. We will discuss more about becoming a manufacturer or outsourcing it overseas in a future article within this series.

Trying to choose the right product can get tricky, but the bottom line is to choose a product that is the right fit for you personally and fits well within your business goals. Choose a product that is affordable and accessible to you. Keep in mind, you’ll have to create the market demand and niche for whatever products you end up choosing.

This article is one of several within our Start to Finish eCommerce Guides.

Drop shipping occurs when the merchant displays and markets their products, attracts customers, receives orders and directs the sale on to a supplier who then ships the merchandise directly to the customer. A common concern and issue for merchants who use drop shippers is that there many be many other Online sellers using the same supplier or drop ship company. Using the same product source as hundreds or thousands of other merchants can make establishing a niche more difficult. It can also mean you will be competing directly with many other merchants, meaning the market is typically more saturated.

A drop shipper relationship as a product source is certainly a great way to start an Online business and can even be used as a way to supplement an existing businesses products, however it is not an easy way to get rich quick or something that can magically transform your eCommerce business into a fortune 500 company overnight. There are many pros and cons surrounding the word of drop shipping. It is always best to understand the potential benefits and risks of running a drop hip reliant business. Understanding the different aspects can help you to accurately estimate the potential negative effects of using a drop ship supplier as a large part of your eCommerce business. Aspects of drop shipping to understand may include the typical process, benefits or risks and common drop ship suppliers.

The Typical Drop Shipping Process:

1. Merchant establishes a product niche
2. Product advertising, promotion and marketing
3. Customers order and payment is collected
4. Merchant directs orders to the drop ship supplier
5. Payment is made by the merchant to the supplier
6. Customers receive items directly from the supplier

Drop Shipping Benefits & Potential Risks:

Benefits of drop ship business models…

• Doesn’t require much budget or funding to get the process started
• Doesn’t require as much overhead to continue selling products
• Doesn’t require as much risk as a typical business model does
• Doesn’t require the merchant to carry inventory on hand or in a warehouse
• Doesn’t require costs associated with shipping or packaging materials
• Doesn’t require the merchant to restock items that get returned
• Doesn’t require custom shipping or packaging labels
• Doesn’t require any fees upfront for product purchases
• Doesn’t require the merchant to physically shipping the product
• Doesn’t require the merchant to settle on less products to sell

Risks of drop ship business models…

• There isn’t complete control over the store inventory
• There isn’t control over product images or image resolution
• There isn’t usually a way to setup inventory tracking
• There is less control over shipping times and methods
• There isn’t a way to control back order shipping times
• There is more of a chance that items will go on back order
• There isn’t usually a way to take advantage of bulk discounts
• There is less of a chance to get better pricing or negotiate
• There isn’t usually a way to brand packages, inserts or labels
• There is a chance the drop shipper may not be reputable
• There isn’t liability if errors are made, merchants take the blame

Common Drop Ship Suppliers:

• Doba
• DropShip Direct
• Salehoo
• Drop Ship Design
• MegaGoods
• Online Supplier

Finding Other Drop Ship Suppliers:

• Searching Engines
• Product Manufacturers
• Local Businesses
• Industry Publications
• eBay
• ThomasNet (US)
• Alibaba (World)
• Paid Directories
• Crafters
• Trade Show Events
• Importers/Exporters

Things to Consider When Attempting to Find Drop Shippers:

• Are there any extra fees or hidden costs for signing up or during a sale?
• Has the drop shipper been in business long and is their site domain new?
• Is the drop shipper registered with the BBB or other similar business programs?
• Do they use quality standards that are clear and flexible for your business?
• Does the drop shipper offer support and quality customer service?
• Are drop ship related policies clearly stated and easy to understand?
• Do they regularly update their product and supplier list and offer it to members?
• Are their suppliers qualified before they are able to join the drop ship program?
• Is the program a service or is it simply a list of suppliers, know what you are getting?
• Is the drop shipper able to provide adequate support and education about their program?

It is important to spend quality time and effort while researching potential drop ship suppliers for your eCommerce business. If you cut corners and make uneducated decisions, you may open yourself up for more of the risk associated with using a drop ship business model. Conduct quality research and spend time getting to know the company(ies) you are considering as your supplier. You wouldn’t want an unethical company fulfilling your orders as any mistakes they may make during the process can come back to reflect poorly on your business, not theirs.

You need to take every precaution and spend time getting to know to ins and outs of drop shipping, including any suppliers you are thinking of dealing with. By knowing what and who you’re going into business with, and more importantly, how to deal with potential issues that may arise, drop shipping can be a great business model for eCommerce.

This article is one of several within our Start to Finish eCommerce Guides.

• Drop Shipper (wholesaler, distributor)
• Manufacturer (supplier, vendor)
• Make Them Yourself (you are the source)

Sourcing Overseas & Domestically:

Good product sourcing means finding a quality item at prices that are low enough for you to still make a profit from each sale. Generally, sources can be established either domestically, overseas or both.

Using a domestic source can be more convenient (mainly location) and may make it easier to communicate or negotiate. You shouldn’t have to worry about language barriers or overseas shipping costs. It may be more difficult to establish a relationship as there may be less sources available, but generally, good negotiators do not have issues finding domestic product sources. The main thing to be aware of with domestic sourcing is the prices you get on merchandise purchased. Your domestic vendor may purchase their items from an overseas source, so you may not be getting the best possible deal, but there are still tons of product still made here in the U.S. that can easily be sold Online.

Using an overseas source can be better mainly due to the special price breaks and generally leaves room for future negotiations. Items manufactured in countries like china or India cost far less than the exact same items made here in the U.S. these countries have been known for manufacturing for decades and almost always offer their items at the very lowest prices possible. So much so that they even have World renowned trade shows, lasting at least a week at a time, where manufacturers get together to show off and display the items they mass produce. These trade exhibits are a great place to find quality items at extremely lower costs compared to similar show in the U.S.

Tips For Finding Product Suppliers:

• Establish contact with suppliers who have a proven track record.
• Visit domestic and international trade show exhibits for suppliers.
• Generate a list of supplier prospects and compare their products.
• Appear to be an expert in whatever product you are researching with suppliers.
• Inquire about special deals, terms, discounts or other perks offered.
• Learn everything you can about the product before meeting suppliers.
• Do not appear to be too eager once you’ve found the product you hope to sell.
• Shop around and talk to numerous suppliers before deciding on one.
• Subscribe to and read industry trade magazines or trade publications.
• Know how different suppliers price their products and shipments to your location.

As mentioned previously, good products are items that do not require a high price to ship. Once, you’ve established your product idea you should begin prospecting vendors and making contacts within the appropriate circles. Visit the trade shows, conduct research and learn about the products you hope to sell.

Some vendors will allow you to purchase product samples and trial orders which are generally below the original minimum quantity limits. Try this with various suppliers and then try to sell a few items through channels such as eBay or other product marketplaces. Marketplaces can provide an immediate means for you to begin selling and testing your new product idea and supplier source. Although eBay is great for some, it may not be your end all solution. Generally, you’ll still have to build an eCommerce enabled site to sell from, but by testing in marketplaces, at least you’ll know your items will sell and that you have a reliable supplier.

This article is one of several within our Start to Finish eCommerce Guides.

Generally, items that should be avoided will fall into one of two categories; items that simply won’t sell through the Web or items that cannot be sold Online (whether it is against the law or it is physically impossible to sell them).

Items that don’t sell well Online…

It can be tricky determining whether or not a certain item will sell well Online or not. Using good common sense can tell you a lot, however there may be things that you cannot predict or don’t know enough about to make an educated decision on whether it will sell well to your target market, or any market.

Certain smaller items should be avoided, especially if they are fragile and can easily break during shipment or transport. Perishable items, like groceries, may also be small and cost little to ship, however it can be challenging to sell them Online as special packaging and quick shipping times are a must. Anything with a short shelf life should be avoided in addition to anything can can easily break during shipment.

Additional items that do not sell well can include things that consumers would want to physically taste, touch, smell or hold before buying (like a couch or cologne fragrance). Unless the shopper has already tasted, touched, smelled or used the item previously, chances are they won’t buy it Online.

Examples of products that don’t sell well include:

• Breakables
• Perishables
• Perfumes
• Colognes
• Furniture
• Cosmetics
• Custom Clothing

Items that are illegal to sell Online…

Items that are illegal to sell through the Web should be completely avoided all together. Some products are outlawed all together, some have specific rules put into place by individual cities, counties, states or federal laws.

Illegal drugs, weapons, and similar items are against the law to sell Online in most all states, however there are some gray areas for other illegal products. For instance, some states will allow the sale of alcoholic beverages while others classify it as a felony. In addition, certain guns and ammunitions can be sold in certain states Online where as others will charge you with a crime and may even possibly break federal laws. Animals and some food products are also illegal to sell Online in some states.

It can get complicated really easily and these aren’t the types of government officials you would want to mess with in the wrong manner. Think long and hard if you intend on selling items which are sanctioned in many states but can be sold in others. If you think you may be headed into a gray area with the products you’re selling, be sure to consult with an attorney first. There’s no point on taking chances as there may be accompanying fines, or possibly even jail time as a consequence.

Examples of illegal or gray area products include:

• Guns
• Knives
• Weapons
• Drugs
• Prescriptions
• Alcohol
• Beer
• Wine
• Tobacco
• Illegal Imports
• Pornography
• Livestock
• Animals
• Grocery Produce

Product fads and consumer buying trends…

Other items you may consider avoiding can include product fads or trends which may be here today and gone tomorrow. We have all seen trendy product hit the market with buzz and then several weeks or months later no one is talking anymore. It happens more often than you think.

If you want to operate your business for many years and continue selling the same types of products, you should avoid selling trendy or fad type items in the beginning. Be sure to choose a product that has some potential longevity in the Online selling world and that it projected to remain in demand for a long period of time. You could find yourself in a real mess if the only product you sell suddenly flops with consumers. It’s best to pick items that have real staying potential and have proven to sell well year after year Online.

Examples of fads or trends include:

• Elmo Dolls
• Pet Rocks
• Beanie Babies
• Pokemon
• Trading Cards
• Comics
• Pogs

No matter what you decide to sell, make sure it is something that will last and that has an extended shelf life. We recommend avoiding the types of items mentioned on this page, especially if you are a new merchant or starting an eCommerce business for the first time. Give careful consideration to the different types of products and the different products to avoid. If possible, always try to avoid illegal or gray area products, but also consider avoiding product that simply don’t sell well Online or are potential short term trends with little to no shelf life.

This article is one of several within our Start to Finish eCommerce Guides.

What is a Tax Identification Number?

Tax ID numbers, also called an Employer Identification Number (EIN), is a special identifying number assigned solely to businesses by the IRS. Your tax ID number is used to identify your business to several federal agencies responsible for the regulation of business, both Online and Offline.

Many merchant accounts, banks and other financial institutions require a tax ID in order to utilize their services. Tax ID’s can also keep your social security information private as many institutions who request tax ID’s will also accept personal social security and banking information as an option (which has to be used unless the business has a tax ID).

Do I Need a Tax Identification Number?

As a general rule of thumb, nearly any business that offers goods or services for sale, that are taxed in any way, must get a business tax ID number. If the state your business is located in taxes personal services, or if you are required to collect sales taxes on purchases made, you will most likely need a tax ID number. As mentioned above, many agencies and institutions you deal with will require either a personal social security number or a tax ID number.

Almost any business that has employees and/or pays any kind of taxes will need a business tax ID. Generally, you should not worry about whether you are required to have a tax ID, you should just assume you do and take the steps to obtain one. It’s simple and easy to get so why not, right?

How Do I Obtain a Tax Identification Number?

The best, and quickest way to obtain your business tax ID is to contact your local IRS office or call the IRS tax hotline (800-829-4933) for more information on how to obtain your tax ID.

The form you will need to complete and return is the IRS SS-4. The form can be accessed and filled out in one of four ways by either downloading the form and sending it via fax, mail, by phone or applying via the Web.

Apply via the Web:

• The Online tax ID application can be accessed by clicking here (Web page).
• Instructions for filling out the form can be accessed by clicking here (PDF).

Apply via Phone:

• Business owners can also obtain a tax ID by calling the Business & Specialty Tax Line at (800) 829-4933 between the hours of 7:00 a.m. – 10:00 p.m. local time, Monday through Friday. A phone representative takes the information, assigns the tax ID, and provides the number to an authorized individual over the telephone.

Apply via Fax:

• Business owners can complete the Form SS-4 (PDF) and fax it back to their individual state’s fax number. Be sure to include a return fax number so they can send back your tax ID via fax. It typically takes between 1 – 4 business days to receive back.

Apply via Mail:

• Out of the four options listed, mail takes the longest. It typically takes between 3 – 4 weeks to receive via mail once the Form SS-4 (PDF) has been completed and mailed to the appropriate address.