Let’s face it, the idea of starting an ecommerce business is to sell, not to take back. But achieving ultimate customer satisfaction demands a fair and equitable way to appease clients if their purchase doesn’t fit their expectations, or worse, if it’s defective.
It’s not enough to have an informal, barely mentioned caveat referring to returns. Customers want to know upfront how you will respond to their decision to return what you’ve sold them. If you don’t have a clear, articulate, and accessible return policy available for them to read prior to purchase, you’re asking for trouble.
Keep in mind that whatever is a reasonable way for your business to handle returns, it’s essential to conduct research using figures and anecdotes from other vendors before writing up a policy.
It may sound like a sad reality; a necessary evil. But think of this: Your clear, fair return policy may actually keep a customer base and, better yet, drive sales.
Unfortunately, the escalating cost of shipping with all carriers is a critical factor. If you can’t afford to return items that are structurally sound but just not what the customer likes, you will have to spell that out in plain language. It could deter some business, but as long as the buyer understands at the outset that the purchase is permanent, you’re off the hook.
The Taxing Process of Business
Uncle Sam puts the fear of God into just about everyone who receives income or revenues. When the Tax Man cometh, it’s not to be taken lightly.
Businesses are wise to prepare before launching when it comes to how to treat taxes on federal, state, and local levels. As you’re starting or upgrading an ecommerce venture, the pressure to focus on marketing and aesthetics is intense. But do yourself a favor and make sure your financial ducks are in a row.
If you can’t yet hire a professional accountant, pay attention to these basics of doing business. You will be liable for taxes on profits you make at the end of each business year. Typically, the formula for determining taxable revenues is this:
The government will collect taxes on your profits only, so make sure they are calculated accurately. Depending on the corporate structure you have chosen, you will experience asset protection and a separation of personal and business assets and liabilities. This is where an accountant becomes essential. You may be shortchanging yourself by overpaying taxes, and the IRS will not graciously correct your errors if it doesn’t benefit them.
It’s no surprise that ecommerce now represents the future of consumer buying. As computer use has become more widespread, and as large virtual retailers such as Amazon have paved a path, the natural result would be a proliferation of acquiring goods and services online. The explosive growth is so profound that economists have forecast worldwide sales revenues of $4.5 trillion in 2021 from online shopping – a hike of more than 240 percent over a 7-year period.
With opportunities like that down the horizon, the number of individuals and entities looking to enter the ecommerce sector will be equally grand. And while the playing field may not be level, there are ways to capitalize an ecommerce business from the ground up. Despite an obvious concern over a glutted market and competition, the number one factor causing ecommerce startups to fail is funding. Second to that is a lack of a tangible market.
Understanding scale, competition, risk, and creditworthiness, potential and new ecommerce merchants should conduct in-depth research on how to conjure up enough funding to launch a startup or pour more fuel on a fledgling business that hasn’t quite taken off.
The usual methods of financing a new or newer business are still there, although instability in world and domestic markets due to multiple factors in 2021 may temper those opportunities. Banks are still underwriting small business loans through government programs, and if you have success in that area, it’s a great option. But criteria have tightened because of constraints imposed during the global pandemic, making liquidity an issue.
Unique to 2020 (and now 2021) is the rush to provide stimulus relief funding that will salvage businesses after the Covid-19 pandemic threw a monkey wrench into the economy. A massive package from the spring of 2020 dispensed billions of dollars in grants and loans backed by or given directly from the Treasury and state governments. Despite widespread fraud, the next stimulus bill making its way through Congress will also offer funding help. Here are some details on how to apply.
Also in this category are venture capital investors targeted to ecommerce firms, and even ecommerce grants. Some examples of grant programs and other funding sources may be found here.
Private financing is a great deal—if you can get it. Typically an existing relationship with a banker is a prerequisite, but not always. Explore your options, beginning with connections you currently have.