Launching a business online can be exciting and profitable. It’s a great way to supplement an existing income stream or even to become one’s sole occupation. Many individuals and small businesses have met with tremendous success, some making millions a year, even after starting at ground zero, with no knowledge of the Internet beyond the basics, if
that. There are no guarantees, but it can be done. It does require patience and a willingness to go through the steps to get it right, though. That’s what we’re going to teach you here.
Why Three Services?
In this book, we explain how to use three different “channels” to build your business online:
- Selling products through eBay auctions
- Setting up an online store using Yahoo! Merchant Solutions
- Promoting your business through Google, other search engines, and online marketing mechanisms. Why three channels? There are several reasons:
- Few businesses are simple enough to survive with a single method for finding a company. If you sell hot dogs to people who eat hot dogs, you may need only to place your hot dog stand on a busy street. But if you sell hot dogs to businesses that sell hot dogs to people, you would use many different ways to reach those businesses.
- What works well for one business may not work so well for another. Using multiple channels to sell and reach people increases the likelihood that you find the best one. Multiple channels provide numerous opportunities. If you can find people to buy your products more than one way, why leave money on the table using only one method?
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You’ll find some of the things we suggest in this article can be implemented very quickly, in some cases, in just a few hours. Having various options helps you get your toes wet and work your way in slowly.
For instance, an already established business could begin selling online with eBay over a weekend, gradually build the online business, and then investigate other sales channels later.
While it’s true that some businesses have done very well by finding something simple that works and doing it over and over again for decades, most businesses are not so fortunate. Thanks to competitive pressures—other people want your customers, too; remember—most businesses have to do many things to survive and thrive. What works today may not work tomorrow. Some methods you try to find more business may not work or may not work as well as something you haven’t yet tried. Business is an evolutionary process, with the notion of natural selection replaced by the degree of initiative of the business owners and managers. A business gradually evolves as the people running the business try new things, discard things that don’t work or that no longer work, and adopt techniques that show promise.
The three-channel method described in this book is a great way to start an online business. It shows you some of the most important things you need to know to stay alive and do well online.
In particular, companies succeeding online often use several strategies to do so. These are the sort of things you may one day find yourself doing:
- Selling through online auctions
- Selling through discount channels, such as Overstock
- Selling through merchant sites such as Amazon
- Selling through a web store
- or, in some cases, several web stores for different audiences or perhaps different pricing strategies
- Buying Pay Per Click ads to bring buyers from the search engines to your store
- Using Search Engine Optimization to get buyers from the search engines without paying a click fee
- If you own an offline business, using various techniques to integrate online and offline operations, pushing industry from the offline business to the online, and vice versa
- Using an affiliate program, paying other websites commissions for purchases made by buyers arriving at your store through affiliate sites
- Publishing an e-mail newsletter to keep in touch with customers and promote your products to their friends
- Marketing through PR campaigns targeting e-mail newsletter editors
- Promoting your products through discussion groups
- And many other things . . .
One thing you can say about doing business online is that however successful you become; there’s always more to learn!
Q: “If I am selling stuff on eBay for a drop shipper, when do I charge sales tax, or is this the drop shipper’s responsibility?”
A:When you work for a drop shipper, you must charge sales tax if the buyer or successful bidder is a resident of the same state as you or a resident of a state where the drop shipper has an office, physical site, or nexus. Here are a couple such examples:
- You live in Maine and work for an Ohio drop shipper. You must charge Maine sales tax if you sell to a Maine resident, and Ohio sales tax if you sell to an Ohio resident.
- You live in New York and work for a Vermont-based drop shipper with offices or warehouses in California, Georgia, Montana, and Illinois. If you sell to a resident of any of the states indicated in this example, you must collect sales tax from that state.
When working with a drop shipper, make sure they provide you with a complete list of all states where they currently charge sales taxes to their own buyers. When you post your eBay listings, include the following line in the Terms and Conditions section: "Attention Residents of the Following States: [List them alphabetically]. State and local sales taxes will be added to the price of your purchase or winning bid." Make sure the text is in boldface type or all capital letters so that your buyers see it before they buy or bid on your drop shipper's merchandise.
Q: “When I buy inventory for resale on eBay, the vendor sometimes insists that I pay sales taxes. Are they right to do that?”
A:No. Purchases taxes are solely levied on retail sales in the United States, not on wholesale transactions. When purchasing wholesale, you should not be required to pay sales tax. Some retailers, however, levy sales tax because they are not sure that you are purchasing the things for resale. You must provide them with a resale certificate to set their concerns at ease. If you do this, they will not charge you sales tax. The form of resale certificate for your state can be found on the website of your state tax office. Go to www.taxsites.com/state.html and click on your state when the map of the United States appears. Search for "resale certificate" in the Forms and Publications area of your state tax authority's website.
The resale certificate is essentially an affidavit in which you swear to your vendor that you are purchasing his or her things with the aim of reselling them on eBay, rather than for your own use. To complete the resale certificate, you will need a resale number, which is the same as your state tax ID number. You will not be able to utilize a resale certificate if you have not registered with your state tax department and got this number. Vendors are exempt from charging sales tax if you provide them resale certificates. If they ever are audited by your state tax authorities for failing to pay sales taxes, they will wave your resale certificate in the auditor's face and then tell the auditor exactly where you live.
Another thing regarding resale certificates: delivering a counterfeit or fraudulent resale certificate to a vendor is a felony in most states. If you're buying a container of ten thousand bobble-head dolls for personal use, don't tell the vendor it's a wholesale transaction. That is punishable by imprisonment. Save your sales tax money and enjoy your new collection (if you can find enough room in your home to store it).
