things to do BEFORE you start trading online

[seamus]

I've seen quite alot of people come at dropshipping and online retail from the wrong angle entirely.
Paying to much attention to the website and not nearly enough attention to the fact its a retail business they are creating, not just a website and a paypal account.

Legalities,
you need to be registered as a business, be it a sole trader or a company, you need to be registered.
Even if you consider this as a hobby business, you still have to be registered.
Registering as a sole trader is seriously simple, and you have three months from starting trading, if you have not registered your business within three months you can end up with a fine.
If you decide to notify the inland revenue within the first three months of trading, you need to make sure you have every invoice and details of every transaction made as this all has to be declared.

Say you make your first sale on 10th of January, and you register your business on the 10th of march, every sale you have made since the 10th of January will need to be declared on your tax return. It doesn't matter when you registered, the important date is the date you started trading, that's the date the inland revenue care about, your trading date.

National Insurance, make sure you keep your NI payments up to date, if you fail to do so you may find that getting benefits in the future may be rather difficult, be it unemployment benefit, incapacity benefit and even a state pention, all rely on your NI contributions
(there are ways round this but to be honest it makes life so much easier if you just keep your NI payments straight)

Insurance, this needs to be considered, especially if you are holding stock yourself or making the stock.
If you are making items for sale you will need product liability insurance, there is no two ways about that, it is a legal requirement.
You can not produce and sell your own products without product liability insurance, which isn't that much to be fair, normally it works out less than car insurance and it covers you for a million pound court bill, something you probably could never afford without insurance. If your product injures someone you will need to make sure you are covered for such instances.

Insurance varies depending on where you are trading, so make sure you are trading within the laws of the country you are selling to, if it is a requirement of that countries law then you will need to abide by those laws regardless of where you business is located.

First things first, make sure your business is legal and you are aware of all the relevant laws associated with the country you are trading in aswell as the country you are located in, its not one or the other, you need to abide by both.
Make sure you are registered as a business and are declaring all your figures from the very first sale, and keep your NI payments up to date.
Find out what insurance you might need and if it is mandatory for you to have insurance, get that done before you make any sales at all.

Then you can turn your attention to your website.
Again the legalities have to be considered right from the start.
Terms and conditions, you need a water tight set, you will need to declare a valid and legal contract of sale, sticking to all the distance selling regulations and the sale of goods act, if you declare the wrong information on your site regarding terms and conditions, you will be the one to lose out, not the customer. It doesn't really matter what you state on your site regarding terms and conditions, you can not dictate terms if they have no basis in law.

Shipping and returns, again you need to declare all this on your site.
State exactly what your shipping costs are and what your returns procedure is.
Again you need to stick to the laws regarding this, you can not decide your returns policy off the top of your head.
Your customer has a seven day cooling off period and are well within their rights to return the item within that time, for a full refund, incurring no charges what so ever, you can not state other wise.

Privacy policy,
you need to state what information is held about your customers and how this info is handled and who else has access to this info.
First off your dropship supplier has access to this info, so does the courier, this needs to be stated.


All this should have been researched before you start trading, all the legalities that you will need to abide by should be totally clear in your mind, and documented properly for future reference.

When all that is done, then you can turn your attention to your website, how it looks, how to bring in customers etc.

The thing to remember is, you are running a retail business so you should be using retail tricks to bring in customers.
Forget about driving traffic to your site, unless the traffic you are getting is targetted traffic and is generating sales.
The way to get targetted traffic, two ways you should be looking at this, first is google, make sure you are hitting all the relevant keywords relating to your products and the other is pure retail marketing, find your target market and advertise directly to them (as every other retail business does) there are plenty of ways to do this, social networking is always a good place to start. Google ads might be worth a try but ad campaigns need to run for more than just a week here and there, it has to be sustained advertising in order to work, and if you don't research this properly it can cost you a fair bit of money and give you no return at all.
Research is key here, research tried and tested retail marketing, find out what works and what doesn't, find out how your competition is going about it and find out why their marketing strategies work. If you have no idea why they work then its likely you will not get the same effect.

I've heard people say "you don't need a business plan, just do what you think you should"
OK, I'll give you three months and you'll be gone and if you are still around after three months I'll be calling you rather lucky.

You are running a business, not just having a laugh, you need to research properly and draw up a proper business plan, stating all the legal aspects your business has to abide by, stating your break even costs (that bit is rather important) you then need to draw up a plan on how to meet these bottom line costs, how much you need to sell per week, how are you going to make these sales, where are your customers going to come from, how are you going to get them on your site, what competition do you have, how will you compete with them.
If you can not guarantee enough sales to hit your bottom line, your business will never last, research and proper planing are a must, not an option but a necessity.

RESEARCH!
make sure you know all the laws that involve your business, and that you stay legal at all times.
Make sure you know exactly what your day to day running costs are and plan properly to cover these costs.
Research your market properly, find out who you will be competing with and how you can compete within the same market.
Research proper retail marketing, not "how to drive traffic to your website" you need sales not traffic.
and last of all, keep your fingers crossed that all your research pays off and you can turn a profit.

[tefnut]

Thanks thats really useful

[donthidethem]

I completely agree, the amount of times I go shopping online or look at a retail shop and leaving without purchasing anything, because they have not setup things properly.

When you get up your online store as well as staying on the right side of the law you need to be professional and protray a professional image even if you are running your business from your bedroom.

1. You need to display a address on your website this is a legal requirement.
2. If you can get a phone number, it would be a plus.
3. On your contact page tell people how long they might have to wait for a reply to there question. But make sure its sooner.
4. Always use a domain name email ie. sales@yourwebsite.com rather than yourname@hotmail.com or something.
5. Another thing, you need a business account, you can not run a business through a normal account even if you take the payments through paypal.
6. Always spell check your T&C's

But a great post, just my two cents. Sorry if I have completely gone off the wrong on this.

[seamus]

thats some rather good points there 

the email address, Im sure people dont realise how off putting a hotmail address is, displaying a hotmail address (or similar) instead of an email attached to your domain can kill off 50% of potential sales easily,

[donthidethem]

thats some rather good points there 

the email address, Im sure people dont realise how off putting a hotmail address is, displaying a hotmail address (or similar) instead of an email attached to your domain can kill off 50% of potential sales easily,

Thanks man, I have learnt the hard way. I am trying to keep on the right side of the law this time. But there are some basics steps that I have learnt over the time. Look how the big people work and then go from there.

Main thing is to look at your site and ask yourself. Would I buy from this store?

[wayzgoose]

5. Another thing, you need a business account, you can not run a business through a normal account even if you take the payments through paypal.

Not true on that one. In fact when my daughter started her site a few years back it was the bank manager that suggested a 2nd personal account until turnover had reached a few thousand. Don't want to be paying charges unless you have to. But make sure it's a 2nd personal account though, so that home finances can be kept separate from your business ones.

[seamus]

business bank accounts dont need to be expensive though,
Alliance & Leicester (or santander as they are now) do a business account that charges £5 a month if you dont turnover more than £1000 a month I think it is,

[donthidethem]

business bank accounts dont need to be expensive though,
Alliance & Leicester (or santander as they are now) do a business account that charges £5 a month if you dont turnover more than £1000 a month I think it is,

No I completely agree and HSBC do it free for 24 months. Its not the cost just that you have to be careful because some people say you don't need a business account if you are a sole trader, which you don't legally but in the banks t&c's for current account you can not run a business.

I am going to a 101 / my e commerce story, from idea to building to advertising to building a online store. So would be great if you could pitch in.

PM me if you are interested.

Thanks

[beads4breakfast]

Can you not say  contact me for my address. I have included email and phone number on mine but ask them to email me for address for returning items. First and last time I did this I had a load of crap sent to me catalogues etc... that i did not want one customer even turned up un announced wanting to see my stock personally. I was arm deep in flour i was baking with my then 7 year old!!

[seamus]

Can you not say contact me for my address.

no, an address is a legal requirement for a retail site, if you are selling online you need to show an address
although one way to stop people turning up is to state "office address"

to be honest I've not had any issues with junk mail from having my address online

[Rainee Bows]

me either and our address is all over the place  on countless sites, :o)


Rainee x

[Andy c]

I have been looking into all of this legal jargon and have decided I need to do something
Do I need to take out product liability insurance if I am only drop shipping products
on 1 drop shipper site it say yes and in another it says no so am really confused about this

If I do register being a sole trader do you actually pay anymore ni .As the profits I actually make are minimal at present ...I don't want to say make a profit of £20 and payout £30 in ni ... I did see that you only start paying above £110 per week ....but does this include my day job as drop shipping is only  part time

i can't seem to find a straight answer with drop shipping .

thanks

[Rainee Bows]

I have been looking into all of this legal jargon and have decided I need to do something
Do I need to take out product liability insurance if I am only drop shipping products
on 1 drop shipper site it say yes and in another it says no so am really confused about this

If I do register being a sole trader do you actually pay anymore ni .As the profits I actually make are minimal at present ...I don't want to say make a profit of £20 and payout £30 in ni ... I did see that you only start paying above £110 per week ....but does this include my day job as drop shipping is only  part time

i can't seem to find a straight answer with drop shipping .

thanks

IF you register ?? you mean you havent already ???

if you are trading online you only have 3 months after start up to register  .....

wether you are holding stock or dropshipping makes absolutely NO difference as to wether you should register or not ,

it counts as a second job , you will pay tax on it as such, and if you have been trading online for more than 3 months you have some catching up to do, it should be one of the  FIRST things you do ....


Rainee x

[FionaJMD]

business bank accounts dont need to be expensive though,
Alliance & Leicester (or santander as they are now) do a business account that charges £5 a month if you dont turnover more than £1000 a month I think it is,

Santander gives free business banking for life apparently.

Also as a member of the Federation of Small Business, you can get free business banking with the Co-operative.

[Andy c]

Only really been aware of it since I first saw this post ..I was told if you don't go over so much a year don't need to sign up +- £200 sales in 1 year is well under..
that was with dpuk ... If they were such a good company they should have advised me from the start to do it
anyway I am trying to do it right now and will do but
Still don't understand a lot of stuff and not piling in without consequence by signing up
Will I end up paying tax ..do I get a tax number ,must I add tax to my products
I already pay ni with my day company ...so does that mean I have to pay more ??
This is a part time job for evenings and no money in it for me yet

have read though the thread and look on the hmrc website which is complete jargon and relates nothing to drop shipping