I spent years working as a freelance writer, digital marketer and SEO expert and last year I had an idea for a new e-commerce business. I thought that it would be a natural progression considering I could do the writing, the marketing and the SEO myself. I had a talented partner on board, I had an idea, a product and a ready market. It seemed like a no-brainer.
I actually remember thinking to myself, “This is so easy. Why isn’t everyone starting their own business?” only to be given the answer several months later when I realized that even with the product, the marketing and the virtual stuff sorted, there are so many obstacles I just never saw coming.
These are the three biggest issues I never saw coming, the ones that nearly ended my dreams of getting this business up and running. If you have your heart set on getting started with your own e-commerce venture, these might come in handy.
1. Product Complications
The product packaging was cheap initially. We checked a few Chinese suppliers, we did our calculations and we got our hopes up.
The Chinese suppliers were more responsive, friendlier and considerably cheap than the ones based in our own country. We tried to stick with local suppliers, but after they repeatedly ignored us or failed to deliver, we were left with no choice and can now understand why do many companies rely on products from China.
The problem is, we were quoted $50 to $100 to have single samples shipped over. The samples themselves were worth 2 or 3 cents and were sent for free, but we had to pay for the shipping and that amounted to a lot. If we wanted printed samples so we could get a better idea of what the product looked like, we had to pay $250. In the end, we spent over $3,000 just checking samples and getting everything right.
Bear in mind that our initial—optimistic—calculations suggested that we could launch the entire business for just $2,000.
Once you order bulk packaging from overseas you also need to go through customs declarations, arrange for the freight to be picked up and shipped to your address and check that everything complies. You can go with local suppliers, but they often charge 3 to 4 times as much and we later discovered that they were simply acting as middlemen to the same Chinese suppliers we were working with.
2. Shipping and Handling
I used to trade on eBay so I thought I had a good idea of how much it cost to ship products. I thought I could ship all over the world without issue. I was wrong because a lot changed in the 10 years since my eBay days.
This business was setup in the UK where I was under the assumption that it would cost just a few pounds (about $5) to ship any small parcel nationwide. Upon checking with the delivery companies, however, I discovered that even tiny parcels cost up to £11 each. That’s $15!
The big delivery companies that come to your home to collect the goods and then deliver for you are only a viable option when you’re shipping dozens of items a day, at which point that $15 comes down to $7 or so. If you’re sending single items, you don’t stand a chance and need to opt for the old-school route of dropping them off at the delivery office. Even then, you still end up paying more than $5.
If you choose to ship worldwide then you will face just as many issues. In the end we limited our company to the UK because we discovered that shipping a small item of $40 value to the US would cost a further $50 in shipping.
3. Legal Issues
I’m not a lawyer and I don’t know much about business law. But I was selling a foodstuff, what could I possibly need to know?
A lot, apparently.
The first step in this uniquely frustrating process was to acquire a legal business address. If you sell a product then you need to stamp your address on it and if you plan to operate out of your home and don’t want to use your home address, then you will need to setup a PO Box or use a lawyer’s address.
But that was the easy part. Once the address was setup it was time to officially register the business, a process that involved having to decide what type of business I wanted to register as, even though I didn’t have a clue what the differences were. And it wasn’t as easy as checking an option, because an official registration requires memorandum articles.
And if you know what the hell that is then you’re in a better position than I was.
I then had to trademark my brand—a process that requires 4 months of waiting and hoping that no one will counter your claim—and make sure the product, the packaging and the premises complied with health and safety.
You want to pack in your own kitchen and you have pets? Just make sure you don’t let them in the kitchen. You really like peanuts? Now you have to store and eat them a safe distance away from the kitchen.
I could have hired an expert in business law (click here for more info) but that would have been more money I didn’t have.
It was tiring and by the end of it I was ready to give up. My cat hated me, I had a severe distaste for peanuts and I never wanted to see another blue sticky plaster or hairnet again. Of course, the UK is notorious for its overcomplicated health and safety laws, but UK law and US law isn’t that much different when it comes to stuff like this. In fact the FDA can be very difficult to navigate for new food businesses.
Thankfully, that was the end of it and I could actually start thinking about launching the business. But if you ever have a similar idea and think it will be a breeze, think again because a world of red tape awaits.
Source: Business Start Up
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