Why selling physical goods on the Internet is not as easy as people think
It’s Monday again and as usual I’ll be exposing my thoughts on a specific topic. As you can tell from the title I’m going to try and explain why selling physical goods on the Internet is not as easy as most people think it is. As always this is not an exhaustive list but just my thoughts on the topic.
1. You need to think about distribution
This point is a bit obvious. How are you going to distribute the stuff you have, to the people you’re selling it to? You must go through the motions of thinking about a way to get the product to the customer. If the customers you’re selling to are local it might be easier using a postal service near you to get it to the people in your local area. If you selling to international clients that’s a whole different ballgame. There are many moving parts. I will be explaining further in the points below.
2. You need to think about shipping
In some countries even nationally, you have to think about shipping. Moving goods between states for example might have shipping costs if the state is far away from where you’re located. In an international setting the same applies. You must think about how much it’s going to cost you to package and ship the item or items that you’re sending to your client.
3. You need to think about taxes
Like any business this is a yet another simple but known fact. You must think about the taxes that you have to pay to your government so that you can mark-up the price based on that amount. This is business 101 but I guess I thought I should just mention it.
4. You need to think about returns
This point is more difficult than previous points. As a business you have to think whether or not you will be accepting returned items from clients when either they dislike the product, or they think it was falsely advertised in terms of what it actually was and what it does. I’ve seen many kinds of return policies but in most cases the client actually has to pay the shipping cost to return it to you and whatever remains is what he or she will be refunded based on the initial purchase price. You can set up any kind of return policy you want just remember to bundle it into any kind of profit margin that you are going for.
5. You need to think about fulfillment
You need to think about fulfillment. Fulfillment is the way in which you will be completing orders in the sense that you will have to get the items from warehouse for example, package the item and get it ready for shipping to the client. There are many ways in which you can do this these days. You could package it and send it yourself from the comfort of your own home or business, you could get a distribution center to package and send the item with your logo on it. This kind of distribution obviously has a cost and depending on the distributor those costs may fluctuate. Just because I want this article to remain small in size I’m not going to actually explain the fulfilment cost, but I will link to an Internet article explaining Amazon specific fulfillment fees just so that you can get a feel of what it actually means when fulfilling with these kinds of services. Even if you label the products incorrectly you are charged a labelling fee as you’ll see from the link below. Make sure you study the article carefully https://fitsmallbusiness.com/fulfillment-by-amazon/
6. You need to think about the countries that you’re going to target
I’m just going to give a quick disclaimer. I am not a lawyer but common-sense dictates that every country has laws. As such you need to obey them as a merchant in that country. The goods you are selling may or may not be subject to law in that country. That is why you need think about the countries that you are actually going to sell your products to.
7. You need to think about import taxes
We have discussed taxes in previous point but now I’m going to discuss what is known as import tax. You as a business have an obligation to pay taxes to your government. Sending a product to another country may or may not require that you pay import taxes. In most cases at least. Sending items from one European country to another European country may not require you to pay any kind of import taxes but other than that there will always be a tax amount attached to importing to another country. I am trying to emphasize that you need to factor all this into your profit margin equation.
8. You need to think about your profit margin
Profit margin is determined by figuring out how much it costs to you to make something, package it ship it and after all that, figure out how much you made off the product after sending it to the client.
9. You need to think about customer support
Finally, you need to think of the ways in which you will be providing customer support because that might cost you. You may need specific software to create an online support system. Obviously, you need staff, probably 24/7 if you’re sending to international clients. Good support makes for good customer service and customer will return if you solve a problem promptly. Customer service costs don’t actually factor into to the price of a physical product, but I thought I should put it in here just because you need to think about this. Customer support can be a hassle, but it needs to be there for a better customer experience.
If you find these tasks daunting, you need to get a professional to do them for you or help you through the process of thinking if it’s worth selling these products online based on all the above points. If you have any questions, feel free to email me at [email protected]