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More and more people are venturing into the world of eCommerce, both as a side hustle or as a full-time job. You may have heard of online marketplace platforms like TradeMe or Shopify that people can use for eCommerce businesses, there are a considerable number of different types of eCommerce businesses that you could venture into. If you are interested in eCommerce, this article will outline what an eCommerce business is. It will also discuss the details of some types of eCommerce business. Finally, it will discuss the pros and cons of entering into these business types. 

What is an eCommerce business?

ECommerce businesses typically involve the buying and selling of goods and services over the internet. While this may seem simple, there are several different forms that an eCommerce business can take due to the relationship between the parties, like the manufacturer, packager, and seller of the products. Some of these types of businesses include:

  • dropshipping;
  • wholesaling;
  • subscription boxes; and
  • private manufacturing and sale. 

However, even though you may be conducting business online, you will still need to obey New Zealand consumer law. You will need to ensure that your products are good quality and fit for purpose. Additionally, you need to make sure that you correctly advertise your products and clearly state the correct price. You will also need to pay income tax on your earnings from your business and GST if your business is earning more than $60,000 a year. 

Dropshipping

One of the fastest-growing eCommerce businesses is dropshipping. Typically, dropshipping involves someone selling products that they do not manufacture themselves. People who dropship connect buyers to the product’s manufacturers, facilitating the transaction. Dropshippers are not responsible for the manufacture or shipping of the product – often, they do not even come into contact with a single product.

A profit is made by marking up the price of the goods and taking a small cut to facilitate the transaction. While dropshipping can be highly profitable, it can also be highly competitive. Make sure that you are prepared if you decide to enter this market. Additionally, you do not handle any products yourself, but you are still accountable if there is an issue with a product. Therefore, you should ensure that you have a good relationship with the manufacturer of the products that you are selling. 

Wholesaling

A wholesaler facilitates transactions between a manufacturer and a retailer. A wholesaler buys a significant amount of products from a manufacturer and then transfers them to a retailer at a small profit. In some cases, wholesalers purchase products at a low price and then sell them through their online store at a marked-up price.

Wholesaling can be risky in some cases, as you buy vast amounts of products that may not end up being sold by retailers. You are taking on the risk of purchasing a large amount of stock. However, if you can find a good product with consistent sales, there are enormous possibilities for this to be successful as an eCommerce business. 

Subscription Boxes

While you may think that subscriptions only refer to magazines or newspapers, subscription boxes are now a popular eCommerce venture. While there is a lot of flexibility for this type of venture, you typically sign up to receive a subscription box by paying a regular fee in exchange for the monthly delivery of a box of products that fit the theme. For example, you can have a book, wine, or plant subscription box.

If you have an area that you are passionate about and are interested in sourcing products related to this, you may be the perfect person to start a subscription box. If you have many subscribers, this may get a little challenging to handle by yourself. However, it is a great way to be creative and shine a light on some lesser-known products. 

Private Manufacturing and Sale

If you have a talent for developing products and the means to manufacture them, you may want to venture into private manufacturing and sale. This involves you manufacturing, packaging, selling, and shipping the products to customers. You could sell these goods through an existing online marketplace like TradeMe or your own website or social media. This is a common way to do business online and has several benefits. You have total control over the business, so you will see every product that is sent out to your customers. You can create a high-quality experience from start to end. 

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Key Takeaways 

Starting an eCommerce business can be a fascinating venture. There is enormous potential for a successful eCommerce business based on your skills, relationships, and experience. If you are a successful product manufacturer, you may wish to start a private manufacturing and sale business. If you have strong business skills, you may want to create a dropshipping or wholesale business.  If you need help with starting an eCommerce business, our experienced eCommerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Does my dropshipping business need to obey New Zealand consumer law?

Yes, if you are selling products in New Zealand, you will need to ensure that you obey all New Zealand consumer laws, advertising laws, and tax laws. 

Do I need to sell goods I privately manufacture on an online marketplace like TradeMe?

You are able to sell goods through an existing marketplace like TradeMe, but you are also able to create your own website or sell them through social media forums like Facebook marketplace.

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