Complete Guide to Opening an Online Store
Complete Guide to Opening an Online Store: Since the outbreak of COVID-19, physical stores worldwide have been hit hard by social distancing policies or lockdown measures. In contrast, e-commerce has accelerated its expansion during this period, with the number of online stores surging. This reflects the increasingly important status of e-commerce, with many stores transitioning to online stores - online stores are the future trend. Now, let's begin our guide to opening an online store!
So how do you start creating an online store?
Compared to physical stores, the process of opening an online store is simpler and less expensive. Here's a detailed introduction.
First, Understand What is E-Commerce
E-commerce is the business of trading goods and services over the internet.
E-commerce business types can be divided into four categories:
- B2B (Business to Business) - Transactions between businesses, such as suppliers wholesaling goods to stores
- B2C (Business to Consumer) - Transactions between businesses and consumers, which is the most well-known business model
- C2C (Consumer to Consumer) - Transactions between consumers, such as selling second-hand items on online platforms
- C2B (Consumer to Business) - A relatively special and innovative business model led by consumers
1. Process of Opening an Online Store
Does an Online Store Need Business Registration?
According to Section 5 of the Business Registration Ordinance (Cap. 310) of Hong Kong, "any form of trade, business, craft, profession, occupation or other activity carried on for profit" requires business registration. Therefore, opening an online store also requires business registration, otherwise you may face a fine of HK$5,000 and imprisonment for one year.
Does an Online Store Need a Corporate Bank Account?
Some people may find it troublesome and want to use their personal account for the online store's financial transactions, but this is risky. When there are large and frequent fund transfers in a personal account, the bank may freeze the account的理由冻结账户. To avoid sudden business interruptions, it is recommended to open a corporate bank account for your online store.
The basic fees for major Hong Kong banks range from HK$1,000 to HK$3,000, plus a search fee of HK$100 to HK$150 for business registration verification.
Additionally, many banks have minimum deposit requirements for business accounts, generally HK$50,000. Accounts that do not meet this requirement will be charged a monthly service fee.
Do You Need to Use an Online Store Platform?
There are many different online store platforms on the market. Once you decide on the types of products you want to sell, you can choose one of these platforms to establish your initial online store. If you choose not to use an online store platform, you will need to register your own domain, server, cloud services, etc., which can be more complex to manage than using a platform.
2. What Costs Are Involved in Opening an Online Store?
Business Registration Fees
There are two types of business registration certificates: "one-year validity" and "three-year validity," with different fees. According to the Inland Revenue Department, if the average monthly turnover of your business does not exceed the following limits, you can apply for exemption from business registration fees and levies:
- Business mainly providing services for profit: HK$10,000
- Other businesses: HK$30,000
Company Registration Fee
According to the Companies Ordinance, fees for registering and establishing a local private company with share capital are:
- Electronic filing: HK$1,545
- Paper filing: HK$1,720
Do You Need to File Taxes?
According to Hong Kong laws, any profits arising in or derived from Hong Kong are subject to profits tax. Therefore, online store operators must also file taxes and pay taxes.
3. Operational Costs and Expenses of an Online Store
The main costs and expenses for maintaining an online store operation include the following three aspects:
- Logistics costs, including warehousing fees, shipping fees, etc.;
- Online store platform fees, usually paid monthly or annually;
- Marketing expenses, i.e., advertising - common methods include advertising on Google, YouTube, Facebook, and Instagram.
4. Product Sourcing Channels for Online Stores
There are four main product sourcing channels for online stores:
- E-commerce platform sourcing, such as Taobao, Rakuten, eBay, Amazon, etc., usually offering lower sourcing costs.
- Online wholesale intermediary websites, such as Orange Box, Super Delivery, etc. These websites gather products from wholesale markets around the world, allowing you to source products online and save costs on traveling abroad to find products.
- Direct sourcing by visiting overseas wholesale markets in person. Many online store owners personally visit overseas wholesale markets like Seoul's Dongdaemun or Bangkok's Platinum Fashion Mall to ensure product quality.
- Local wholesale markets - the benefit is saving money and time on traveling abroad, while also being able to check product quality in person.
5. What Are the Advantages of Building an Online Store?
No Time and Location Restrictions
Online stores break the limitations of time and space, and can reach customers around the world faster and wider than physical stores. Customers can shop at your online store from anywhere, at any time.
Low Entry Barrier
Opening a physical store requires significant upfront costs, such as shop rent, renovation costs, staff salaries, and electricity bills. It's easy to have more expenses than income at the beginning. Online stores are different - with just a phone or computer connected to the internet and setting up an online store account, you can open your store. The entry barrier is low.
Closer Relationships with Customers
Compared to physical stores, online store owners have closer relationships with customers. Customers can message the owner before and after shopping; at checkout, they leave their name, phone number, address, or social media account information. This data helps you develop precise sales strategies, such as sending birthday discounts, notifying customers about new product arrivals, sales, etc., to improve marketing effectiveness and increase sales.
6. Comparison of Common Platforms for Online Business Development and Their Fees
Common platforms for developing online business each have their advantages. ThinkShops stands out with the best price-performance ratio!
ThinkShops' platform advantage is that payment and logistics are tailored to Hong Kong people's habits. For payment methods, it offers WeChat Pay, Alipay, and Tap&Go. For logistics, it supports Hong Kong regular mail and SF Express automation.
