| This 41 message thread spans 2 pages: 41 (  2 ) > > || |
|E-commerce with no physical location = not trustworthy?|
I wrote a post in June 19th which can be found here
To summarize that thread, I started an online retail store but is based in Peru, South America. Being our target market the U.S. and Canada, time proved that our location wasn't helping us at all (as LifeinAsia said).
My partner and I decided to take the risk and move our operations to the U.S. Therefore, we incorporated an LLC a couple weeks ago and now we are polishing the details. Here comes the reason of this thread's subject. We don't have a physical location. We will manage all administrative tasks from Peru, like phone calls, coordination with the lawyer, CPA and our products will be handled by a fulfillment company. For regular mail, we will use mail forwarding services (they give you a street address <not a P.O. box> that can be used in your "contact us" section).
Renting an office, hiring a person to answer the phone, handle our products (pack them, take them to the post office for shipment, etc) and every other cost that may be involved is not within our possibilities, at least not yet.
I was wondering if this could have a negative effect on customer trust. We have good policies in place to ensure customers feel safe to buy from us, but I somehow think that this will not be enough.
Edit: We will use a phone number via Yahoo talk. It's a real number that can be answered with the computer. We ran tests on it, the sound is clear although bandwidth issues may interfere with the communication.
[edited by: Argentdreamer at 5:53 pm (utc) on Oct. 9, 2008]
I hope you trust your fulfillment company and they provide the level of quality and service you expect. They could make or break you.
|E-commerce with no physical location = not trustworthy? |
I would not knowingly buy from a company operating like you describe.
|(they give you a street address <not a P.O. box> that can be used in your "contact us" section). |
You have all necessary information there doesn't matter were your doing the contact from as long as your prompt and deliver on time.
Truth be know 99% of ecommerce sites are doing just as you described. They sell dirt cheap cuz they don't have stock ect employees and so on. Problem is u can't tell.
|I hope you trust your fulfillment company and they provide the level of quality and service you expect. They could make or break you. |
I don't know them. I did research online and didn't find negative feedback. When one does business, there are always risks involved. As a manager, it's your duty to make the best decisions, based on all the information you can gather. Until I use their services, I won't know if things will go fine or not but we are very aware that they will be key in our success or failure.
|I would not knowingly buy from a company operating like you describe. |
Unfortunately to us, it's either this or send all the widgets from Peru. U.S. customers are not used to waiting 2-3 weeks for their purchase. We tried to find a way to just have a distribution center within the U.S. and sales made online would have been made to our Peruvian company but that wasn't possible due to Peruvian tax regulations.
This will be a really challenging venture, and if successful, I wouldn't mind sharing the experience with this community. At this point, what I am working on are mechanisms to build customer trust.
While Internet sales are up and increasing over the last few years, Amercian and Canadian buyers are still interested in physical locations for business operations. Most don't have a problem with overseas locations, but do have a problem with misdirection of location.
Don't have a technical answer, merely speaking to the buyer consciousness and perception of viability after 30 years of B&M retail sales handling "mail orders".
Isn;t this exactly what you need? [en.wikipedia.org...]
I think if you can get by with a virtual secretary as suggested and have a reliable support system, you should be good to go. As long as your products or services can be supported that way.
IANAL, but your T&Cs should probably confirm what jurisdiction any legal disputes will be handled by
|Most don't have a problem with overseas locations, but do have a problem with misdirection of location. |
I think both are a problem. If your company is located oversees, the customer has its doubts about buying to you because they don't know how can they be protected if they are scammed by the seller, especially if their purchase is done with Paypal or money orders.
If you don't have a physical location, the customer may have its doubts when dealing with you because they may not know how to find you in case problems arise.
To be completely honest with you, I didn't know of the existence of Virtual offices. But after reading the article, I can say that's basically what we are doing here.
|IANAL, but your T&Cs should probably confirm what jurisdiction any legal disputes will be handled by |
I've been thinking a lot about this. A lot. I do want to find a way to put in our policy page that our company has its principal address in <A>, but we use mail forwarding services therefore our mailing address is <B> and our products are shipped from <C>. I just can't think of a way to build a paragraph with this information and sound professional and trustworthy.
You could always just mention in your FAQ that your home office is in Peru so that you can be close to the source of supply for your widgets, or that you have buyers on the ground in Peru but that your US corporate offices are in fill-in-the-blank US city, wherever you registered your LLC. Frankly, I think it is better if the customers do not think the business is being run from Peru. I buy a lot of stuff from abroad and am really surprised by how many Americans won't buy anything even from Canada, much less Europe, much much less Peru.
Will your US LLC be processing the credit cards? Because I think customers would have a fit to see a charge from Peru on their bill.
We've been using 2Checkout as our payment gateway. Now that we will operate in the U.S. we are looking for other options. We opened a merchant account and will be applying to merchant services of a known U.S. bank.
We've had a few sales, customers who "took the risk" of buying from us (from Peru), and we've had 100% positive feedback from them. I make sure there is permanent communication with them from the moment they place the order to the point the carrier gives us delivery confirmation. Unfortunately like you said, most American customers won't even buy from Canadian stores much less from a Peruvian one.
Past customers will know that we are a Peruvian store, regardless from our location. I don't want to hide anything and try to be as clear as possible.
[edited by: Argentdreamer at 3:30 am (utc) on Oct. 11, 2008]
If you have a US mail address, phone and merchant account I would argue that you are actually based and have a business located in the US. If you choose do have everything forwarded to another country that's your option. If people don't accept that they are working off some old ideas about the family market down the street, either choose to explain to them and hope they will understand if it's worth the effort, or don't tell them.
Is your US bank actually an Indian bank? Do they have the need to inform you that they have a large portion of their staff based in India? Is it a problem that when you phone them, you are talking to someone in India? Just like you, the bank is a US business which undertakes significant parts of its operation overseas; and yet nobody doubts that the bank is US bank as it is legally registered in and subject to the laws of the US.
A large chain of US coffee shops which you may well frequent if you visit is majority owned by a group from the Middle East. It's still a US chain, seen as US businesses, despite the ownership. You in Peru may own a US company, but it's still a US company; the nationality or place of residence of the shareholders does not change the company's status.
You are incorporated as an LLC, therefore the business is a person in and of itself. It does not depend upon you, your location or the location of your other directors.
The business resides at the registered address you provided at incorporation, unless changed. Unless you have registered the business at your Peruvian address, you have a US business, albeit with some Peruvian assets and/or operations. You need to remember this, i.e. that you don't have a a Peruvian company incorporated in the US, you have an US company incorporated in the US and subject to US law.
Put only your US details. Clothing manufacturers don't list their foreign factories on their website. Your email address, telephone forwarding and mail forwarding already put you ahead of many US businesses in terms of ease of contact.
|If you have a US mail address, phone and merchant account I would argue that you are actually based and have a business located in the US. If you choose do have everything forwarded to another country that's your option. If people don't accept that they are working off some old ideas about the family market down the street, either choose to explain to them and hope they will understand if it's worth the effort, or don't tell them. |
We have a saying which literally translated to English would be "don't try to look for a 5th leg in a cat". I don't know the American version but basically it means that you shouldn't be looking for problems where there aren't. My business partner keeps repeating this to me. We have the mail address, the merchant account, a registered agent (for legal disputes), U.S. phone number so we should be good to go. It is my nature to try to predict the most common issues that may happen to have tools to counter them.
|Is your US bank actually an Indian bank? Do they have the need to inform you that they have a large portion of their staff based in India? Is it a problem that when you phone them, you are talking to someone in India? Just like you, the bank is a US business which undertakes significant parts of its operation overseas; and yet nobody doubts that the bank is US bank as it is legally registered in and subject to the laws of the US. |
|Put only your US details. Clothing manufacturers don't list their foreign factories on their website. Your email address, telephone forwarding and mail forwarding already put you ahead of many US businesses in terms of ease of contact. |
You are totally right here. I'll do this, it's what my business partner has been telling me to do from the start. I think where I need to work more is on polishing the policies. They were solid, but for example, one of them mentioned that we didn't share personal information with third parties but now, we will have to with the Fulfillment company (reason is self explanatory). I emailed the company asking for their privacy policies so my customers can click on a link in my page that will direct them to those policies.
|I don't know the American version but basically it means that you shouldn't be looking for problems where there aren't. |
American Version: If it ain't broke, don't fix it.
I think I can help assuage some of your fears... Many phone calls our customer service reps receive involve questions about our "physical" location. They don't actually care where we are located, they just want to make sure that the shipping charges are in-line with the distance their package will travel, that it isn't shipping from a factory overseas (they are worried they will have to wait an extra week or two for delivery!), or because they think we are literally just around the corner and they can stop in and pick-up the item. I don't think I detect as much "fear/distrust of foreigners" as it is just a general assumption that we are either located a block from their residence or across the country -- in the end it doesn't make a difference to them as long as someone answers the phone and we have a location, anywhere in their vicinity which they think they can show up at and demand money back or yell in the face of a person if they feel wronged.
I would say that if you can show a US address, a location to which items may be *returned, and a phone number which is answered during US business hours, you should only have a few extra headaches as compared to the rest of us.
*Customers are going to ship back merchandise to a listed location whether you want them to or not...so if they get "returned to sender, address not valid" on a return, they will write reviews to this affect and cause you problems.
We get these "physical location" calls often too.
|they just want to make sure that the shipping charges are in-line with the distance |
This can't be it, we have free shipping.
|they just want to make sure that the shipping charges are in-line with the distance their package will travel |
This can't be it, they ALWAYS ask about delivery time.
|or because they think we are literally just around the corner and they can stop in and pick-up the item |
They can't think this with your address right next to the phone number.
|they think they can show up at and demand money back or yell in the face of a person if they feel wronged |
These types usually make their own problem before the item even arrives. Could be better if they don't purchase if you are dealing in high end items.
People who call in with the 3rd degree questions about the business are usually working off an agenda which has nothing to do with the current purchase. It could be past problems, fear, paranoia, whatever problem is being assumed before it occurs.
Who you really have to watch out for are those ones who are overly friendly or sweet on the phone, who want to know who the owner is, or who ask personal questions, or call back multiple times asking for a particular person by first name. These are the ones who really backbite if anything should go wrong like the item arrives a couple days later (even though you said "estimated delivery time") or you don't return a call the same day (even though their is a time lag in this country), or a product arrives damaged (it looks like this was "broken at your store"). They take it as a personal insult. When this occurs we have learned to pass them of to another rep who they did not initially talk to saying the other person is out of the office which almost always diffuses the situation.
|This can't be it, they ALWAYS ask about delivery time. |
Not if you charge freight and slap them in the face with a big UPS logo -- which explains the time-frame for each type of shipping -- at each stage of order...then they call in and request free shipping, discounted shipping etc. This is despite our rates being as close to exactly what we will be charged as possible...
|They can't think this with your address right next to the phone number. |
You should tell them that... they call assuming that we have a "showroom" or other, secondary brick and mortar locations which are different than our "corporate" location which is listed on the website. Think of it this way: If you go to some manufacturers' websites, they only show you the address of their corporate headquarters under the "Contact Us" tab, not all the locations their products may be viewed and purchased. Same thing; they call in and assume we are just not showing all of our locations.
I have started using Google Street View to check out the addresses listed on ecommerce sites. What's your US address look like?
-- What's your US address look like? --
Like 4 years ago before the entire Blocks of Biz got leveled and new Warehouses/Biz Complex went up. Realy... There is a picture of my Supplier's(his bussiness dead for the past 3 years) car in our drive-way. Street view and Satelite of our area are so oudated even the Police cant use it!
added: Blend27.moonLocation = false;
<!--- B is not Case sensitive --->
>They sell dirt cheap cuz they don't have stock ect employees and so on. Problem is u can't tell.
And, yes, some sell dirt cheap cuz they don't have any intention of shipping product.
How do you tell the difference? Simple. If there's a physical address from which the police can forcibly extract them, then ... you have at least the possibility of having the transaction protected by law.
If there's not, you don't. And it's that simple: a rational person doesn't deal with them.
|then ... you have at least the possibility of having the transaction protected by law |
Charge it to your credit card. File a charge-back if goods don't turn up. Why worry?
>>I would not knowingly buy from a company operating like you describe.
For what it's worth, I agree.
I don't have anything to add of any value... but I love this;
|We have a saying which literally translated to English would be "don't try to look for a 5th leg in a cat"... |
Can you get orders without an "real" location? Definitely. Will the lack of an apparent physical location be off-putting to some customers? Yes.
It's worth reviewing the Stanford Web Credibility Guidelines [credibility.stanford.edu]. Several of these are very relevant. "Show that there's a real organization behind your site" translates into at least listing a physical address, and preferably including a photo of your offices and/or listing membership in a chamber of commerce or similar.
"Show that honest and trustworthy people stand behind your site" is closely related to the previous one, IMO, and can be bolstered with staff pictures, bios, stories, etc.
I'd suggest reading through all 10, and do the best you can with each without posting anything phony on the site (e.g., inventing employees, using stock photos of an office building, etc.)
Those guidelines are rather old, but I think the are still good. When I visit an ecommerce site I'm not familiar with, I am far more likely to buy if I get a warm feeling about the company. A photo of the owner or CEO welcoming me and assuring me that he/she will do whatever it takes to satisfy me, a photo of a building, a street address, some testimonials, etc. all help build confidence.
Consider a photo of your outsourced distribution center, maybe with an interior shot showing people and/or sophisticated automation. Something like, "All Example Company orders ship from this state-of-the-art distribution center located in _____" would be truthful.
I'm not sure how much it comes up anymore - but it also might depend on how much you're expecting your customers to plunk down for your goods and/or services. I know someone located in Detroit; I built an ecommerce store for him a few years ago. It does pretty well. He decided he wanted to try expanding into Canada - it's just across the river, maybe a 15 minute drive. So he went over to Windsor, rented basically what amounts to a post office box (although it sounds like a physical address - I think it's actually a restaurant or coffee shop or something) and I built him a second site for Canadian customers. Shipping makes a huge difference depending on which side of the Detroit River you're on, plus there were payment and currency issues, so it was best to just do everything separately. Once a week, he goes over the river and ships out his Canadian orders there, has lunch at the coffee shop and comes back. He doesn't really have a physical presence in Canada, but he doesn't really need one.
I have ran an online business selling physical products from Hong Kong for over 6 years and only ended the operation recently. I am personally in the US, but the business is under the name of a family member in Hong Kong.
The thought of buying from another country annoys a lot of people, which is why I would never say that on my site. The business has a PO box in the US and has a Skype US number, enough to convince buyers to think that we are in the US. We also include shipping prices into the products, and say that shipping is "free", which helps a lot because if I am charging the actual shipping costs to customers, an order might look something like $100 for the product with $80 for shipping....a big turnoff compared to $180 with free shipping (at least that’s the feeling I got after testing the 2 different models)
I also ship with post office express mail, which is super fast, typically 3-4 days coming from Hong Kong and the post office even deliver those packages on Sunday because they are express! The products I sell have a high enough margin that even with this type of shipping, there's still a good profit. Also, I am in a niche where I designed the products myself and they are very unique and in high demand, so that might make a difference too.
Customers only find out that the company is in Hong Kong after they get the package or if they use the tracking number to see where their order is. By that time, our physical location no longer matters. Many customers would be amazed when they find out we are in Hong Kong and they receive their order 3-4 days after they placed the order online. Once in a while, someone would email me back after I send them to tracking number, and tell me that something is wrong with the tracking because it says the package is coming from Hong Kong. Repeat customers are also not unusual.
Overall, I never really have issues with the business being located in another country. I have read some people’s comments on forums after finding out where we are, some people do assume that all products from China/Hong Kong are crap, which is not true at all. I even read a comment from a non-customer who said something like “I heard they are in Hong Kong and so their products are probably made in some back alley sweat shop by children”.
>>their products are probably made in some back alley sweat shop by children
Concern about purchasing from an offshore company is mostly about possible hassles if the product isn't delivered, arrives broken, doesn't meet expectations, etc. In countries without a perceived strong legal system, the risk of fraud or credit card theft is higher. (I'd be kind of reluctant to buy, for example, from a Nigerian firm because I've encountered so many fraudulent orders originating from that country. My assumption, whether true or false, is that the local authorities may not have a good handle on things, and what seems like a legitimate offer might be a scam.)
I think you just need to apply common sense according to your product & service.
Being identifiable , & having local distribution / service provides a stronger level of trust. But there are other offsets and additions that you could look for. Ask a professional marketing person, perhaps, to assist.
| This 41 message thread spans 2 pages: 41 (  2 ) > > |