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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]
But if you cant live up to your customer expectations (the expectations you have given them through the image of your website), your unhappy customers might turn quite nasty when they start to dig a little deeper to find your not actually operating in the US.
[edited by: Seb7 at 8:44 am (utc) on Oct. 24, 2008]
Agreed.
Where is the charge on my credit card statement going to show as coming from? People start seeing 'Peru', and you can expect a lot of chargebacks.
Where is the charge on my credit card statement going to show as coming from? People start seeing 'Peru', and you can expect a lot of chargebacks.
Yeah, that's a big concern for me when I was running the business out of hong kong, but you can always use Paypal or Google Checkout to avoid that. 2checkout also works because it shows up as 2co.com
but you can always use Paypal
Unfortunately if you are using Paypal many wont purchase in the first place because it has become associated with a lack of transparency and shady auction dealings. Google checkout is probably ok becuase it has Googles name on it, at least for now.
I tend to purchase low-end items. CDs or music stuff, if that makes any difference. A fan is a fan.. and will pay well beyond what the actual item is truly worth, just to get it! :)
Physical location has very little relevance to me, unless of course it is certain countries.. which probably need no actual mention here! (notorious for poorly-made replicas and such)
You could also go one step further and open another 'branch' operation in Canada.
If I should make an analogy to explain why we choose to operate like this, I'd say that when you go to a war, you don't send your troops right away without knowing what to expect (because it could be disastrous). Instead, armies sent scouts (in the past) and nowadays with the use of (key word here) "Technology", you can do reconnaissance, therefore minimizing loss.
That's what we are doing here. No matter how many studies we've done, how much information on the market we've gathered, there is no way we can tell if our business will be successful just by making numbers. Only way to know that is by doing it, and analyzing the results. We don't want to spend 4x times our current investment in facilities, personnel, equipment and others only to see our widgets won't sell.
Over the months, we realized what others told us. Selling from abroad is not the way to go. "If your target market is the U.S. then you need to sell from the U.S.". Like I mentioned in a previous post, a few American customers bought from us (we shipped from Peru) and were 100% satisfied with their orders. This led us to believe that although there is a risk, we should enroll in this venture.
I'm going to consolidate your questions and will try to answer them the best I can.
What's your US address look like?
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.
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.)
your unhappy customers might turn quite nasty when they start to dig a little deeper to find your not actually operating in the US
Where is the charge on my credit card statement going to show as coming from? People start seeing 'Peru', and you can expect a lot of chargebacks.No, you will not see the name Peru in any statement because we are using 2checkout as our payment gateway and are currently applying to our bank's merchant services.
but I do prefer sellers to tell me WHERE THEY PHYSICALLY ARE. Lying about this type of stuff does nobody any goodI know you are not referring to me, but if anyone ever told me that, I'd say "I'm not lying". We are using technology, internet tools as means to save us initial costs. As much as it may look fishy, it is not. We are not in the scam business. We are in the widget business and we will keep it as honest as it can be.
"I would not knowingly buy from a company operating like you describe. "Agreed.
Consumer behavior (I think) has at least evolved to expect this sort of thing. Example: I've never walked into an Amazon or Ebay store once, but won't hesitate putting down my cc num on their sites.
We are based in Barcelona, Spain (only because we choose to live here).
We are incorporated in the US, our merchant account is there, our business address is in California.
We ship from a fulfillment house in California as well.
On top of that we also use the Business version of Skype to let our customers call us on US phone numbers (not 800 but at least it is not overseas).
We have full transparency on our About Us page listing where our company is based and where the owners of the company live.
Having a set up like this makes absolutely no difference to our customers and they actually are quite impressed when they learn that we are running an American company from Spain.
Obviously thats not the story with your company but thats what I would assume.
I think of the guy (or gal) sitting in his underwear
This is discrimination against working in y-fronts!
