An online trading company is a trading company that operates primarily through the internet and its e-commerce tools. Similar to any regular retail company, online retailers specialize in buying goods from manufacturers and reselling them to consumers or other retailers. However, the online nature of this business makes it different and comes with specific benefits and limitations. Selling goods online offers tremendous opportunities and benefits, since you can trade worldwide and save on organizational and administrative costs such as wages, office rent and others.
The main difference is that a 100% online trading company (with no physical stores whatsoever, just headquarters and warehousing facilities) requires virtual rather than physical infrastructure. An offline trading company needs offices, shops, warehouses and a logistics network that connects suppliers, offices and points of sale; An online trading company needs offices, storage space, powerful servers and websites, and a flexible logistics system that allows it to serve customers in many locations.
As you can see, online trading companies require less physical infrastructure, but they also need to be much more flexible to serve their customers. While a website is a useful addition for a regular trading company, for an online trading company it is an indispensable tool without which the company cannot function – hence the high demands on the website and host server's capabilities.
Features of an online trading company
The main function of an online trading company is to buy goods from a manufacturer and resell them to retailers and consumers. A subordinate, but nevertheless essential task is the delivery of the goods to the customers, as online trading companies usually lack physical infrastructure such as shops, outlets and other points of sale.
In order to buy and sell goods, an online retailer needs to set up a hub for transferring products from manufacturers to customers. In this case, that hub is a website. Just as a physical store needs designers and marketers to optimally arrange and present products, a digital store needs specialists to guide customers through the possible purchase options.
As far as the delivery of goods is concerned, an e-commerce company can either set up the delivery network itself or outsource this task by contracting with a logistics company. The online retailer then hands over his goods to the logistics company, which takes care of the delivery of the goods via its own network.
Key aspects of online trading
Although the goods or services sold by online retail companies vary, there are some common elements due to the specific ways these companies market and sell their end products. Here are some of the main problems you will encounter no matter what you sell online.
Distance selling
A special category of online trading is EU distance selling. E-commerce has grown tremendously in Europe and the online market is growing year after year. However, every retailer needs to understand the impact of e-commerce in the EU on VAT. VAT rules are very different for online sellers; For example, there are different thresholds for VAT registration (e.g. £70,000 for the UK, EUR 35,000 for Poland or Italy, EUR 100,000 for Germany). There is no minimum threshold for digital, electronic and broadcast service providers to charge VAT at the rate set by the country where the consumer is located.
Online stores and websites
Of course, a website is an absolute must for any online business. Conceived as an online store (description of the range of products available, their prices and features), the site must also include the following important sections:
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