Running head: CREATING AN E-COMMERCE BUSINESS 1

Assignment 1: Creating an eCommerce Business

Stacy Reed

Professor Dr. Adrienne Garabedian

BUS402: Small Business Management

August 2, 2020

CREATING AN E-COMMERCE BUSINESS 2

Creating an E-Commerce Business

Develop an idea for a prospective small business, and select a name for the company.

The internet provides a reliable online business and social forum that is beneficial for

promoting and marketing your company. Electricom is an e-commerce company which sales

electronics, hi-tech products, and home appliances to consumers at lower than average retail

prices. The company focuses on using online platforms to market, sell, and distribute our

products within the market. Hi-tech electronics and appliances are readily available to get to the

end consumer in a quick manner, ensuring an overall positive experience buying from our

company. Another area of focus is ensuring that Electricom distributes products at an affordable

retail price, making it one of the leading competitors within the industry. Electricom applies

modern diversification strategies to ensure that it expand its popularity within the market. This

paper explains the operation and business environment that Electricom operates within in such a

competitive environment.

Identify its key competitors and summarize the strengths and weaknesses of one of the

competitors.

The E-commerce industry is highly congested based on the positive rate of returns that

often incur. The main competitor’s of Electricom within the market are E-bay, Amazon, and

Walmart. They are considered major competitors based on their positive image they have

amongst consumers and being known for selling major electronics and appliances. The

company’s positive images also contribute to development of brand loyalty that they must abide

by to ensure that they remain competitive. The weaknesses that the companies have is the poor

pricing (Epstein, 2014). The cost of logistics and delivery charges is what makes most customers

CREATING AN E-COMMERCE BUSINESS 3

shift their attention away from the actual services that the companies have to offer. Shipping

charges are critical in controlling since this is a major reason why consumers choose to use one

company verses the next.

Prepare a mission statement that encompasses the purpose of the business and considers its

target market.

The mission of Electricom is to deliver the best products at an affordable price, in a

timely manner to ensure customer satisfaction and will become a regular client. The mission

statement reflects the interest of the company in a positive way (Epstein, 2014). The activity of

the company focuses on the distribution of quality goods that reflect on the interest of the market

in a positive manner and in a reliable time frame. The main aspect of this business is to keep

focus on the target market who are needing or wanting quality electronics or appliances for the

best prices.

Identify the ownership form for this business, taking into consideration tax implications,

liability exposure, managerial ability, and cost of formation.

Electricom will operate as an LLC, Limited Liability Company. This type of ownership

is favorable for me as an LLC is legally separate from its owners. Operating as an LLC is ideal

for sole proprietorship or partnership if I decided to go that route later and take on a partner to

help me run the business. Since this is a new start-up business, this type of ownership will

protect me from personal liability if there was ever negligence with a future partner or an

employee. My personal assets would be protected in this case. Since this will be strictly an

online business, choosing to be an LLC will also mean less paperwork and not having to run my

business in the same manor as major corporations and not having to keep extensive records as a

CREATING AN E-COMMERCE BUSINESS 4

corporation would require. Tax advantages are a big reason to operate as an LLC as we do not

have to pay corporate taxes or LLC taxes. I can file my business taxes along with my personal

tax return and just pay income tax on any profit that was made. It is known as pass-through

taxation, and there are no restrictions on the type of owners or the number of owners we could

have. Having an LLC does not require the formal management structure that corporations

require. Such as, having a board of directors who oversee the company and officers who over-

see the day-to-day business operations. With having an LLC, we have more choices as to how to

run our company and more choices with less formality structures. It offers the company potential

investment choices that reflects on the interest of the company in terms of expansion and other

essential services (Angell, Ames & Lathrop, 2015). As an owner, if I had a partner, I do not have

to distribute the profits equally if I invested more time, money, or labor into the business. This

simple and adaptive business structure is perfect for my small start-up business.

Conclusion

In summary, this paper explains the business environment that Electricom operates in

such a competitive industry. The E-commerce industry is highly congested based on the positive

rate of returns that are often incurred in this industry. Doing research and exploring the market

and major competitors is essential for my business to thrive. There are many factors that will

contribute to the success of the company, such as choosing the right type of ownership.

Choosing to run the company as an LLC will allow us to take advantages of the LLC tax

benefits. We would have more flexibility with management and less reporting and record

keeping requirements.

CREATING AN E-COMMERCE BUSINESS 5

References

Epstein, M. J. (2014). Implementing E-Commerce Strategies. Westport: Greenwood Publishing

Group.

Angell, J. K., Ames, S., & Lathrop, J. (2015). Treatise of the law of private corporations

aggregate. Clark, N.J: Lawbook Exchange.

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