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What is an Internet Merchant?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 08 November 2016
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An Internet merchant is a person or business who does business online. Widespread broadband penetration and acceptance of Internet entrepreneurship led to an explosion of Internet merchants in the 2000s, ranging from global companies to people doing business out of their own homes. Working as an Internet merchant has some distinct advantages, although there are also some downsides to consider.

One major advantage to working online is that a much smaller initial capital outlay is required. An Internet merchant does not need physical premises and all of the costs which go with them, including liability insurance and overhead costs such as utilities and cleaning services. Additionally, people can start out with a small-scale business online, working their way up to larger offerings as they start to generate money. By contrast, someone with a physical store needs stock to fill the store, which can require a substantial investment just to get the doors open.

Some small businesses with brick and mortar stores also do business online, and these Internet merchants may end up doing more business over the Internet than they do in their own facilities. People can also sell a variety of products and services from home, operating their open websites or working with sites like Etsy and eBay to sell their goods to members of the public. Such sites usually collect a commission for handling the sale, but they offer promotion and a safe space for Internet transactions.

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Some disadvantages to doing business online include the need to set up a payment processing system; for a small business with a store, sales may be handled in cash and checks, but to do business online, people must be able to process credit cards. This requires an Internet merchant account with a bank and payment processor which will handle credit cards on behalf of the business. Doing business online can also expose people to risks such as fraud. Additionally, Internet merchants need to handle shipping, which can become quite complicated, especially when an Internet merchant is working with international customers.

Internet merchants appear and disappear every day. The more successful find a product niche and market themselves well to ensure that they gain a big following as quickly as possible. Less successful merchants may find that they are trying to penetrate an oversaturated market, or that they fail to handle their marketing well, and consequently do not attract the customers they need to survive. Many aspiring Internet merchants start out in online business as a sideline, building up the Internet business to a stable point before they quite their day jobs.

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