Internet and E-Commerce Business Law

Despite a general economic downturn in 2020, one area saw dramatic growth: electronic commerce. E-commerce surged by an extra 19% in 2020 and 22% in 2021 on top of projected growth rates. When the COVID-19 pandemic kept people home, they shopped online, creating a boom for existing online businesses like Amazon and a growth market for entrepreneurs.

Although e-commerce business growth began to slow somewhat in 2023, it remains a viable business model for owners of large and small companies. Competition is sharp, and the smart startup owner will take time to learn about the online business market and get sound legal advice before plunging into the world of online retail.

E-Commerce 101

The original e-commerce business model copied the brick-and-mortar store model: If you make it, they will come. Today's marketing strategy requires a new business to create new customers to buy their products. You'll have to create a demand before creating a customer base for your product.

Your e-commerce platform may resemble a physical store or be more ephemeral. These days, some online businesses have no physical location. They exist only as online catalogs and order fulfillment warehouses.

Business Types

The first thing you must do is define your business type. Your business type will dictate your online presence.

• Online sales: You are selling your own product or service on an online sales site. In marketing lingo, this is “business-to-business" (B2B) or “business-to-consumer" (B2C) e-commerce. You're selling what you create directly to the end user.
• Online shopping or marketplace: These sites gather various products under one virtual roof and distribute them for the creators. Amazon is the best-known online marketplace, but Etsy and eBay started as small e-commerce websites.
• Subscription sites: You may consider a subscription service if you offer a regular service, such as a podcast. Your subscribers pay a monthly fee and receive access to your site and your products.

Most e-commerce stores are still B2C sites and operate in conjunction with brick-and-mortar business operations. It takes a leap of faith to become a fully online store without a physical storefront.

Creating an Online Presence

In the early days of the internet, a small-business owner could design a website, submit it to one of the search engines, and have customers within a week. Online transactions involved sending credit card numbers via unsecured email.

Things are different in the 21st century. Before leaping into the internet business, you should discuss your plans with a business attorney to be sure you've done everything according to the law. Legal sites provide checklists to ensure you cover all your business needs.

• Select a domain name. The Internet Corporation for Assigned Names and Numbers (ICANN) monitors all domain names and ISP numbers on the internet. No two companies may have the same name or identifier. Your name should be easy to remember and spell. Suffixes have assigned users: You'll see .gov used for government entities and .edu for schools and educational institutions. Nations also have identifiers, such as .ru for Russia and .ca for Canada.
• Design your website. Web design is deceptively simple. Many website providers have a range of user-friendly templates that let you plug in your business and product information and publish your page directly from their site. This is useful for small businesses with a limited range of products or services. Larger businesses or those with more extensive catalogs may need professional webpage designers. Your site needs to be accessible on computers and mobile devices.
• Protect your data. You will need good data encryption if you're conducting any retail transactions. The Payment Card Industry Data Security Standard (PCI DSS) is an industrywide standard that protects retail sales via credit card. If you intend to carry out e-commerce sales through credit cards, you must be PCI-compliant.
• Protect yourself. Be sure your company data is safe from hackers and malware. After spending money on a website, social media advertising, and products, don't skimp on antivirus protection and data breach prevention.

Marketing and Advertising

E-marketing is its own subsection of e-commerce. An entire industry has sprung up around email marketing, social media optimization (SEO), brand exposure, and all things related to bringing your business into the public eye.

Internet advertising has its own set of laws and regulations as well. Once you have established your website and are selling your products or services, you should consult internet marketing specialists for the best way to sell your brand online.

Find an E-Commerce Lawyer

Discuss your online marketing plans with a business attorney or intellectual property lawyer before making your move into e-commerce sites. FindLaw can help you locate a business attorney near you to answer your questions.