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E-shop Basics gives an outline of the basic essential requirements for establishing an e-commerce sales and distribution site offshore. The sections below outline the types of products and services likely to be needed.

1. Professional Services

NB See the Services Directory open now in all jurisdictions on the site for listings of offshore professionals in many of these categories.

  • Company Formation – establishing a tax-efficient corporate structure and choosing the right type of offshore company is crucial; assistance in selecting and forming a company is available from law firms and specialised company formation agencies.
  • Legal – besides tax law, various other types of legislation can impinge on offshore e-commerce operations, including data protection, distance selling, intellectual property, product liability, financial and marketing regulation. Local offshore firms can help, but it is probably necessary to pick one with an international dimension if they are to give thorough advice on international e-commerce business.
  • Accountancy –- offshore e-commerce is not different from any other type, although a given jurisdiction may have specialised auditing rules, and tax computations (if there is any tax!) can vary widely. It is never easy to choose between a local firm with good local knowledge, and an international firm which may be weak in a particular jurisdiction. A Big Four firm with a local office is perfect, but will charge a perfect price.

2. Technical Installation:

  • ISP/Hosting –- with some exceptions, most offshore jurisdictions offer a somewhat limited choice of internet service provider. The Jurisdictions section contains information on the stage of development of e-commerce in each case; and the Services Directory contains the names of some ISPs. Except for a very large operation, an in-house set-up offshore will be expensive and technically risky - therefore it will be wise to stick with the best-developed jurisdictions where there are established ISPs and hosts.
  • Telecommunications –- this is less of a problem, since most offshore jurisdictions have well-developed telecommunications systems and good international connections. Prices are falling rapidly, and in many cases privatisation is imminent or has already taken place, bringing price and service benefits.
  • Internal Technical Staffing –- although some straightforward businesses will be able to use off-the-shelf solutions for service delivery, or will be able to rely on offshore technical support agencies, most firms will need at any rate some offshore technical staffing (and tax considerations may dictate that these individuals need to be offshore). Local skill levels are inadequate in many cases, and it is absolutely necessary to establish the availability and cost of work and residence permits in advance. See the Jurisdictions section for information on local rules in each case.

3. Commercial Installation

  • Front-end Customer Systems – this includes marketing modules, stock database, shopping basket or cart, associated multi-currency and sales tax calculators, and customer database or links to it.
  • Payment Systems –- either out-sourced or in-house systems to provide secure credit card processing and authorisation mechanisms.
  • Distribution Systems –- either storage and down-loading of digital product, or the control of stock, warehouse and delivery mechanisms.

Increasingly, the major IT systems suppliers such as Oracle, Sun and Microsoft are offering integrated packages which handle major parts of these commercial functions. The trend is increasing towards making these available on an ASP basis (ie from the Internet rather than locally), which will make location irrelevant.

To the extent that an offshore e-commerce operation is providing, maintaining or running its own systems, please see the remarks above concerning the supply of skilled labour.

One particular difficulty has traditionally been the expensive and laborious process of arranging merchant facilities through a bank. This is not directly a result of offshore location and applies to all e-commerce businesses, especially small ones; but being offshore is likely to compound the negotiating process. This is a problem to address before and not after a move to offshore.