Before Going Online to Sell Groceries, Shop for Data

Question: I would like to sell Filipino groceries online in partnership with an established grocery store owner. How do I find such a store owner and persuade him or her to partner with me? Can I find statistics that would show this person his sales will increase if he goes online?

--Errol E. Hingco, Wilmington

Answer: An established grocery store owner is locked into his geographic area most of the time, unless he or she fills orders through a toll-free number, as certain (primarily wholesale) grocery stores in the ethnic Indian market do, for example. If a store owner is happy with his general turnover rate, then he is probably not going to be motivated to go beyond his current customer base.

Your challenge is to show an established business owner that going online would be a viable economic enterprise. To do this, you might have to prove that the online efforts would, say, double grocery sales in a short period of time while keeping costs low; allow inventory reduction over time by moving increasingly to online sales and distribution; enable the store owner to buy online, allowing him to become a far more effective broker; and give the store a wide swath of customers in a relatively large area, thus providing an opportunity to build loyalty and branding.

To do this, you’ll need to assess your primary Filipino target population and its demographics throughout the U.S. The Web site of the U.S. Census Bureau (https://www.census.gov) may be helpful in your research. To find data on general Web usage, try sources such as Media Metrix, which has a report at https://www.mediametrix.com/usa/data/HMPG__PROMO_HOUSEADS2_11.pdf featuring its current research on advertising relevance. The report lists current stats on the top portal sites by category and could help you with a general overview of the Web market when you are planning your sales pitch (you will need Acrobat Reader to access it).

Armed with this kind of data, you need to calculate the cost of filling orders online, including shipping, packaging, etc. This is an area in which many consumer sites lack credibility because they are slow to recognize the logistical issues involved. Obviously, the cost of the shipping and packaging is passed on to the consumer, but you still have to work through the math because ethnic shoppers are just as price sensitive as others. Also, you should recognize that they are generally loath to buy anything other than packaged foods online.

Don’t forget to research the issue of the value proposition. The only reason that ethnic shoppers would buy online is to fill a need they cannot fulfill in another way, such as through existing stores in their area. Go to retail food industry associations to try to find information on ethnic markets. Your demographic research should help you build the case that there is an unmet need for Filipino groceries.

--Rohit Shukla, president and chief executive, Los Angeles Regional Technology Alliance

Business Broker Advised

Q: I am planning to purchase an established liquor store. What things should I look at during the observation period?

--Luis Tapia, Whittier

A: I would advise you to work with a professional business broker who is familiar with liquor store transfers. By purchasing a liquor store, you are going into one of the most hazardous of the retail businesses, both because of the threat of crime and because the alcoholic beverage industry is highly regulated. Transferring ownership and liquor licenses is a complicated process and if you do not do it correctly, things will fall through the cracks that will come back to haunt you later.

That said, you want to start by checking with the Department of Alcoholic Beverage Control (https://www.abc.ca.gov) to make sure that the store does not have any active violations on its record. Next, get the answers to several crucial questions, such as: What kind of volume does the store do? What is the status of its existing lease? Is the local municipality going to be making land-use demands on the site in the future? Is the store a particular target of robberies or in a high-crime area? Have there been internal theft problems? Is parking adequate? Does the store have a good location for walk-in traffic? What is the store’s monthly cost of doing business? What is the annual cash flow, minus expenses? What will it cost you to purchase insurance?

The retail beverage industry is unique, and you need to study the laws, rules and regulations that govern it before you buy into a store, or you will find yourself with deep problems in a hurry. The laws governing liquor stores vary from state to state, so make sure you get information that pertains to California. There are industry associations that should be helpful in your research. One place to start is the California Beverage Merchants (https://www.nabronline.org/cbm/government.html), which is affiliated with the National Assn. of Beverage Retailers (https://www.nabronline.org).

--Max Kerstein, consultant, retail beverage industry, Los Angeles

License Required

Q: I am researching starting a home-based freelance editorial business. My city does not permit home-based businesses, but is willing to look the other way as long as I don’t have customers coming and going. I need to know whether it is necessary to register my business, and with whom.

--M.W.T.

A: You are fortunate that your local zoning department says it will look the other way, but this is a promise not to be counted on. Several things can trigger the department to gear up, including complaints from a jealous or angry neighbor and your getting a business license (if business license records are shared with the city’s zoning department).

As a business, you are undoubtededly required to get a city business license. Although many home-based services businesses ignore this requirement, it is still a requirement. An alternative is to have your business use the address of an office suite (that you pay for) or use a private post office box that has a street address.

You do not need any special licenses to render editorial services. For detailed information on start-up costs, marketing, potential earnings and references to associations and courses that could help you get started, check out the section on “Editorial Services” in our book, “Best Home Businesses for the 21st Century” (J.P. Tarcher/Putnam Publishing, 1999).

--Paul Edwards, author and self-employment consultant,

Los Angeles

If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.