How To Pay Yourself as a Business Owner: Salary vs. Owner’s Draw

ByVladana Donevski
July 08,2022

If you're running a business, knowing how to pay yourself as a business owner is essential. This can be a tricky process, as there are several factors to consider, such as tax implications and the best interests of your business.

This article will discuss the different ways small business owners can pay themselves and help you decide which method is suitable for you. We will also take a quick look at each payment method's tax implications and give you tips on avoiding mistakes while doing so.

Paying Yourself as a Business Owner: The Two Options

One of the first things you need to decide when figuring out how to get paid for your work as a business owner is whether you want to take a salary or an owner's draw.

Paying Yourself a Salary

A salary is a regular paycheck taxed like any other employee's income.

For the self-employed, salary can mean different things. While some may take home whatever is left after they pay taxes and handle all the business expenses, others may set aside a specific monthly amount that goes towards their personal expenses.

Paying yourself a salary when self-employed should not pose a problem, provided that you maintain accurate financial records. One method of calculating compensation is to calculate your net income first, which is your total revenue minus any business expenses. The other is relying on the average market salary for your position so you can get an idea about the appropriate amount.

Whichever method you choose, it is crucial to maintain accurate financial records and ensure that you have separate personal and business accounts.

Relying On an Owner's Draw

An owner's draw is money you take out of your company's profits and is not subject to payroll taxes. The owner's draw is the amount of money you, as your business owner, pay yourself from your business each year for basic expenses.

The IRS doesn't require business owners to pay themselves a salary, but if they don't, they may have to pay self-employment taxes on their net earnings from the company. This is why even self-employed people often allocate a salary for themselves.

The amount of the owner's draw should be based on the needs of the business and the owner equally. It's important to remember that taking too much out of your business can jeopardize its financial health.

The Best Way To Pay Yourself as a Business Owner - Factors To Consider

You need to think about a few things when deciding which payment method suits you best.

Type of Business Structure

As an owner, one of the first decisions you'll need to make is what type of legal business entity your business will be. This decision will have significant implications for how much you'll pay yourself and affect factors such as liability protection and tax treatment.

So, how do business owners get paid? In general, sole proprietorship and partnership offer the most flexibility when setting your salary, while corporations have more restrictions. 

Sole Proprietorship or Partnership

If you're operating as a sole proprietorship, you can rely on the owner's draw from the owner's equity balance and business profits. The partnership also doesn't allow a salary, as you are both a partner and an employee.

C-corp and S-corp

Both C-corp and S-corp allow you to set a salary for yourself. If you've set up a C-corporation, you can rely on salary and distributions. In the case of an S-corporation, you can pay yourself a market-rate wage as an employee and take dividend income as a shareholder.

Limited Liability Company (LLC)

An LLC is the only business structure where you can pick sides in the owner's draw vs. salary debate. If you've established an LLC, you'll again be both an employee and a company member. However, LLCs offer more flexibility in how profits are distributed, as according to the IRS, they can be taxed as a sole proprietorship, partnership, or corporation. 

How Much You Need vs. How Much Your Business Needs

Second, you must consider how much money you need to take out of your business each month. Taking funds in the form of a regular salary might be the best option if you only need a small amount. However, if you are trying to figure out how much you should pay yourself from your business because you need a larger sum, an owner's draw might be a better option.

Another thing to consider is your current business situation. If the cash flow of your business has seen better days, then taking an owner's draw might not be a good idea.

If you take too much money out of your business, you might reduce its profits and affect its performance negatively. This will mean you’ll get fewer profits in the long run and might have to dip into your own wallet to pay operating expenses down the line.

Understanding Tax and Compliance Implications Behind Paying Yourself From Your Business

When you are paying yourself, it is crucial to understand the tax rules of each payment method.

The sole proprietor and partner will have to pay self-employment tax, including Social Security and Medicare taxes. These taxes are also included in the salary withholdings if the business structure allows this kind of payment. Different implications apply to different types of businesses, so you should inform yourself about the right way to file taxes as a small business owner.

It is essential, especially if you are a small business owner, to get tax advice when figuring out what type of business structure would be right for you. You must understand how you will have to pay taxes with a specific business structure before you even get to your first tax report.

Mistakes To Avoid When Paying Yourself As a Business Owner

There are a few mistakes new business owners often make, so let’s take a look at how you can avoid them.

Make Sure You're Not Overpaying or Underpaying Yourself

First, you must ensure you are paying yourself reasonable compensation. Consistency is the key here, and you should ensure that you are paying yourself the same amount at the same intervals.

While the owner's draw might seem like a good idea initially, it often pays to leave money in your business account to cover unexpected expenses instead of drawing it for personal needs.

Calculate the Taxes Into Your Budget

You need to make sure that you comply with all the payroll and tax regulations when paying yourself as self-employed. You might have to pay penalties or get a sizable tax bill if you do not.

It’s advisable, especially for new business owners, to rely on accounting software to help you budget everything.

Not Paying Yourself at All

The third and final mistake to avoid is not paying yourself at all! While many new business owners initially hold out on receiving a salary, calculating the owner's compensation into your operating budget should happen as soon as the business is profitable enough to allow it.

Conclusion

Figuring out how to pay yourself as a business owner is a difficult task, and you must consider several factors to find an optimal sum and compensation method.

It is always worth consulting with an experienced accountant and seeking advice before forming your business. They can help you avoid the most common mistakes and give some tips based on your specific situation.

FAQ
How much can I pay myself as a business owner?

How much you can pay yourself from your business depends on how well it is doing and the tax situation you find yourself in. You need to consider how much money you need to take out of your business each month and how it will affect your bottom line and running expenses. You also need to factor in the type of business and the tax obligations regarding salaries you’ll need to meet.

When should business owners pay themselves?

They should pay themselves a salary when they can do so without it negatively impacting their business. Taking a salary ensures that the company is still making a profit and allows the business owner to take advantage of certain tax benefits. If the business is not doing well, the business owner might want to wait until things improve before paying themselves a salary.

Can I pay myself from my business account?

Yes, you can, but it is vital to understand how to pay yourself as a business owner. This includes your specific business structure, its finances, and the rules set out by the IRS. You need to ensure that you comply with all payroll tax regulations and not take so much money that it will endanger your business operations.

More from blog

In times of turmoil and economic crisis, it is more important than ever for businesses to have a clear idea of their finances and where their money is going. A well-thought-out budget can help a company stay afloat during tough times, while a poor budget can lead to financial ruin. Why is budgeting important, you may ask yourself, when businesses have other things to worry about? The answer is simple: it is very difficult to make informed decisions about where to allocate resources without having a clear idea about your budget. A budget allows businesses to track their spending, income, and profits over time to make adjustments as needed. Stay with us and learn more about the importance of budgeting for businesses, big and small. Budgeting for Beginners: Where to Start? If you're new to budget planning, you may need help getting started. It’s only fair to ask yourself:  “What does budgeting mean in the first place?” It is the process of creating a plan for managing your finances. We see it as a roadmap that tells you where your money is going and shows you how much money you have to work with each month. To create it, you need to start with a central place where you'll track and record your spending and lay out your expenses. It can be a simple spreadsheet,  an app on your phone, or even a notebook where you jot down your expenses each day.  There are plenty of affordable business budgeting software options available if you’d like to make the process even easier. Once you have a place to track your spending, begin by evaluating your monthly income and expenses: determine where your money is going and see if there are any areas where you can make cuts to save some money. Then, start with budget management: set some financial goals for the month or even a year in advance. These could be saving for a new piece of equipment, increasing your marketing budget, or paying down debt. Finally, create a plan for how you will meet your goals. This may involve setting a budget for each category of expenses, cutting back on non-essential spending, or finding ways to increase your income. Once you have a plan in place, stick to it as best you can. Review your budget regularly to ensure you're on track and fine-tune it as needed. The Importance of Budgeting Budgeting might not be the most glamorous task on your to-do list, but it's essential for any business owner who wants to stay afloat. Small business owners and big corporations use budgets as a way to keep up with their financial goals and save for a rainy day. Below, we've compiled a list of reasons for having a comprehensive budget plan – and sticking to it. 1. Budgeting Helps You Achieve Your Financial Goals With a clear budget in place, you can easily determine what your short- and long-term financial goals are. Are you planning on saving for new office equipment? Do you need a top-notch cash register? Increased marketing efforts? A rainy day fund? A focus on growing your business? Setting a budget will help you allocate the resources in a way that aligns with your goals. Once you've set those goals, you can have a better idea of what you need to save each month to reach them. This will help you stay disciplined and on track. You'll also manage your money more efficiently, knowing what you need to spend on and where you can make some concessions. 2. Budgeting Helps You Keep Track of Your Spending Do you know where your money goes each month? A budget will help you track your spending and see what you spend your hard-earned money on. This can help identify areas where you may be overspending, such as office supplies or entertainment. Why is budgeting important when starting out with limited resources, or even thinking of applying for a bad credit business loan? Tracking your spending is essential to ensure that you are making the most of your limited resources. Once you have a little more financial wiggle room, you can start allocating more money to areas that may have been neglected in the early days. 3. Budgeting Forces You To Be Realistic About Your Finances Yet another reason why budgeting is important is that it requires you to take a close look at your business's revenues and expenses. This can be eye-opening and may even require you to make tough decisions about where to cut back on spending or what changes need to be made to boost profits.   Most businesses that have been operating for a while tend to lull in their growth, and this is where budgeting can help you take a step back and analyze your how your business is doing. If it is not growing as quickly as you'd like, a budget can help you pinpoint areas where you may need to make drastic changes to reach your financial goals. 4. Planning a Budget Can Help You Avoid Debt By sticking to a budget, you can avoid overspending and racking up debt. This is especially important for small business owners who may be tempted to use business credit cards to finance their operations. If unaware of their expenses, they can easily find themselves in over their heads. With proper budget planning, you can avoid this trap. Knowing that 20% of small businesses fail within the first year, mainly due to poor financial management, it's more important than ever to be mindful of your spending habits and keep your business debt-free. 5. Budgeting Makes it Easier to Plan for Emergencies Among the reasons why budgeting is important, this one is often overlooked. No one knows when an emergency will hit, but having a budget can help you be prepared for whatever comes your way.  By setting aside money each month into a savings account, you can build up a cushion that can be used to cover unexpected expenses. This can help you avoid going into debt or being forced to make tough choices about where to cut back on spending. We recommend you have at least 3-6 months of living expenses saved up in case of an emergency. This may seem like a lot but remember: it's better to be safe than sorry. 6. Having a Budget Plan Holds You Accountable Accountability is a not-so-obvious advantage of budgeting. Namely, creating and planning your budget can help you be more accountable for your business's finances. By tracking your spending and setting limits, you can avoid making impulsive decisions with your money. This can help you feel more in control of your finances and better able to manage your resources. Staying on target with your budget can also help build trust with investors or lenders. 7. Budgeting Helps Decision Making Budgeting can help you make better decisions about your money. By taking the time to review your finances, you can identify areas where you may be able to cut back on spending or make more efficient use of your resources. This information can be invaluable in helping you make informed choices about the direction your business will go in the future. 8. Preparing a Budget Helps Build a Retirement Fund A budget can also help you plan for retirement. By setting aside money each month, you can ensure that you have enough saved to cover your retirement costs. If you set aside money each month, you can also take advantage of compounding interest and grow your retirement fund even faster. By contributing to your Individual Retirement Accounts (IRA) or 401(k) account, you can also get tax breaks that can help you save even more money. 9. Budgeting Reduces Stress Finally, if you’re wondering why capital budgeting is important for living a stress-free life, it’s having a clear idea about the state of your finances can help you feel more in control of your money and better able to make informed decisions about your spending.  You get more organized, have more time to focus on the things you love, and can relax a little bit knowing that you have a plan. So take the time to create a budget that works for you, and enjoy the peace of mind that comes with it. Final Words  Why is budgeting important if you’re a business owner? By taking the time to create and follow a budget, you can improve your chances of success and ensure that your business is on a solid financial footing.  Budgeting can help you track progress, avoid debt, and save for retirement. Without proper planning, it can be easy to overspend and put your business at risk. If you're unsure where to start, our guide on creating a budget can help you. Once you've created your budget, stick to it as closely as possible to improve your chances of success. And if you need help staying on track, consider working with a financial advisor who can help you make the most of your money.
By Julija A. · August 12,2022
If you're considering starting your own web hosting business, congratulations! This is a great way to earn a living while doing something you're passionate about. As companies are in constant need of web hosting services, you can tap into this growing market by starting your own business.  So, if you're a beginner in this line of work, we'll provide a thorough guide on how to start a web hosting business, including everything from choosing a niche to setting up your website. Starting From Scratch: What Is Web Hosting? Web hosting is an online service that allows businesses and individuals to publish their websites by renting the necessary space and infrastructure. A good web hosting provider will offer everything you need to get your website up and running, including a domain name, email accounts, and secure server space. There are several types of web hosting, including shared, cloud, VPS, and dedicated hosting. Shared hosting is the most common and affordable type of web hosting. This means your website will be sharing a server with other websites. Even though shared hosting gives users less control over their website, it's a good option for those who are just starting out. With cloud hosting, your business’ website will be hosted on multiple servers. Owing to this, you’ll have more flexibility and scalability than with shared hosting. It's also more expensive and requires more technical expertise. VPS (virtual private server) hosting provides each user with a private server and more control over their website. Most of the top-rated VPS hosting companies offer higher speeds, IP addresses, an option of a managed account, and robust security measures. Dedicated hosting is the most expensive type of web hosting, but it's worth it as it’s also the most powerful. With a dedicated hosting provider, your website will be the only one on that server. This gives you complete control over your website and allows you to customize it so it fits your specific needs perfectly. Why Start a Web Hosting Business? There are many reasons you might want to start a web hosting company. Perhaps you're passionate about technology and helping others build their online presence. Or, you might be looking for a way to earn a steady income from home. Whatever your motives, this type of business can be a great way to achieve your goals. Here are a few benefits of starting your own web hosting company: It's a Lucrative Industry The web hosting industry is growing rapidly. In fact, it's expected to reach a whopping $267.10 billion by 2028. This provides an excellent opportunity for those who are looking to start their own business. It's a Reliable Business People will always need web hosting for their business operations, so tapping into this niche is a proven way to earn an income. As long as you provide quality service, you can be sure that your customers will stay with you for years. It Provides Additional Income Another benefit of starting a web hosting business is that you can generate multiple income streams. For example, you can sell web hosting, domains, and email services. You can also upsell by offering your customers additional services such as website design or SEO. It’s an Easy Job As most of the legwork can be performed by the web hosting provider, outsourcing the day-to-day tasks of running a successful web hosting business will give you more time to focus on marketing and growing your business. You can even find freelancers who can help you with everything from customer support to website maintenance.  How To Start Running a Web Hosting Company The growing internet hosting market offers new opportunities for entrepreneurs who are ready to commence their business. However, just like any other commercial venture, hosting requires meticulous preparation. We've compiled a list of six steps you can undertake to start hosting websites for clients:  1. Identify Your Niche With so many large hosts on the market, trying to stand out as an emerging web hosting business startup can be a challenge. A good way to carve out a place for your company is by identifying the niche you can cater to and becoming an expert in that area. It’s best to focus on a specific market segment and then provide the best possible service for that particular group of consumers. For example, you could focus on small businesses that are just starting out and need an affordable and user-friendly web hosting solution. Or, you could target eCommerce businesses that require a reliable and secure platform to host their online store. Another option is to specialize in hosting WordPress websites. When starting a web hosting company, keep in mind that increasing numbers of people are becoming aware of the importance of renewable energy. By hosting with green energy, you'll be able to show that you're a company that cares about the environment. Not to mention that turning to renewable energy sources for powering your servers is a great way to draw attention to your company. Yet another exciting niche might be the one that offers DDoS-protected servers. With the number of DDoS attacks on the rise, this is a service that more and more businesses will need. By providing this type of protection, you'll be able to attract customers who are looking for extra security for their website. 2. Research the Market Before you ask yourself: “How much money do I need to start a web hosting business?” conduct thorough market research and find out what the unmet needs of your potential customers are. This will help you determine what type of hosting services you should offer, how much to charge them, and how you can make your company stand out from the rest. Start by looking at your competition and analyzing their offers. What type of services do they provide? What are their price ranges? How can you make your company outperform theirs? Then, engage in a bit of customer satisfaction research by taking a look at what your potential customers are saying online. Are they happy with the services they're receiving from their current host? If not, what would they be looking for in a new host? By answering these questions, you'll be one step closer to figuring out how to start a web hosting business on your own. 3. Define Your Business Model The next step is to define your business model. There are several ways to do this, so it's important that you take the time to delineate your strategy. Before you venture into creating your own hosting company, pick a suitable name for your domain, think of pricing plans, and consider the design for your website. You can leave it to a selection of website builders, which will further reduce your initial costs.  Then, decide which type of hosting services you will offer. As we mentioned, you can go for a shared, cloud, VPS, or dedicated website hosting business model.  You can also try reseller hosting, where you'll be able to purchase hosting services from a larger company and then sell them to your own customers. If you opt for this approach, you won't need to invest anything in technology, which means that you can get started with modest capital.  Numerous reseller hosting programs are available, so it’s best to do your research and select the one that's just right for you.  Or, you could offer services of a web host manager, where you'll take care of all the technical aspects of running a website for your customers. This is yet another excellent option if you have the necessary skills and knowledge. 4. Get the Right Technology How to start a web hosting business at home? Well, if you want to offer high-quality hosting services, access to the right technology is indispensable. This includes both hardware and software. In terms of hardware, you'll need to invest in servers that are powerful enough to handle the load of your customers' websites. Remember that you'll have to factor in future growth when choosing your servers. You should also have a good backup solution in place in case of any technical problems. In terms of software, you'll need to install a web server such as Apache or Nginx, as well as a database server such as MySQL. Starting a web hosting company will also require you to choose a control panel for your server. The most popular options are cPanel / WHM and Plesk, but there are other options available as well. While cPanel’s WHM offers a built-in support desk to deal with customer inquiries, most hosts use external helpdesk software. Some popular choices are Zendesk or Kayako. Another vital component that most hosting companies have started offering as an add-on is the email server.  Finally, don’t forget to include a sophisticated security solution to protect your servers from malware, hackers, and increasing DDoS attacks. A firewall is a good option, but you should also consider investing in a robust anti-virus program. 5. Offer Reliable Customer Support Providing prompt and reliable customer support is essential when building your own web server. This means being available 24/7 to answer any questions that your customers may have. It also means being quick to resolve technical issues such as downtimes. Clients that run a business will rely on their hosting company to keep their website up and running smoothly. If you can provide this, you'll be sure to retain their business. There are many channels that you can use to offer customer support. Consider providing email, live chat, or even toll-free phone support. Keep in mind that customers who require website hosting for their business needs appreciate quick responses, so make sure that you're available as much as possible. 6. Spread the Word Once you have everything set up, it's time to start marketing your hosting company. There are several approaches, so you must find the one that works best for you. Creating a website is an effective ways to market your business. This will give you a platform to showcase your services and attract new customers. But simply knowing how to start a small web hosting business isn’t enough; to promote it, you should set up social media accounts and start posting regular updates. This is a great way to connect with potential customers and build a presence among them. Another effective marketing method is to create a blog and write articles about hosting-related topics. This is a great way to show your expertise and spread the word about your business along the way. You can also consider using an email marketing service provider that will allow you to send out regular newsletters to your subscribers and keep your services top of mind. Bottom Line All in all, once you decide to pursue the business model that best suits your needs, make sure to invest in the right technology so that you can provide high-quality services to your customers, and market your business effectively. Hopefully, our guide on how to start and run a web hosting business from home will help you make informed decisions. Hosting is a great way to make money online, and it can be a profitable business if you do it right. With so many emerging companies that are yet to establish an online presence, it’s a market segment replete with possibilities. With the right tools and technology, a prudent web hosting business plan, as well as a bit of marketing savvy, you can be well on your way to becoming a successful hosting provider.
By Danica Djokic · August 08,2022
Today, eCommerce is revolutionizing the way we shop. No longer do we have to trek to the mall or stand in line at the store. We can simply sit at our computers or use our smartphones to purchase whatever we want with just a few clicks. The ease and convenience of online shopping have made it one of the most popular shopping methods, and businesses have taken notice. The top eCommerce companies are now worth billions of dollars, and they’re only getting bigger. To save you the trouble of scouring the internet for the best online shopping venues, we’ve compiled a list of the top six. 1. Amazon - The King of Market Dominance Market cap: $1.168 trillion Revenue: $469.8 billion Monthly visits: 2.4 billion No list of eCommerce retailers would be complete without Amazon. This online store is the undisputed king of eCommerce, with a staggering market cap of $1.168 trillion, a dominance of the market with 44% of all eCommerce sales, and over 12 million products on its shelves. What started as a small online book store in Jeff Bezos’ garage has now grown into a multi-billion-dollar empire that sells everything from books and electronics to clothing and groceries. Amazon operates in 20 countries across five continents and is one of the largest eCommerce companies in the US and the rest of the world. The retailer’s total monthly visits in the US reached a whopping 2.4 billion in May 2022, making Amazon one of the most visited sites in the country. Part of Amazon’s success can be attributed to its retail-oriented services, such as Fulfillment by Amazon and Amazon Web Services. The former lets businesses store and ship their products through Amazon, while the latter provides businesses with cloud computing services. Another game-changer in the competitive landscape of eCommerce is Amazon Prime. For an annual fee of $139 or a $14.99 monthly subscription, members get free shipping, access to Prime Video and Prime Music streaming services, extra discounts, and coupons, thus generating additional revenue for the company. Speaking of which, the company reported $469.8 billion in revenue in 2021. Despite being one of the top eCommerce companies in the world, Amazon didn’t make it through the COVID-19 pandemic unscathed. Even though the outbreak led to a surge in online shopping as people avoided going to physical stores, the retailer had to deal with a significant strain on its resources, leading to delays in shipping times and limited stock. 2. eBay - The Pioneer of Online Shopping Market cap: $25.56 billion Revenue: $10.42 billion Monthly visits: 753.5 million eBay is one of the oldest and best-rated eCommerce platforms. The online marketplace was founded back in 1995 and was one of the first to capitalize on the power of the internet for the purposes of shopping. Today, eBay is a behemoth with a market cap of more than $25 billion as of July 2022, becoming one of the largest eCommerce brands with over 159 million active users and availability in over 180 countries. The site accumulated 753.5 million worldwide monthly visits in April 2022, thus becoming one of the most visited websites globally. The company operates as a marketplace, allowing individuals and businesses to sell almost anything, from cars and clothing to antiques and art. What sets eBay apart from other eCommerce companies is its auction system. This lets sellers set a starting price for their product and allows potential buyers to bid on it, with the product ultimately going to the highest bidder.  However, the company has been pushed to adapt in recent years, as Amazon and other top eCommerce companies have gained ground. To stay competitive, eBay has introduced features such as “Buy It Now,” which lets buyers purchase items immediately at a set price, as well as “Best Offer,” which allows consumers to negotiate with sellers. Yet another benefit eBay users can count on is its “Best Price Guarantee.” If shoppers find a product they purchased on eBay for a lower price at another online retailer within 48 hours, eBay will offer a coupon worth 110 percent difference in price. Along with the guaranteed delivery scheme, which guarantees a refund if delivery takes more than three days, these initiatives make for a very customer-centric approach. 3. Alibaba - The Chinese eCommerce Dragon Market cap: $278 billion Revenue: $129.44 billion Monthly visits: 138.4 million The next entry on our handpicked list of eCommerce companies is a Chinese brand that has taken the world by storm - Alibaba. It was founded in 1999 as a business-to-business portal meant to connect Chinese manufacturers with overseas buyers.  Starting as a rags-to-riches story, the company has since transformed into a massive eCommerce empire with a market cap of over $278 billion. Currently, Alibaba is the largest eCommerce company in China and the world’s third-largest Infrastructure-as-a-Service provider by revenue.  The company operates a range of websites, including Taobao, DingTalk, AliExpress, and Tmall, which have a combined active user base of 1.31 billion, including 305 million overseas consumers. It operates in over 190 countries, offering online shopping, cloud services, logistics networks, digital media, entertainment, and more. Alibaba is one of the eCommerce retail companies that has been incredibly successful in China thanks to its focus on the country’s vast and growing middle class. The company has also been very innovative, introducing features such as Tmall, which provides a platform for businesses to sell to consumers, and AliExpress, which lets small businesses sell to buyers outside of China. In recent years, Alibaba has been expanding aggressively outside of China. The company has made a number of high-profile acquisitions, such as the purchase of the South China Morning Post in 2015. Alibaba has also invested heavily in overseas eCommerce companies, such as Lazada in Southeast Asia, further cementing itself as one of the top 5 eCommerce companies worldwide. In 2021, the company reported $129.44 billion in revenue, representing a considerable increase compared to the previous year’s $94.46 billion. We expect the upward trend to continue as Alibaba continues to capitalize on the growing global middle class and new international ventures. 4. Rakuten - The Amazon of Japan Market cap: $7.36 billion Revenue: $15 billion Monthly visits: 542.7 million Founded in 1997, Rakuten is a Japanese eCommerce company that is often referred to as the “Amazon of Japan.” The firm operates over 70 services, including an online marketplace, Japan’s largest online bank, the Viber messaging app, an e-book store, and Rakuten Mobile, a mobile carrier.  Today, Rakuten is the largest eCommerce company in Japan and one of the top 10 eCommerce companies in the world, with a market cap of $7.36 billion. The company’s website got a total of 542.7 million visits in April 2022, many of which were searching for Rakuten Travel services, which is Japan's largest online hotel reservation website. The ground-breaking acquisition of Viber in 2014 for $900 million was a strong statement of Rakuten’s ambitions to become a global player in the tech industry. The messaging app has since been integrated into Rakuten’s ecosystem and is used by over one billion people worldwide. Rakuten’s online marketplace is the company’s largest business and accounts for the lion’s share of its revenue. Being one of the best eCommerce brands, it sells everything from books and clothes to electronics and furniture. Rakuten is also known for its cashback program, which gives shoppers a percentage of their purchase back in the form of Rakuten Points. In 2021, Rakuten’s annual revenue amounted to $15 billion, having increased over the previous decade. With that in mind, and given that the name “Rakuten” means “optimism” in Japanese, we expect this upward trend to continue. 5. Walmart - The eCommerce Pioneer Market cap: $361.80 billion Revenue: $571.96 billion Monthly visits: 407.8 million Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. Headquartered in Bentonville, Arkansas, the company was founded in 1962 and currently has around 10,500 locations in 24 countries. Being one of the top eCommerce companies in the USA, the total number of visits to its website was 407.8 million, according to the May 2022 data. Walmart’s online sales in the US amounted to around 47.8 billion dollars, which is an increase of about 11% compared to the previous year’s figures. Moreover, the company has a market cap of $361.80 billion and has been ranked 1st on the Fortune 500 list for 10 consecutive years.  The continued, steady growth encouraged the company to invest in its eCommerce resources by focusing on expanding and improving its delivery services and grocery pickup. This, combined with Walmart’s wide range of available products and its competitive prices, makes it one of the dominant entries on the eCommerce companies list.  Overall, Walmart offers a great customer experience, provides convenient delivery options, and has an impressive supply chain of 210 distribution centers and a fleet of almost 90,000 vehicles that deliver products to stores and customers. 6. The Home Depot - Everyone’s Favorite Home Improvement Store Market cap: $306.45 billion Revenue: $147.69 billion Monthly visits: 203.6 million Founded in 1978, The Home Depot is the world’s largest home improvement retailer, with more than 2,000 stores in the United States, Canada, and Mexico. The company offers a wide range of products, including tools, building materials, furniture, lawn and garden products, and appliances. When it comes to eCommerce services, Home Depot is currently one of the top eCommerce furniture companies, along with IKEA, with a website that received around 203.6 million visits in June 2022. In recent years, Home Depot has put a lot of focus on its eCommerce business, investing in initiatives such as same-day delivery and in-store pick-up. One of the newest additions to its online services, the “Rent Online, Pick-up In Store” feature, has become quite popular among customers.  ROPIS allows customers to reserve items online and then pick them up at their nearest store. This service is highly convenient for customers who don’t have time to wait for delivery or wait in queues, as well as those who live in rural areas. Combined with its mixed cart selling scheme, whereby customers can purchase both physical and digital items in one transaction, Home Depot’s online presence among other top eCommerce retailers is becoming quite strong. Final Thoughts Many factors have been contributing to the growing popularity of eCommerce in the world. The COVID-19 pandemic has played a significant role in this, as people started turning to online shopping out of necessity. In addition, the availability and popularity of contactless payment options, such as Apple Pay and Amazon Pay, have made it easier and more convenient for people to shop online. In times of drastic changes in the business world, it is hard to imagine the eCommerce industry without the six online sales companies we listed above, as they have all played a significant role in shaping the eCommerce landscape as we know it today.
By Danica Djokic · July 28,2022

Leave your comment

Your email address will not be published.


There are no comments yet