Ecommerce

Two Parts to Ecommerce

If you wish to sell products or services from your site, you will need some method of taking payments and delivering the product. While adding e-commerce need not be difficult, it can be confusing because of the wide variety of options available.

First, You have to have some method of accepting money from your buyers and then having that money sent to you. You can sign up with a third party processor, such as PayPal, or elect to have your own merchant account.

Second, You have to have some way to capture orders, transmit the data to a secure server where your customer can enter in credit card information, and have a record of the sale. This is what a shopping cart does.

Third Party Processors:

These companies take a percentage of each sale and then pay you the difference.  [Note:  Be sure to read the fine print regarding reserves, funds availability, and charge backs.]

  • PayPal:  This well known company boasts over 20 million members in 38 countries. Setting up an account is free.  It takes a Business or Premier account in order to accept credit cards.  Fees range around 2.9% + $.30 of each sale.  Monies you make on your sales are stored in your PayPal account and are instantly available. You can easily move money from your PayPal account into your checking account.
  • 2Checkout: For both download and shipped products, there is a $10.99 - $49.00 initial set-up fee.  A rate of 5.5% is retained from each sale plus a $0.45 transaction fee. Your payout schedule will be determined by 2Checkout.

Most third party processors have the shopping cart functionality built in. They will give you the "buy now" code to paste for each product you sell.  When a customer clicks on the "buy now" button, they are transported to a secure server where they complete their transaction and then are returned to your site. There are, however, a few drawbacks:

  • You may have to wait over a week for your money
  • Many of your shoppers, when they see they have to 'join' a service to pay, will surf on without buying.
  • Some do not allow multiple purchases.
  • Third party card acceptance has its own risk with funds availability and reserves. Many times you can wait up to six months to receive all of your money.

Merchant Accounts:

If you want to accept credit cards at your business under your own business name, you need a merchant account. A merchant account is simply a money pipeline that can put credit card funds directly into your own bank account. Acquiring a merchant account is not the ordeal it was just a few years ago. Even the smallest business can easily budget for it, and arrange it easily within a week or less.

There is normally an application fee which can run from $50 to $300.00. You then pay a monthly fee, transaction fees, and a discount rate to be a credit card merchant. You should budget about $30 to $40 per month to become a credit card merchant. Most merchant accounts now include the gateway as part of the merchant account service.

Some drawbacks of a merchant account are:

  • You must have an established business banking account.
  • A credit check - the better your credit, the lower your fees.
  • You are solely responsible for the security of transactions. Be sure you understand security issues completely.
  • You are responsible for the validity of all orders and will penalized for charge backs and fraudulent orders. Be sure to read the fine print on your contract. Too many fraud/charge back orders can result in your merchant account being closed and you stuck with the penalty fees.

The Gateway:

Once you've arranged to take credit cards at your business (a merchant account) then it's your choice how you are going to process the card transactions. You can buy one of those cute plastic terminals, or crunch paper slips in a machine, or call an 800 number.

Most internet merchants want a "gateway" which will allows their web site to clear card transactions automatically. Gateways cannot total merchandise or calculate tax or shipping (you need a good shopping cart to do that!). You pay a monthly fee to use a gateway, usually about $10-$40. Gateways are included with most good internet merchant accounts.

Shopping Carts:

If you need to have two or more products totaled, calculate taxes and shipping, and want to see a record of these orders then you need a shopping cart. If this is not the case, in other words, if you always sell 1 of a single product, then you can skip the cart and hook your web page directly to a gateway. Remember, gateways cannot do math or total products. A good shopping cart will be able to connect to your gateway to process card transactions automatically.

There are hundreds of carts available - far too many to list on this site. Do a search for "ecommerce carts" or "shopping cart software" and do a slow, careful search for the one that will work best for you.

Hosted Ecommerce Solutions:

Simple eCommerce setup: A lot of solutions are either too slimmed down or too robust. There doesn’t seem to be anything that’s in the middle as far as hosted e-commerce solution setups go. Make sure the provider you choose pays close attention offering wizards or helpful step by step instructions for setting up your online store front.

Managing your Catalog: All online eCommerce shopping carts will provide some sort of catalog feature to enable you to manage your products. Make sure it’s very intuitive for you to import and export items you decide to sell online and that there are easy ways to add SKUs, product images, product descriptions, and prices. Higher end e-commerce platforms will allow you to build groups and select policies, run analytics, and price changes on multiple items in your storefront at once.

E-Commerce Templates: Do you have your own eCommerce website? Are you going to have a developer design a website for you? Or do you want to use a template to create your storefront and go from there. This is a very important decision and aspect of your online business.

Advertising and Marketing your Storefront: Of course you need to make sure you get your name out there and you hosted e-commerce solutions should be carrying some of this load for you. Make sure the shopping cart is SEO friendly and optimized for Google search results. Nicer options are the ability to generate email lists, provide coupons, tie into solutions like Froogle, Google’s shopping feed, accept affiliate marketers and allow them to be compensated on their online sales leads, and more. Make sure it’s something you research with each shopping cart.

Performance Measuring and eCommerce Analytics: In order to be successful you need to make sure you are tracking every aspect of your e-commerce business. That means product success, price strategies, pages or articles that are frequented, and other things related to your website need to be studied. You need to know also how your visitors interact with you eCommerce storefront. Are you loosing sales at checkout? Is one advertisement working better than the other? If you can’t answer those questions you may want to take advise from an e-commerce consultant who is an expert in the industry.

Payment Gateways and Shipping Products: Collecting money would sure be nice, right? Take a look at what merchant gateways the hosted e-commerce solutions supports. You’ll also need to make sure that shipping is an automated or near automated process. Are you using FedEx, UPS, or USPS? Do you know your shipping dimensions and can you import them into your shopping cart catalog? How do you plan to manage returns inside your eCommerce platform? Keep looking deeper inside as the choices you make today are not easy to change tomorrow.

If all of this sounds a bit complicated, it isn't really. But you do have to be prepared to do some research to find what option best suits your needs. When we first got started, we used PayPal as our payment processor. As we grew, it quickly became apparent we needed more options. What works well for us may not be the best choice for you. Do your homework and read up on your various options. Only you can decide what is best for your business.