eCommerce Primer

Want to sell stuff online? Here’s an overview of what’s involved on the technical side, what your options are, and what it will cost.

There are a few things that make an eCommerce website, or online store, different from “regular” websites. Basically, with an eCommerce website you’ll need, in addition to the regular website stuff (home page, about us, contact us, etc.):

1. A shopping cart
2. A payment processor/merchant account
3. Security
4. Customer Resource Management (CRM)
5. Marketing

1. The Shopping Cart

This component is a bit of special software that allows people to add items to their shopping cart, then check out. While in some cases it may need to be custom-built, in most cases, it makes better sense to use one that has already been built. A good free one is Magento, and a good commercial one is X-cart ($229).

The shopping cart will need to be integrated with the rest of the website, and for professional websites the cart will also need to be customized so that it looks and feels like the rest of your website instead of looking like it was just slapped on to your website. This customization can take a long time, so even if you get a free shopping cart, you may end up paying a web designer/programmer to customize it.

Most hosting services also come with shopping carts that can be integrated with your website by your web designer, though most of these offer limited functionality.

2. The Payment Processor

When a customer checks out and fills in their payment information, typically a credit card number, there are a number of ways your website can handle their payment. In order from cheapest to most expensive, these include:

NO PAYMENT PROCESSING
If you already process credit card payments in your brick-and-mortar store location, and if you don’t have too high a sales volume, you might want to go this route. Instead of having your website process each payment, instead each payment could just be emailed to you for you to process manually on your in-store machine.

The benefits of this method are that there are no additional costs involved, and you already know how to process each order. Downsides to this method typically happen when you have a high sales volume — you don’t want to be spending all your time punching numbers.

PAYPAL PAYMENT PROCESSING
If you don’t have a merchant account already, and your sales volume is under $1,000 a month, PayPal is a good route to take. If you’re not familiar with it, PayPal allows people to pay vendors using their credit cards, debit cards, and bank accounts. They take about a 3% cut of each sale, and are relatively easy to use and implement.

The main downside of using PayPal is that during the payment portion of the checkout process, your customers will be in the plain-looking PayPal website instead of in your website. If you want a seamless process, you’ll need …

INTERNET MERCHANT ACCOUNT
A merchant account allows you to process credit card transactions. If you already have a merchant account for your brick-and-mortar store, you may or may not be able to use it for your internet transactions. Check with your provider. Internet merchant accounts can take from several days up to a month for your preferred provider (a bank) to set up, so if you’re planning to open up a store tomorrow…well, that’s not realistic.

Internet merchant accounts typically cost $100 to set up, plus $30 a month in service charges, plus 20 cents and 3% of each sale. Compare this to the PayPal option above and you might wonder why you’d use them at all. The upside to merchant accounts is that you get access to a range of tools. For example, you’ll be able to take phone orders and process them right there and then. Also, with an internet merchant account the payment process can remain entirely within your own website, which can be important for larger retailers.

NOTE: You can often mix these three different types of payment processing. And you should also include a more primitive method in order to maximize sales: a printable order form that can be mailed in with a check or money order.

Security

While it’s highly unlikely, in theory if you collect someone’s credit card number from a web form, a hacker could intercept it. In order to prevent this, it’s necessary to get a Secure Socket Layer (SSL) Certificate, and a dedicated Internet Protocol address for your website. This SSL cert. and dedicated IP combo typically costs around $75 to $200 a year depending on who you get them from, usually your hosting service.

There are a number of additional things that need to be done to enhance the security of any collected private data. These include changing admin passwords on a regular basis, deleting credit card numbers when you’re done with them, and other more highly esoteric things (which can only be done by a programmer).

Customer Resource Management (CRM)

For smaller stores, CRM only entails adding each customer to your email newsletter list (you DO have a regular newsletter, don’t you?). For larger stores, you might want to analyze shopping patterns and print out all sorts of fancy charts for your marketing department to analyze. CRM is a function of your shopping cart or a third party service. Google Analytics, in particular, stands out for its ease of use, power, and the fact that Google gives it away for free.

Marketing

What’s the good of a web store if no one knows it’s there? You’ll need to market it! Market it! Market it!

You’re in luck if you’re the only game in town (and on the internet, “in town” means “in the world”). If you have competitors, expect to spend a lot on marketing. If you have a lot of competitors, expect to spend a LOT on marketing.

Mention the website every opportunity you get. Advertise in relevant venues. And pay attention to the search engines. Click here for more detailed online marketing info.

Summary

Opening an online store is a lot easier than opening a brick-and-mortar store, but it’s not as easy as creating a simple online brochure. This primer has given you the basics. Speak with your web designer about the details. Typical costs for opening an online store that sells a handful of items are often under $1000. For a full-blown store with lots of items, expect to pay between $2000 to $5000 to setup the store, plus monthly maintenance costs of a few to several hundreds of dollars.

Oh, and it helps to sell stuff that there’s a market for (but that’s a separate article).
Good luck!

Written April 13, 2006 on 11:22 pm in category(s):
Marketing, eCommerce | No Comments