Solid Decisions Lead to E-Commerce Success


Publishing date: Dec 26, 2005 05:49

E-Commerce is the great equalizer. It enables small companies to move beyond their traditional boundaries to challenge the big players. In the first of two columns, the president of Affininity Internet discusses four vital and potentially confusing e-commerce issues.

Solid Decisions Lead to E-Commerce Success

Selling products online is a great way to establish or expand a business. Today, many companies substantially increase sales using the Internet to attract customers from beyond their traditional boundaries.

Unfortunately e-commerce can be a confusing world, filled with unfamiliar acronyms and service providers who make claims that aren’t accurate. There are some basic concepts that you must familiarize yourself with before venturing into e-commerce. It's a good idea to understand their precise meaning, even if you’ve heard them over-and-over again.

The term "e-commerce" generally refers to the sale of, and collection of payment for, products or services over the Internet. Frequently, small businesses only want a web site that functions as an online brochure that provides information about the business--but doesn’t actually sell products. In this case, only a basic or standard web hosting account, otherwise referred to as "brochure ware," is needed.

E-commerce, on the other hand, deals exclusively with selling products and services online. Establishing an e-commerce web site, or online business, requires five key components:

• The e-commerce web site hosting account.
• Product catalog.
• The shopping cart.
• Payment collection.
• Online marketing.

These five components are not only essential to e-commerce functionality. They can be the difference between success or failure online. This column will discuss the first four of these topics. The all-important marketing category will get its own column in the near future.

Selecting your e-commerce web hosting account : Every online store requires a Web hosting account. While discount solutions are available, a rule of thumb is that the better services--those that enable e-commerce--cost between $30 and $100 per month, depending on the scale, reliability and level of service delivered. Most web hosting companies sell easily identifiable e-commerce bundles containing everything you’ll need, including a basic Web hosting package (bandwidth, disk space and email access) and an e-commerce component (such as Miva Merchant) that offer the catalog and shopping cart functionality. Higher-end solutions add a payment gateway and merchant accounts.

Setting up your store: The first step is creating the customer shopping experience. Your online store must enable customers to easily find the items they seek. Try to figure out ways to put complementary products near each other or in logical bundles (such as "Value Meals"). For instance, if you have an online camera store, you can sell the camera body, lens, case, flash and strap separately--or you can bundle them as a "Smart Pack." In many cases, bundling items in this fashion leads to extra sales. The customer might not think of buying the strap until they see it in the package, for instance. If they buy the package, you are selling an extra high-margin product by just thinking a little ahead of time.

When to use a shopping cart: Consider whether average customers are going to buy one or many items. If they are likely to buy many items at once, then you will need a shopping cart. A shopping cart--created through an easy-to-use online software package that integrates with your catalog--makes it easy for customers to browse, "pick up" items and keep track of what they’re buying.

Deciding on a payment system: Once your online store is set up, you must select a payment solution. This can be handled in several ways. The easiest method is subscription to an online payment service such as PayPal. In this scenario, the customer simply pays you by transferring money from their consumer PayPal account to your vendor PayPal account. You get a confirmation of funds received and ship the product or products. The downside is that these payment solutions require the customer to subscribe ahead of time. This can be a significant impediment to sales.

Another option is to subscribe to a payment service such as In these scenarios, the customer actually buys your product from the payment service. You act as the “supplier.” A payment service can be a good option if you don't offer a significant variation of product online because it saves you both time and money. Services like can handle the complete payment process, typically for 10 percent to 20 percent of the selling price, rather than a large monthly fixed fee.

High volume e-commerce businesses should establish a merchant account with a company such as Card Services International or Wells Fargo. There is a higher setup fee for a merchant account, but a much lower transaction cost (typically, less than 5 percent).

Our next column will look at online marketing which is a vital element of e-commerce. After all, why create a great website if nobody visits?

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