E-commerce

E-commerce : Step-By-Step Guide

Welcome to the one-stop source for setting up your business online! Our clear e-commerce development guides will enable your company to quickly understand what it takes to establish an online e-commerce presence and make your digital commerce flourish. The seven articles are designed to be read in sequence - to bookmark this page simply hit Control-D.

Introduction To E-commerce

E-commerce, a definition: --"E-commerce is any electronic exchange of data between a business and its customers. This includes fax, telephone, voice-mail, EDI (Electronic Data Interchange), e-mail, extranet, Internet, to name just a few."

This is about as sweeping a generalization as it gets. However, this is just the introduction. The following series of articles will narrow the focus to what the majority of business' think of when they hear those enticing words "E-Commerce"(ec) and zero in on the Internet.

It's important to note that there is a chronological sequence of events that occur when taking your business on-line. The intent of this series is to provide you with a global understanding, rather than give you step-by-step instructions. E-commerce is one of the most "integrated" solutions you can possibly attempt in terms on taking your business to the Web. That is to say, a multitude of different applications and service providers will be working together in unison to enable your e-commerce site. The choices you make in terms of applications and services are in many cases proprietary; this means if you choose to have "X", you must have "Y" and cannot have "Z". This is not as ominous as it sounds. Simply keep this in mind as you review each article. After this series you should be able to choose a solution that fits your needs. It may be viable for you to attempt an in-house do-it-yourself approach, or you may determine to out-source the entire project. In either case, this series will help you to communicate your needs more effectively.

Most of the answers provided will be relatively general in nature. However, this series should provide you with enough information to set up an on-line store yourself, or allow you to communicate effectively with your IT department or web development company whom you outsource to.

Indeed, there is a lot of ground to cover. Nonetheless, taking your business on-line is no different from opening a physical storefront in another city.

Suffice it to say that, after you have gone through this series and have the information you need to begin choosing software, hosting providers, merchant account providers, etc. your business will be well on it's way to e-commerce success​

 

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E - Commerce: Know Your Product

Knowing your product is important because it will dictate some of the application and service provider requirements. Again there is not much difference in principle between the virtual and physical worlds of business. For example, you wouldn't purchase glass and chrome display shelves if your selling bricks.

Although the article May I take Your Order investigates hosted shopping cart applications in more detail, it's important to introduce some important facts now about how this technology works, and how your product will dictate required features and/or options.

The shopping cart application is what makes it all happen. It allows you to show your products; it displays images, descriptions, and prices and provides some means for your customer to select a quantity for purchase, proceed through a checkout, and enter their shipping and payment information. In order for all this to work properly, there are a several components that must work in unison; underlying all of it are databases on the web hosting server that contain information for display and capture information provided by your customer. Fortunately, you can purchase all of this functionality right out of the box or subscribe to it through you web-hosting provider. Unfortunately, it is difficult to modify or add features/functions that do not exist.

Consider your products for a moment. Some products are fairly straight forward, like an embroidered baseball hat; on the other hand, some products have variations like a T-shirt; color and size. In terms of displaying your product on-line, most, if not all, shopping carts provide for some basic product variations like size and color. Here's where you need to understand some things about your product and the ability of the shopping cart to manage these product variations.

If you have a product that has some rather unique variations, you will need some way to modify or CUSTOMIZE the shopping cart application.

The best way to explain this is by example. Let's say, for instance, that you're selling vehicle roof racks. The "FIT-KIT" for these little babies is dependent on the MAKE, MODEL, and YEAR of the vehicle. With most of the shopping carts available, you can probably change the "size" and "color" options to read "vehicle make" and "vehicle model"; the question may be can you easily add another variable to this product and include "vehicle year".

Key points to consider here are:

1. -"CAN THIS EVEN BE ACCOMPLISHED WITH THIS SHOPPING CART APPLICATION..."?
2. -If so, how much will it cost?
3. -If you are doing this yourself, is it easy?

Granted, this is a bit of an extreme situation. In most cases, products are fairly straightforward and you probably do not have to worry about this. In which case there are some excellent, and surprisingly easy to use options for you to develop on on-line store.

The best thing you can do at the end of this article is to clearly define each of your products. Regardless of whether you will develop your e-commerce web site your self, or choose to use an outside source, this product information will be used extensively throughout the development of your on-line store.
Here's a checklist of things about your product you should identify:
1) How many items in total? (If it has its own price... it is an individual item).
2) How many categories? be as detailed as you can and condense later E.g.:
a) Clothing
i) Men's
(1) Casual
(2) Formal
ii) Women's
(1) Casual
(2) Formal
3) Product variables (size, color, make, model, finish…)
4) Product weight, price, size (as in dimensions)
5) As your going through this, it's not a bad idea to consider which products compliment each other; (you may have the option of cross selling, depending on the shopping cart you choose.)
Keep in mind your web-hosting provider is available should you have questions or need assistance.
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[prakash_dudes]

E-Commerce - Security
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First of all, let's explain all the excitement and media hype around this issue of security. Just consider for a moment that once any data leaves your computer and begins its journey over the Internet, it is, for all intents and purposes, public domain. In other words, if someone were so inclined, they could get their hands on this data and do with it what they will. It's not quite as easy as that, but it is a reality.

The main concern your customer will have around security is whether or not their payment information, usually in the form of credit card, will be sent over the Internet and subject to this possibility of someone getting his or her hands on it. They may even be concerned about where their information is later stored and whether someone could ever hack into this repository of information and obtain their credit card number.

The solution is SSL (Secure Socket Layers) and Digital Certificates. These two items really go hand in hand; the Digital Certificate is a recognized standard for confirming a given web site (actually the web server the site is hosted on) uses SSL when transmitting or receiving data. This should tell you that you only require this function on those pages of your site where you actually request the customer's payment information. Without getting into a lot of the technical details, suffice it to say these are so much a standard that, without SSL and a Digital Certificate, no one will buy your products.

So, how do we get SSL and this Digital Certificate? For the most part, you won't have to worry about this. Your web site-hosting provider will ensure all the necessary steps are taken and they usually bundle all of these little details together with your e-commerce-hosting package. It is a good idea to make the fact you have all this security is on your site very conspicuous. Both VeriSign and Thawte, the recognized digital certificate authorities, allow you to post logos on your site once you have purchased a certificate.

VeriSign (http://www.verisign.com) and Thawte (http://www.thawte.com) have all the information on their web sites. If you are developing, hosting, and maintaining the entire project in house, VeriSign is a "must visit" web site.

 

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E-Commerce - Merchant Accounts

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Let's explain what a Merchant Account is, and why you even need one. Merchant Accounts are different from standard business banking accounts in that they allow you to accept credit cards and/or InteracDebit cards as a form of payment from your customers. When you get a merchant account you get a Merchant ID number and a POS (point of sale terminal). The POS has the ability to "communicate" over standard telephone lines much like a fax machine. This allows you to "swipe" a credit card or debit card, which reads the magnetic stripe and records the customer information. The POS then sends this information and the details of the purchase to the respective authorizing institution (VISA, AMEX, etc. or customers bank, in the case of debit). The institution sends back confirmation that credit/funds are available in the form of an authorized or declined receipt. In instances where the POS terminal is broken or you cannot otherwise get authorization using the POS, you are provided with a 1-800 telephone # that you can call to manually process the transaction.

A merchant account to process Internet transactions has one final distinction and is commonly known as a MOTO (mail order / telephone order) merchant account. Simply obtaining this type of merchant account does not automatically provide you with real-time transaction processing. You will, and in fact should (depending on how many transactions you initially process), start off processing the transactions manually. We will discuss this more in the article "Transaction Processing".

There are a number of ways you can get a merchant account:
• 1. Your current business banking institution will almost certainly have some form of merchant account services. If you are unable to get a merchant account with your bank, consider non-banking institutions.
• 2. Non-bank institutions; these are transaction clearing service providers that typically include mandatory real-time credit card authorization with the merchant account.
• 3. Your web host provider may have established partnerships with merchant account providers. They may be banks or non-bank institutions.

You would do well to understand the fees associated with any type of merchant service. One relatively unknown fact about Internet transactions is the requirement to first ship the product before actually charging the customer card ("posting"). Obviously you must authorize the card first to confirm the funds are available, or that the card is not stolen; but "posting" the transfer of funds to your account, must be done after shipment is underway.

Here's some considerations to take into account (excuse the pun):
• 1. The Merchant Account provider you select may have an impact on the shopping cart you can choose. This has to do with real-time transaction processing where the "Pay Now" button is linked to their authorization services. Though you may not elect to do this right away, it will likely become impossible for you to manually process all transactions in the future. Check to see what shopping cart applications they support.
• 2. The Merchant Account provider you choose may have an impact on the shopping cart you can choose. This has to do with real-time transaction processing where the "Pay Now" button is linked to their authorization services. Though you may not elect to do this right away, it will likely become impossible for you to manually process all transactions in the future. Check to see what shopping cart applications they support.
• 3. Transaction processing fees; these are separate from the standard card (VISA, AMEX...) fees. Whether manual or real-time, look around, compare, and negotiate these fees. If it sounds too good to be true…

In our next article we discuss how to display your products and enable the first step of taking orders. As we continue, remember that e-commerce is integrated web based business and requires a number of applications and providers working in unison. This fact demands you understand the entire process before making final decisions.

 

[prakash_dudes]

E - Commerce: May I Take Your Order
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There are numerous options for displaying your product and taking orders on-line. The most basic solutions consist of nothing more than simple HTML and forms. If you only have 1 or 2 products that are strictly a one-time purchase, this may be all you need. However, if you have more items to sell and there is the possibility that your customer may buy from you more than once, you should consider other more comprehensive solutions.

Outside of simple forms, solutions will fall into two main camps:

-Freeware/shareware scripts (Java, CGI, etc.)

-Hosted applications

Free and share scripts have an advantage in that they can cost less. In some cases these may be a viable solution. There are some drawbacks, however, when compared to e-commerce hosting solutions provided by the major web hosting companies:

• More difficult to initially set up.
• More difficult to maintain in terms of product and price updates.
• Limited features to dynamically display special promotions.
• No cross promotion functions.
• May have more cross browser/platform compatibility issues.
• No customer management utilities.
• Limited store management utilities.
• Can be slow to load and cause a customer's browser to "hang".

For many of the free/shareware options that are available, the developer will probably have a working demo version on their web site that you can try out. You should also be able to download a time expired demo version and install on your server. When considering any of these as a possible solution for your web based business, be sure to put them through all the paces. Keep in mind future requirements, especially as they relate to the drawbacks mentioned above.

The majority of web hosting providers offer some form of shopping cart application. These applications use some very complex programming and interface directly with databases to enable the entire on-line e-commerce experience. They dynamically display products, descriptions calculate prices, tax, and shipping totals, but they also provide comprehensive reporting, store maintenance, and customer tracking functions. In some cases features may allow you to change a featured special, cross promote products based on customers purchase/page request habits, personalize content for returning customers, etc. Many of these feature rich applications can also be used for Business to Business (B2B) e-commerce web sites. In fact it is easier to conduct B2B e-commerce for the simple reason that most transactions are to pre-approved customers who receive net 30 invoices. This eliminates the need for merchant accounts, credit card processing, etc.

Because of this tight integration with databases and dynamically driven content display, these solutions require a proprietary server side component to function. This is commonly referred to as the "back-end" of e-commerce. Naturally, it makes sense for web hosting providers to include e-commerce-hosting options as part of their value-added services. As is the case with most software, you do have the option to purchase the shopping cart applications directly from the vendor. Doing so will require you find a web host provider that supports your choice of software.
The real beauty of hosted shopping cart applications is in the fact that all of this, including initial set up of the store, is done using your browser. Most web-hosting providers even offer comprehensive support options for companies that have hundreds of items and need help setting up.

Some of the major advantages of hosted e-commerce applications include:

1. significantly less difficult to set up
2. much easier to maintain in terms of product and price updates
3. web/browser based store management
4. additional customer management and tracking functions
5. can scale up or down depending on needs
6. may have additional functions like cross selling and featured specials
7. can integrate real-time transaction processing more easily

Although hosted applications may appear to cost more than most of the free/share ware options, you should crunch the numbers to prove this. Be sure to include the additional time spent setting up and debugging the script, as well as the time you may save from having the web based store management utility from a hosted application.

Remember to keep your product attribute list in mind as you research your options. Unless you have thousands upon thousands of items, very unique product configurations, or some otherwise specialized needs, hosted shopping cart applications are the solution of choice.

 

[prakash_dudes]

E-Commerce - Method of Payment
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There are a host of options when it comes to the method of payment and the choices you provide will likely depend on whether you are conducting B2C or B2B e-commerce. Some of these option include Purchase Order, COD, On Account, Debit Card, Credit Card, Internet Check Service, etc. The most common method of payment for B2C is credit card, while B2B e-commerce companies typically prefer Purchase Orders or On Account. In either case, your shopping cart application will provide some means of capturing the necessary information for you to begin shipping the product and receiving payment.

This brings us to the options you have in terms of processing transactions. In the case of B2B e-commerce where your customers typically have an account and are invoiced NET 30, it is merely a matter of confirming a customers account status prior to shipment. If you have chosen the globally preferred method of payment for B2C Internet transactions (Credit Cards), then you really have only two options:

1. Manual processing
2. Real-time processing

Manually processing transactions is just as it sounds and involves the following:
• Authentication - ensures the credit card # is valid and has not been stolen
• Authorization - confirms that the funds are available and allows you to reserve them for settlement.
• Settlement – initiates release of funds and begins process of transfer to your account.

These steps are performed by manually entering the card information using a touch-tone telephone or the POS terminal provided with your merchant account. Authentication and authorization occurs in one process while settlement should be performed after products have been shipped. This is a little known fact about Internet transactions unless you have been involved in mail/telephone order business before; you may not initiate the transfer of funds until after product has been shipped.
Real-time processing eliminates virtually all human involvement. However, it is substantially more complex in terms of what happens behind the scenes (READ: costly). It involves the cooperation of several independent service providers including your bank, the customers' bank, credit card companies, and the large credit and debit "acquiring banks" that administer all of it. All of them tied to your e-commerce sites unimposing "Buy Now" button. Amazing, don't you think?

Although this sounds immensely difficult to set up, your web hosting provider, the major banks, shopping cart application developers, etc. have gone to great lengths to make this as easy as possible. There are also companies outside of banking institutions that provide this service as well. The only point of advice when considering these is "check the fees!" The best resource you may have for assistance in this area is your web-hosting provider; they will know all about compatibility issues and are most qualified to advise on the best course of action.

Regardless of how expensive any of the real-time options may seem, they can very quickly become not only viable, but also an absolute necessity. Consider the time required to process 120 transactions by hand at an average of 4 minutes (on a good day) per transaction; do the math…it equals 8 hours. If your worst problem is no time to process transactions, these fees will not likely be a problem

 

[prakash_dudes]

E - Commerce: Marketing Your Store
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"Build it and they will come" only works for baseball diamonds. Particularly those built in cornfields. This philosophy does not work for e-commerce web sites. It is imperative that you play an active role in marketing your web site; key word here is "Active".

It goes without saying that you should include your WWW address in and on all traditional ad media you are involved with. This includes business cards, letterhead, newspaper, TV, radio, matchbooks, pens… well you get the idea. Aside from this fundamental best practice, you should also actively market your e-commerce business on the Internet.

The following Internet marketing strategies have entire books dedicated to expounding their respective virtues. You may attempt any or all of these yourself or you may outsource these tasks to the professionals. Either way, you should not ignore their necessity.

• Affiliate Programs –very effective revenue sharing programs where you pay the owner of a non-competing web site (your Affiliate) for sending customers to your site that convert into sales. Accomplished by using graphic and/or text links to your site strategically positioned on your affiliates site and complex tracking programs that ensures all referred sales are accounted for.
• Fee Directories – specialized vertical market directories that charge a fee for including your listing.
• Banner Ad Placements –graphical links to your site usually placed on high traffic sites. Fees are usually charged per expected "impression" (display of your banner) based on most recent site statistics. E.g. fee is $0.13/impression – if the page your link is contained on will receive 3,500,000 views this month and your impression ratio is 1:10 (1 impression/10 page views), then you will pay $56,000.00
• Search engine submissions – Infoseek, Lycos, HotBot… all free, but a lot of work to be listed near the top on a given keyword search.
• Free Directories – Yahoo, SNAP.com … and some smaller, more vertical market directories. These have some form of banner ad placement programs available as well.
• Reciprocal links – negotiated between you and a non-competing site where each party exchanges links to the other.
• Banner exchange programs – opt-in programs where the number of views your banner receives depends on how many banners your site displays: e.g. exposure ratio is 1:3. For every three banners you display, your banner will be displayed once.
• Web rings – opt-in text link exchange programs around a specific topic that allow a visitor to "view next in the web ring": e.g. – The Star Trekkers of America" web ring.

If you are serious about marketing your web-based business successfully, you should either outsource to professionals that specialize in their respective strategy, or higher experienced staff.