Foundations For an E-Commerce Business

To build a successful business you need to start on firm ground. A good place to start is to ask yourself the following questions:

“What are my primary goals in life?”   Do you want free time? Do you want to travel? Do you want to become an expert in a particular subject?

“Where do I see my company in ten years time?”   What size company will it be? What will it be doing? What role will you be playing in it?

“What exactly am I selling?”   All widgets are the same. What you’re selling goes beyond a lump of metal in a box or a piece of code on a website. Are you selling hope? Status? Reliability?

“Who are my potential customers?”   If you don’t know who your customers are you can’t sell to them. What values do they have? What pressures are they under? What sort of people are they?

“What is my business model? ”   A business model is a means of extracting value (not always money) from a relationship. A business model is a dance between you and your customers, giving a little here, taking a little there. For example, will you be upselling, cross-selling, using loyalty cards, loss-leaders or affiliates?

“What is my business strategy?”   Your business has to chart choppy waters. Looking ahead, what potential dangers do you see? Will you have to market your products in new ways or create new markets? Do you plan on outwitting your competitors or cooperating with them?f your customers don’t like what you’re doing, do you have backup plans?

“How will my website help my customers? ”   Your customers may be slow and dreamy (perhaps researching a holiday), or they may want to buy NOW. They may want interaction with others or they may simply want an anonymous resource to utilise. Whatever it is they want your site has to deliver it or your customers will be GONE.

“How will my website help my business?”   A website has to work for you. And to make it work you need to know what you want from it. Is it going to deliver leads? Are you going to make direct sales? Is it helping customers research an offline purchase ? Is it a branding opportunity?

Start Small, Think Big!

Theoretically, one of the simplest ways to start selling on the internet is to use Ebay, where you can test the waters for your product or even branch out temporarily into an Ebay store. However, read around to decide whether or not Ebay is right for you. The Ebay mindset has been pretty appalling in the past. There was a dodgy feedback system, fraudulent goods were rife, users’ complaints were ignored, and there’s still a terror of Google (Google Checkout is banned), imposition of the dreadful PayPal, a fee system that charges you for breathing, and a lack of branding opportunities – meaning that many small businesses should think twice, three times, four times before venturing there. That said, there are many highly successful businesses on Ebay.

Alternatively, Yahoo! Merchant Stores offers a relatively cheap way of creating a ‘proper’ e-commerce site with its own domain name. However, to make such a site look professional you still need to employ a designer (since the templates are simplistic and you need some design skills). Furthermore to accept payments you still need to jump through all the hoops of applying for a Merchant Account.

Amazon also offers WebStores, similar to Yahoo! Merchant Stores. Both Amazon’s and Yahoo’s packages are relatively simple to understand, easy to set up and manage and provide low-cost, low-risk means of testing your business model, often with excellent support and information, but are essentially transitional websites limited by the resources and terms and conditions of the host provider.

At some stage you’ll probably want to put your e-commerce site on a more professional footing.

Shopping Cart Hell

There are many different shopping carts available, but they broadly fall into two categories.

Open Source carts (such as Zen or OSCommerce) are free, and are built by many different programmers contributing their time voluntarily. However, there are two main drawbacks to Open Source carts:

• Open Source shopping carts are currently driven by the passion of programmers and are thus often designed from the programmers’ point of view rather than from the users’, resulting in technically brilliant but ridiculously over-complicated software.
• Major updates to Open Source carts can take years once the original passion behind a project dies.

Commercial carts pay mortgages and there’s therefore an incentive to constantly improve them. The downside is that some companies effectively sell the same software every month through recurring monthly fees, usually justified by unnecesary bells, whistles and ‘support’.

At the moment there are hardly any good quality, affordable shopping carts around for the small business on a budget. Most carts tend to be complex to look at (read ‘confused and messy’), difficult to administer and don’t integrate easily into existing sites.

The only cart I currently recommend is ecommercetemplates.

Painful Details

When choosing a shopping cart you should look for a cart that’s easy to use and administer and that ideally blends invisibly into an existing site and costs a one-time fee.

Shopping carts need (among other things) shipping charges on category pages, clean links (no javascript), ‘clean’ urls (simple and user-friendly), cross-linking capabilities (when you select an item you notice a link to a complementary item), the ability to change the design in different sections of the cart, unique title tags (for Search Engines) and an easy to use Admin area.

When you customise your cart you should ensure that you have easy navigation, fast-loading thumbnail images, shipping information and costs BEFORE you get to the checkout, credibility (contact information, privacy policy, a good looking design, testimonials, warranties), alternative payment methods (the ability to phone through a credit card order), detailed descriptions (concise and emotionally appealling copy), no distractions (piped music, talking avatars, flashing banners, off-site links), a help page, friendly error messages, and easy to understand weights/measures/phone numbers.

Credit = credibility

To receive credit card payment from a customer on your own website smaller companies can use services such as Paypal (NOT recommended – see below), 2checkout.com or Google Checkout. (Update: Google Checkout is now becoming as bad as PayPal as described at Squidoo, Slash7 and on the Google Forums. Google is becoming renowned for its breathtaking arrogance and appalling customer service, as detailed here

A cheaper and more flexible option for established companies is a Merchant Account.

A Merchant Account will have many hidden charges – annual fee, batch fee, AVS fee, encryption fee, chargeback fee, monthly minimum fee, cancellation fee, all on top of the up-front application/set-up fee, discount rate, transaction rate, debit fee, statement fee and customer service fee – so it pays to check around. On the whole a low-volume business would probably be best advised to avoid fixed-monthly costs and to go for variable but higher-rate transaction charges.

Paypal Sucks?

If you choose to use Pay Pal you should be aware that when things go well they go really well but when they go badly (and if you’re a professional seller eventually they will go badly) you can find yourself in deep trouble. Where a fraudulent chargeback arises (a customer receiving your goods but claiming not to have done so and then demanding their money back) Pay Pal can help themselves to money from your bank account and freeze your Pay Pal account. You may find Pay Pal customer support less than helpful (read around). Here’s a YouTube video from October 2006 that explains the PayPal mindset succintly, here’s a thread about their rolling reserve and you can read a lot of other interesting comments about this appalling company here .

Here’s a credible forum devoted to payment processing options.

You Don’t Need to be A Genius!

There’s a huge amount to get right when starting off in E-commerce, but none of it is rocket science.

All it takes is a bit of application (effort) and a passion for what you’re doing.