With the nation's economy in such a fragile state more and more businesses and individuals are looking to use the internet as an alternate or in some cases a primary source of income. The internet is used by billions of people around the world and everyone has heard at least one story about someone or some business that has made a fortune selling products online or selling services online. It's only natural to want to hop onto that band wagon. If you are considering the possibility of selling online or developing some kind of ecommerce website then there are a few things you really should know before making any kind of financial or time investment into selling online.
I am sure everyone has heard of eCommerce, but what exactly is it? Ecommerce is any type of business or commercial transaction (buying or selling of products or services) involving the transfer of information over electronic systems such as the Internet. Many retail websites, music websites, trading goods websites and even service based websites use some kind of eCommerce solution. The main types of eCommerce solutions include: B2B (Business to Business), B2C (Business to Consumer), C2B (Consumer to Business) and C2C (Consumer to Consumer). In some cases, you may hear online retail selling referred to as e-tailing.
Since eCommerce is the up and coming way to run a business, you may be asking yourself why? Why are people selling online as opposed to having a physical storefront? Probably the biggest reason that businesses decide to take the plunge into eCommerce is investment costs. Opening a brick and mortar store can cost a lot of money. Rent or mortgage payments on an office alone can run monthly operating expenses into the thousands of dollars. In addition to rent or mortgage, you also have to consider utility expenses and property tax expenses. Of course an ecommerce website is not free, however when you compare the operating costs of an eCommerce store with those of a brick and mortar store you will quickly realize that operating an online store is dramatically cheaper.
Typical brick and mortar stores require numerous employees to manage the shop. Employees are still needed with an eCommerce store however the number of employees is much less. Large changes require a lot less time to mange with an online store. For example, if you need to make a mass price change, with an ecommerce store all you have to do is change the price in the online interface, whereas in a physical store it is normally more time consuming to update prices because you not only have to change the prices in your inventory management system, but you also have to physically change the prices on any products, shelving, or fixtures that display prices.
Business operating expenses are definitely one of the biggest reasons to start an only store or eCommerce solution but what if you already have a store front? Why would you want to either switch or add an eCommerce solution? The answer is simple. As previously stated in the first paragraph, there are over a billion people using the internet which means there are over a billion potential customers. If eCommerce is pursued correctly, a business could potentially triple their profit margin in a relatively short amount of time.
Setting up a brick and mortar store limits you to business in your particular area. You can’t expect to open a store in California and have customers visiting your store from New York, Florida or even Canada. In an eCommerce store you aren’t limited to any specific geographical location. Since the web is accessed by people from all over the world, eCommerce can enable a business to tap into international markets. For example, there are many companies in India that are making websites for businesses in the United States and more than likely those companies in India are found on the internet. Unfortunately web development is one of the biggest industries outsourcing work to India and we would like to go on record by saying that WebDuck Designs does NOT outsource any work of any kind to India. There is no substitute for the quality and support you get when working with a company located here in the United States.
There are many available options for running selling products or selling services online. The first step in creating an eCommerce solution is deciding which option is right for your business. Because of the variation in business budgets and the number of products/services being sold online, anyone interested in selling online should examine all possible eCommerce solutions to determine which eCommerce solution is best for you.
Pre-made shopping cart/online store program: There is a number of shopping cart programs available for selling products or services online. Some of the pre-made shopping cart programs WebDuck Designs is familiar with include: X-cart ( $230 ), Cubecart ( $400 ), OScommerce ( free ) and Zencart ( free ). All of these online shopping programs offer an inexpensive solution to selling products or services online. Pre-made shopping cart programs may be an inexpensive and effective online eCommerce solution however they do have their weak points. These eCommerce solutions offer limited options for customization and in the case of the two free shopping cart programs support is very limited if any at all. OScommerce is actually an open source shopping cart program which means that there is no single person, company or entity that created it. Instead, the program was written by hundreds of “contributors” so if you have a problem there really is nobody you can contact for help.
Custom Online Shopping Cart Programs: Some businesses generate a large number of sales online and require a more extensive online store. Custom online stores are the way to go for these larger businesses or businesses that are interested in search engine optimization. Since custom online stores are created according to each individual client’s needs and specifications, a good development team can make your eCommerce do and look anyway you need. The design of a custom online store is limited only by your own imagination and the technical ability of the website development company you choose to build your application. WebDuck Designs not only builds custom shopping cart applications and custom eCommerce solutions, we build them search engine optimized to maximize your earning potential. Having WebDuck Design build your eCommerce solution or custom online store means that support for any problems is not an issue because we know every inch of the code.
Ebay Stores: If you have a limited number of items that you would like to sell online or if you don’t have the budget of a search engine optimized shopping cart, then you might want to consider an eBay store. Ebay stores are inexpensive, have a guaranteed audience, and have a proven track record. Unfortunately like everything else, Ebay stores also have their own short comings. Ebay stores are very difficult to customize, have a limited interface for store management, and are subject to a lot of hidden fees. Click here to learn more about Ebay Stores.
Pre-made Storefronts: A pre-made storefront is a good way to get into selling online however it’s also a good way to get taken advantage of or scammed out of your hard earned money. WebDuck Designs is not saying that every pre-made storefront is a fraud; however our limited experience with them has proven to be nothing short of disastrous. Let me share with you a short story about a pre-made storefront company named “StoresOnline.com”. It begins with an invite to an “Internet Marketing Conference” at a large Hotel or banquet or conference area. In our case it was a Marriott Hotel. If you go to one of these conferences, be prepared to be sold. These guys are good at what they do. What is it they do? They take your money and give you nothing in return. They will build you up and get you so excited about how rich you can be by having an online store that you can’t wait to sign on the dotted line. Believe me they have a lot of people sitting at tables waiting for that signature. Whether or not you feel they are a good investment is your own judgment call. If you want to look into StoresOnline.com then you can click here and find out more.
Pay Pal “Buy it Now” Button: Everyone has seen this in some form or another. If you are looking to sell a very small number of items or services online, then this might be the solution for you. All you need is a Pay Pal account, a website, and something to sell. WebDuck designs has only used this a couple of times and although it is not our preferred method for selling online it is a very inexpensive eCommerce solution. For more information about the Pay Pal “Buy It Now” button click here.
As previously discussed running an online store has its expenses. Since companies selling online have varying needs and budgets the cost of running an eCommerce store can vary quite dramatically.
The most expensive upfront cost of selling online is incurred for the development time required to build, integrate, and/or design the actual website that will be used for eCommerce. Although development of an online store can be expensive, it is a onetime charge and can make or break your ability to sell online. Some website design companies will allow larger online stores to break up the development costs over a period of time in an effort to help spread out the payments.
A proper domain name is an important part of eCommerce and conveniently it’s the least expensive must have for an online store. There are many companies that handle domain name registration and since all of them are in the same price range it really doesn’t matter which domain register you choose to use. The price for a single domain name is usually between $5-$10 (unless of course you are looking to purchase a currently owned domain name which could costs thousands). Registration for domain names is paid for on a yearly basis.
Hosting prices for websites vary depending on many factors. The bandwidth ( amount of traffic your website uses )a website uses on an average month determines what size server is needed to host a website. Online stores that have more traffic generated monthly will have a higher hosting fee due to the bandwidth used. Hosting on a dedicated server might cost more, but in many cases the extra hosting expense is worth it. Servers that aren’t dedicated can be overloaded with websites causing your eCommerce site to go down more often which can lead to a lot of other problems. Hosting fess can range from as low as $10 a month for a shared hosting environment to as high as $300 a month for a dedicated hosting environment.
Before setting up an online store, an SSL certificate is needed. SSL certificates create a secure connection between the site visitor and the server, to protect any data that is being transferred (ie. credit card information). Visitors prepared to purchase your product or service want to have a secured connection before providing you with any of their sensitive information. SSL certificates vary in price depending on the company you are using. The average simple ssl certificate costs around $150.00. The most important thing about having an ssl certificate is that the company that issued your ssl certificate is liable if there is identity theft or credit card fraud instead of you.
Last but not least, we come to online payment gateways. An online payment gateway is the interface that processes online payment information ( credit cards, checks ) and deposits the money into your bank account. Payment gateways can be simple interfaces like Pay Pal or complicated customized interfaces like Authorize.net or Sterling. WebDuck Designs has familiarity with many of the most popular payment gateways but ended up choosing Sterling to handle all of our online credit card processing. The costs or fees associated with an online payment gateway are dependent upon the individual company or provider. Although they vary from company to company, you can usually count on a initial setup fee between $50 to $300, a monthly statement fee around $30 a month, and last but not least a small percentage for ever transaction which is usually around .03%.
There are a few ways to accept eCommerce payments. Google checkout can be used if you wish to have customers shop on your site and then checkout using their Google account. Google checkout fees are based on your sales. Google charges 2% plus $.20 fee per transaction for their checkout. If you are selling a product online that costs $1,000, you are paying Google $20.02 just to use their checkout, which can be very costly if you sell a large quantity of expensive items.
PayPal is a widely used method of collecting eCommerce payments. Just because it is a popular payment method does not make it a good choice. PayPal has had a couple issues including phish sites and identity theft. PayPal’s merchant rates are similar to that of Google checkout. For customers to purchase the products you are selling online through PayPal costs anywhere from 1.9% to 2.9% plus $.30. Although we don’t recommend PayPal it can be a better choice for small businesses who don’t sell much online.
A payment gateway is needed for an eCommerce site to be able to accept credit card payments online. To ensure that information passes securely between the customer purchasing a product and the company selling the product online, payment gateways encrypt sensitive information like credit card numbers.
With all these shopping cart options, online payment options, hosting options, ssl certificate options and domain name options, it can be difficult to determine what eCommerce solution is right for your business. The size of your business is an important to factor in deciding what method of selling online will work best. Larger corporations will more than likely have a larger budget to spend for an online store than that of a smaller company. The budget available for a corporation to have an online store makes a difference when comparing shopping carts, hosting options and budge also plays a large part in development of an online store. Online stores that cost less to build are more than likely not as professional looking and not as complex than those costing a large sum of money. Expensive online stores are not necessarily the way to go for smaller businesses wishing to sell just small amounts online.
The number of products that are going to be sold in an online store plays an important role in determining what eCommerce solution will work. Companies wishing to sell thousands of products online are best off using a custom online store, whereas businesses only selling a couple of items a week online may find eBay works well for them. The amount of products being sold online will also impact what type of hosting should be used. Businesses selling a large quantity online and have a large number of visitors will want to have their own server, which will cost more but be more apt to not tax the server.
Company’s specific needs will also need to be thoroughly considered in beginning an online store. If future plans of a company are thought about when a store is developed it can be created to allow for future business growth. Online stores can be built in stages where features can be added on as needed. An online store might not do enough business in the first months to have the need for coupons or featured items, but after a year of selling online they might have to add these features to your website.
Probably one of the most overlooked topics with selling online is the website owner’s liability. With an ssl certificate you protect yourself from theft identity and online credit card fraud if sensitive information is stolen during the transfer of data from one place to another. Now, you are liable in the event that identity theft or credit card fraud is traced back to information you store within your database. Because of this WebDuck Designs does NOT store any credit card or sensitive information in an online database. Let your payment gateway company handle all this information so you don’t have to. Why take the chance. An online business is just like a regular business in that is someone purchases a product or service from you then you are responsible for providing the customer with product or service he or she paid for. In the event that an order error occurs or the product is damaged, you are responsible for handling the situation. Now how you handle the situation is based on your own company policies. Remember word of mouth spreads on the internet like fire through dry brush so consider that when you create your online return or damaged good policies.
If you are selling a product that can inflict harm on someone if used improperly then it is a good idea to put legal disclaimers on your website. A good example would be if you sell children’s bicycles. If a child purchases a bike from your website then goes out and gets hurt riding it then you might be liable in a court of law. This may sound petty but let’s not forget some idiot spilled coffee and the courts forced McDonalds to make him a millionaire. Now it’s almost impossible to get a real hot cup of coffee from McDonalds. They still serve coffee but you can be confident it’s not scolding hot anymore.
Anyone can start up an online store, but it takes time, money and more time to make a profit selling online. When a website first goes live it will not rank high in search engines unless extra money is spent to market the site. If an eCommerce site does not show up high in the search engines chances are it will not get the traffic or sales it could potentially have. More often than not when a person is searching for an item to purchase they do not look past the first few pages so it is imperative for an online store to show up on those first two pages. Although initial costs of online marketing can be pricey, once a campaign has exhausted available resources the time and money spent on marketing the website can be slowly decreased which in turn increases your profit margin. The biggest advantage to online marketing is that 90% of what you do to market online stays online for years with the exception of pay per click or search engine marketing.
Pay per click or search engine marketing, a method of online marketing, can be used to forcefully bring a website to the top of the search engines’ rankings. Search engine marketing rates vary based on specific keyword or keyword phrases chosen. Cost per- click rates have no real average cost. Our online marketers have seen cost per-click prices up to $10 per click! With pay per click marketing don’t forget that every penny spent directly affects your profit margin and not every pay per-click online marketing campaign is profitable. You get charged every time someone clicks on your ad whether they buy from you or not. Pay per click campaigns can bring an eCommerce site on top quickly, but is not recommended as a standalone method of online marketing. As the money runs out of a pay per click campaign the website will drop back down to the bottom of searches. If a pay per click campaign is run alongside other methods of online marketing and is tracked properly it can be a good strategy to market an eCommerce site.
If you are interested in learning more about online marketing or pay per click advertising, then check out our resources page which contains several informational pages similar to this one about online marketing, social online marketing, search engine optimization, and pay per click search engine marketing.