What is E-commerce? Should I use it for my business? Will it help me grow my business?
These questions and many more are some of the issues troubling business owners as they try to adopt new technologies to help grow their business.
As the internet grows it trickles down into our daily lives, by making traditional services easier and better then before. Some of us may still use regular mail but most of us have long forgotten what a postal stamp looks like. This same trend is moving into every part of our lives, rapidly placing the internet as the technology that most effects our generation.
Today, internet growth is not only responsible for how we stay in touch with each other and how we receive our news, it is also effecting the way we shop for products and services.
Internet business is booming, that is a fact! Companies like Amazon and EBay are just an example of multi billion dollar companies that had become such by building their business plan around the internet. Today each of these companies are reporting billions in profits and a steady business growth.
If I build it, they will come
More and more businesses are going online. Business owners are taking their business online in an effort to attract more potential clients and ultimately, more business. No doubt, most business owners agree, the internet is an important medium that holds great promise of potential customers and should not be ignored. They all would like an internet presence, but what kind?
There are two major types of websites that should be considered if you own a business and would like to adopt the internet as part of your business plan.
The ad type website This is an information only website that will act as an online ad for your business, thus providing potential customers with information about your business as well as your products and services, and will urge visitors to contact you via email or by phone to receive more information or a price quote. Combine that with advertising on an online classified service such as yellow pages or yellow book, and you get a great formula for attracting potential customers, providing them with information they need and hopefully getting their business. One of the most common benefits for that kind of website is that it allows you to provide more customers with information while minimizing the need for an employee to answer calls, provide answers to frequently asked questions, mail catalogues and do other tasks related to client information requests.
I see, I like, I buy
E-commerce website During business hours and after, weekdays or weekends. This is the next level of websites providing not only information about your company but also allowing customers to buy your products and services online. Without ever leaving their couch and without ever contacting your business, the customer is given all the information he will need to make a purchase. They then move on to placing an order on your website.
Wow, that is easy
Yes it is, not only for you but also for your customer. Your order can come in at any time, day or night, and your customer can enjoy the convenience of shopping from the comfort of their home, while you have more time to further enhance your business. Furthermore, E-commerce allows you to display an unlimited amount of items at your online store without the need to physically hold them in stock.
Okay, I get it, E-commerce is the way to go.
But what is a shopping cart? Are there different types of carts? why do I need a merchant account? And what the heck is a payment gateway?
What can E-Commerce do for you?
Increase Sales - By reaching larger number of potential customers in existing and new markets.
- Lower Costs - Save on marketing costs, Promotional materials and events, order processing, distribution costs, handling customer calls, reduces inventories
- Increase Profits - increasing sales volume while decreasing your costs will increase your profits.
Part Two, E-commerce mechanics:
What Makes a site an E-Commerce site?
Very simple, any site that enables its visitor to pay online is an E-Commerce site.
Some businesses choose to use their "old" website as an ecommerce website or build a new simple site, then adding a payment option through Pay Pal or similar services. When a visitor is interested in an item or service and would like to pay for it he clicks on a link that takes him to the payment service provider, in this case pay pal. He then pays using his credit card or other available form of payment and returns to the website to continue shopping. This is by far the least recommended way of doing e-commerce, as your visitors leave your site and that is never a good thing. Once you send your customer to another website, even if it is just to pay for your item, you relinquish control over the transaction. You lose part of the impression you created as a serious company and might lose the sale. How would you feel if you wanted to purchase an item and were told to pay for it at the store across the street and then come back to pick it up, because they did not have a credit machine? While this is not exactly how it is done in this case, but it is the same feeling your customer will be left with.
Merchant account? I have one...don't I?
Maybe you do, but most likely it is for physical transactions or what is called "card present" transactions. Your online merchant account will provide credit processing solutions from a bank or other credit processing provider. They are the ones processing the actual credit card transaction, giving you the approval for the credit card and transferring the funds to your bank account. Authorize.net is the largest merchant account provider to e-commerce websites today.
Payment gateway, Your gate to online business
An integral part of every E-commerce website is a payment gateway. That is basically a link between your site and your bank or the credit card processor where your customer's transaction will be processed. This link is essential since it provides your customers the security they need when they shop on your site. The information they enter such as credit card number, expiration date etc.. will be sent through a secured tunnel directly to the credit card processor and will return with an approved or declined status the same way. Think of it this way, you have your site on one side and your bank on the other. Payment gateway is like a trusted messenger connecting the two.
Database, the foundation of every e-commerce site
Whether you are planning to have just a few items or unlimited items sold on your site, it is always a good idea to have your database in place. The data base holds all your item information in an organized and centralized way. Your item description, price and other info is stored in the database and can be accessed by the site administrator or the shopping cart. The database is like a library of your catalogs, but much more then that. It can be a base for collecting important information such as user or item activities, sales reports, contact requests and many more options.
Shopping cart? What is that?
Shopping cart is essentially a piece of software installed on your website. This is the mechanism that ties everything together. It pulls information from the database and displays it on your site for visitors to browse through. Once a purchase process is initiated the cart will collate all the items ordered, calculate totals and add preconfigured values such as shipping & handling costs to the price. It will send the transaction details through the payment gateway to the merchant account provider and receive the information back. It can be configured to display a message confirming the transaction and send an email message to both the site owner and the customer with a similar confirmation. The best way to look at it is that the cart is like a store manager, making sure everything works together.
Shopping Carts Dos and Don'ts
There are many types of shopping carts, some more popular then others. You may have heard names like OsCommerce or Zen cart, these are some of the shopping cart software available on the market today. They are also free for use which makes them attractive for budget conscious businesses. Although these shopping carts are very popular they are by far the least secure and will leave your e-commerce site vulnerable. The one thing that makes these carts popular also makes them the least secure solutions for any ecommerce site, and that is that these carts are based on an open source license, which means that anyone can gain access to the code. it is freely available and can be easily downloaded and modified. I would like to think of it as a retail store with an alarm. The problem is everyone knows what kind of alarm you have and how it works.
Of course you can always modify the code to make it more secure, but you then also run the risk of creating an unknown vulnerability due to incompatibility or overlooked issues. Want to use a free cart? That's fine, but know that hackers love standard, widely available software to mess with. And having the code available for them to learn only makes it easier. Another downside to free shopping carts is the need to customize them to fit your needs. These carts are standardized and will likely need customization for different types of businesses. These modifications may seem simple, but can prove to be quite complex as the programmer who modifies the cart is not the one who originally built it. In these cases, the programmer can sometimes spend days trying to figure out how to modify or incorporate a newly developed addition to the cart while trying to understand the logic of the original developer. In short, besides the security downside, if you need to make a lot of changes and modifications to the cart, it is sometimes better to have a customized cart developed for you.
Close the door
The best way to build it is just like you would anything else, from the ground up. Having a custom made shopping cart is not necessary for every business. Nevertheless, it is definitely recommended. A shopping cart that is developed by an experienced developer is the best way to go. It can be built to your specifications, to fit your exact needs and offer many features not available anywhere else. Built the right way, it is also the most secure shopping cart solution your business can have.
Your shopping cart is your business. Having a non secure e-commerce site is like leaving your business with the front door open. I wouldn't do it. Would you?
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