eCommerce Demystified – Part 4: General Considerations

In previous parts of this series, we described the major steps in a typical eCommerce process, identified the 4 major scenarios for how to divide the eCommerce functionality between the merchant's website and outside providers, and examined recent payment card security initiatives that affect all merchants.

In this part, we'll continue covering general considerations that might influence your decision about which of the 4 major eCommerce scenarios is right for you.

Investment vs. Ongoing Cost

If you want to accept payment (credit/debit) cards, then you are going to pay a fee for each transaction. There's no way to avoid it.

But what about the rest of your eCommerce solution? In general, you have a choice between upfront investment and ongoing operating expense.

If you have a store on your own website, then you have the cost of initial development but pay no additional transaction fees. Since you are already paying for web hosting, the online store is simply another website feature.

If you use a hosted eCommerce service, then you will typically have to pay additional transaction fees. There may also be a setup charge, but if so it is usually less than the cost to set up your own store

If you expect to have a relatively small annual transaction volume, then the transaction fees may be a small price to pay for the advantage of having a complete store that you don't need to develop.

Branding

You have a brand, whether you realize it or not. Your brand is how customers, clients and prospects think about you. One aspect of eCommerce you need to consider is how your online store reflects your brand.

If you have an online store on your website, then there's no reason (other than cost) why it shouldn't fit your brand perfectly. This is why many merchants are interested in their own store.

If you use one of the popular services offered by PayPal, Google, Amazon and others, then your store will be co-branded. You will be able to display your logo, but your service provider's logo will also be prominently displayed on the store as well. The structure of the web page will make it obvious to the visitor that you are using a separately-hosted service. This has both advantages and disadvantages (see "Consumer Trust" below).

Other hosted services may offer more customization options, but at a potentially higher cost. The key here is to decide what level of branding you need, and take that into account when choosing your scenario or eCommerce vendor.

Consumer Trust

By now, most consumers have heard enough stories of Internet fraud that they are justifiably wary of providing just anyone with their payment card information. If you plan to offer goods or services online, you will need to overcome this reluctance.

Perhaps the best approach for small- to medium-sized merchants is to use a hosted payment solution from a recognized provider. This could be a household name like PayPal, Amazon or Google, but could also be one of the larger financial transaction providers like Authorize.net. Because of the trust they place in such services, consumers will readily use them to complete their transaction.

If you're not using a recognized provider, then you need to find a way to allay the consumer's fears. This is generally not a problem for big merchants (for example, Walmart or Apple), but is a big challenge for small- to medium-sized merchants.

Some sites display "trust" seals from recognized security vendors, indicating that the site is routinely scanned for viruses and other malware. This addresses one aspect of the problem, but not the issue of payment card information safety. Also, it is not clear that visitors actually pay attention to such seals.

eCommerce Features

What features do you really need for your store? If you offer only one item (a single product, subscription, donation, etc.), then having your own online store would probably be overkill. There are a number of simple and inexpensive services that could satisfy your needs.

If you need a basic shopping cart, then most eCommerce vendors will have a solution for you. In that case, the determination will probably be based on criteria other than features.

But let's suppose that you need bells and whistles—coupons, special deals, cross-selling, up-selling, customer reviews and so on. Now your options have become a lot more limited.

Many of the hosted solutions cater to the mainstream market, and have only the features needed by almost all merchants. Even the offerings of eCommerce software providers vary widely in their support for less-common requirements.

You should make a check-list of the specific features that you need and use that check-list when researching possible solutions. If you need to use a hosted solution, then you may need to either make some compromises or be willing to pay a substantial premium. If you pay to have an online store developed on your own website, then you need to understand which features come with the package, and which are extra-charge.

Bank or Non-Bank?

Banks and other financial institutions are governed by a host of federal and state regulations. If you have a disagreement with your bank about credit card transactions there are strict rules as to what they can do and can't do.

Most of the eCommerce services (PayPal, Google, etc.) are financial intermediaries, not banks. Some of the rules apply to them, and some don't. The terms that you have to agree to in order to use their services say that they can do pretty much anything they want (within the law, of course).

Should you care? Most businesses that use these services seem to do so without any issues. On the other hand, there are a minority who claim that this or that service has abused them (you can find these without much trouble by searching). You will need to decide for yourself how much importance to place on this factor.

Merchant- or Industry-Specific Requirements

Are there any online store requirements that are specific to your industry or perhaps your business?

For example, as you might expect, here in the Wine Country we have a lot of winery websites. When purchasing wine online, the customer must attest to the fact that they are at least 21 years old. Many online store options do not have this feature directly (although there may be other ways to fulfill this requirements).

If you require any features not needed by mainstream merchants, you'll need to check carefully to determine which services or software packages offer the feature (or can be adapted to provide it).

Support

Who do you turn to when you have a problem? All hosted service providers have support organizations that can help you. A number also have active forums, where you can get help from other merchants.

If you have an online store on your own website, then you will either need to have the expertise in-house or contact the developer who created your store. If you need to contact the developer, there will probably be a charge.

What about changes to your store? Online store security? Software patches and upgrades? Data backup?

Support is seldom the determining factor when choosing your eCommerce solution, but you should take into account all of the administrative functions that are required for ongoing operation.

What's Next

That wraps up our overview of additional eCommerce considerations. In Part 5, we'll begin looking in detail at our four eCommerce scenarios, starting with the Merchant Store.

Note: When you're ready, I have the skills to help you implement your online store.

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