eCommerce Demystified – Part 8: Hosted Store

You've decided that you want an online store, but you'd like someone else to handle all of the details and host that store for you. There are many Hosted Store providers who offer such services. In this part of our series, we'll look at what you can expect.

Overview

In this installment, we'll cover the Hosted Store scenario (last on the right in our diagram). The distinguishing characteristic of this scenario is that, except for a link to your off-site store, your website is not involved in the sales process. A Hosted Store Provider vendor provides the product pages, the shopping cart and payment card processing.

What Is Required?

The pieces of the total solution are:

• Web server (optional)
• eCommerce software
• Hosted Store provider
• Secure connection with SSL Certificate
• Payment Gateway (see discussion)
• Merchant Account (see discussion)
• Privacy & Security Policies

eCommerce software is now unnecessary. In fact, you don't even need to have your own website. Many Hosted Store vendors let you define additional pages to the store website, which might be all that you need.

As with the Hosted Payment plans we already discussed, whether you need a Payment Gateway or Merchant Account depends on the plan you pick. Some providers handle these functions themselves, some require that you have your own Merchant Account and some offer multiple options.

Hosted Store Plans

There are many vendors offering Hosted Store plans. As with the other scenarios, we can't cover them all here. Instead, we'll try to give you a good overview.

Well-Known Brands

As with the other scenarios, the most popular tend to be the well-known brands. The table below summarizes some of these.

	Yahoo Small Business	eBay ProStores	WebStore by Amazon
Setup	$50	None	None
Monthly	$39.95	$29.95	$24.99
Per Transaction	1.5%	0.5%	2.0%
Payment Gateway	Included	Multiple	Amazon
Acquirer	PayPal or Merchant Account	Multiple	Amazon

As you can see from this table, prices and approaches vary widely. Note that, in all cases, there are additional charges for Merchant Services.

Yahoo Small Business

Yahoo Small Business offers a online store that uses your own Merchant Account. They include Payment Gateway services as part of their package. For payment card processing, you may use PayPal Checkout, Bank of America Merchant Services or any Merchant Account compatible with their Payment Gateway provider (FDMS Nashville).

eBay ProStores

eBay ProStores offers a number of payment processing options, including:

• PayPal Website Payments Pro
• PayPal PayFlow Pro
• Authorize.net
• Quickbooks Merchant Service

Whether you need a Merchant Account or not depends on which of the options you choose. For PayPal Website Payments Pro, PayPal is the acquirer, so you do not need a separate Merchant Account. All of the others use your own Merchant Account.

In this case, the transaction fees charged by eBay are lower, but you're paying additional for both Payment Gateway and Merchant Account services.

WebStore by Amazon

In the case of WebStore by Amazon, Amazon handles all of the payment card processing. This means that, in addition to the charges listed above, you pay for transactions as follows:

Monthly Sales $	Transaction %	Per-Transaction Fee
<3,000	2.9%	$0.30
3,000-10,000	2.6%	$0.30
10,000-100,000	2.5%	$0.30
>100,000	2.4%	$0.30

General-Purpose Hosted Store Providers

The well-known brands tend to address the eCommerce "mass market"—all of the basic features and a relatively low price.

If you need additional customer support or some customization, there are many other Hosted Store providers (for example, Nexternal) who you might consider.

Industry-Specific Hosted Store Services

Depending on your industry, you might find that there are specialty Hosted Store providers with offerings tailored to your needs.

For example, here in the California wine country, there are a lot of wineries. As a result, there are providers like Cultivate Systems and eWinery Solutions that specialize in Hosted Store solutions for wineries. Even Nexternal (mentioned in the previous section) has a special "wine vertical".

If appropriate, you might want to evaluate the special features they offer and how their pricing compares to the alternatives.

Hosted Store Design

One point to keep in mind is that your hosted store is a second website. Someone is going to have to design it.

All of the big-name services offer design templates. Their advantage is that they are easy to implement and guaranteed to work. Their disadvantage is that they probably don't look much like your main website.

If you want your online store to look like your website, someone is going to have to do the customization. It's easier, since they are not having to develop the design from scratch, but it is still work that you have to either do yourself or pay someone else to do.

Choosing a Hosted Store

So, how do you choose a plan? We discussed a lot of the considerations in Part 4. In this case, some of the factors to consider are:

• Support. With a Hosted Store solution, you're using someone else's system for your eCommerce. How much support are you going to need? What kind of support? The larger, more generic providers tend to offer lots of documentation and basic support. Smaller, more specialized providers expect to provide more personal support. You have to decide which better meets your requirements (and budget).
• Existing Merchant Account. If you already have a Merchant Account, you'll have to decide whether you want to continue using it or not. For example, if you have Point-Of-Sale (POS) terminals you'll need to keep your Merchant Account to service those. In that case, you might prefer a Hosted Store that uses your existing Merchant Account.
• Features. Although all of the Hosted Store providers offer the basics, they differ in how these are implemented. And don't stop your evaluation with just the basics— you might find that one provider offers a more obscure feature that's exactly what you need.
• Cost. Of course, cost is always a consideration. You should use your expected transaction volumes and other costs (for example, a Merchant Account) to estimate you annual cost.

Summary and Next Steps

That ends our overview of the Hosted Store scenario. This is a very popular approach, but as you probably noticed, there are still a lot of decisions for you to make.

This also is the last of our four major eCommerce scenarios.

But choosing which of the scenarios is appropriate for you is only part of a successful eCommerce implementation. There are many other aspects that you need to consider. In Part 9, we'll take a look at what else you need to keep in mind .

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

Get a Quote