eCommerce Lesson #1 – An Introduction To Ecommerce
Many people new to websites and/or ecommerce are confused at the in and outs of ecommerce. Even many people who are fairly adept at scripting can set up a store using some popular package such as OSCommerce and then are left stumped by the idea of making it work with a payment gateway to actually collect money and put it into their account.
The Basics – How Funds are Collected
Ecommerce simply refers to the practice of shopping online. From the site owner’s perspective, it entails collecting funds from sales transactions on their website and depositing that money into the bank. In order to collect funds, you need to have a merchant account and a payment gateway (discussed below). Basically, when a person enters their credit card number on a website, the card number and buyer information is sent to a payment gateway. This is done securely. The payment gateway will interface with a payment processor to check availability of funds as well as any other criteria set for accepting transactions. If the funds are available, the payment processor will then deduct the funds.
A Merchant Account is a special type of account specifically for online retailers. They are designed to allow non-POS (point of sale) transactions using credit cards, or transactions where you don’t have the person’s credit card in hand. In other words, you don’t have a card swiper. A merchant account is not the same as a bank account. It acts as a go-between between your payment gateway and your bank account, accepting funds from credit cards which are then deposited into your bank.
A merchant account is a relationship based on trust between you and the issuing bank. The bank takes funds from the buyer’s account and deposits into your account. A payment processor takes care of checking for availability of funds and debiting from the credit card account. The bank issuing the merchant account is trusting that you will fulfill your end of the transaction by providing the product or service that the buyer purchased.
A payment gateway serves as the front end to your merchant account, allowing you to manage funds, transactions, and the like. It also serves as a connection between your website and your merchant account. It takes data submitted via your secure order forms and presents it to your processing bank. The processing bank then approves or declines the transaction and sends its response back to the payment gateway. The payment gateway then turns around and provides this data back to the merchant for appropriate handling of the transaction. A payment gateway, then, does not offer services such as merchant accounts or shopping carts, although some of the larger-known gateways do provide such options as value-added services.
Fraud prevention is a big one because, as stated above, too many fraudulent transactions will result in chargebacks which could end up putting you on the Match List and your merchant account closed. Some of the common fraud detection mechanisms are Address Verification (AVS) which compares the customer’s address with that on file with the issuing bank, CVV2 which makes use of the 3-digit security code on the credit card (4-digit on American Express cards).
Most gateways will provide instructions on how to interface with their servers from your web store. Many gateway providers can get you set up with a merchant account at the same time as the gateway. So, in most cases, you do not need to sign up for them separately.
eCommerce Lesson #2 – The Plan
Planning an ecommerce website is like building a house – architecture and budget need to be agreed before the decoration. Once the specification has been agreed then solutions need to be evaluated and costed against that specification are:
– Project management – Hardware – Web design and software
All aspects of the project need to be managed. Decide who is going to do it and properly plan the requirements, activities, outcomes, milestones and timings.
Your choices here are a managed service or your own server. The security and disaster recovery aspect that is achieved by hosting with a major provider is very important. Only go with your own server if you have the experience and facilities.
Design and Software:
Develop site templates and test them with real people. They have to be easy to use and navigate. Don’t let “design” drive the site; let ease of use and sales drive the “design”. Think how the customer thinks.
At least 3 solutions need to be considered.
– Shopping cart – Email – Statistics
There are 2 realistic routes here. Either an online or an offline, PC based content management system (CMS). The online CMS can be either an Open Source CMS (Open Source means any application that has been made available, generally free, to developers to view and modify freely. Examples of Open Source applications are MySQL and PHP) or commercial.
There are pros and cons to both routes. An online system is available to anyone with relevant security clearance anywhere any time. A PC based system is, obviously, limited to the PCs running the licenses. An example of a PC based system is Macromedia Contribute which integrates with Dreamweaver. There are a whole range of online Commercial and Open Source options such as SuiteWise, Drupal, Joomla, and WordPress etc. However, even this is complicated by the fact that some of the shopping cart solutions also contain CMS that may be sufficient for many companies’ requirements.
There are other factors to consider with the shopping cart:
- – Does it have its own or does it easily integrate with your exiting stock control systems?
- – Does it integrate easily with accounting systems? (e.g. Sage, QuickBooks)
Most CMS, shopping carts and forums have email solutions. However, some solutions are very basic. If the chosen shopping cart solution that best meets the ecommerce and other requirements does not have an effective integrated email solution and if the same be true of the CMS and forum solutions then stand alone Open Source applications such as PHPlist are one alternative solution and the other is an online solution such as Constant Contact or many others.
This is arguably the most important part of the package. If you do not know how visitors to your website and in the shop are behaving, what turns them on and what turns them off then it is far, far harder to improve sales and site profitability.
eCommerce Lesson #3 – How To Choose A Merchant Account
For a number of e-Businesses, discovering the best way to accept payments is a frustrating task. As the Internet is an instant medium, it is highly recommended that a ecommerce website must accept credit/debit cards and online checks as modes of payment. In order to accept credit card transactions, you require setting up a merchant account with a merchant bank. As soon as you set up a merchant account, an online processor can provide you with the software or gateway you need to transact.
Selecting a suitable merchant account is considered to be one of the most tough business decisions you make as their existence has almost doubled and are now into more than hundreds. At the time of choosing a merchant account, you should be aware of the cost involved in setting up the account. Refer to the list below and don’t forget to ask about each of these items before agreeing to an account.
The application fee is compulsory so an agent or bank can “research” you as a potential customer. Few firms are more likely to repay this fee if your application is not accepted while others won’t. It is always advisable not to pay an application fee that will not be refunded in case you are rejected.
Minimum Account Billing
This fee requires you to do a least amount of business with a merchant bank. A majority of banks require a monthly minimum of at least 25 dollars in transaction fees. Anything less than 35 dollars minimum is satisfactory.
In case there is a considerable minimum-billing need, then there should be no statement fee. Still, a number of banks charge this to cover administrative costs. If you are assessed a statement fee, it shouldn’t exceed 10 dollars per month.
Charge back Fee
In case a customer is not satisfied with their purchase, can’t get a refund, or is just looking for something free, you may be faced with a charge back attempt. Under this, the bank will return customer’s fund and debit your account for the full amount. Always make sure to ask about your bank’s charge back policy. Most banks tend to be more loyal to cardholders than merchants so protect yourself by preventing charge back fees.
This fee, which is usually about 2-3 percent of the purchase, is assessed on every transaction. If a product costs US$100, the bank would receive US$2-3 for their services. While rates are relative to the nature of your business, anticipated volume and your credit history, you should never pay more than 3 percent.
This covers administrative work necessary to establish your account. In case you’re charged an installation or programming fee, there shouldn’t be a setup fee. There is a considerable amount of work completed to create merchant accounts, so fees of US$50-500 should be expected.
At the time of approaching banks or an intermediary about a merchant account, always keep in mind the following tips:
1. Read the terms, conditions and anticipated charges carefully. Don’t sign anything until your questions are answered to your satisfaction. Take time to understand exactly what you are getting and how much you are paying to get it.
2. Do you require a reserve account? It shouldn’t be, but if you are a start-up Internet business, have poor to marginal credit, anticipate low volumes or run a “risk” business, it may be required.
3. How long before funds are available to you? Ideally it should not take more than 72 hours from the time an order or transaction is processed.
eCommerce Lesson #4 – Ensuring Delivery
In the early days of ecommerce it was more likely that you would have direct interaction with an online business. Before the advent of shopping carts and online credit card transactions you might have been advised to call the online business phone number and place your order over the phone. Packages may have arrived with a hand written mailer and a note of thanks enclosed. As a customer you might have even been saddled with the task of sending a check and then waiting for the product to arrive once payment cleared the bank.
As ecommerce business has expanded, so too have the methods of payment. With the payment issues moving toward an automated accounting system we have seen the fulfillment of orders move toward a more automated function as well.
This is the typical order of product fulfillment with major online companies today.
- 1) Product ordered through online store using standard shopping cart.
- 2) Autoresponder used to confirm order placement and payment information.
- 3) Order added to a fulfillment database.
- 4) Autoresponder used to alert customer to the successful shipping of the product.
- 5) Tracking information provided to allow customer to follow the delivery of their product.
There may still be room for human error, however this type of product fulfillment takes into account the needs of the consumer, the advantages of current technology and a more efficient means of follow through with customers.
Defining your shipping policy in your Frequently Asked Questions (FAQs) section may be a very positive way to help customers know what to expect from your ecommerce store.
It could be your online store provides customized gifts or services that may find benefit from personal interaction with your clients. In some cases it may be wise to adopt a positive human touch when working with your clients. However, as your business grows you may discover it is time consuming to keep up with every order personally. This is when a more automated delivery system may be in order.
Customer service is a prized component to any ecommerce business. If a customer has to remind you to make a delivery it is possible you have lost that individual as a customer.
I had a situation where a software product was ordered, but was not delivered. The company found the information, discovered the shipping error, and sent the product to me overnight and added bonus software. Their response to the issue was what allowed me to feel comfortable returning to their ecommerce store for additional software purchases.
If you make a mistake – make it right – make it better than right – and do it quickly. A reputation is hard to gain and easily lost.
eCommerce Lesson #5 – Fundamentals
eCommerce can be VERY complex. To offer a world class customer experience, retailers must incorporate technologies and functionality that exceeds rising customer expectations.
On the flip side however, site fundamentals still play a very large role in converting visitors into customers. Many retailers surprisingly lose sight of these site basics and leave significant sales on the table. This brief examines 4 quick “fundamentals” every eCommerce manager cannot afford to lose sight of.
Speed has become less of a problem due to the penetration of broadband, but don’t forget that a significant number of people won’t have the fastest connection. When creating a site framework, designers and e-commerce teams should ensure that the site is developed with pages loading in a few seconds.
Online retailers should avoid flash at all costs within their transactional site. Flash’s artistic aspects may help you establish a brand presence – but it will likely lose potential customers before they have even searched within your store.
Image is important
Images are a very important aspect of selling online and are often neglected. All product images should be of the highest resolution possible, be much larger than the product page original, and have
multiple views. Dynamic imaging capabilities can improve the user experience to an even higher level by increasing interactivity (zoom & rotate). At a minimum – retailers should have at least two additional views outside of the product page image to help build emotion.
Be my guest
Shoppers do not like being forced to do anything, especially when they are ready to open their wallets. Forcing a shopper to register on your site before purchasing is a sure way to drive a portion of your traffic to your competitors. Too often, shoppers do not have the time or the inclination to fill out a lengthy form explaining what types of information they desire.
Always offer the ability to checkout as a guest. You will see less customer leakage within the checkout process and can still offer the option to register when the sale is completed.
Make sure it’s “above the fold”
Your homepage is the most important page within your eCommerce store. It sets the initial tone for the shopping experience and offers your best promotions and products to your visitors. Users typically visually scan a web page from top to bottom and then from left to right. All critical content and navigation options should be obvious to the shopper without having to scroll down. If you have your best promotions “below the fold” – you can bet that a large percentage of browsers are not scrolling down to see it.
eCommerce Lesson #6 – Two Most Important Factors In eCommerce Design
OK, so the title isn’t strictly true there is one important factor in ecommerce shopping cart design and two things you have to do achieve it. The goal is to make people purchase your product. The two things you have to do to make them buy is to help and persuade.
When you design a site you need to pay serious attention to it’s usability and it’s persuasive abilities. The aim of a good eCommerce solutions is to gently (or not so gently) persuade the sites user to purchase the product they want to make sure that they find this as easy as possible..
When a customer lands on your internet store they will only have a certain amount of patience, once this all runs out they will give up and leave your site for one of your competitors. The easier your site is to use and the less they have to think about how it works the longer they will stay on your site, and the more likely they will be to purchase from you.
With the increase in the use of CSS and the increasing accessibility of graphic manipulation packages people are able to completely customise the way the ‘things you click’ on their web-site look, the limit it pretty much their own imagination. Unfortunately this can lead to some confusion for users who have to think about what is clickable and what isn’t, this will cause them to get frustrated.
With text links it’s best to follow HTML tradition, keeping links in a contrasting colours and keep them underlined. Users also like to know where they have been, so keeping links that have been visited in another colour is good practice.
Once you’ve addressed the Usability of your store and your visitors can find their way around your site easily and find their way to where they want to be, you must then consider the second important part of the design. You need to make then go to where YOU want them too, the order confirmation page. Below are 3 tips for making this happen.
Once the user has put some items into their cart and clicked on the checkout button there is a good chance that they really want to buy something. So whatever you do make it as easy as possible for them to put their credit card details in and click the order confirm button.
A design practice that we implement is removing all unnecessary links from the order process. For example all links to the ‘home’ and search boxes are removed. If the user goes searching for other products then it’s possible that they’ll get side tracked and forget that they were going to buy your products. But make sure that the user still has access to the information about the product that they’re buying, we try to implement this by including all the information on the shopping cart page, or by linking to pop-up with the info in, we don’t link back to the original product page as this could lead to further distractions.
Long checkout processes with multiple pages is also something that should be avoided. Only ask the customer for information that you really need.
You need to make your product descriptions and products images as descriptive as possible, don’t ever assume that your customers are as well versed on your products as you are.
Also the more information that you include the more ’spider food’ there is for the search engines.
eCommerce Lesson #7 – The Future of Ecommerce Store Development
As a long time web designer I’ve dealt with any number of eCommerce options over the years. In general you’ve always had two major options:
1) You build and code from scratch. This required a great deal of knowledge in various coding languages in addition to the ability to design an attractive interface which will work within the construct of the website’s structure.
2) You pay a company with pre-built systems. This was not only extremely expensive but rarely allowed you freedom to create any sort of pleasing design as it would have to conform to their limited header/footer customization.
Free solutions are Open Source based online shop e-commerce solutions that are available under the GNU General Public License. They all contain a rich set of out-of-the-box online shopping cart functionalities that allows store owners to setup, run, and maintain their online stores with minimum effort and with no costs, fees, or limitations involved. Most of these Open Source solutions provide an e-commerce platform, which include the powerful PHP web scripting language and the fast MySQL database server.
In addition to the obvious advantages of these open source stores, there are many less obvious benefits such as.
– The ability to change the design of your store nearly instantly by simply selecting a new “template” from within your administration panel
– Countless free “add-ons” and “modules” which add all types of additional features to your store.
– As the projects continue to grow and the stores improve you can upgrade, and of course the upgrades are free also.
You can find more information on these Open Source eCommerce Solutions at their hub sites. Just type in the OS solution name you wish to research into your search engine and their home pages will show up. The most popular solutions are ZenCart, OScommerce & CRE Loaded. But there are many other ones out there to choose from; however these three have proven themselves over time and have such large user bases and support groups that I would recommend trying one of them first before attempting to delve into lesser known solutions.
To sum this all up. While large companies will always need a custom built solution for their online stores, the average small business no longer needs to spend five or ten thousand dollars to have a quality store developed. The use of a free OS solution along with an inexpensive design template will have you selling online for pennies on the dollar compared with a custom built store. Even if you don’t feel you have the skill set to work with the OS solutions, you can hire any competent developer to implement it for you. Sure you’ll be charged, but the price will be a small percentage of what you would have paid.