Business Support Bulletin - April 09

A Beginners Guide to E-commerce

Welcome to April's edition of sdesign1's Business Support Bulletin! This month we are looking at e-commerce and how to sell online.

At the bottom of this newsletter you will find a list of business networking events taking place in the near future in and around the North West, so you can skip to that if you are not interested in the ecomm stuff.

This guide is intended for those just dipping their toes into the waters of online retail not for the more seasoned ecommerce bods.

Terminology

We'll start off by getting all the jargon out of the way, as that's what usually stops people understanding what it's all about.

Shopping Cart: This is the software that either has to be installed on your existing Website or you buy a standalone version of it. You can get cheap ones and you can get expensive ones.

Online Payment Handler: This is a company that processes your online transactions for you and enables you to accept online payments. Examples of these are PayPal, Worldpay, Paypoint, Netbanx et al.

Internet Merchant Account: You can get this from your bank and it allows you to receive payments by credit/debit card be it online or by phone or whatever. You can alternatively get it from your Online Payment Handler.

Payment Gateway: A Payment Gateway is provided by your Online Payment Handler (PayPal and co.). Your shopping cart sends encrypted details of a transaction request to a Payment Gateway. This then deals with the Card company e.g. Visa, Mastercard etc. and receives authorisation (or not!). It also tells your bank about the transaction (so you get the money!). Finally it sends back information to the Website so it can show a transaction successful message, store some details such as purchase amount, quantity,and purchaser details etc. It does a few other bits and bobs but we're trying to keep this simple.

Merchant/Gateway: A number of online payment handlers offer a merchant account and payment gateway bundled as single package. This is so you don't need to go to your bank and organise one. Sometimes it's cheaper to do it this way, sometimes it isn't - depends on what your bank is charging.

SSL encryption: This ensures information sent from your browser is encrypted when it is sent to the e-commerce Website and also when it is sent from the e-commerce Website to the Payment Gateway. It is designed to prevent naughty people obtaining credit card details by electronic eavesdropping.

What you need in order to sell Online

• You need a Merchant Account either via your bank or as part of the package provided by the Online Payment handler.
• A Website with a shopping cart! There are lots of off the shelf shopping cart solutions available. These can be stand alone solutions such as CubeCart or plugins which can be added on to your Website if it has a Content Management System running behind it. Some of them you have to pay for and some are free but you may have to pay someone to make it look half decent or do some tinkering for you.

Some things to think about

There is a lot of trust involved in buying online so a cheap looking messy template might not be the best way to create that trust. Here are a few other things to ask yourself:

• Are you selling something which people are likely to buy online?
• How usable is your shopping cart to use by buyers? Does it have a nice clear interface?
• Dos it have stock control? Pain in the butt if people are ordering and paying for something you don't have anymore.
• Will it be worth it after the payment gateway has taken their cut and the bank taken its cut and you've had to spend time on packaging and posting it?
• Will you be able to respond to orders quickly 24/7? Would you want to?
• Do you need to install it yourself?

Some Popular Shopping Carts

There are numerous ones out there. Some will be suitable for developers and designers but not joe public and some can be set up with relatively little technical knowledge.Tthere are also some which can be set up by Joe Public but then something goes wrong or you can't figure something else out and in the end you need a developer to fix it for you.

In no particular order of priority:

• Actinic - various setups - some for the novice, some for web designers.
• Shopify - hosted, so no installation; all in one package from $24 and above.
• Yahoo - hosted, simple template based for novice users
• Google Checkout - actually it's not a shopping cart
• Zen- cart - free but needs an install - best left to developers - flexible
• OS Commerce - as above.
• Magento - free, powerful, and flexible but needs good developers to install and still in its infancy
• Cubecart - about £50 depending on exchange rate; needs install but fairly simple to do
• Joomla Virtue mart (plugin for a Joomla Website)
• Drupal Ubercart (plugin for a Drupal Website) - for developers - good ones too.
• WP e-commerce (plugin for a Wordpress Website)

We won't be recommending any particular one as it largely depends on your needs, expertise, and resources.

Costs: Depending on who your handler is and which package you have opted for there are a myriad of pricing structures so we have produced a table below which shows some of the charges you may come up against:

Setup fees: You may or may not be charged a set up fee.

Percentage fees: If you have a merchant acount organised via your bank they will be taking a percentage of your online sales (and presumably using that percentage to pay excessive bonuses to people who haven't justified them). If you have a payment gateway/merchant account all in one package you will not be charged a percentage by your bank but by your online payment handler.

Transaction fees: For every transaction a fee of, for example, 20p is charged.

Monthly fees: Sometimes they are non existent; sometimes you need to have a minimum monthly turnover like £50, sometimes there is a stock monthly fee.

Anti-fraud fees: These are normally built in but flagged by the online payment handler so you know what you are paying for.

You have to examine your potential turnover and the profit per item to choose a best fit for your online business. A solution which is scalable or portable might be an idea if you want to feel you're way in.

Our One Recommendation

Think twice about getting your shopping cart from your online payment handler. if you do your shopping cart will most likely be tied into your payment handler and so it won't be easy to switch to another payment handler.

And Finally

We can of course sort it all out for you. Just give us a call (0151 223 0001) or use our contact form.

Business Events

Here's all the events we know about coming up:

• BNI Riverside Breakfast Meeting - Networking Event - Every Wednesday >>
• Survive and Thrive - Thursday 11th June, 8.30am - 5.00pm, Crowne Plaza, Liverpool >>
• Software as a Service - Thursday 30th April, 11.00am - 2.00pm, Liverpool Innovation Park >>
• Annual NW Business Pitch - Advanced Engineering, Chemicals & Instrumentation - Wednesday, 22nd April, 11.00am - 1.30pm, Daresbury Science and Innovation Campus, Warrington >>
• Daresbury Business Breakfast - Friday 24th April, 8.00am - 9.30am, Daresbury Science and innovation Campus, Warrington >>

That's it for this month - We hope you find the information in these bulletins useful and would like to know if there is anything you think we should be including in our monthly installments.