How to Set Up, Part 2

The Host with the Most

If you'd rather not build your site yourself, there are many hosted web or e-commerce solutions that can help. Web-hosting companies generally offer a combination of site-building tools; product catalog tools; shopping-cart technology; payment, shipping and marketing strategies; tracking and reporting capabilities; domain registration; and hosting.

eBay offers a storefront solution called ProStores. ProStores--which is available to everyone, not just eBay sellers--offers a full-featured, customizable web store. Unlike eBay Stores, ProStores sites are accessed through a URL unique to the seller and have no eBay branding. ProStores sellers are responsible for driving their own traffic, and items on ProStores sites sell only at fixed prices. The cost of a ProStore ranges from about $7 per month with a 1.5 percent transaction fee to about $250 per month with a 0.5 percent transaction fee.

Hosted solutions generally start at about $30 to $40 per month, plus setup fees of up to $50 per month. Some companies also charge transaction fees. Keep in mind, $40 will only get you basic functionality--bells and whistles cost a few hundred dollars per month.

Jacquelyn Tran, founder and president of Perfume Bay Inc., a Huntington Beach, California, company that sells cosmetics, skin-care products, perfume and home fragrances on its website, uses a full-featured e-commerce service from Yahoo!. Tran started Perfume Bay in 1999 and now offers more than 30,000 types of products, with 2005 sales of $8 million. During startup, Tran hired a web designer to build her site. Her total startup cost was high, coming out to $50,000. "This included advertising, a custom-built shopping cart--everything," she says.

A few years later, Tran decided to sign on with Yahoo! Merchant Solutions (then called Yahoo! Stores). "The pro-gram was easy to use, fairly customizable with a lot of great features, and fully integrated," says Tran, 28. "This was very important because we depend on having a really easy-to-navigate site." She also found a web designer through Yahoo! to help set up the new site. Tran saw a difference almost immediately: "We got more orders," she explains.

Tran chose Yahoo! Merchant Solutions' most expensive offering: Yahoo! Merchant Professional, which costs $300 per month, plus a one-time setup fee of $50 and a fee of 75 cents per transaction. Hiring a web designer costs an additional $2,000 to $10,000. Still, that's a lot less than it cost Tran to set up her customized site. "Looking back," she says, "I wish I had gone to Yahoo! first."

Sebastian Moser, U.S. director of technical development at Chesterbrook, Pennsylvania-based 1&1 Internet, says that before you sign on, make sure your hosted e-solution offers:

• A full wizard-driven setup: Most merchants need a proper wizard-driven system that takes you from start to a fully operational, production-ready e-commerce storefront.
• Many templates: An e-commerce solution provider should have many different templates to meet the needs of its varied customers and their products.
• SSL encryption: The system should include the option of SSL encryption-a protocol for transmitting private docu-ments via the internet. This means your customers' credit card information and address is transmitted securely.
• A database-driven system: This allows a system to be inte-grated with your customer database, so you can send out promotional e-mails.
• Payment beyond paypal: PayPal serves the needs of a lot of e-tailers, but not all of them. The best hosted e-commerce vendors offer several payment gateways.

How to Set Up, Part 1

by Melissa Campanelli, March 27, 2006 Entrepreneur Magazine

So you want to set up an e-commerce site. While it may seem daunting at first, don't fret. The following is an overview of different ways to go about it. Simply pick the one that's right for you, and log on.

Going Solo
Many experts and entrepreneurs believe that building your own website is a no-brainer, thanks to the inexpensive, easy-to-use and sophisticated e-commerce services available.

"If you're a one- to two-person firm, [you have] someone on your staff [who] can design a website and you only sell a few products, there's no reason not to do it yourself, particularly with the out-of-the-box solutions available nowadays," says John Jantsch, a marketing coach, author and creator of the Duct Tape Marketing system for small businesses.

Jantsch, who lives in Kansas City, Missouri, built his site, www.ducttapemarketing.com, in 2001 and says you can create a robust site for less than $150 per month, plus a few hundred dollars for software. Popular tools include Microsoft's FrontPage, for $199, and Macromedia Dreamweaver 8, for $399.

After setting up your website, you'll need a shopping-cart software program or service so you can take orders, calculate shipping and sales tax, and send order notifications. This costs about $29 to $79 per month. The most popular options include GoEcart.com, 1Shoppingcart.comand ShopSite Inc.

Your next step should be to obtain an internet merchant account from your bank, allowing you to accept credit card payments online. If your bank turns you down, try others--and consider offering to move all your accounts to that bank to up your appeal. Or you can perform an online search for "credit card processing" to find a variety of companies offering accounts to budding online businesses.

You'll also need a payment gateway account, which is an online processor that hooks into both your customer's credit card account and your internet merchant account. The gateway verifies information, transfers requests and authorizes credit cards in real time. Leading providers to smaller merchants include Authorize.Net, CyberSourceand VeriSign.

An even less expensive way to get started accepting online payments is to use PayPal, an account-based system that lets anyone with an e-mail address securely send and receive online payments using a credit card or bank account. PayPal is free, but the company charges 2.9 percent plus 30 cents for every transaction under $3,000. The company also has a product called PayPal Website Payments Pro, which offers basic shopping-cart functionality and costs $20 per month plus transaction fees.

Of course, you still have to actually host your site. You can do it yourself on a computer that can be dedicated as a web server and that has a broadband internet connection, but such systems are costly and have limited capacities. Your other option: Use a web-hosting company. Many entrepreneurs swear by some of the bigger names in web hosting, such as Affinity Internet, Go Daddy Software, Hostway, Interland, iPower, Network Solutions, 1&1 Internet, Verioand Yahoo!. But some entrepreneurs prefer small, local hosting providers since they offer a direct contact--especially important if your site has an outage. Whether you use a large or small provider, basic hosting services--as well as domain-name registration and e-mail accounts--cost about $10 per month.

There's also a free option: Microsoft plans to launch a beta version of Microsoft Office Live early this year, providing small businesses with their own domain name, a website with 30MB storage, and five e-mail accounts, each with 2GB storage. Visit www.microsoft.com/office/officeliveto check for availability.

SBC: 2005 best choices

Storefront
Yahoo's Small Business arm had much to be proud of in 2005. Primarily, the company revealed tremendous growth numbers in terms of e-commerce Yahoo! Merchant Solutions Web hosting subscribers. As of August, Yahoo had more than 35,000 e-commerce customers — 5,000 more than they had four months earlier. So it should come as no surprise that our readers overwhelmingly voted Yahoo! Merchant Solutions hosting as the top e-commerce storefront for 2005.
Yahoo's e-commerce solution isn't necessarily the easiest solution to use, and there are still issues with slow customer support response time and its confusing monthly financial statements. However, the company upgraded its outdated shopping cart in August with a new, highly configurable checkout manager. Despite some of the blemishes, it's clear Yahoo Merchant Solutions has plenty of happy customers.

E-Commerce

Storefront

Yahoo's Small Business Runner-up: GoDaddy Quick Shopping Cart

Web Hosting

GoDaddy Register.com Build-It-for-Me

Customer Service

Register.com Runner-up: Interland

Web Analytics

Webtrends 7.1 Runner-up: NetSuite NetCommerce

Search Engine Marketing

Google AdWords Runner-up: Yahoo Search Marketing

Affiliate Program

Google AdSense Runner-up: Amazon Associates

Runner-up in our voting is relative newcomer GoDaddy and its Quick Shopping Cart solution. GoDaddy has gained popularity in the e-commerce world due in part to its low pricing plans — which range from $9.95 to $49.95 per month.
Web Hosting
In the category of non-e-commerce Web-site hosting for 2005, we had a tie between GoDaddy and Register.com's Build-It-for-Me.
Starting at $499 per year, Register.com offers the Build-It-for-Me package that includes a domain name, e-mail and a professionally designed five-page Web site. It also includes a Monthly Web Site Fitness Program, which gives customers free monthly edits and updates, search engine optimization services, online form development and competitive analysis reports.
GoDaddy, again, is gaining fans thanks to its $1.99 domains and low-cost hosting plans starting at — get this — $3.19 per month! Backed by catchy and aggressive marketing, GoDaddy has made great strides in the crowded hosting field.
Customer Service
Once again, Register.com scores a victory in the customer service arena. Customer service is king — regardless of the business you're in. Judging by the number of votes received, it appears Register.com gets it.
Interland (soon to be Web.com) earned the runner-up honors in the customer service category.
Web Analytics
It's no longer enough to have a well-designed site and good products. Competition in the e-commerce field is so intense, business owners need to exploit every advantage they can find. One way to really find out what's going wrong (or right) with a site is to employ a Web analytics package. Find out where potential customers are bailing. Find out where your customers are coming from and why. Understanding this data can make or break a business.
Analytics veterans NetIQ takes the prize for Best Analytics Package with its latest product Webtrends 7.1. The latest version hit the streets in early 2005 with three notable improvements aimed squarely at helping businesses reach paying customers. It helps drive higher sales by letting you you tweak online marketing efforts including improved campaign performance, better search engine marketing and detailed audience segmentation.
The three features — integration with ExactTarget, which measures e-mail campaign performance; the WebPosition Gold 3 module, which optimizes search engine page results, rankings and keywords; and audience segmentation, which can easily identify profitable visitor segments and visually compare their behavior and conversion rates — appear to be hits with customers.
The popular NetSuite NetCommerce analytics and CRM package is this year's runner-up.
Search Engine Marketing
The other battle among e-commerce businesses is taking place on the search engines such as Google and Yahoo. A site's placement in a search engine can be the difference between a couple of sales per day or hundreds of sales. In the "good 'ole days," optimal search engine placement could be had by stuffing a site's pages with popular, random keywords. However, search engines have become a lot smarter and employ secret, complicated formulas to determine where a site comes up in a given search.
One way to beat the "organic" search game is to pay for sponsored ads on a search engine (also known as Pay-Per-Click campaigns). With PPC campaigns, you can pay to have your ad come up on a search results page based on the keywords typed in by an online shopper. Effective PPC campaigns can drive tremendous traffic to your e-commerce site.
It should come as little surprise to our readers that the two most popular search engines — Google and Yahoo — battled it out for having the most popular search engine marketing tools. Well, "battled it out" might be an overstatement. Google's AdWords service outran Yahoo Search Marketing (formerly known as Overture) by a 3-to-1 margin.
We're not terribly surprised since Google done a great job in winning mindshare and keeping its name in the news on an almost daily basis (and, no, the $400-plus stock price hasn't hurt, either). We're also fans of the ease with which you can create a PPC campaign in Adwords, as opposed to the complicated process you have to trudge through with Yahoo's Search Marketing.
Note to Yahoo: improve your Search Marketing interface and you just might make it to the top next year.
Affiliate Program
Another way to cash in on the Web without opening your own store is to place ads on your site and get paid by bringing in sales leads or clicks to other vendors. Affiliate programs have become extremely popular the past few years — earning savvy Web site owners plenty of extra cash.
While effective use of any affiliate program can reap rewards, our readers picked Google's AdSense as the Best Affiliate Program for 2005. A snippet of code placed on your site is all you need to have targeted text-based ads that bring in a few cents to a few dollars per click (those ads, by the way, come from Google's AdWords program). That's the main advantage AdSense has over the other popular affiliate programs that mostly pay out based on actual sales.
Another long-running program —Amazon.com's Associates — came in second place this year. Amazon Associates gives Web masters innumerable options to advertise Amazon's millions of products — from banners to creating your own virtual storefront. Generous commissions normally begin at four percent of sales. A tiered structure gives successful Associates the opportunity to bump that percentage over 7.5 percent.

Scorecard Building & Hosting

For our integrated site-building rating, we consider the clarity of the site-building process, wizards, and control panel; how professional the templates look; clip art and prebuilt content; the page design interface; interactive elements; and image handling. We base our commerce and catalog management rating on the number of products a site can accommodate, support for product variants, payment acceptance, shipping charge and tax calculation, bulk upload tools, ability to track inventory, and phone support.

For promotions and customer management, we evaluate e-mail list management, cross-listing for services like eBay, search engine submissions, gift certificates and coupons, and reporting. Advanced features include scripting support, database access, delegated administration, Web-based file managers, and direct FTP access.

Easy Commerce 12 tips

12 Tips for a Successful Web Store 04.20.04
By John Clyman
Hosting services that integrate site-building tools and e-commerce capabilities can simplify building an e-commerce site, but you can still take some steps to make the most of the opportunity. Here are a few suggestions: Before You Start... Compare the costs. Monthly hosting fees are just the beginning. You'll also need a merchant account if you intend to process credit cards. That often means another monthly fee, as well as a percentage "discount" on each purchase, and possibly a fixed per-transaction fee. Some hosts, like the Yahoo! Merchant plans, take a cut out of each transaction as well, and some merchant accounts withhold a reserve against charge-backs (disputed or reversed transactions). Get your paperwork in order. Secure your domain name, if you haven't already. Set up your merchant account. Even if your business has one for a retail location, you may need a different one to accept card-not-present transactions. And consider a visit to your accountant and attorney to find out if expanding your sales to new regions will have tax or legal implications. When You Design Your Site... Plan your site. Know who your customers are and develop a clear vision of how your site will meet their needs. Devise a plan: Put together some simple mockups—even on paper—and decide what pages and sections your site needs before you jump into designing pages and uploading your product catalog. Remember that different users may prefer to find products in different ways: browsing by manufacturer or brand, browsing by product category, or using a site search, for example. Apply best practices to your design. Common principles of effective Web site and e-commerce design are well established at this point. Consult books and Web sites, like Jakob Neilsen's Alertbox (www.alertbox.com), for expert advice. Surf your competitors to see what they do well—and not so well. A few basic principles: Keep it simple. Don't make your customers work hard: Other sites are just a click away. Make sure your pages are slim and fast-loading (lots of users still have dial-up connections), but don't skimp on detailed product information that will help them make an informed purchase. Use tactics like creating thumbnail images that you can click to enlarge; this helps keep page size down but still lets customers see lots of detail if they're interested in a particular item. Include critical information. Almost every e-commerce site needs to provide contact information, payment options, shipping and return policies, and a privacy policy. If you also have retail locations, be sure to provide addresses, business hours, maps, and directions, too. Other types of content that are often useful include an About Us page describing the company and providing bios of key personnel. You can also have pages for customer testimonials, news and announcements, and order status. Conduct informal usability testing. Do a quick sanity check on your design and site organization. Show it to a friend or colleague who hasn't seen it before and is willing to give an honest opinion. Ask them if they can figure out how to find interesting products and place an order. Repeat this with a few different people and you'll quickly flush out major shortcomings and oversights. Check your site carefully before you launch. Nothing says unprofessional like broken links, spelling errors, missing graphics, and other obvious glitches. Make sure you catch them before the site goes live. And check again after you launch to make sure nothing changed when you went from preview mode to live site. After You Launch... Gain visibility. You don't necessarily need to pay for a search-engine submission tool: It's not hard to submit your site manually to the big players like Google and MSN Search. You can try to get a listing in directories like Yahoo!'s, but you'll have to pay for the privilege. Driving traffic to your site can be a major challenge, so consider cross-listing your products in high-traffic marketplaces like eBay or Amazon. Keep it fresh. Take advantage of seasonal opportunities, refresh content regularly, and consider running promotions and specials so that visitors get in the habit of returning to see what's new. Don't forget to remove dated material when sales or other special offers end. Build customer relationships. It's often much more efficient to service repeat customers than to acquire new ones. Entice visitors to sign up for e-mail notifications, offer promotions and discounts to your best customers, or find other ways to go beyond just fulfilling individual transactions. Monitor your results. What sections of your site are customers visiting? How many of them buy, and how many just leave? Which products are selling well? Use whatever reporting tools your host provides to learn as much as you can. Update your site often to serve your customers better.

Gateway and Merchant

By Matt Jackson
January 29, 2007

Payment gateways and merchant accounts are always hot topics in our forums, as is offering potential customers the flexibility to pay by credit card and debit card. To help e-tailers who aren't sure exactly what they need when setting up shop, or for those who are considering switching or adding services, we've outlined the basics you need to know. There are many options for both merchant accounts and payment gateways, but they do differ greatly from one to the next. Before we lunge headlong into a search for either, though, we need to understand what they both do. What A Payment Gateway Does
When a consumer clicks on the "pay now" button and submits his or her personal and financial information, these details are passed through your secure server to a payment gateway. Essentially this is the same as a till, or POS (point-of-sale) system in a brick-and-mortar store and acts like a middleman between banks. The transaction details are encrypted and passed from the payment gateway through to the merchant account bank. What A Merchant Account Does
Your merchant account bank then requests authorization from the issuing bank to complete the payment. The issuing bank responds via the payment gateway outlining whether the payment was successful or not along with any reasons why the payment was not successful. The payment gateway then processes this response and sends the relevant information back to your Web site and to your customer. Hybrid Solutions
While this may seem complex, the entire process takes just a couple of seconds and requires no intervention from you or your customers. Both aspects of this transaction process are essential, although hybrids exist that combine both. For instance, PayPal integrates a payment gateway system and a merchant account making the process much easier and more fluent, but the costs are a little higher than when using two separate accounts. Always do your homework and research to ensure you are getting the best deal for features you require. Some of the more important features to consider include:

• Shopping cart compatibility
• Whether a separate merchant account is required
• Fees and payments
• Hidden costs
• Chargeback or refund costs
• Fraud prevention and security measures
• Reporting and account management

Shopping Cart Compatibility
One of the most crucial aspects of choosing a payment gateway is ensuring that it is fully compatible with your choice of shopping cart. Many payment gateways and shopping carts can be configured to integrate with one another, but you want to be sure yours will work together. Most payment gateway services also provide extensive fraud prevention systems that can, in the long run, save you time and heartache. Full Payment Gateway And Merchant Account Features
If you are setting up a new online business then it is unlikely that your business will have a positive credit history. Under these circumstances it can prove difficult to gain access to a merchant account. If this is the case, you should attempt to find a payment gateway that includes some merchant account features. 2CheckOut and PayPal enable you to process and accept credit card payments without the need for a separate merchant account. The fees are comparatively higher, but ignoring the credit card section of the market will cost a lot more in lost revenue. Fees And Payments
The fees you will have to pay should obviously play an important factor in your decision. The first thing to note is the difference in price between using separate payment gateway and merchant account when compared to using a fully integrated service like PayPal. Payment Gateway Fees
Unfortunately, fees can be complicated with some accounts. It may be necessary to pay a setup fee, and you will also be required to pay a percentage of any transactions, generally equivalent to between 1.5 percent and 2 percent. A fixed fee per transaction that's usually less than 50 cents may also be required as well as a monthly management and administration fee, which could be anywhere up to $100. Different accounts offer different options and your sales figures will determine the right choice for you. If you sell a small number of higher value items then you should try to find a payment gateway that charges a fixed fee. In contrast, if you sell large amounts of items for minimal cost, then you should avoid this fixed fee and concentrate on accounts that offer fees based on a percentage of transactions. Combined Account Fees
Payment gateways that do not require a merchant account do generally incur greater costs, because they combine the two required aspects of processing a payment. While some services charge as much as 50 cents per transaction plus a 4 percent to 5 percentfee, PayPal is one of the cheapest available options with a 30-cent and 1.9 percent to 2.9 percent fee on all transactions. With no set-up fee and no gateway fees. this makes PayPal genuine value for money. Similar services like NoChex offer similar rates. Another point worth noting is that services like these do not tend to charge refund fees, monthly or annual fees or regular administration fees. Merchant Account Fees
Individual merchant accounts have similar fees to PayPal but they also generally require a set-up fee and a monthly payment. Ultimately the choice is yours and while PayPal does offer good overall value, it is more difficult to integrate into a Web site despite recent additions to its merchant tools section. Hidden Fees
Always check the terms and conditions before you sign up for any account. Hidden fees may exist in the form of extra monthly administration costs. Some merchant accounts charge fees for withdrawals or for currency conversions. They will almost certainly levy a fee for chargebacks (refunds to your customer's credit card) so extra care should be taken when choosing an account.
Fraud Prevention
Fraud prevention and security are important considerations. Some payment gateways do offer fraud prevention measures and all should provide a level of online security. Risk management tools are much more commonly found with merchant accounts and hybrid solutions although some services may seem like they are leaving you in the wilderness to decide for yourself. Reporting And Account Managing
Finally, we should look at the reporting and account management features that are offered. Hybrid solutions like PayPal tend to offer a reasonable range of reporting with details of all transactions including withdrawals to your bank account, credits, debits and any refunds. Always attempt to check the extent of reporting available to you before opting for a particular account. In general, all account management options should be accessible through the Internet and easy to change. Hybrids Generally Best Route
For convenience and affordability, hybrid solutions tend to offer the best option. They work out much cheaper because the payments are combined and with competition heating up in this area, things are only likely to improve in the future. PayPal is one of the most widely used of the hybrid solutions because its rates are among the cheapest available. Look around before opting for the first available account, though, because every business and every e-commerce venture has its own different requirements. Matt Jackson is a regular contributor to ECommerce-Guide.com and a provider of Web site content and articles for new media publication. For more information visit his Web site at webwisewords.com.