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Online Checklist Part 2
By James Maguire , April 18, 2006
Yesterday, we gave you seven top tips for getting your e-commerce venture started. Today, we conclude with the final eight items on your startup checklist.
8) Knowledge of Search Engine Optimization (SEO)
If you don't know how to set up your site to get high rankings in Google and Yahoo, you'll never get the traffic necessary to build a thriving business. Some of your competitors are experts in this area. They even hire SEO gurus to fine-tune their site to attain its greatest ranking.
To educate yourself, read some of the copious online guidance about SEO. A good place to start is Search Engine Watch. While you're there, look at the tips for submitting your site to the leading engines — that's essential.
By the way, many Web designers claim to be adept at SEO. Not all of them are. The best practices for SEO change constantly, so if your designer last studied SEO in 2004, they're not up on the latest tactics.
The point: you may need to hire a Web designer and an SEO expert. Wow, this is getting expensive!
9) An Accounting Package
Okay, so accounting software isn't sexy — but you'll quickly drown without it. Even before your first dollar of profit, you'll need to track a long list of expenses. Once you start making sales, your accounting program allows you to answer the most important question: am I making money?
A small business favorite is Intuit's QuickBooks, and Sage's Peachtree is also popular. Not surprisingly, Microsoft is vying for market share with its relatively new SBA 2006 small business accounting package.
10) A Web Analytics Package (and Knowledge of Conversion Rates)
A Web analytics program tells you how shoppers are using your site. It reveals where users come from, what pages they visit and what keyword searches brought them to the site. An analytics package enables merchants to calculate their conversion rate. (Your "conversion rate" is the percentage of your visitors who make a purchase — a critical fact to know and track over time.)
Over the last couple years, having a good Web analytics program has become a major dividing line. E-commerce sites that effectively use their analytics programs tend to be winners; those sites that don't mine data from an analytics package tend to fall behind.
Fortunately, there's a package for every budget. Although you can spend a whole lot of money, you don't need to buy a Rolls Royce analytics program to start.
Among the favorites are NetIQ's Webtrends (they have a small business edition), Clicktracks and WebSideStory. (WebSideStory's program starts at $27 a month.) There are many more good ones out there.
Google offers a free analytics program (based on the former Urchin analytics program), though in classic Google style they're mysterious about how to get it. Merchant must "request an invitation." It's not clear on what basis Google awards invitation, and the search firm says it may take "several weeks" to get one.
(Editor's Note: Our invitation took nearly three months to arrive.)
11) Awareness of Competitive Sites
Just as your Web analytics tool tells you what's going on at your own site, you must be highly knowledgeable about your competitors' site. How does their inventory stack up with yours? Their navigation? Some merchants even sign up for their competitors' newsletters to know every sale they offer.
To find out how much traffic your competitor is getting, you can use the Alexa service (http://www.alexa.com). This tool doesn't give absolute numbers of visitors, but it provides a relative ranking number. Another tool that shows your competitor's page rank (among other things) is the Google Tool Bar.
12) A Shipping Rate Structure
Before you get your first order, you'll need to decide what you'll charge for rush and standard delivery.
If you're willing to lose some money on shipping, offering inexpensive shipping is an aggressive move to attract customers. Shoppers love cheap shipping, and free shipping over certain purchase levels is also a popular technique.
On the other hand, many sites make a tidy profit by tacking a few extra bucks onto shipping fees (even beyond labor costs to cover packing).
Your decision about shipping charges should be partially guided by what your competitors are doing. Your rates should be in line (or hopefully lower) than theirs.
If your product can be sold internationally, look at this guide to reaching customers beyond U.S. borders.
13) A Security System and Data Backup
The Internet is a veritable den of thieves, with new forms of data theft, phishing and scamming invented everyday.
You'll need software to protect your site. Of the several good programs available, a favorite of small online business owners is the McAfee Internet Security Suite 2006, which stiff-arms all manner of viruses and hackers.
No matter how secure your site, though, you want your business data backed up. (In fact you need to have your business data backed up.) Both Symantec and Maxtor make well-respected back-up systems.
14) A Marketing Plan
This is the big one. An effective, multi-prong marketing campaign is an online business's best friend - the more you can spend on advertising, the better. Go here to learn about creating an online marketing plan.
The best marketing plan evolves and grows over a business's life — it's certainly not a "set it and leave it" kind of thing. So you can start small if need be, yet during your site's early days you'll need these basics:
Be aware that creating an affiliate program through such portals as Commission Junction can cost several thousand dollars up front. You may want to investigate whether or not your e-commerce hosting provider allows you to create your own program.
15) Plenty of Gumption
It's a familiar scenario: a business owner invests a substantial amount in site design and advertising, launches a new site, and…it gets about 137 page views a week. Then, a good bit of time later, that number rises to about 300 page views a week — and almost no sales.
Merchants in this case often complain: "I thought there were 200 million Internet users. So where are they?"
Well, just like in the brick and mortar world, it takes time and continued investment to build a business. Gumption is required. If creating a business was as easy as building a Web site, we'd all be raking in the cash.
But keep at it. E-commerce is still new — there's time to take your lumps, learn from your mistakes, and find out how to turn a profit. Good luck!
Yesterday, we gave you seven top tips for getting your e-commerce venture started. Today, we conclude with the final eight items on your startup checklist.
8) Knowledge of Search Engine Optimization (SEO)
If you don't know how to set up your site to get high rankings in Google and Yahoo, you'll never get the traffic necessary to build a thriving business. Some of your competitors are experts in this area. They even hire SEO gurus to fine-tune their site to attain its greatest ranking.
To educate yourself, read some of the copious online guidance about SEO. A good place to start is Search Engine Watch. While you're there, look at the tips for submitting your site to the leading engines — that's essential.
By the way, many Web designers claim to be adept at SEO. Not all of them are. The best practices for SEO change constantly, so if your designer last studied SEO in 2004, they're not up on the latest tactics.
The point: you may need to hire a Web designer and an SEO expert. Wow, this is getting expensive!
9) An Accounting Package
Okay, so accounting software isn't sexy — but you'll quickly drown without it. Even before your first dollar of profit, you'll need to track a long list of expenses. Once you start making sales, your accounting program allows you to answer the most important question: am I making money?
A small business favorite is Intuit's QuickBooks, and Sage's Peachtree is also popular. Not surprisingly, Microsoft is vying for market share with its relatively new SBA 2006 small business accounting package.
10) A Web Analytics Package (and Knowledge of Conversion Rates)
A Web analytics program tells you how shoppers are using your site. It reveals where users come from, what pages they visit and what keyword searches brought them to the site. An analytics package enables merchants to calculate their conversion rate. (Your "conversion rate" is the percentage of your visitors who make a purchase — a critical fact to know and track over time.)
Over the last couple years, having a good Web analytics program has become a major dividing line. E-commerce sites that effectively use their analytics programs tend to be winners; those sites that don't mine data from an analytics package tend to fall behind.
Fortunately, there's a package for every budget. Although you can spend a whole lot of money, you don't need to buy a Rolls Royce analytics program to start.
Among the favorites are NetIQ's Webtrends (they have a small business edition), Clicktracks and WebSideStory. (WebSideStory's program starts at $27 a month.) There are many more good ones out there.
Google offers a free analytics program (based on the former Urchin analytics program), though in classic Google style they're mysterious about how to get it. Merchant must "request an invitation." It's not clear on what basis Google awards invitation, and the search firm says it may take "several weeks" to get one.
(Editor's Note: Our invitation took nearly three months to arrive.)
11) Awareness of Competitive Sites
Just as your Web analytics tool tells you what's going on at your own site, you must be highly knowledgeable about your competitors' site. How does their inventory stack up with yours? Their navigation? Some merchants even sign up for their competitors' newsletters to know every sale they offer.
To find out how much traffic your competitor is getting, you can use the Alexa service (http://www.alexa.com). This tool doesn't give absolute numbers of visitors, but it provides a relative ranking number. Another tool that shows your competitor's page rank (among other things) is the Google Tool Bar.
12) A Shipping Rate Structure
Before you get your first order, you'll need to decide what you'll charge for rush and standard delivery.
If you're willing to lose some money on shipping, offering inexpensive shipping is an aggressive move to attract customers. Shoppers love cheap shipping, and free shipping over certain purchase levels is also a popular technique.
On the other hand, many sites make a tidy profit by tacking a few extra bucks onto shipping fees (even beyond labor costs to cover packing).
Your decision about shipping charges should be partially guided by what your competitors are doing. Your rates should be in line (or hopefully lower) than theirs.
If your product can be sold internationally, look at this guide to reaching customers beyond U.S. borders.
13) A Security System and Data Backup
The Internet is a veritable den of thieves, with new forms of data theft, phishing and scamming invented everyday.
You'll need software to protect your site. Of the several good programs available, a favorite of small online business owners is the McAfee Internet Security Suite 2006, which stiff-arms all manner of viruses and hackers.
No matter how secure your site, though, you want your business data backed up. (In fact you need to have your business data backed up.) Both Symantec and Maxtor make well-respected back-up systems.
14) A Marketing Plan
This is the big one. An effective, multi-prong marketing campaign is an online business's best friend - the more you can spend on advertising, the better. Go here to learn about creating an online marketing plan.
The best marketing plan evolves and grows over a business's life — it's certainly not a "set it and leave it" kind of thing. So you can start small if need be, yet during your site's early days you'll need these basics:
- Many types of free marketing Listing your site on Google's comparison shopping engine, Froogle, is free. Also free — and good for driving traffic — are joining a Web Ring; offering a free service to users; writing articles or blogs to attract traffic; and sending out an online press release using PR Web.
- An e-mail newsletter You can use your e-mail newsletter to inform shoppers of your special deals and to offer previous buyers a special discount - a great sales technique. You'll need e-mail software, like the low-cost version of Constant Contact or the Gammadyne Mailer. Group Mail offers free version here.
- A link-building campaign You can trade links with non-competitive sites for free, but some sites hire professional link building services. The reason: search engines boost your ranking if your site has many inbound links. Whether you do it yourself or hire some help, an active link building campaign is essential.
- A pay-per-click campaign It gets expensive to buy sponsored links from the Google's Adwords or Yahoo's Search Marketing services. But your competitors are undoubtedly doing it. So if you're not, it's unlikely you'll be competitive (unless you have a very compelling product or price). As online competition has increased, a PPC campaign has become essential.
Be aware that creating an affiliate program through such portals as Commission Junction can cost several thousand dollars up front. You may want to investigate whether or not your e-commerce hosting provider allows you to create your own program.
15) Plenty of Gumption
It's a familiar scenario: a business owner invests a substantial amount in site design and advertising, launches a new site, and…it gets about 137 page views a week. Then, a good bit of time later, that number rises to about 300 page views a week — and almost no sales.
Merchants in this case often complain: "I thought there were 200 million Internet users. So where are they?"
Well, just like in the brick and mortar world, it takes time and continued investment to build a business. Gumption is required. If creating a business was as easy as building a Web site, we'd all be raking in the cash.
But keep at it. E-commerce is still new — there's time to take your lumps, learn from your mistakes, and find out how to turn a profit. Good luck!
Online Checklist Part 1
By James Maguire
April 17, 2006
Here's an inspiring fact for anyone starting an online business: If you gather everything you need before you launch, you'll be far ahead of most people who start online stores.
Believe it or not, thousands of people launch e-commerce sites only to realize they lack an essential element. Six months in, after spending their nest egg, they ask: "You mean I need a pay-per-click campaign? But I didn't budget for that." Or, "I need Web analytics software? I had no idea."
Assembling everything you need prior to launch will save you numerous headaches. And it will better prepare you to compete with established businesses, which are operating with full toolboxes.
The list below contains everything you'll need to get your online store off the ground. Read it, assemble the items, and prepare to work long hours.
One more thing. This list assumes you already know what you'll be selling. Of all the things you need to figure out ahead of time, deciding what to sell is the most important. It must be an item or service that few businesses already sell, one you can get for a low wholesale price or one you have a special knowledge of.
Something about what you sell has to allow you to stand out from the herd - at least a little bit - otherwise you'll be trying to sell snow to Eskimos. And that's discouraging.
So now you have something truly great to sell. Gather or create the following 15 items, and you'll have a reasonable chance at making some money online:
1) A Business Plan
Writing a business plan seems daunting. You might say, "I'm starting a business, I don't want to sit down and write a paper, like I'm in school." But think of it this way: it's free, and it will help you immeasurably.
Real businesses have business plans. For guidance on how to write a plan for an e-commerce site, go here.
Your business plan lays it all out. It details what you sell and where your profit comes from; how much inventory you'll have on hand and where you'll store it. It lays out your return policy — and you'll need one of those. Most important, your business plan details your total start-up cost, from your ad campaign to Web designer to monthly server fees.
Are you sure you believe in your business enough to risk this amount?
2) A Reliable Source for Your Product
If you're selling hand-sewn Korean quilts, are you confident the price of yarn isn't going to skyrocket three months from now? Do you have more than one wholesale source? Hopefully yes, otherwise you could be in trouble.
The best problem of all: if you make your product in your basement, can you handle success if you suddenly get 125 orders? Make sure your supply line is steady before you plunk down your money.
3) A Good Domain Name
When you try to register your business's domain name, you'll probably find that the name you want is already taken.
In response, some people choose terribly cumbersome names. They find out that "Tshirt.com" is taken and then learn that "HockeyTshirt.com" is also taken. So they create an unworkable domain name like VeryCool-HockeyTshirt.com. Not only is it too long, it contains a hyphen, which should be avoided (some users forget to put them in, sending them to your competitor's site.)
A good domain name is short and memorable and — most important — easily typed. Ideally, a user can simply hear it and know how it's spelled. So GoodShoe.com is much better than GoodeShoe.com. In fact any word that's hard to spell should be avoided.
The ".com" version is typically far better than ".net," because browsers default to ".com."
Be aware that your URL affects your search engine ranking, so if you want to be found for "shoe," it's a good idea to fit "shoe" into your domain name. One way to do this is to use your brand name along with a keyword term. So MillerShoe tends to work better than FantasticShoe.com. (Which is why MillerShoe is taken, but FantasticShoe is still available.)
4) A Reliable Web Host
Your Web hosting service is the technical backbone of your site: its service and support options will play a big role in your business's operation. Hosting companies usually charge monthly, and the cheapest company isn't always best.
Choose carefully the first time. Once you pick your Web host and install your files there, moving to a new host is, at best, a major headache. Ideally you'll choose a good one and stay there.
To see a couple popular choices, take a look at Small Business Computing's 2005 Product Picks.
5) A Web Designer
Many Web design software packages are so easy to use that business owners think they can design their own site. That's a mistake.
Homemade Web sites aren't like homemade cookies. No one likes the way they look. Worse, an ugly site makes shoppers wonder: should I enter my credit card number in this funky looking site?
Select a Web design firm with great care, and be prepared to pay for quality work - you'll get nowhere without it.
On a related note, can your Web designer handle your photo needs? Because you'll need a steady flow of product shots.
6) E-Commerce Software
This is the software that will run your store, from product display to inventory management to checkout.
Selecting your e-commerce software is one tough choice. You can try it out ahead of time, but you won't fully know how you're going to like it until you're up and running for a while. At that point, changing your e-commerce platform is like changing boats in the middle of the ocean.
Consequently, you want to do a lot of research before you choose. For more information and a list of well-known e-commerce programs, go here.
Realize a couple of key facts: A) the prices for e-commerce software have fallen, so you don't need to spend a fortune unless your needs are complicated, and B) many of today's e-commerce packages include a full range of tools in one package, from an inventory management system to marketing tools. Many of today's merchants prefer this "all-in-one" approach because it makes life simpler.
7) A Credit Card Merchant Account
To accept credit cards online, you'll need a merchant account, which is an account with a bank or other financial institution that allows you to accept your shoppers' credit card numbers.
Setting up a merchant account gets pricey. Banks typically charge a set-up fee, a monthly fee, and a percentage of each transaction. (So even if you have just a few customers, you pay the set-up fee and the monthly fee. Ouch!)
To learn more about setting up a merchant account, go here.
Many first-time small merchants get a merchant account through PayPal. The company is moving aggressively to gain clients, so it offers a no set-up fee method of accepting major credit cards.
Next: Top Tips 8-15.
April 17, 2006
Here's an inspiring fact for anyone starting an online business: If you gather everything you need before you launch, you'll be far ahead of most people who start online stores.
Believe it or not, thousands of people launch e-commerce sites only to realize they lack an essential element. Six months in, after spending their nest egg, they ask: "You mean I need a pay-per-click campaign? But I didn't budget for that." Or, "I need Web analytics software? I had no idea."
Assembling everything you need prior to launch will save you numerous headaches. And it will better prepare you to compete with established businesses, which are operating with full toolboxes.
The list below contains everything you'll need to get your online store off the ground. Read it, assemble the items, and prepare to work long hours.
One more thing. This list assumes you already know what you'll be selling. Of all the things you need to figure out ahead of time, deciding what to sell is the most important. It must be an item or service that few businesses already sell, one you can get for a low wholesale price or one you have a special knowledge of.
Something about what you sell has to allow you to stand out from the herd - at least a little bit - otherwise you'll be trying to sell snow to Eskimos. And that's discouraging.
So now you have something truly great to sell. Gather or create the following 15 items, and you'll have a reasonable chance at making some money online:
1) A Business Plan
Writing a business plan seems daunting. You might say, "I'm starting a business, I don't want to sit down and write a paper, like I'm in school." But think of it this way: it's free, and it will help you immeasurably.
Real businesses have business plans. For guidance on how to write a plan for an e-commerce site, go here.
Your business plan lays it all out. It details what you sell and where your profit comes from; how much inventory you'll have on hand and where you'll store it. It lays out your return policy — and you'll need one of those. Most important, your business plan details your total start-up cost, from your ad campaign to Web designer to monthly server fees.
Are you sure you believe in your business enough to risk this amount?
2) A Reliable Source for Your Product
If you're selling hand-sewn Korean quilts, are you confident the price of yarn isn't going to skyrocket three months from now? Do you have more than one wholesale source? Hopefully yes, otherwise you could be in trouble.
The best problem of all: if you make your product in your basement, can you handle success if you suddenly get 125 orders? Make sure your supply line is steady before you plunk down your money.
3) A Good Domain Name
When you try to register your business's domain name, you'll probably find that the name you want is already taken.
In response, some people choose terribly cumbersome names. They find out that "Tshirt.com" is taken and then learn that "HockeyTshirt.com" is also taken. So they create an unworkable domain name like VeryCool-HockeyTshirt.com. Not only is it too long, it contains a hyphen, which should be avoided (some users forget to put them in, sending them to your competitor's site.)
A good domain name is short and memorable and — most important — easily typed. Ideally, a user can simply hear it and know how it's spelled. So GoodShoe.com is much better than GoodeShoe.com. In fact any word that's hard to spell should be avoided.
The ".com" version is typically far better than ".net," because browsers default to ".com."
Be aware that your URL affects your search engine ranking, so if you want to be found for "shoe," it's a good idea to fit "shoe" into your domain name. One way to do this is to use your brand name along with a keyword term. So MillerShoe tends to work better than FantasticShoe.com. (Which is why MillerShoe is taken, but FantasticShoe is still available.)
4) A Reliable Web Host
Your Web hosting service is the technical backbone of your site: its service and support options will play a big role in your business's operation. Hosting companies usually charge monthly, and the cheapest company isn't always best.
Choose carefully the first time. Once you pick your Web host and install your files there, moving to a new host is, at best, a major headache. Ideally you'll choose a good one and stay there.
To see a couple popular choices, take a look at Small Business Computing's 2005 Product Picks.
5) A Web Designer
Many Web design software packages are so easy to use that business owners think they can design their own site. That's a mistake.
Homemade Web sites aren't like homemade cookies. No one likes the way they look. Worse, an ugly site makes shoppers wonder: should I enter my credit card number in this funky looking site?
Select a Web design firm with great care, and be prepared to pay for quality work - you'll get nowhere without it.
On a related note, can your Web designer handle your photo needs? Because you'll need a steady flow of product shots.
6) E-Commerce Software
This is the software that will run your store, from product display to inventory management to checkout.
Selecting your e-commerce software is one tough choice. You can try it out ahead of time, but you won't fully know how you're going to like it until you're up and running for a while. At that point, changing your e-commerce platform is like changing boats in the middle of the ocean.
Consequently, you want to do a lot of research before you choose. For more information and a list of well-known e-commerce programs, go here.
Realize a couple of key facts: A) the prices for e-commerce software have fallen, so you don't need to spend a fortune unless your needs are complicated, and B) many of today's e-commerce packages include a full range of tools in one package, from an inventory management system to marketing tools. Many of today's merchants prefer this "all-in-one" approach because it makes life simpler.
7) A Credit Card Merchant Account
To accept credit cards online, you'll need a merchant account, which is an account with a bank or other financial institution that allows you to accept your shoppers' credit card numbers.
Setting up a merchant account gets pricey. Banks typically charge a set-up fee, a monthly fee, and a percentage of each transaction. (So even if you have just a few customers, you pay the set-up fee and the monthly fee. Ouch!)
To learn more about setting up a merchant account, go here.
Many first-time small merchants get a merchant account through PayPal. The company is moving aggressively to gain clients, so it offers a no set-up fee method of accepting major credit cards.
Next: Top Tips 8-15.
Jan 7, 2012
Shopping Cart Considerations
By Michelle Megna
January 9, 2007
Every Web shop owner knows that their shopping cart is an integral part of their business, and therefore, having one that fits your particular needs is paramount to a successful operation. With that in mind, together with Shannon McMurtrey, president of Cart32, we've compiled a checklist of important issues to consider, whether you're thinking of switching carts or just getting ready to sell online. How Will the Cart Operate?
Check to see whether you will be limited to a certain number of products. "You have to pay attention to the ability to grow, because if your business changes and you need database integration or want to add categories, you don't want your cost structure tied to it. That's one of those 'gotcha' hidden costs that can sneak up on you," says McMurtrey. "Plus, once you're up and running, you don't want to have to revisit your set-up." You also want to think of inventory tracking, and if the cart will integrate with any third-party applications you may have, or be adequate on its own, and be sure no manual processing is required. Another thing to consider is the option for coupons or gift certificates. "You want your cart to have specials-and-promotions features like free shipping so you can configure it ahead of time and present it to shoppers. That way they get the final total at check-out," says McMurtrey, adding that you should also check to see if the application is flexible enough to incorporate any affiliate programs you have set up. It's also recommended that you include a "quick-buy" feature that doesn't require registration at checkout. Often, shoppers will bail on a site if there is a registration form to fill out before finishing their payment transaction. McMurtrey says adding options such as Google Checkout can help in this area. "I'm a fan of Checkout," he says, "there were some hiccups at first but nothing that hasn't been resolved. Overall we're seeing that merchants are quite satisfied with it." How Does the Cart Handle Shipping?
If you determine shipping based on weight, be sure the cart can accommodate that need. Look for applications that plug directly into the big companies, such as UPS and FedEx, so that you can get real-time rates and tracking status. Of course one of the most important cart functions is payment processing. McMurtrey says you want to know what types of payment gateways the cart supports, if it supports other types of transactions aside from credit cards and whether it computes sales taxes. "You need a payment plan for people who don't have credit cards, because that can be a big source of cart abandonment. You also need to be prepared to handle different types of currency," says McMurtrey. "We have lots of merchants who never dreamed of doing international business, and next thing you know they're getting surprised by the volume of business and customers coming from around the world." Additionally, you want to inquire about which payment gateways the cart supports, and if it has the ability to determine sales tax. "Taxes get extremely complicated. As regulations change, you need a product that can respond instantly. State tax is an issue that's turning into a hairball because the government is starting to get involved. It will certainly be an issue at the forefront this year." Can the Cart Report the Numbers?
You should be aware of what type of sales activity information you can glean from your cart software. "It's a good idea to generate reports on the basics you want to track, such as sales, taxes, conversions," says McMurtrey, "and to be able to integrate third-party applications like Google Analytics or other analytics programs if you want to use them." What if You Need Help?
Finally, it's wise to find out if you will get prompt responses to your questions should you need tech support. McMurtrey says Cart32 includes Live Chat and has a popular support forum. "Merchants want to flip the switch and have it work, they don't want to have to send e-mails and wait overnight for help or get automated receptionists if they want someone to walk them through something. Touches like customer service provided by real people, live chat and a forum for peer support are important parts of the relationship with your cart supplier."
Three Basic Tips: Simplicity, Trust and Follow-Through
Finally, when setting up your shopping cart and selling online, McMurtrey says there are three simple things to remember.
First, make the checkout process simple and intuitive. Second, establish trust. "You don't want a customer to experience shopper's remorse at checkout where they're thinking 'I don't know if I want to give them my information,'" he says. "You want to signal that you are legitimate so there's no doubt, no reason to close the browser."
To that end, Cart32 just announced it is incorporating buySAFE into version 6.3 and higher, to be available in March. buySAFE certifies and monitors online merchants, identifying qualified merchants with the buySAFE Seal, and uses surety bonds to guarantee merchant transactions for online shoppers. Web shop owners display the buySAFE Seal on their sites and will be able to offer their customers the ability to bond their purchases at checkout.
The third and final point to remember, McMurtrey says, is to "Do what you say you're going to do. If you ship the correct product promptly, answer the phone, respond to e-mails and build customer trust, things will go well for you."
January 9, 2007
Every Web shop owner knows that their shopping cart is an integral part of their business, and therefore, having one that fits your particular needs is paramount to a successful operation. With that in mind, together with Shannon McMurtrey, president of Cart32, we've compiled a checklist of important issues to consider, whether you're thinking of switching carts or just getting ready to sell online. How Will the Cart Operate?
Check to see whether you will be limited to a certain number of products. "You have to pay attention to the ability to grow, because if your business changes and you need database integration or want to add categories, you don't want your cost structure tied to it. That's one of those 'gotcha' hidden costs that can sneak up on you," says McMurtrey. "Plus, once you're up and running, you don't want to have to revisit your set-up." You also want to think of inventory tracking, and if the cart will integrate with any third-party applications you may have, or be adequate on its own, and be sure no manual processing is required. Another thing to consider is the option for coupons or gift certificates. "You want your cart to have specials-and-promotions features like free shipping so you can configure it ahead of time and present it to shoppers. That way they get the final total at check-out," says McMurtrey, adding that you should also check to see if the application is flexible enough to incorporate any affiliate programs you have set up. It's also recommended that you include a "quick-buy" feature that doesn't require registration at checkout. Often, shoppers will bail on a site if there is a registration form to fill out before finishing their payment transaction. McMurtrey says adding options such as Google Checkout can help in this area. "I'm a fan of Checkout," he says, "there were some hiccups at first but nothing that hasn't been resolved. Overall we're seeing that merchants are quite satisfied with it." How Does the Cart Handle Shipping?
If you determine shipping based on weight, be sure the cart can accommodate that need. Look for applications that plug directly into the big companies, such as UPS and FedEx, so that you can get real-time rates and tracking status. Of course one of the most important cart functions is payment processing. McMurtrey says you want to know what types of payment gateways the cart supports, if it supports other types of transactions aside from credit cards and whether it computes sales taxes. "You need a payment plan for people who don't have credit cards, because that can be a big source of cart abandonment. You also need to be prepared to handle different types of currency," says McMurtrey. "We have lots of merchants who never dreamed of doing international business, and next thing you know they're getting surprised by the volume of business and customers coming from around the world." Additionally, you want to inquire about which payment gateways the cart supports, and if it has the ability to determine sales tax. "Taxes get extremely complicated. As regulations change, you need a product that can respond instantly. State tax is an issue that's turning into a hairball because the government is starting to get involved. It will certainly be an issue at the forefront this year." Can the Cart Report the Numbers?
You should be aware of what type of sales activity information you can glean from your cart software. "It's a good idea to generate reports on the basics you want to track, such as sales, taxes, conversions," says McMurtrey, "and to be able to integrate third-party applications like Google Analytics or other analytics programs if you want to use them." What if You Need Help?
Finally, it's wise to find out if you will get prompt responses to your questions should you need tech support. McMurtrey says Cart32 includes Live Chat and has a popular support forum. "Merchants want to flip the switch and have it work, they don't want to have to send e-mails and wait overnight for help or get automated receptionists if they want someone to walk them through something. Touches like customer service provided by real people, live chat and a forum for peer support are important parts of the relationship with your cart supplier."
Three Basic Tips: Simplicity, Trust and Follow-Through
Finally, when setting up your shopping cart and selling online, McMurtrey says there are three simple things to remember.
First, make the checkout process simple and intuitive. Second, establish trust. "You don't want a customer to experience shopper's remorse at checkout where they're thinking 'I don't know if I want to give them my information,'" he says. "You want to signal that you are legitimate so there's no doubt, no reason to close the browser."
To that end, Cart32 just announced it is incorporating buySAFE into version 6.3 and higher, to be available in March. buySAFE certifies and monitors online merchants, identifying qualified merchants with the buySAFE Seal, and uses surety bonds to guarantee merchant transactions for online shoppers. Web shop owners display the buySAFE Seal on their sites and will be able to offer their customers the ability to bond their purchases at checkout.
The third and final point to remember, McMurtrey says, is to "Do what you say you're going to do. If you ship the correct product promptly, answer the phone, respond to e-mails and build customer trust, things will go well for you."
Furniture Business (Story)
SexyFurnishings.com
Sexy still sells. Just ask brothers and business partners Michael and Ronald Lipka, who launched SexyFurnishings.com in April 2001 - and kissed their decidedly un-sexy backgrounds in accounting and engineering goodbye. The secret, they found, was being able to sell sexy at an affordable price. It all started in 2000 when Michael Lipka happened upon a crowd gathered outside a Boston furniture store. "It was this great big chair shaped just like a high-heeled shoe, and it was sitting out in front of the store for people to look at and sit in," recalls Lipka. "It was a typical dark and dreary Boston day with not that many people walking around, but there were still dozens of people standing around this chair." But Michael also noticed that all of the potential customers were making themselves scarce after reading the chair's price tag, which was over $1,000. "This clearly was a great piece of furniture, but the main problem people had with it was the price," he says. Business Model: Drop Shipping
A few months and many hours of market research later, which included a handful of trips to furniture factories, the brothers Lipka (Ronald is 29, Michael 28) knew they were on to a viable business model: Internet-only furniture retailing using drop-shipping direct from manufacturers, which would keep overhead down and prices low. Oh - and make sure that furniture had some sex appeal, too. "We knew the demand was there," says Michael Lipka, but "it was a risk we were taking that people would be willing to buy these products online."
The risk has clearly paid off. Sales of their 500+ home products, which include everything from sofas and tables to ottomans and clocks, have increased 16-fold in four years. And with the expertise of their aunt, Ronda Prokop, an interior design veteran who joined as business partner 18 months in, SexyFurnishings.com doesn't just sell to homeowners — they sell to design-minded corporate clients like the MGM Grand, Pennsylvania State University, the Subway sandwich franchise, and even the federal government (the last of which is somehow even un-sexier than accounting and engineering). The company drop-ships from factories in five geographically diverse states — California, New York, Illinois, Georgia and North Carolina — for 90 percent of their sales, with the remaining products shipped directly from their own California warehouse. "Having a factory that is willing to work and grow with you is important," says Michael Lipka, who relied on trade shows, industry reputation and word-of-mouth to pick his suppliers. "A lot of our customers are looking for answers to their questions immediately, and if we can't answer them right away, we need to be able to get any requested information from our factories as soon as possible." The company also uses Live Chat from Live Person to handle customer inquiries.
Stylish chairs are most of their current top-sellers, such as their Jacobsen-style Egg and Swan Chairs, the Collage Chair, and the A-OK Chair. Their customers skew female, ages 30 to 50, and over 10,000 people are on the company's e-mail list. Unique site visitor numbers hover at around 20,000 per month. Pay-Per-Click Not Paying Off
Attracting customers certainly hasn't been owed to pay-per-click marketing. "We used to spend several thousand dollars a month" on such programs, says Lipka, "but found those to be a total waste of money." Instead, they hand-coded the website themselves for optimal search engine appearances, and say the vast majority of their site visits comes from "organic, unpaid listings." Nearly all payments are handled via credit card, with Authorize.net; PayPal, personal checks and wire transfers account for a scant few. The family company uses Jumpline as their hosting provider. "We liked the pricing structure they had and the amount of storage space they provided at the time," says Michael Lipka, though he admits that newer companies "probably provide just as good a service as they do." That said, Jumpline's new Web-based e-mail functions are keeping the Lipkas as customers. Switching Storefronts: More Flexibility
But Lipka is "not happy at all" with his bCentral storefront software, and says fixing that is their biggest challenge. "The software doesn't allow the customer to choose the product options (color, size, etc.) prior to adding it to the [shopping] cart," he says candidly. And "the cart doesn't allow you to show the customer any related product info after they have added the product." SexyFurnishings.com is planning a transition to Yahoo!'s storefront software early this year, though they're less than pleased at the associated per-transaction fees. They also want to automate more of their Web design, to spend less time on page coding and "focus more on expanding our product offering." Even with those challenges ahead, the founders haven't forgotten where their inspiration came from — remember that high-heel shoe chair in Boston that cost over $1,000? Not only can you customize it by choosing from 14 different colors for the trim, insole and overall shoe hue, it sells on their Web site for $199.
Sexy still sells. Just ask brothers and business partners Michael and Ronald Lipka, who launched SexyFurnishings.com in April 2001 - and kissed their decidedly un-sexy backgrounds in accounting and engineering goodbye. The secret, they found, was being able to sell sexy at an affordable price. It all started in 2000 when Michael Lipka happened upon a crowd gathered outside a Boston furniture store. "It was this great big chair shaped just like a high-heeled shoe, and it was sitting out in front of the store for people to look at and sit in," recalls Lipka. "It was a typical dark and dreary Boston day with not that many people walking around, but there were still dozens of people standing around this chair." But Michael also noticed that all of the potential customers were making themselves scarce after reading the chair's price tag, which was over $1,000. "This clearly was a great piece of furniture, but the main problem people had with it was the price," he says. Business Model: Drop Shipping
A few months and many hours of market research later, which included a handful of trips to furniture factories, the brothers Lipka (Ronald is 29, Michael 28) knew they were on to a viable business model: Internet-only furniture retailing using drop-shipping direct from manufacturers, which would keep overhead down and prices low. Oh - and make sure that furniture had some sex appeal, too. "We knew the demand was there," says Michael Lipka, but "it was a risk we were taking that people would be willing to buy these products online."
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| Sole Brothers: Ronald and Michael Lipka founded SexyFurnishings.com, which thrives on a drop-shipping business model. |
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| Everthing's A-OK: Top selling seat. |
Attracting customers certainly hasn't been owed to pay-per-click marketing. "We used to spend several thousand dollars a month" on such programs, says Lipka, "but found those to be a total waste of money." Instead, they hand-coded the website themselves for optimal search engine appearances, and say the vast majority of their site visits comes from "organic, unpaid listings." Nearly all payments are handled via credit card, with Authorize.net; PayPal, personal checks and wire transfers account for a scant few. The family company uses Jumpline as their hosting provider. "We liked the pricing structure they had and the amount of storage space they provided at the time," says Michael Lipka, though he admits that newer companies "probably provide just as good a service as they do." That said, Jumpline's new Web-based e-mail functions are keeping the Lipkas as customers. Switching Storefronts: More Flexibility
But Lipka is "not happy at all" with his bCentral storefront software, and says fixing that is their biggest challenge. "The software doesn't allow the customer to choose the product options (color, size, etc.) prior to adding it to the [shopping] cart," he says candidly. And "the cart doesn't allow you to show the customer any related product info after they have added the product." SexyFurnishings.com is planning a transition to Yahoo!'s storefront software early this year, though they're less than pleased at the associated per-transaction fees. They also want to automate more of their Web design, to spend less time on page coding and "focus more on expanding our product offering." Even with those challenges ahead, the founders haven't forgotten where their inspiration came from — remember that high-heel shoe chair in Boston that cost over $1,000? Not only can you customize it by choosing from 14 different colors for the trim, insole and overall shoe hue, it sells on their Web site for $199.
FAQ eStore
eBiz FAQ
Everything you need to know to start your own successful e-business.
You have the great idea, you have the enthusiasm, you even have the money to get started, but you still have more questions than answers when it comes to starting and sustaining your e-commerce site. To help address the issues all e-businesses face, we've compiled this list of frequently asked questions. We'll continue to add to the listing, so keep FAQ checking.
Search Engine Marketing
How do I profit from affiliate marketing?
How do I get started using search engine marketing?
How can I find a reliable e-commerce hosting provider?
How do I sell on eBay?
I want to sell internationally. What do I do?
How do I keep track of my e-biz finances?
How can I accept online payments?
I'm getting visitors but no sales. What do I do?
How can I optimize my search engine results?
Where can I get help designing my e-commerce site?
How do I provide excellent customer service?
What is drop-shipping?
What do I need to know about online taxes?
Everything you need to know to start your own successful e-business.
You have the great idea, you have the enthusiasm, you even have the money to get started, but you still have more questions than answers when it comes to starting and sustaining your e-commerce site. To help address the issues all e-businesses face, we've compiled this list of frequently asked questions. We'll continue to add to the listing, so keep FAQ checking.
Search Engine Marketing How do I profit from affiliate marketing? How do I get started using search engine marketing? How can I find a reliable e-commerce hosting provider? How do I sell on eBay? I want to sell internationally. What do I do? How do I keep track of my e-biz finances? How can I accept online payments? I'm getting visitors but no sales. What do I do? How can I optimize my search engine results? Where can I get help designing my e-commerce site? How do I provide excellent customer service? What is drop-shipping? What do I need to know about online taxes?
Hosting Plan Primer
By Matt Jackson
January 16, 2007
All Web sites require hosting, and if you own a Web shop, it is especially important to find a company that offers plans for e-commerce. These days, more companies cater to e-tailers, providing packages that serve their specific needs, so it's wise to capitalize on the trend. The basic needs of any online store include back-end functionality that lets you manage a product catalog, exceptional site security, secure certificates and the integration of a payment gateway. We explain these functions and offer some tips on what to consider when shopping for a host. Product Catalog And Shopping Cart Software
The product catalog is arguably the most important part of any e-commerce venture. Not only will site visitors need to intuitively access and navigate the catalog, but the site administrator also needs to quickly and efficiently maintain product listings, prices, promotions, shipping costs and much more. For a small e-commerce site with only a few items, this isn't as big a consideration as it is for a store offering hundreds or even thousands of products. Still, care should always be taken when looking for hosts, to ensure that they offer appropriate applications. Site Security
Site security is also paramount. Many customers will be unwilling to make any purchase from a site that does not offer the appropriate level of security. SSL (Secure Socket Layer) certificates can be purchased from certificate registrars, but some hosting plans, albeit a relatively select number, offer them as part of the package. The use of a secure server means exceptional security and is depicted in users' browsers by a padlock symbol and through the addition of an s in the URL (https instead of http). This promotes a sense of trust and reliability that will offer shoppers peace of mind, which in turn, will boost the bottom line. Payment Gateway Software And Merchant Accounts
In order to sell products online and accept credit card and debit card payments it is necessary to use a payment gateway and merchant account. Although some services effectively combine the two, the most popular service being PayPal, these can prove more costly in the long run. It is prudent to offer customers flexibility when it comes to payment options to maximize your sales. Disk Space And Bandwidth
In addition to these features, you should also consider the amount of disk space and bandwidth that your online store requires. Hosting accounts vary wildly in terms of the limits they set for both of these.
Finally, cost implications will obviously play a factor. No business, including an online store, can survive without maintaining a realistic budget. Budget e-commerce hosting accounts are out there if you know where to look. Just remember to consider all the features you need and to budget for the addition of these extra options. If you're looking for a hosting provider, or thinking of switching, we'll help you get started by outlining three that offer excellent e-commerce plans. Website Source — All Round Performer
Website Source offers a range of e-commerce plans that are arguably the best available for the money. They are feature rich and should fit within any Webmaster's or business budget. The least expensive package is $6.85 per month and offers 50GB of bandwidth and 5,000MB of storage, which should be ample for even medium-sized online stores. This package also lets you host an unlimited number of Web sites, too, making it perfect for the small network owner. Also included is an OsCommerce shopping cart that provides the intuitive product catalog we discussed earlier. More advanced packages range in price from $14.55 per month for 90GB bandwidth and 7,000MB of disk space to $129 per month for dedicated server plans that provide use of an entire server. All of these advanced packages provide Miva Merchant 5 shopping cart software, which is more advanced than OsCommerce software, and designed for larger e commerce stores. All Website Source plans also include a free setup of the Authorize.net payment gateway software and the use of shared SSL certificates. Dedicated server customers also receive impressive discounts for Web site specific SSL certificates. LunarPages — Most Powerful
The LunarPages e-commerce hosting plan is more expensive than the Website Source plan, however, it offers a lot more for the money and is more closely suited to the needs of larger online stores. All LunarPages plans offer the software you need to get your store up and running. They also provide a shared SSL certificate making them a good value. The basic plan costs $6.95 per month and provides an impressive 800GB per month of bandwidth and 35,000MB of storage. It also includes use of the shared SSL certificate, directory encryption and a choice of OsCommerce, Zen or Cube shopping cart software. In contrast, the e-commerce specific package costs $21.95 per month, meaning it isn't for the faint hearted. However, in exchange, customers receive 1,000GB per month of bandwidth and a staggering 50GB of storage. The same e-commerce software and features are also included. The stand out feature of this account is the sheer amount of disk space you receive, making it perfect for larger stores with many products. SiteGround — The Best Budget Plan
SiteGround is virtually unbeatable when it comes to price for an e-commerce plan. For $5.95 per month, you get 40,000MB of Web space and 900GB of monthly bandwidth. They will also install (free of charge) OsCommerce, Cube or Zen shopping cart software for you, making it very easy to get up and running. A free, shared SSL certificate is included along with a huge range of other features. If budget plays a big part in the final decision, then SiteGround is probably the best choice for you. It is also a good choice if you have little or no knowledge of how to install shopping cart software or how to integrate payment systems into your site. The Bottom Line: E-commerce Hosting
E-commerce hosting does not need to be expensive but it does need to offer the appropriate features. OsCommerce is an open source shopping cart so can be installed on any compatible server, however, using an e-commerce hosting plan can mean that the software is installed for you at no extra cost. Some hosts even provide payment gateway software for no extra fee. Your exact requirements as well as those of your online store will determine the best choice for you. Matt Jackson, making his debut on ECommerce-Guide.com, is a new media copywriter specializing in crafting Web site content.
January 16, 2007
All Web sites require hosting, and if you own a Web shop, it is especially important to find a company that offers plans for e-commerce. These days, more companies cater to e-tailers, providing packages that serve their specific needs, so it's wise to capitalize on the trend. The basic needs of any online store include back-end functionality that lets you manage a product catalog, exceptional site security, secure certificates and the integration of a payment gateway. We explain these functions and offer some tips on what to consider when shopping for a host. Product Catalog And Shopping Cart Software
The product catalog is arguably the most important part of any e-commerce venture. Not only will site visitors need to intuitively access and navigate the catalog, but the site administrator also needs to quickly and efficiently maintain product listings, prices, promotions, shipping costs and much more. For a small e-commerce site with only a few items, this isn't as big a consideration as it is for a store offering hundreds or even thousands of products. Still, care should always be taken when looking for hosts, to ensure that they offer appropriate applications. Site Security
Site security is also paramount. Many customers will be unwilling to make any purchase from a site that does not offer the appropriate level of security. SSL (Secure Socket Layer) certificates can be purchased from certificate registrars, but some hosting plans, albeit a relatively select number, offer them as part of the package. The use of a secure server means exceptional security and is depicted in users' browsers by a padlock symbol and through the addition of an s in the URL (https instead of http). This promotes a sense of trust and reliability that will offer shoppers peace of mind, which in turn, will boost the bottom line. Payment Gateway Software And Merchant Accounts
In order to sell products online and accept credit card and debit card payments it is necessary to use a payment gateway and merchant account. Although some services effectively combine the two, the most popular service being PayPal, these can prove more costly in the long run. It is prudent to offer customers flexibility when it comes to payment options to maximize your sales. Disk Space And Bandwidth
In addition to these features, you should also consider the amount of disk space and bandwidth that your online store requires. Hosting accounts vary wildly in terms of the limits they set for both of these.
- Disk space is the amount of space that a Web site is allowed on a server. Typically, e-commerce sites contain a large number of pages and generally also include images and occasionally videos. All of this adds up to a high disk space demand.
- Literally speaking bandwidth is the capacity that a network connection can carry at any time. In the case of hosting accounts, bandwidth is determined by the amount of data served to all visitors in the space of a month, and again, varies greatly from one hosting plan to the next.
Finally, cost implications will obviously play a factor. No business, including an online store, can survive without maintaining a realistic budget. Budget e-commerce hosting accounts are out there if you know where to look. Just remember to consider all the features you need and to budget for the addition of these extra options. If you're looking for a hosting provider, or thinking of switching, we'll help you get started by outlining three that offer excellent e-commerce plans. Website Source — All Round Performer
Website Source offers a range of e-commerce plans that are arguably the best available for the money. They are feature rich and should fit within any Webmaster's or business budget. The least expensive package is $6.85 per month and offers 50GB of bandwidth and 5,000MB of storage, which should be ample for even medium-sized online stores. This package also lets you host an unlimited number of Web sites, too, making it perfect for the small network owner. Also included is an OsCommerce shopping cart that provides the intuitive product catalog we discussed earlier. More advanced packages range in price from $14.55 per month for 90GB bandwidth and 7,000MB of disk space to $129 per month for dedicated server plans that provide use of an entire server. All of these advanced packages provide Miva Merchant 5 shopping cart software, which is more advanced than OsCommerce software, and designed for larger e commerce stores. All Website Source plans also include a free setup of the Authorize.net payment gateway software and the use of shared SSL certificates. Dedicated server customers also receive impressive discounts for Web site specific SSL certificates. LunarPages — Most Powerful
The LunarPages e-commerce hosting plan is more expensive than the Website Source plan, however, it offers a lot more for the money and is more closely suited to the needs of larger online stores. All LunarPages plans offer the software you need to get your store up and running. They also provide a shared SSL certificate making them a good value. The basic plan costs $6.95 per month and provides an impressive 800GB per month of bandwidth and 35,000MB of storage. It also includes use of the shared SSL certificate, directory encryption and a choice of OsCommerce, Zen or Cube shopping cart software. In contrast, the e-commerce specific package costs $21.95 per month, meaning it isn't for the faint hearted. However, in exchange, customers receive 1,000GB per month of bandwidth and a staggering 50GB of storage. The same e-commerce software and features are also included. The stand out feature of this account is the sheer amount of disk space you receive, making it perfect for larger stores with many products. SiteGround — The Best Budget Plan
SiteGround is virtually unbeatable when it comes to price for an e-commerce plan. For $5.95 per month, you get 40,000MB of Web space and 900GB of monthly bandwidth. They will also install (free of charge) OsCommerce, Cube or Zen shopping cart software for you, making it very easy to get up and running. A free, shared SSL certificate is included along with a huge range of other features. If budget plays a big part in the final decision, then SiteGround is probably the best choice for you. It is also a good choice if you have little or no knowledge of how to install shopping cart software or how to integrate payment systems into your site. The Bottom Line: E-commerce Hosting
E-commerce hosting does not need to be expensive but it does need to offer the appropriate features. OsCommerce is an open source shopping cart so can be installed on any compatible server, however, using an e-commerce hosting plan can mean that the software is installed for you at no extra cost. Some hosts even provide payment gateway software for no extra fee. Your exact requirements as well as those of your online store will determine the best choice for you. Matt Jackson, making his debut on ECommerce-Guide.com, is a new media copywriter specializing in crafting Web site content.
Jan 5, 2012
eBiz 4: shoestring Marketing
By James Maguire October 24, 2005
Okay, you've built your new online store, and now all you need is a large crowd of customers. But you face a major problem: without customers, you can't afford advertising - but without advertising, you can't attract customers.
The solution is to use effective shoestring marketing methods to begin building a customer base. Once you have a steady revenue stream, you can bulk up your marketing. But, for now, you're looking to do it on the cheap.
Marketing on the Internet revolves around search engines, e-mail campaigns, and affiliate programs; all three of which require investment for maximum return — sometimes a hefty investment.
We'll look at each of these. But before we do, let's face it: we're cash-strapped. Are there any marketing methods that are free, or almost free?
The Real Freebies (Well, Almost)
Mention your site in online forums Find an online forum that relates to your business — there are dozens of them, no matter what you sell — and post there. Don't overtly push your business. Instead, make an intelligent comment and list your URL in the signature line of your post. This invites people to your site without offending them by turning the forum discussion into an ad for yourself. To find a relevant group, visit Google Groups.
Offer a free service Make your site useful by posting a service, or information, that relates to your product, like a mortgage calculator, a bunch of great recipes, or a list of the 100 most popular boys and girls names. Not only will this draw in visitors (that is, shoppers), but, if it's really useful, other sites will link to you. Also, don't forget to present your sales offers near your free service.
Write a blog, or related articles No matter what you sell — from sailboats to CDs — a running commentary on that area can spark user interest, drawing visitors to your site. (Hint: a little controversy does wonders.) To host a free blog, go to TypePad or Blogger.
Include your URL on everything Any time you print something, especially business cards or your stationary, include your URL. Don't forget to include it in the signature line of every e-mail you send.
Join a Web Ring A Web Ring is a series of related sites that link to one another, promoting traffic flow between them. It costs nothing to join, and having other sites link to you will increase your search engine ranking. Find a Web Ring resource at — you guessed it — Webring.com.
Hold a contest A chance at winning something excites people — and can also convince them to part with their e-mail address in exchange for a chance to win. Choose the item you give away carefully to ensure you're attracting the kind of users who will likely turn into repeat buyers. (Also, check to be sure your contest rules are legal.)
List your site on Froogle Froogle is Google's free comparison shopping search engine. Other comparison shopping engines charge, but since Froogle is free you've got nothing to lose by listing your site there.
Distribute a free press release PRWeb mass distributes press releases to a legion of publications and news-business outlets. The basic service is free, and the PRWeb caters to small and medium-sized businesses. (Although free, the service accepts voluntary contributions.)
Viral marketing Viral marketing is a message you send out that users find so interesting or entertaining that they send it out to other users - it spreads by itself, like a virus. So there's no advertising expense required to keep it circulating in ever-wider circles. It's usually some kind of joke, or perhaps an odd video clip. A successful viral marketing campaign is a hard thing to develop, and you're a genius if you can do it successfully. (There are highly-paid people working right now on creating viral campaigns for big budget companies.) A few imaginative people have managed to do it cheaply, or at no cost at all.
Search Engines: Unpaid Results
Getting your site listed near the top in a search engine is arguably the best possible Internet marketing. However, 100 zillion other Web sites just like yours want top listing, too. These days, getting highly ranked requires both time (several months, at least) and money.
The first step is registering your site with the top search engines, but that alone won't get you listed. Being registered merely means that as the search engines send a "spider" out to "crawl" the Web (automated software that indexes sites) they'll know to crawl your site.
Be leery of those services that charge you $50 to "submit your site to 500 top search engines." There aren't 500 top search engines. Those cookie cutter submission services submit the same information to each site, although the sites themselves have different submission criteria.
It's worth registering your site with the top search sites on a one-by-one basis. Among the many you want to register with is the Open Directory, Google, MSN, and both the Yahoo search engine and the Yahoo Directory. (Yahoo offers both a free "standard" submission and a paid "Express" submission; experts concur that that the fee is worth it for faster ranking).
Because high rankings attract so many shoppers, businesses spend large sums on search engine optimization (SEO). SEO is the process of tweaking your site so that search engine spiders will more readily recognize it, and hence boost your site's ranking.
Many e-businesses hire SEO experts, who are high-priced gurus that help them change their site to boost their ranking on search results.
Quickie SEO
If you can't afford a SEO guru there are some basic steps you can take to optimize your site for search engines.
Your site's ranking will be determined chiefly by two things: 1) the keywords in the text of your pages, which must be included in your page titles and meta tags; and 2) the number of other sites that link to yours (including how popular those other sites are, and how their content relates to yours).
So first make sure your page titles, meta tags, and site text are all focused on attracting the shoppers you want. In short, they all have to echo the same keywords.
If you're working with a professional site designer to build your site — a good idea — it's important to check whether they've done the following:
Title To get the most click-throughs from search engines, make your site's title specific and interesting. Not "Joe's Shoes" but "Joe's Shoes: Athletic, Dress and Casual." Shoppers want to know before they click through if you offer what they want.
Description meta tag In this one- to two-sentence description of the site (no more than about 250 characters), incorporate all the keywords you know shoppers are searching for. These terms should echo those you used in your title. Not only do the search engine spiders index this, the description also shows up in search results, so it must clearly compel surfers to visit.
Keywords meta tag This list of terms (about 170 characters or so) should include all the most common terms that shoppers use to search for your product. These terms should be the same ones used in your description meta tag.
Headings Your site's text will have headlines, and these headlines must, again, incorporate your site's key search terms.
Text If your search terms aren't built into the text in your site, all your work with tags won't count for much. For example, if you want to be found for music downloads, you have to weave "music download," "get song," and "download music" in your site's text.
Hyperlinks Your links must, once again, use the search terms you want to be found for. So on a site that sells sailing gear, instead of a hyperlink that that says "more information" it should say "sailboat gear" or "learn about sailing."
Two key points: 1) sites built with frames encounter difficulty with search engine spiders; and 2) pages built dynamically — which means a software program creates them only when a shopper request that page — are indexed more slowly.
For more information about SEO, visit Search Engine Watch and Search Engine Forums.
Linking for Success
Even if all your tags are in order, to get highly ranked you'll need many sites to link to your site. Search engines place great weight on this.
Google, for example, tracks the total amount of incoming links to your site, boosting your ranking more if those links come from what Google considers a leading site in your area. Google explains this, somewhat, on its technology page. (In truth, Google keeps its technology secret, lest anyone learn how to trick the system.)
Ideally, you want to convince as many related sites as possible to link to you - particularly big ones. To find influential, non-competitive sites, install the Alexa toolbar, which will provide a site's relative ranking.
You can contact related sites and suggest reciprocal links, but be warned that is a tough process. It will only work if you can offer something of value, at the very least, a link from a truly relevant site (yours), which boosts their search ranking.
(Whatever you do, don't use those automated programs that request links - your e-mail will only get deleted.)
One way to build a network of links to your site is through affiliate marketing. With an affiliate marketing program, you sign-up other Web sites to link to yours, and pay them a commission if a click-through results in a sale.
The advantage to affiliate marketing is that you pay only when you make a sale. Consequently, many well-established e-commerce sites use affiliate marketing. They hire firms like LinkShare and Commision Junction to help them administer their programs.
However, affiliate marketing is of limited value to a brand new online store with a shoestring budget. It's hard to recruit affiliates to drive traffic to an unknown site, and many of the programs charge a set-up fee. But keep affiliate marketing in mind as you grow - with time it can be a valuable traffic driver.
Paid Search: A Necessary Evil
In today's competitive online marketplace, merely optimizing your site for high ranking is rarely enough. Many of your competitors are paying for high-profile search results, using tools like Google AdWords, which is why you'll probably need to as well.
To ensure your site comes up when a user searches for a given term, you bid for that term on a per-click basis. The more popular the term, the more expensive it is. Many terms are pennies per click (though many are far more expensive), and the search engines allow you to set a spending cap so you don't spend the family fortune.
Naturally, this gets expensive, and fast. "When people step up to the plate who don't know what they're doing, it's very easy to get hurt," notes Jeff Binder, CEO of Saffron Rouge and an expert on setting up e-businesses.
The key to surviving and thriving in the world of paid search is doing the math to see what you can afford. You need to calculate your cost of acquisition, which is the amount it costs you to attract each customer. (This is an important figure to know for your entire marketing budget, not just for your paid search expenses.)
In short, you must calculate: what is the maximum dollar amount you can spend to attract a customer and still make a profit from that customer? As long as your cost of acquisition stays underneath this figure, you have a chance of making a profit.
To calculate your cost of acquisition, you must know your conversion rate, which is the percentage of the visitors to your site who actually make a purchase. Conversion rates vary wildly across the e-commerce industry, but many sites report a one to three percent rate.
Let's calculate a theoretical cost of acquisition. Let's say you buy a keyword search term for 18 cents per click. At that rate, it will cost you $180 to get 1,000 people to your site. With a conversion rate of 2 percent, from those 1,000 visitors you'll get 20 sales. So here's your math: $180 (advertising cost) divided by 20 (number of customers attracted) equals $9. Your cost of acquisition, the amount you pay for each customer, is $9.
Do you have more than $9 profit in each of your sales? If you do, you can afford to spend 18 cents per click and still make a profit. When you start out, you won't know your conversion rate, so you'll need to experiment. Be prepared to lose some money in the experimentation phase.
So, which words should you bid on? To research which words shoppers are using to find your product, go the Overture Keyword Tool. Enter the search terms you know are related, and the results will show you how many times each term was used, along with related searches. The only drawback is Overture's results are calculated using data from the previous month.
It's important to remember that these popular terms are the ones you want to build into your meta tags and the text of your site, so you're boosting your free search ranking while you're paying for higher ranking.
Another key point I want to make is that as you run your paid search campaign, you need to monitor your results using your Web analytics software. Where are visitors coming from? What keywords are driving the most business? Only by knowing the answers to these questions can you maximize the return from your paid search buy.
Examples of Web analytics software includes WebTrends, ClickTracks, and Urchin, and there are many good packages available.
E-Mail Marketing
Wow, you've actually attracted a shopper to your Web site — now you have to convince them to come back. A great way to do that is to send them an e-mail with relevant and timely product offers.
But harvesting your shoppers' e-mail addresses is easier said than done. Typically you have to offer today's spam-wary shoppers something of real value to cajole them into parting with their e-mail. Some merchants offer a coupon or a discount on purchase. Whatever you offer, it's a good idea to provide a sign-up option on every page.
This process of gathering e-mail addresses is part of what's called opt-in marketing or permission marketing. Two key principles of successful opt-in marketing are: 1) letting your shoppers know you'll never, ever, give or sell their e-mail address to another party; and 2) providing a Unsubscribe link so they can easily get off your list.
If don't have an e-mail list, you might consider renting one. There are vendors who sell lists of address of people who have indicated they're interested in a given topic. Be careful, though, because some of these vendors are simply spammers selling addresses they've collected with automated harvesting software - e-mailing to these lists will quickly make you a very unpopular merchant. You can search for e-mail list vendors at the Direct Marketing Association, among other places.
You'll need special software to administer your e-mail marketing campaigns - gathering addresses in Outlook Express just won't do. If you're on a tight budget, there's a free version of the popular Group Mail software, and a low cost version of the popular Constant Contact. Other leading programs include Gammadyne Mail and iBuilder, and there are many good group e-mail applications.
To be sure, e-mail marketing is one of the great special weapons of online store owners. But your e-mails must be written effectively — a complicated art form that takes considerable time to master. The basics, however, include two golden rules:
How often should you send out e-mails? There's no set answer, but the point is to establish a regular connection without pestering your customers. At a minimum, e-mail your customers once a quarter. Many businesses send a couple mailings a month, and plenty send weekly mailings.
Marketing Your Site: The Bottom Line
The process of promoting your site never stops - and it never gets cheap. The only way to truly thrive online is to market constantly, and to regularly monitor the results of your marketing efforts. Start now and don't stop!
Okay, you've built your new online store, and now all you need is a large crowd of customers. But you face a major problem: without customers, you can't afford advertising - but without advertising, you can't attract customers.
The solution is to use effective shoestring marketing methods to begin building a customer base. Once you have a steady revenue stream, you can bulk up your marketing. But, for now, you're looking to do it on the cheap.
Marketing on the Internet revolves around search engines, e-mail campaigns, and affiliate programs; all three of which require investment for maximum return — sometimes a hefty investment.
We'll look at each of these. But before we do, let's face it: we're cash-strapped. Are there any marketing methods that are free, or almost free?
The Real Freebies (Well, Almost)
Mention your site in online forums Find an online forum that relates to your business — there are dozens of them, no matter what you sell — and post there. Don't overtly push your business. Instead, make an intelligent comment and list your URL in the signature line of your post. This invites people to your site without offending them by turning the forum discussion into an ad for yourself. To find a relevant group, visit Google Groups.
Offer a free service Make your site useful by posting a service, or information, that relates to your product, like a mortgage calculator, a bunch of great recipes, or a list of the 100 most popular boys and girls names. Not only will this draw in visitors (that is, shoppers), but, if it's really useful, other sites will link to you. Also, don't forget to present your sales offers near your free service.
Write a blog, or related articles No matter what you sell — from sailboats to CDs — a running commentary on that area can spark user interest, drawing visitors to your site. (Hint: a little controversy does wonders.) To host a free blog, go to TypePad or Blogger.
Include your URL on everything Any time you print something, especially business cards or your stationary, include your URL. Don't forget to include it in the signature line of every e-mail you send.
Join a Web Ring A Web Ring is a series of related sites that link to one another, promoting traffic flow between them. It costs nothing to join, and having other sites link to you will increase your search engine ranking. Find a Web Ring resource at — you guessed it — Webring.com.
Hold a contest A chance at winning something excites people — and can also convince them to part with their e-mail address in exchange for a chance to win. Choose the item you give away carefully to ensure you're attracting the kind of users who will likely turn into repeat buyers. (Also, check to be sure your contest rules are legal.)
List your site on Froogle Froogle is Google's free comparison shopping search engine. Other comparison shopping engines charge, but since Froogle is free you've got nothing to lose by listing your site there.
Distribute a free press release PRWeb mass distributes press releases to a legion of publications and news-business outlets. The basic service is free, and the PRWeb caters to small and medium-sized businesses. (Although free, the service accepts voluntary contributions.)
Viral marketing Viral marketing is a message you send out that users find so interesting or entertaining that they send it out to other users - it spreads by itself, like a virus. So there's no advertising expense required to keep it circulating in ever-wider circles. It's usually some kind of joke, or perhaps an odd video clip. A successful viral marketing campaign is a hard thing to develop, and you're a genius if you can do it successfully. (There are highly-paid people working right now on creating viral campaigns for big budget companies.) A few imaginative people have managed to do it cheaply, or at no cost at all.
Search Engines: Unpaid Results
Getting your site listed near the top in a search engine is arguably the best possible Internet marketing. However, 100 zillion other Web sites just like yours want top listing, too. These days, getting highly ranked requires both time (several months, at least) and money.
The first step is registering your site with the top search engines, but that alone won't get you listed. Being registered merely means that as the search engines send a "spider" out to "crawl" the Web (automated software that indexes sites) they'll know to crawl your site.
Be leery of those services that charge you $50 to "submit your site to 500 top search engines." There aren't 500 top search engines. Those cookie cutter submission services submit the same information to each site, although the sites themselves have different submission criteria.
It's worth registering your site with the top search sites on a one-by-one basis. Among the many you want to register with is the Open Directory, Google, MSN, and both the Yahoo search engine and the Yahoo Directory. (Yahoo offers both a free "standard" submission and a paid "Express" submission; experts concur that that the fee is worth it for faster ranking).
Because high rankings attract so many shoppers, businesses spend large sums on search engine optimization (SEO). SEO is the process of tweaking your site so that search engine spiders will more readily recognize it, and hence boost your site's ranking.
Many e-businesses hire SEO experts, who are high-priced gurus that help them change their site to boost their ranking on search results.
Quickie SEO
If you can't afford a SEO guru there are some basic steps you can take to optimize your site for search engines.
Your site's ranking will be determined chiefly by two things: 1) the keywords in the text of your pages, which must be included in your page titles and meta tags; and 2) the number of other sites that link to yours (including how popular those other sites are, and how their content relates to yours).
So first make sure your page titles, meta tags, and site text are all focused on attracting the shoppers you want. In short, they all have to echo the same keywords.
If you're working with a professional site designer to build your site — a good idea — it's important to check whether they've done the following:
Title To get the most click-throughs from search engines, make your site's title specific and interesting. Not "Joe's Shoes" but "Joe's Shoes: Athletic, Dress and Casual." Shoppers want to know before they click through if you offer what they want.
Description meta tag In this one- to two-sentence description of the site (no more than about 250 characters), incorporate all the keywords you know shoppers are searching for. These terms should echo those you used in your title. Not only do the search engine spiders index this, the description also shows up in search results, so it must clearly compel surfers to visit.
Keywords meta tag This list of terms (about 170 characters or so) should include all the most common terms that shoppers use to search for your product. These terms should be the same ones used in your description meta tag.
Headings Your site's text will have headlines, and these headlines must, again, incorporate your site's key search terms.
Text If your search terms aren't built into the text in your site, all your work with tags won't count for much. For example, if you want to be found for music downloads, you have to weave "music download," "get song," and "download music" in your site's text.
Hyperlinks Your links must, once again, use the search terms you want to be found for. So on a site that sells sailing gear, instead of a hyperlink that that says "more information" it should say "sailboat gear" or "learn about sailing."
Two key points: 1) sites built with frames encounter difficulty with search engine spiders; and 2) pages built dynamically — which means a software program creates them only when a shopper request that page — are indexed more slowly.
For more information about SEO, visit Search Engine Watch and Search Engine Forums.
Linking for Success
Even if all your tags are in order, to get highly ranked you'll need many sites to link to your site. Search engines place great weight on this.
Google, for example, tracks the total amount of incoming links to your site, boosting your ranking more if those links come from what Google considers a leading site in your area. Google explains this, somewhat, on its technology page. (In truth, Google keeps its technology secret, lest anyone learn how to trick the system.)
Ideally, you want to convince as many related sites as possible to link to you - particularly big ones. To find influential, non-competitive sites, install the Alexa toolbar, which will provide a site's relative ranking.
You can contact related sites and suggest reciprocal links, but be warned that is a tough process. It will only work if you can offer something of value, at the very least, a link from a truly relevant site (yours), which boosts their search ranking.
(Whatever you do, don't use those automated programs that request links - your e-mail will only get deleted.)
One way to build a network of links to your site is through affiliate marketing. With an affiliate marketing program, you sign-up other Web sites to link to yours, and pay them a commission if a click-through results in a sale.
The advantage to affiliate marketing is that you pay only when you make a sale. Consequently, many well-established e-commerce sites use affiliate marketing. They hire firms like LinkShare and Commision Junction to help them administer their programs.
However, affiliate marketing is of limited value to a brand new online store with a shoestring budget. It's hard to recruit affiliates to drive traffic to an unknown site, and many of the programs charge a set-up fee. But keep affiliate marketing in mind as you grow - with time it can be a valuable traffic driver.
Paid Search: A Necessary Evil
In today's competitive online marketplace, merely optimizing your site for high ranking is rarely enough. Many of your competitors are paying for high-profile search results, using tools like Google AdWords, which is why you'll probably need to as well.
To ensure your site comes up when a user searches for a given term, you bid for that term on a per-click basis. The more popular the term, the more expensive it is. Many terms are pennies per click (though many are far more expensive), and the search engines allow you to set a spending cap so you don't spend the family fortune.
Naturally, this gets expensive, and fast. "When people step up to the plate who don't know what they're doing, it's very easy to get hurt," notes Jeff Binder, CEO of Saffron Rouge and an expert on setting up e-businesses.
The key to surviving and thriving in the world of paid search is doing the math to see what you can afford. You need to calculate your cost of acquisition, which is the amount it costs you to attract each customer. (This is an important figure to know for your entire marketing budget, not just for your paid search expenses.)
In short, you must calculate: what is the maximum dollar amount you can spend to attract a customer and still make a profit from that customer? As long as your cost of acquisition stays underneath this figure, you have a chance of making a profit.
To calculate your cost of acquisition, you must know your conversion rate, which is the percentage of the visitors to your site who actually make a purchase. Conversion rates vary wildly across the e-commerce industry, but many sites report a one to three percent rate.
Let's calculate a theoretical cost of acquisition. Let's say you buy a keyword search term for 18 cents per click. At that rate, it will cost you $180 to get 1,000 people to your site. With a conversion rate of 2 percent, from those 1,000 visitors you'll get 20 sales. So here's your math: $180 (advertising cost) divided by 20 (number of customers attracted) equals $9. Your cost of acquisition, the amount you pay for each customer, is $9.
Do you have more than $9 profit in each of your sales? If you do, you can afford to spend 18 cents per click and still make a profit. When you start out, you won't know your conversion rate, so you'll need to experiment. Be prepared to lose some money in the experimentation phase.
So, which words should you bid on? To research which words shoppers are using to find your product, go the Overture Keyword Tool. Enter the search terms you know are related, and the results will show you how many times each term was used, along with related searches. The only drawback is Overture's results are calculated using data from the previous month.
It's important to remember that these popular terms are the ones you want to build into your meta tags and the text of your site, so you're boosting your free search ranking while you're paying for higher ranking.
Another key point I want to make is that as you run your paid search campaign, you need to monitor your results using your Web analytics software. Where are visitors coming from? What keywords are driving the most business? Only by knowing the answers to these questions can you maximize the return from your paid search buy.
Examples of Web analytics software includes WebTrends, ClickTracks, and Urchin, and there are many good packages available.
E-Mail Marketing
Wow, you've actually attracted a shopper to your Web site — now you have to convince them to come back. A great way to do that is to send them an e-mail with relevant and timely product offers.
But harvesting your shoppers' e-mail addresses is easier said than done. Typically you have to offer today's spam-wary shoppers something of real value to cajole them into parting with their e-mail. Some merchants offer a coupon or a discount on purchase. Whatever you offer, it's a good idea to provide a sign-up option on every page.
This process of gathering e-mail addresses is part of what's called opt-in marketing or permission marketing. Two key principles of successful opt-in marketing are: 1) letting your shoppers know you'll never, ever, give or sell their e-mail address to another party; and 2) providing a Unsubscribe link so they can easily get off your list.
If don't have an e-mail list, you might consider renting one. There are vendors who sell lists of address of people who have indicated they're interested in a given topic. Be careful, though, because some of these vendors are simply spammers selling addresses they've collected with automated harvesting software - e-mailing to these lists will quickly make you a very unpopular merchant. You can search for e-mail list vendors at the Direct Marketing Association, among other places.
You'll need special software to administer your e-mail marketing campaigns - gathering addresses in Outlook Express just won't do. If you're on a tight budget, there's a free version of the popular Group Mail software, and a low cost version of the popular Constant Contact. Other leading programs include Gammadyne Mail and iBuilder, and there are many good group e-mail applications.
To be sure, e-mail marketing is one of the great special weapons of online store owners. But your e-mails must be written effectively — a complicated art form that takes considerable time to master. The basics, however, include two golden rules:
- A compelling subject line Getting your users to open your e-mail is the biggest hurdle because we're all drowning in spam. The subject line must romance your specific target demographic, not merely the general audience, and it must offer real value without hucksterism. It's a good idea to include an "action word" like free, bargain, sale, and close-out, or promise some truly interesting tidbit of information.
- Make the body copy brief — and relevant Your readers won't give you much time, so you must state your message succinctly. The point is to present an offer. It can be a free sample, free shipping, a money-back offer, a special new customer discount, a quantity discount or any of dozens of other offers. But the offer must be clear and present compelling value.
How often should you send out e-mails? There's no set answer, but the point is to establish a regular connection without pestering your customers. At a minimum, e-mail your customers once a quarter. Many businesses send a couple mailings a month, and plenty send weekly mailings.
Marketing Your Site: The Bottom Line
The process of promoting your site never stops - and it never gets cheap. The only way to truly thrive online is to market constantly, and to regularly monitor the results of your marketing efforts. Start now and don't stop!
eBiz 3: Critical Components
By James Maguire
October 10, 2005
As noted in Parts I (here) and II (and here) of this series, setting up an online business requires gathering a number of tools — in essence, building the technical infrastructure required to serve your customers (and maintain your sanity).
Three of the truly critical tools you'll need are a merchant account, a Web hosting provider, and an accounting package. Along with your core e-commerce platform, these three key elements form your e-business's basic foundation.
Be aware that these three elements are often sold as part of an integrated package. Several e-commerce platforms offer their own hosting service, a built-in accounting package, and an alliance with a company that offers merchant accounts.
Many online business owners prefer these integrated packages because they know the elements work together — and they don't have to shop for each one. However, if you're assembling your items a la carte, below are tips for selecting each of these three essential e-business tools.
Setting up a Merchant Account
To accept online credit card payments from your customers, you must have an Internet merchant account. You set up a merchant account with what's called an acquiring institution, in other words a bank, or a middleman company that works with a bank. This bank authorizes the transaction — or declines it, if there's a problem with the shopper's credit card — and deposits the money into the merchant's bank account.
Setting up a merchant account is far from hassle-free — in fact, it requires serious shopping around at the many businesses that offer this service, and at no small expense.
First, some jargon. As you shop around, realize that there's more than one type of merchant account. Brick and mortar businesses use merchant accounts that accept point of sale (POS) transactions, because the customer is standing right there. In contrast, online businesses need a merchant account that accepts transactions in which the customer isn't present, or CNP (cardholder not present) transactions. This type of merchant account is sometimes called a MOTO (mail order/telephone order) merchant account.
Because there's a higher rate of fraud over the Internet than at brick and mortar stores, the fees tend to be higher for an Internet merchant account. Because of the higher fraud rates, banks tend to be leery of Internet merchant accounts. Many banks won't offer an Internet merchant account to a first time online entrepreneur. Instead, plenty of new e-business owners get their merchant accounts through an ISO, or Independent Service Organization.
These ISO's are middlemen who work with banks. The ISO's are more tolerant of risk, and are geared for working with the transient population of Internet business owners. However, since the ISO's are taking more risk, their fees are also higher.
You can tell a bank from an ISO by its URL. Banks have URLs like WellKnownBank.com. But ISO's have URLs like Rock-Bottom-Rate-A1-MakeAFastBuck.com. (Actually, that's not fair to ISO's — there are plenty of reputable ones.)
Whether you get your merchant account from a bank or an ISO, you'll face an array of fees. As you consider the offers from various ISOs and banks, it's a good idea to write down each provider's fees, so you can easily compare between them - the fees are numerous, and present a blizzard of variables.
Setup fee This can range anywhere from $50 to $300, in some cases more.
Monthly fee Most providers charge a minimum monthly fee, regardless of whether a merchant makes any sales.
Discount rate All providers charge a percentage of each transaction, known as the discount rate. This varies widely, though usually fits somewhere in the range of 1.8 percent to 4 percent per transaction.
Per-transaction fee Most providers charge a fixed fee per transaction (in addition to the percentage charge). This might range from .10 to .40 per transaction, regardless of how much the item costs.
Termination fee It's not uncommon that a provider charges an account cancellation fee, usually if you close your account within a given time period. Read the fine print on this one - watch out for those providers that require a 2-year commitment.
Extra fees When you give a shopper a refund, your provider will charge you a fee, and this can be a hefty, in some cases $10 to $20.
How to Chose Among Them
As you compare the prices of various providers of Internet merchant accounts, consider the needs of your business - a deal that's good for one type of business won't be so good for another type of business.
Low or high volume? If you sell lower cost items in high volume, you need to find a provider with low fixed fees per transaction; you'd be willing to accept a higher percentage per transaction charge to get this lower fixed fee.
Batch or manual transactions? If you chose manual (the cheaper option) you'll be processing transactions one by one. You'll manually be routing the credit card information from your online order form to the card processing company.
If you expect a lot of transactions, you're better off choosing batch processing. Although you'll pay more, in many cases you'll be able to provide faster service, and spend far less time doing it.
How turnkey is it? Some merchant account providers take care of many of the technical and data flow issues that confront online business owners. For example, as part of setting up an Internet merchant account you'll need a payment gateway, which is a data-routing bridge from your e-business to the credit card processor. Some of the big firms that provide this service include Verisign and Authorize.Net. A number of Internet merchant account providers offer turnkey solutions, so chores like setting up a payment gateway are handled for you.
Can you trust them? In response to the many new Internet merchants that have sprung up, many new ISO's have sprung up to service them. Not all ISO's are created equal. Some of them hide big fees in the fine print. It's a good idea to find out what other e-businesses the ISO services, and how happy those merchants are.
Be careful of rock bottom rates, and those "everyone's approved" vendors. A good ISO will have a customer service department that takes calls — and then actually handles issues.
A Possible First Step
One highly popular and well-respected provider of Internet merchant accounts is Paymentech. If you're brand new to the idea of merchant accounts, it's worth your while to browse their site and find out the terms, conditions, and services they offer before venturing off to try and find a cheaper price. Yahoo Merchant Solutions is one of many popular e-commerce solutions that partners with Paymentech.
Or, PayPal?
PayPal this year launched an aggressive program to build up its Internet merchant account business. In the old days, a seller who used PayPal to accept credit card payments needed to route a shopper to the PayPal site to accept payment. Now, with PayPal's Website Payment Pro option, buyers can make credit card payments directly on the merchant's site, and PayPal processes them in background. During this program's introductory period, the fee structure is highly competitive.
CHOOSING A WEB HOST
Unless you've got a hefty computer server in your house (along with a fat pipe to the Internet) you're not going to host your online store yourself. Some other business needs to do this for you. And there are a zillion choices.
As you compare Web hosting companies, be wary of the rock-bottom price hosting companies. There are some good, cheap ones. But if they're that cheap, will they really provide customer service?
Reliability This is the big one. Your entire business is sitting on the host company's servers - they must guarantee virtually 100 percent uptime. And they must stand behind that in writing. A reputable host will offer some kind of refund if it falls beneath its uptime guarantee.
Bandwidth As shoppers browse at your site (and make purchases!) they transfer bytes of data from your site. This is referred to as "bandwidth." The more bandwidth a host company offers you, the better. Hopefully, you'll need a lot of it.
But be careful: Web hosts give you a set bandwidth allotment, and then charge you based on how much you go over. Sometimes these extra charges are buried in the fine print, but make sure you know what they are - a sudden spike in traffic could result in a huge bill.
Tech Support This is another big one. You want phone access, 24 hours a day, seven days a week. Run, don't walk, from hosting companies that offer "free e-mail support." The phone support should be included. Also, before you buy, you should actually call them at 9:30 Sunday night and see if A) they pick up the phone, and B) they can really answer technical questions. In the middle of a busy season you'll need a live human to handle a problem, and 24/7, high quality phone support will make a huge difference.
Software Tools: PHP, Perl, CGI Bin Directory, etc. Some hosting companies include a full range of these software tools (which are necessary for a site's full functionality). But some hosts offer a few of these tools, while charging extra for others. Because Web hosting has gotten so competitive, you should expect a full range of these tools included as part of a reasonably priced package. It's also important to know: what are the host's database options? Do they include support for your database software as part of the monthly hosting fee, or is this extra?
E-mail options At this point, most decent packages offer a plethora of e-mail options. All of them, of course, enable you to have own e-mail address at yourname@yoursite.com, with enough e-mail boxes for you and many employees. The host should also offer virus and spam protection, and options like AutoResponder, which lets you send automated messages to your customers. You should also be able to forward your e-mail to any of your other e-mail in-boxes (those not hosted by the host company.)
A really good host will offer an important e-mail extra: a basic e-mail marketing package, to help you reach your customers.
ACCOUNTING PACKAGES
Ah, the poor accounting package — no one gets excited thinking about accounting software (and if you do, well, I'm sorry but you're a little odd). But your accounting program is vitally important. As one e-tailer so aptly stated, "this business is all about numbers." You can't track that ever-important profit and loss statement with pen and paper (although some small merchants try to, to their great detriment.)
Again, there are integrated e-commerce platforms that come with their own accounting package; the advantage is that the accounting software is integrated with the inventory tracking software — a huge plus.
However, if you're looking for a stand-alone program, the key is "simplicity," notes Jeff Binder, CEO of Saffron Rouge and an expert in e-business setup. "You want to buy software that gives you what you need to grow, but is not incredibly cumbersome to operate."
Specifically, it's important that your accounting package be upgradeable; as you take on more employees, or more business functions, your number crunching software must grow with you. What does it cost to upgrade?
It's worth your while to find out what package your accountant or tax person uses. If you can simply send them data in the format they already use, that can lower your tax prep bill.
Be aware that some accounting software companies offer phone support, for an added fee. This option can be worth its weight in gold if you're in crunch time and you need information from an expert.
Perhaps the default small business accounting package is QuickBooks, made by Intuit. "QuickBooks is relatively easy to use — it's a very nice basic package," Binder notes. Intuit claims that QuickBooks 2006 is a big step forward from its previous QuickBooks releases.
Microsoft hopes to take a large chunk of Intuit's small business accounting market share with its new Microsoft Office Small Business Accounting package. Microsoft's obvious advantage is its accounting software's interoperability with the existing Office suite. Industry observers expect the Microsoft accounting app to offer stiff competition to QuickBooks.
Binder is a big proponent of NetSuite's accounting software, which is sold on an ASP basis. "I've used it for three years, and I've never used anything that can compare with it."
But don't stop your shopping with QuickBooks or NetSuite. The list of well-known packages includes Peachtree, Simply Accounting (both Peachtree and Simply Accounting are owned by Sage Software, and MYOB.
October 10, 2005
As noted in Parts I (here) and II (and here) of this series, setting up an online business requires gathering a number of tools — in essence, building the technical infrastructure required to serve your customers (and maintain your sanity).
Three of the truly critical tools you'll need are a merchant account, a Web hosting provider, and an accounting package. Along with your core e-commerce platform, these three key elements form your e-business's basic foundation.
Be aware that these three elements are often sold as part of an integrated package. Several e-commerce platforms offer their own hosting service, a built-in accounting package, and an alliance with a company that offers merchant accounts.
Many online business owners prefer these integrated packages because they know the elements work together — and they don't have to shop for each one. However, if you're assembling your items a la carte, below are tips for selecting each of these three essential e-business tools.
Setting up a Merchant Account
To accept online credit card payments from your customers, you must have an Internet merchant account. You set up a merchant account with what's called an acquiring institution, in other words a bank, or a middleman company that works with a bank. This bank authorizes the transaction — or declines it, if there's a problem with the shopper's credit card — and deposits the money into the merchant's bank account.
Setting up a merchant account is far from hassle-free — in fact, it requires serious shopping around at the many businesses that offer this service, and at no small expense.
First, some jargon. As you shop around, realize that there's more than one type of merchant account. Brick and mortar businesses use merchant accounts that accept point of sale (POS) transactions, because the customer is standing right there. In contrast, online businesses need a merchant account that accepts transactions in which the customer isn't present, or CNP (cardholder not present) transactions. This type of merchant account is sometimes called a MOTO (mail order/telephone order) merchant account.
Because there's a higher rate of fraud over the Internet than at brick and mortar stores, the fees tend to be higher for an Internet merchant account. Because of the higher fraud rates, banks tend to be leery of Internet merchant accounts. Many banks won't offer an Internet merchant account to a first time online entrepreneur. Instead, plenty of new e-business owners get their merchant accounts through an ISO, or Independent Service Organization.
These ISO's are middlemen who work with banks. The ISO's are more tolerant of risk, and are geared for working with the transient population of Internet business owners. However, since the ISO's are taking more risk, their fees are also higher.
You can tell a bank from an ISO by its URL. Banks have URLs like WellKnownBank.com. But ISO's have URLs like Rock-Bottom-Rate-A1-MakeAFastBuck.com. (Actually, that's not fair to ISO's — there are plenty of reputable ones.)
Whether you get your merchant account from a bank or an ISO, you'll face an array of fees. As you consider the offers from various ISOs and banks, it's a good idea to write down each provider's fees, so you can easily compare between them - the fees are numerous, and present a blizzard of variables.
Setup fee This can range anywhere from $50 to $300, in some cases more.
Monthly fee Most providers charge a minimum monthly fee, regardless of whether a merchant makes any sales.
Discount rate All providers charge a percentage of each transaction, known as the discount rate. This varies widely, though usually fits somewhere in the range of 1.8 percent to 4 percent per transaction.
Per-transaction fee Most providers charge a fixed fee per transaction (in addition to the percentage charge). This might range from .10 to .40 per transaction, regardless of how much the item costs.
Termination fee It's not uncommon that a provider charges an account cancellation fee, usually if you close your account within a given time period. Read the fine print on this one - watch out for those providers that require a 2-year commitment.
Extra fees When you give a shopper a refund, your provider will charge you a fee, and this can be a hefty, in some cases $10 to $20.
How to Chose Among Them
As you compare the prices of various providers of Internet merchant accounts, consider the needs of your business - a deal that's good for one type of business won't be so good for another type of business.
Low or high volume? If you sell lower cost items in high volume, you need to find a provider with low fixed fees per transaction; you'd be willing to accept a higher percentage per transaction charge to get this lower fixed fee.
Batch or manual transactions? If you chose manual (the cheaper option) you'll be processing transactions one by one. You'll manually be routing the credit card information from your online order form to the card processing company.
If you expect a lot of transactions, you're better off choosing batch processing. Although you'll pay more, in many cases you'll be able to provide faster service, and spend far less time doing it.
How turnkey is it? Some merchant account providers take care of many of the technical and data flow issues that confront online business owners. For example, as part of setting up an Internet merchant account you'll need a payment gateway, which is a data-routing bridge from your e-business to the credit card processor. Some of the big firms that provide this service include Verisign and Authorize.Net. A number of Internet merchant account providers offer turnkey solutions, so chores like setting up a payment gateway are handled for you.
Can you trust them? In response to the many new Internet merchants that have sprung up, many new ISO's have sprung up to service them. Not all ISO's are created equal. Some of them hide big fees in the fine print. It's a good idea to find out what other e-businesses the ISO services, and how happy those merchants are.
Be careful of rock bottom rates, and those "everyone's approved" vendors. A good ISO will have a customer service department that takes calls — and then actually handles issues.
A Possible First Step
One highly popular and well-respected provider of Internet merchant accounts is Paymentech. If you're brand new to the idea of merchant accounts, it's worth your while to browse their site and find out the terms, conditions, and services they offer before venturing off to try and find a cheaper price. Yahoo Merchant Solutions is one of many popular e-commerce solutions that partners with Paymentech.
Or, PayPal?
PayPal this year launched an aggressive program to build up its Internet merchant account business. In the old days, a seller who used PayPal to accept credit card payments needed to route a shopper to the PayPal site to accept payment. Now, with PayPal's Website Payment Pro option, buyers can make credit card payments directly on the merchant's site, and PayPal processes them in background. During this program's introductory period, the fee structure is highly competitive.
CHOOSING A WEB HOST
Unless you've got a hefty computer server in your house (along with a fat pipe to the Internet) you're not going to host your online store yourself. Some other business needs to do this for you. And there are a zillion choices.
As you compare Web hosting companies, be wary of the rock-bottom price hosting companies. There are some good, cheap ones. But if they're that cheap, will they really provide customer service?
Reliability This is the big one. Your entire business is sitting on the host company's servers - they must guarantee virtually 100 percent uptime. And they must stand behind that in writing. A reputable host will offer some kind of refund if it falls beneath its uptime guarantee.
Bandwidth As shoppers browse at your site (and make purchases!) they transfer bytes of data from your site. This is referred to as "bandwidth." The more bandwidth a host company offers you, the better. Hopefully, you'll need a lot of it.
But be careful: Web hosts give you a set bandwidth allotment, and then charge you based on how much you go over. Sometimes these extra charges are buried in the fine print, but make sure you know what they are - a sudden spike in traffic could result in a huge bill.
Tech Support This is another big one. You want phone access, 24 hours a day, seven days a week. Run, don't walk, from hosting companies that offer "free e-mail support." The phone support should be included. Also, before you buy, you should actually call them at 9:30 Sunday night and see if A) they pick up the phone, and B) they can really answer technical questions. In the middle of a busy season you'll need a live human to handle a problem, and 24/7, high quality phone support will make a huge difference.
Software Tools: PHP, Perl, CGI Bin Directory, etc. Some hosting companies include a full range of these software tools (which are necessary for a site's full functionality). But some hosts offer a few of these tools, while charging extra for others. Because Web hosting has gotten so competitive, you should expect a full range of these tools included as part of a reasonably priced package. It's also important to know: what are the host's database options? Do they include support for your database software as part of the monthly hosting fee, or is this extra?
E-mail options At this point, most decent packages offer a plethora of e-mail options. All of them, of course, enable you to have own e-mail address at yourname@yoursite.com, with enough e-mail boxes for you and many employees. The host should also offer virus and spam protection, and options like AutoResponder, which lets you send automated messages to your customers. You should also be able to forward your e-mail to any of your other e-mail in-boxes (those not hosted by the host company.)
A really good host will offer an important e-mail extra: a basic e-mail marketing package, to help you reach your customers.
ACCOUNTING PACKAGES
Ah, the poor accounting package — no one gets excited thinking about accounting software (and if you do, well, I'm sorry but you're a little odd). But your accounting program is vitally important. As one e-tailer so aptly stated, "this business is all about numbers." You can't track that ever-important profit and loss statement with pen and paper (although some small merchants try to, to their great detriment.)
Again, there are integrated e-commerce platforms that come with their own accounting package; the advantage is that the accounting software is integrated with the inventory tracking software — a huge plus.
However, if you're looking for a stand-alone program, the key is "simplicity," notes Jeff Binder, CEO of Saffron Rouge and an expert in e-business setup. "You want to buy software that gives you what you need to grow, but is not incredibly cumbersome to operate."
Specifically, it's important that your accounting package be upgradeable; as you take on more employees, or more business functions, your number crunching software must grow with you. What does it cost to upgrade?
It's worth your while to find out what package your accountant or tax person uses. If you can simply send them data in the format they already use, that can lower your tax prep bill.
Be aware that some accounting software companies offer phone support, for an added fee. This option can be worth its weight in gold if you're in crunch time and you need information from an expert.
Perhaps the default small business accounting package is QuickBooks, made by Intuit. "QuickBooks is relatively easy to use — it's a very nice basic package," Binder notes. Intuit claims that QuickBooks 2006 is a big step forward from its previous QuickBooks releases.
Microsoft hopes to take a large chunk of Intuit's small business accounting market share with its new Microsoft Office Small Business Accounting package. Microsoft's obvious advantage is its accounting software's interoperability with the existing Office suite. Industry observers expect the Microsoft accounting app to offer stiff competition to QuickBooks.
Binder is a big proponent of NetSuite's accounting software, which is sold on an ASP basis. "I've used it for three years, and I've never used anything that can compare with it."
But don't stop your shopping with QuickBooks or NetSuite. The list of well-known packages includes Peachtree, Simply Accounting (both Peachtree and Simply Accounting are owned by Sage Software, and MYOB.
eBiz 1: The Plan
By James Maguire September 19, 2005
Congratulations — you're thinking of starting an online business. You certainly know how to spot a growth area when you see one. The rest of the economy might be shaky, but e-commerce enjoys rosy predictions for years to come. More and more people are spending more and more money online every year.
Of course, if it were that easy, everyone would start on online business. Well, actually, it seems like everyone is starting an e-business. Hordes of new online stores spring up every week. Retired grade school teachers start them, and people who use to sell shoes for a living start them. Experienced, well-financed business types launch them, and people who have no idea what they're doing launch them.
And why not? The barriers to entry are low, a lot of online businesses can be run from home, and there's gold in them hills.
But, in truth, it's not simple to succeed as an online merchant (which is different from just setting up a site). As one e-commerce expert noted, there are more dollars being spent online all the time, but the amount of competition for those dollars is growing even faster. At this point, it's tough out there.
But don't lose heart. There are a lot of people making money online who don't have degrees from the Wharton School of Business (Trump's alma mater). Plenty of cyber-merchants are flying by the seat of their pants, and doing pretty well in the process.
You can be one of them, if you've got some dollars to invest, are ready to work hard, and — this part gets tricky — are willing to put some serious thought into it. Let's start with the serious thought required before you open for business.
The Two Parts
Roughly speaking, starting an online business is divided into two parts: the hard part and the easy part.
The easy part is assembling your basic business structure. You'll need to choose your software platform, set up a credit card account, develop a marketing plan, and figure out a few more nuts and bolts things. Oh sure, there's a lot of homework involved here — and plenty of cash outlay — but all told, this part's not rocket science.
The hard part is developing your e-business plan. That requires awareness and understanding of what it means to do business online, and an inventive strategy. Developing a sound business plan is not only critical; it's the do-or-die step in starting your online store.
'But wait,' you say, 'I already have my business plan — I'm just looking for a little help in building my site, and I'm rarin' to go.'
Well, hang on. You may think you have your online merchant plan — and you might. But before you assemble your basic business structure, you have one precious opportunity to really think things through — now.
More e-businesses have failed because of a faulty underlying concept than because of problems with software or hosting issues. Remember the Internet boom of the late '90s? Those businesses had full tech staffs and fat marketing budgets, but a lot of them went belly up because their business plan was no better than the Titanic's plans for dealing with icebergs.
"The biggest favor you do yourself in the beginning is to take time to really think about what your doing — make deliberate decisions," says Jeff Binder, CEO of Saffron Rouge and an expert in starting online businesses.
"Am I going to be niche retailer? Am I going to be a mass market retailer?" In short, "how am I going to make money?"
"Your business model could be such that you don't make anything on the products you sell — but you make money by selling ads on your site. Or, you can practically give away your product, but make all your money on your grotesquely expensive shipping fees. Or, your shipping is free all the time, but your product costs are higher," says Binder.
Whatever the case, before you launch YourBusiness.com, make sure you've considered the following:
What's really different?
Is there anything that really distinguishes your site from similar online merchants? If you're merely going to sell widgets like the 14 other well-established widget sites do, your 'me-too' approach will limit your success. Find some way to set yourself apart so people come to you rather than your competition.
Case in point: GatorPack sells packing supplies — nothing unique there. But two things keep customers coming back: the site's design is as simple and efficient as possible — customers order right from the front page (no digging). And, the site focuses like a laser beam on filling orders the same day they get them. GatorPack sets itself apart by being incredibly easy and fast to buy from.
Here's the reason originality is so important in your e-business plan: You can set up a dry-cleaning business in your neighborhood, and it doesn't have to be any different from the dry-cleaning business across town. No imagination, but no problem - because nobody's going to drive across town to get their clothes dry-cleaned.
But online, all businesses are right next to each other. Click your mouse and you're there. So simply setting up the exact same online business that someone set up in 2002 is going to be an uphill climb. They're established in the search engines and you're not.
So setting up an online business takes a little more originality, some kind of twist, that setting up a real-world store doesn't.
What's the competition?
Scope out potential competitors' sites - now is the time to spot the chinks in their armor. What are they missing? What customer need do they fail to serve, that you can cater to and gain advantage? Pretend you're a customer. What do you wish was different about their online store?
Case in point: Before she launched PaperMojo, which sells decorative handmade paper, Shelley Gardner-Alley checked out similar sites. She learned two things: most do not have a broad selection, and many do not have attractive sites. So she incorporated both these features into her business plan - she was ready to one-up her competitors before her first day of business.
To find out how much traffic your competitor is getting, you can use the Alexa service. This tool doesn't give absolute numbers of visitors, but it provides a relative ranking number.
Who are your customers?
The people who spend money at your site are the most beautiful people in the world — you want to know everything about them. (In fact you better share their interests, otherwise you'll never bond with them enough to be successful.) With all your customers' desires in mind, make your site the center of their world. Beginning with the front page, make it clear that you exist for their special needs.
Case in point: AnglersVice is a fly-fishing site started by an ex-stockbroker who's following his lifelong passion with fly-fishing. He not only sells the gear, he offers scads of information about fly-fishing, including "The Angler," an online magazine about the sport. He posts photos of happy fisherman near the top of his front page. He knows his customers and he uses that knowledge to sell to them.
What Sells Online
As e-commerce enters its second decade, certain patterns have emerged about what sells well on the Internet. The product you sell might not be in this mold, but if not, you'll need a good rationale for going outside the norm.
Hot online sellers:
Speaking of Overstock... (and the difficulty of online business)
By the way, Overstock's shipping charge for that full-sized wood bed frame, which it sells for $330, is $2.95. So that's essentially free shipping for an item that is already competitively priced.
No, this is not an ad for Overstock, but a warning before you start your online business: You'll be competing with merchants who have huge marketing budgets - Overstock runs TV ads, for goodness sakes - and have rock bottom prices.
In short, there's no way to compete in this environment without a cogent and inventive business plan. It's rough out there.
Two More Key Points Before You Begin
Talk to people This one's a freebie but it's all-important: get as much advice as you can. Call business owners. Pester people. Look under rocks. Find out why people failed doing the same thing you plan to do. Don't go into this blind: good information can save you tens of thousands of dollars.
(This is the big one:) Do the math! Before making your final decisions about your e-business strategy, sit down with a calculator. Make a list of all your upfront one-time start-up costs, and all your fixed, monthly ongoing costs. Make sure you include a hefty line item for your marketing budget, and another hefty line for unexpected expenses, which will occur every month.
With these numbers in mind, how many widgets do you need to sell at what price every month to turn a profit? Is it realistic that you can sell that many?
And, given that you're not going to sell that many in your first month, how many months can you operate on a money-losing basis before you need to fold your tent?
Do all these calculations and you'll have a single number. This is the dollar figure you'll need to start your online business. Of course, if the thing goes belly up, this is also the dollar figure you've flushed down the tubes.
It's important to do this math ahead of time, because it allows you to look at the number in the cold light of day, before you take the plunge.
Some people don't figure out the math beforehand, and they get a few thousand dollars in, and they realize, "Hey, I'll need x-amount of thousands of dollars more to do this!?" It's only then that they realize they can't afford it, and by then they're in the middle of a deep river.
So take a good look at the initial investment amount. Are you willing to risk it?
Boldly Going Forth
Okay, so you've got your plan. It's an e-business that fills a very real need, and it's at least a little bit different from the other 14 major players in the space.
You know what it will cost, and you're willing to spend it. Let's start the building process.
Congratulations — you're thinking of starting an online business. You certainly know how to spot a growth area when you see one. The rest of the economy might be shaky, but e-commerce enjoys rosy predictions for years to come. More and more people are spending more and more money online every year.
Of course, if it were that easy, everyone would start on online business. Well, actually, it seems like everyone is starting an e-business. Hordes of new online stores spring up every week. Retired grade school teachers start them, and people who use to sell shoes for a living start them. Experienced, well-financed business types launch them, and people who have no idea what they're doing launch them.
And why not? The barriers to entry are low, a lot of online businesses can be run from home, and there's gold in them hills.
But, in truth, it's not simple to succeed as an online merchant (which is different from just setting up a site). As one e-commerce expert noted, there are more dollars being spent online all the time, but the amount of competition for those dollars is growing even faster. At this point, it's tough out there.
But don't lose heart. There are a lot of people making money online who don't have degrees from the Wharton School of Business (Trump's alma mater). Plenty of cyber-merchants are flying by the seat of their pants, and doing pretty well in the process.
You can be one of them, if you've got some dollars to invest, are ready to work hard, and — this part gets tricky — are willing to put some serious thought into it. Let's start with the serious thought required before you open for business.
The Two Parts
Roughly speaking, starting an online business is divided into two parts: the hard part and the easy part.
The easy part is assembling your basic business structure. You'll need to choose your software platform, set up a credit card account, develop a marketing plan, and figure out a few more nuts and bolts things. Oh sure, there's a lot of homework involved here — and plenty of cash outlay — but all told, this part's not rocket science.
The hard part is developing your e-business plan. That requires awareness and understanding of what it means to do business online, and an inventive strategy. Developing a sound business plan is not only critical; it's the do-or-die step in starting your online store.
'But wait,' you say, 'I already have my business plan — I'm just looking for a little help in building my site, and I'm rarin' to go.'
Well, hang on. You may think you have your online merchant plan — and you might. But before you assemble your basic business structure, you have one precious opportunity to really think things through — now.
More e-businesses have failed because of a faulty underlying concept than because of problems with software or hosting issues. Remember the Internet boom of the late '90s? Those businesses had full tech staffs and fat marketing budgets, but a lot of them went belly up because their business plan was no better than the Titanic's plans for dealing with icebergs.
"The biggest favor you do yourself in the beginning is to take time to really think about what your doing — make deliberate decisions," says Jeff Binder, CEO of Saffron Rouge and an expert in starting online businesses.
"Am I going to be niche retailer? Am I going to be a mass market retailer?" In short, "how am I going to make money?"
"Your business model could be such that you don't make anything on the products you sell — but you make money by selling ads on your site. Or, you can practically give away your product, but make all your money on your grotesquely expensive shipping fees. Or, your shipping is free all the time, but your product costs are higher," says Binder.
Whatever the case, before you launch YourBusiness.com, make sure you've considered the following:
What's really different?
Is there anything that really distinguishes your site from similar online merchants? If you're merely going to sell widgets like the 14 other well-established widget sites do, your 'me-too' approach will limit your success. Find some way to set yourself apart so people come to you rather than your competition.
Case in point: GatorPack sells packing supplies — nothing unique there. But two things keep customers coming back: the site's design is as simple and efficient as possible — customers order right from the front page (no digging). And, the site focuses like a laser beam on filling orders the same day they get them. GatorPack sets itself apart by being incredibly easy and fast to buy from.
Here's the reason originality is so important in your e-business plan: You can set up a dry-cleaning business in your neighborhood, and it doesn't have to be any different from the dry-cleaning business across town. No imagination, but no problem - because nobody's going to drive across town to get their clothes dry-cleaned.
But online, all businesses are right next to each other. Click your mouse and you're there. So simply setting up the exact same online business that someone set up in 2002 is going to be an uphill climb. They're established in the search engines and you're not.
So setting up an online business takes a little more originality, some kind of twist, that setting up a real-world store doesn't.
What's the competition?
Scope out potential competitors' sites - now is the time to spot the chinks in their armor. What are they missing? What customer need do they fail to serve, that you can cater to and gain advantage? Pretend you're a customer. What do you wish was different about their online store?
Case in point: Before she launched PaperMojo, which sells decorative handmade paper, Shelley Gardner-Alley checked out similar sites. She learned two things: most do not have a broad selection, and many do not have attractive sites. So she incorporated both these features into her business plan - she was ready to one-up her competitors before her first day of business.
To find out how much traffic your competitor is getting, you can use the Alexa service. This tool doesn't give absolute numbers of visitors, but it provides a relative ranking number.
Who are your customers?
The people who spend money at your site are the most beautiful people in the world — you want to know everything about them. (In fact you better share their interests, otherwise you'll never bond with them enough to be successful.) With all your customers' desires in mind, make your site the center of their world. Beginning with the front page, make it clear that you exist for their special needs.
Case in point: AnglersVice is a fly-fishing site started by an ex-stockbroker who's following his lifelong passion with fly-fishing. He not only sells the gear, he offers scads of information about fly-fishing, including "The Angler," an online magazine about the sport. He posts photos of happy fisherman near the top of his front page. He knows his customers and he uses that knowledge to sell to them.
What Sells Online
As e-commerce enters its second decade, certain patterns have emerged about what sells well on the Internet. The product you sell might not be in this mold, but if not, you'll need a good rationale for going outside the norm.
Hot online sellers:
- It's Niche If you're Wal-Mart, you don't have to be niche, because you have the deep pockets to carry everything. But if you're mom and pop, you better pick one product and sell it better/faster/cheaper/more interestingly than anyone else. Selling women's clothing isn't a niche, but "women's vintage clothing" is a niche (although it's a crowded niche). Even more niche, sell only vintage evening gowns — sell nothing but vintage evening gowns, and have a better selection and more product tips than anyone else.
Along this same line, personalized items are good - something you customize for each customer, or anything that is rare and difficult to find. Or, something that isn't available in your customers' local areas (like fine French perfumes or hand-painted porcelain dolls) that you have easy access to. - It's Convenient Busy shoppers are willing to pay more if you simplify their lives (and online shoppers are still more affluent than their offline brethren). It's a hassle to drive to the store to buy it - but if you sell it hassle-free online, you've got yourself a customer. For example, the owner of CoffeeCakes sells her coffee cakes and gift baskets at above grocery store prices. Owner Sherry Comes knows that her customers are people who don't care about saving three bucks - but they want a gift basket sent quickly and reliably. CoffeeCakes, using a highly efficient fulfillment system, does a brisk business.
- It's a good deal Okay, this contradicts the "it's convenient" point above, but there are many types of online shoppers. In short, people want it cheap - and the Internet makes comparing prices as easy as click-click-click. With the help of comparison shopping sites like Shopzilla and Nextag, and other tools like Dealio's shopping comparison toolbar, people compare prices day and night. This hunger for a cheaper price could benefit a mom and pop operation: in some cases, a small merchant who operates with a skinnier margin can undercut a big player with a fat infrastructure to maintain. (But there's always someone who's willing to undercut that small merchant!) How low are you willing to go?
- It's small, and easily shipped There's a reason that books and CDs were the first big sellers on the Net - you can mail them easily. (That's also the reason it's hard to open a new book or CD site - it's a saturated market.) People get very excited by low shipping charges.
Speaking of Overstock... (and the difficulty of online business)
By the way, Overstock's shipping charge for that full-sized wood bed frame, which it sells for $330, is $2.95. So that's essentially free shipping for an item that is already competitively priced.
No, this is not an ad for Overstock, but a warning before you start your online business: You'll be competing with merchants who have huge marketing budgets - Overstock runs TV ads, for goodness sakes - and have rock bottom prices.
In short, there's no way to compete in this environment without a cogent and inventive business plan. It's rough out there.
Two More Key Points Before You Begin
Talk to people This one's a freebie but it's all-important: get as much advice as you can. Call business owners. Pester people. Look under rocks. Find out why people failed doing the same thing you plan to do. Don't go into this blind: good information can save you tens of thousands of dollars.
(This is the big one:) Do the math! Before making your final decisions about your e-business strategy, sit down with a calculator. Make a list of all your upfront one-time start-up costs, and all your fixed, monthly ongoing costs. Make sure you include a hefty line item for your marketing budget, and another hefty line for unexpected expenses, which will occur every month.
With these numbers in mind, how many widgets do you need to sell at what price every month to turn a profit? Is it realistic that you can sell that many?
And, given that you're not going to sell that many in your first month, how many months can you operate on a money-losing basis before you need to fold your tent?
Do all these calculations and you'll have a single number. This is the dollar figure you'll need to start your online business. Of course, if the thing goes belly up, this is also the dollar figure you've flushed down the tubes.
It's important to do this math ahead of time, because it allows you to look at the number in the cold light of day, before you take the plunge.
Some people don't figure out the math beforehand, and they get a few thousand dollars in, and they realize, "Hey, I'll need x-amount of thousands of dollars more to do this!?" It's only then that they realize they can't afford it, and by then they're in the middle of a deep river.
So take a good look at the initial investment amount. Are you willing to risk it?
Boldly Going Forth
Okay, so you've got your plan. It's an e-business that fills a very real need, and it's at least a little bit different from the other 14 major players in the space.
You know what it will cost, and you're willing to spend it. Let's start the building process.
eBiz 2: Choosing a Platform
From Ecommerce Guide:
Selecting which software you'll use to build your online store is a critical decision. It's like laying the foundation: all the other tools, from your credit card account to your marketing plan, will be influenced by this one decision. So choose carefully. Very carefully.
'But wait,' you say, 'I already have Web design software — can't I just use that, and then simply add a secure method for accepting credit cards?'
You can, but it's a limited solution. Because an online store has so many special requirements, like inventory management and product display, merely building a Web site and calling it an "online store" won't get you very far. You're best served by buying or licensing software specifically intended to handle the heavy lifting of e-commerce.
As you shop for an e-commerce platform, you'll encounter a blizzard of choices, each of which has a blizzard of sub-options. Before you choose one, browse through them until the jargon starts to make sense. The market for e-commerce platforms is far more confusing and lingo-heavy than, say, the market for cars. It's worth educating yourself before you buy.
Even the most established vendors have only been around a few years, so the market is still evolving quarter by quarter. This means that prices and product offers can vary wildly by vendor. You can spend $10,000 a month and get a Rolls Royce, or you can spend a few hundred bucks a month (or less) and get an almost new Toyota. Either one might be right for you, based on your needs.
Test Drive and Get References
To help you sort through the many options, you can "test drive" the software before you buy it. Most vendors will allow you to demo their software (if not, that's a red flag). They either have a model store set up that you can access, or some other way for you to poke around the controls.
Don't plunk down your money until you've really opened up the hood and gotten a feel for the software. You'll be spending a lot of time with it.
While you're investigating, get references. The only way to find out the truth about a platform is to ask people who use it - and not the people the company recommends. Find a user who isn't on the official list, and ask them how they feel about the platform.
The All-In-One / ASP Trend
One key concept to be aware of: some e-commerce platforms are "all-in-one" solutions that provide everything: hosting, accounting tools, Web analytics, even marketing tools like e-mail management. In contrast, some platforms are just the core e-commerce platform itself, and you buy the other tools from separate vendors. Adding confusion, some platforms are in-between; they include, say, hosting and the basic e-commerce software, but you shop elsewhere for the rest.
The all-in-one solution has become ever more popular with online merchants in recent years. The advantage is that A) someone else has done the homework of gathering all the needed tools into one handy package, and B) all the tools are integrated, so they work well together.
As a related concept, some vendors of e-commerce platforms license their software on an "ASP" basis. ASP stands for "application service provider." This means the software seller hosts the software on their own servers, and the online store owner accesses it remotely. This way the store owner doesn't have to worry about servers going down (hopefully). Also, ASP vendors tend to offer a lot of hand holding in terms of maintaining the store owner's software.
The e-commerce industry is moving toward platforms that are all-in-one solutions offered on an ASP basis. This frees the store owner from technical concerns as much as possible. It allows e-tailers to concentrate on selling and leave the technical snafus to someone else. An online merchant who licenses an all-in-one solution on an ASP basis doesn't need to hire tech people — a huge savings. The salary of a tech person can buy a lot of pay-per-click advertising.
But don't let the trend toward all-in-one be your deciding factor. You might buy an inexpensive stand-alone platform, find a cheap place to host it, and you'll be off and running. If you're truly a small fry who's tech savvy, you might not need a tech person very much.
One more thing: you might be successful. If that happens, your software platform must be able to grow with you. In industry lingo, it must "scale," as in "scale larger." Don't be seduced by a platform whose initial price is low, but that won't scale. When your business grows you'll be stuck with a platform that's too basic. And it's really a hassle to change your software platform once its in place.
The general rule: buy as much platform as you can reasonably afford upfront. Get a platform that can grow with you.
Questions to Ask Before Buying E-Commerce Software
Before you buy your platform, look back at your business plan (you did make one, didn't you?) and find out what specific tools you'll need. Based on your needs, ask the vendor's salesperson the following:
Some Really Key Questions:
Do you provide tech support, by telephone, 24/7?
What other important tools are included? Web analytics? Hosting? Accounting package?
Does the platform help with cross-selling and up-selling?
Does the platform have built-in site search? Is so, what kind of tools will I have to enable me to influence search results?
From the page the shopper chooses an item on, what is the total amount of pages they must click through to complete the purchase?
(A higher number of page results in a higher percentage of abandoned shopping carts.)
Site Building Questions:
How many products will your software allow me display? Dozens? Thousands?
Is there a wide array of templates that come with the software, so I can avoid a cookie-cutter look?
If I hire a HTML expert to jazz up the site, will custom-written HTML pages interface with your software?
Does your solution generate both static and dynamic Web pages? (Static pages are written in HTML and are more likely to get recognized by search engines; dynamic pages are created as a shopper requests them, and allow you to more easily present a large catalog of items.)
How much do upgrades cost?
What sort of flexibility does the product shipping section allow me to offer? Will it be easy for me to offer a shipping discount based on total customer purchase?
Marketing and CRM (customer relationship management) Questions: Does the platform help with gathering shoppers' e-mails, and administering an e-mail marketing campaign?
Does your system include a method for tracking coupons or special offers?
Can shoppers keep their own lists of favorite items, or previously bought items, on the site? (Shoppers really like this, and it boosts sales.)
Merchant Administration Tool Questions:
What notification system will tell me I've got an order? (Some systems send the merchant an e-mail; others require you to check a Web interface.)
Will the software send the shopper an automatic confirmation e-mail? To what extent can I customize this e-mail?
Database/Inventory Questions:
What databases will run with your platform? Does the software allow my site to be connected to a real time database that reflects constant changes in inventory and prices?
What features does the software have to allow me to update inventory level based on my bricks and mortar in-store inventory?
What file formats does it work with to import and export inventory reports?
E-Commerce Platforms
The list of e-commerce software providers gets longer all the time, but here's a good start:
Yahoo - If there's a default platform for small business e-commerce, it's Yahoo's Small Business platform. Mom and pops flock to Yahoo's e-commerce software because it includes most everything for one low price — it's the no-brainer solution. Some merchants complain, however, that Yahoo doesn't allow them to scale as they grow and the learning curve for its management console can be difficult.
Affinity Internet is a popular provider of web hosting solutions for small to medium-sized businesses. Its ValueWeb e-commerce package allows you to create a comprehensive Web site and on-line store capable of marketing and selling up to 100,000 products. ValueWeb incorporates tools like Miva Merchant and Macromedia's Contribute site building software.
NetSuite - Well respected in the e-commerce industry as an affordable, scalable package. The company gets a lot of buzz.
iCode - Considered easy to use, the company specializes in the small-to-medium e-business all-in-one solution, although there has been rumbling in our forums about poor customer service from them.
MarketLive - A robust solution that has garnered an impressive client list, including Encyclopedia Britannica and Keds shoes.
Venda For a monthly fee of $10,000, Venda handles everything, from deployment to hosting to maintenance.
Actinic - Used by a lot of small-to-medium sized merchants, the Artinic software interfaces with the UPS shipping system and the popular QuickBooks accounting software.
MainStreet Commerce - MainStreet's base cost is $15,000, with an additional ten percent license fee. MainStreet provides a complete e-commerce infrastructure, and its software is known to be highly configurable.
ProStores - an eBay Company (formerly Kurant StoreSense) - Geared for the smaller merchant, eBay's ProStores has solutions ranging from $30 to $250 a month.
LaGarde StoreFront - Along the lines of ProStores, LaGarde caters to the small merchant, with an array of low cost pricing options.
Miva Merchant - A popular solution aimed at the small business market, the basic Miva Merchant store building program retails for $1,000.
Websphere - Made by venerable IBM, Websphere is too pricey for a shoestring start-up, but if you have the finances it's a full-service platform will scale as large as you can imagine.
Microsoft Small Business - A similar all-in-one platform to Yahoo's, although a bit more expensive. One advantage: it's good to choose a vendor that's going to be around for a while, and it's safe to assume that Microsoft will be (won't it?).
Again, don't limit your shopping to this list alone. As you shop, you might also look at 1ShoppingCart, Shopsite, Mal's E-commerce, osCommerce, AbleCommerce, MonsterCommerce and many more...
Selecting which software you'll use to build your online store is a critical decision. It's like laying the foundation: all the other tools, from your credit card account to your marketing plan, will be influenced by this one decision. So choose carefully. Very carefully.
'But wait,' you say, 'I already have Web design software — can't I just use that, and then simply add a secure method for accepting credit cards?'
You can, but it's a limited solution. Because an online store has so many special requirements, like inventory management and product display, merely building a Web site and calling it an "online store" won't get you very far. You're best served by buying or licensing software specifically intended to handle the heavy lifting of e-commerce.
As you shop for an e-commerce platform, you'll encounter a blizzard of choices, each of which has a blizzard of sub-options. Before you choose one, browse through them until the jargon starts to make sense. The market for e-commerce platforms is far more confusing and lingo-heavy than, say, the market for cars. It's worth educating yourself before you buy.
Even the most established vendors have only been around a few years, so the market is still evolving quarter by quarter. This means that prices and product offers can vary wildly by vendor. You can spend $10,000 a month and get a Rolls Royce, or you can spend a few hundred bucks a month (or less) and get an almost new Toyota. Either one might be right for you, based on your needs.
Test Drive and Get References
To help you sort through the many options, you can "test drive" the software before you buy it. Most vendors will allow you to demo their software (if not, that's a red flag). They either have a model store set up that you can access, or some other way for you to poke around the controls.
Don't plunk down your money until you've really opened up the hood and gotten a feel for the software. You'll be spending a lot of time with it.
While you're investigating, get references. The only way to find out the truth about a platform is to ask people who use it - and not the people the company recommends. Find a user who isn't on the official list, and ask them how they feel about the platform.
The All-In-One / ASP Trend
One key concept to be aware of: some e-commerce platforms are "all-in-one" solutions that provide everything: hosting, accounting tools, Web analytics, even marketing tools like e-mail management. In contrast, some platforms are just the core e-commerce platform itself, and you buy the other tools from separate vendors. Adding confusion, some platforms are in-between; they include, say, hosting and the basic e-commerce software, but you shop elsewhere for the rest.
The all-in-one solution has become ever more popular with online merchants in recent years. The advantage is that A) someone else has done the homework of gathering all the needed tools into one handy package, and B) all the tools are integrated, so they work well together.
As a related concept, some vendors of e-commerce platforms license their software on an "ASP" basis. ASP stands for "application service provider." This means the software seller hosts the software on their own servers, and the online store owner accesses it remotely. This way the store owner doesn't have to worry about servers going down (hopefully). Also, ASP vendors tend to offer a lot of hand holding in terms of maintaining the store owner's software.
The e-commerce industry is moving toward platforms that are all-in-one solutions offered on an ASP basis. This frees the store owner from technical concerns as much as possible. It allows e-tailers to concentrate on selling and leave the technical snafus to someone else. An online merchant who licenses an all-in-one solution on an ASP basis doesn't need to hire tech people — a huge savings. The salary of a tech person can buy a lot of pay-per-click advertising.
But don't let the trend toward all-in-one be your deciding factor. You might buy an inexpensive stand-alone platform, find a cheap place to host it, and you'll be off and running. If you're truly a small fry who's tech savvy, you might not need a tech person very much.
One more thing: you might be successful. If that happens, your software platform must be able to grow with you. In industry lingo, it must "scale," as in "scale larger." Don't be seduced by a platform whose initial price is low, but that won't scale. When your business grows you'll be stuck with a platform that's too basic. And it's really a hassle to change your software platform once its in place.
The general rule: buy as much platform as you can reasonably afford upfront. Get a platform that can grow with you.
Questions to Ask Before Buying E-Commerce Software
Before you buy your platform, look back at your business plan (you did make one, didn't you?) and find out what specific tools you'll need. Based on your needs, ask the vendor's salesperson the following:
Some Really Key Questions:
Do you provide tech support, by telephone, 24/7?
What other important tools are included? Web analytics? Hosting? Accounting package?
Does the platform help with cross-selling and up-selling?
Does the platform have built-in site search? Is so, what kind of tools will I have to enable me to influence search results?
From the page the shopper chooses an item on, what is the total amount of pages they must click through to complete the purchase?
(A higher number of page results in a higher percentage of abandoned shopping carts.)
Site Building Questions:
How many products will your software allow me display? Dozens? Thousands?
Is there a wide array of templates that come with the software, so I can avoid a cookie-cutter look?
If I hire a HTML expert to jazz up the site, will custom-written HTML pages interface with your software?
Does your solution generate both static and dynamic Web pages? (Static pages are written in HTML and are more likely to get recognized by search engines; dynamic pages are created as a shopper requests them, and allow you to more easily present a large catalog of items.)
How much do upgrades cost?
What sort of flexibility does the product shipping section allow me to offer? Will it be easy for me to offer a shipping discount based on total customer purchase?
Marketing and CRM (customer relationship management) Questions: Does the platform help with gathering shoppers' e-mails, and administering an e-mail marketing campaign?
Does your system include a method for tracking coupons or special offers?
Can shoppers keep their own lists of favorite items, or previously bought items, on the site? (Shoppers really like this, and it boosts sales.)
Merchant Administration Tool Questions:
What notification system will tell me I've got an order? (Some systems send the merchant an e-mail; others require you to check a Web interface.)
Will the software send the shopper an automatic confirmation e-mail? To what extent can I customize this e-mail?
Database/Inventory Questions:
What databases will run with your platform? Does the software allow my site to be connected to a real time database that reflects constant changes in inventory and prices?
What features does the software have to allow me to update inventory level based on my bricks and mortar in-store inventory?
What file formats does it work with to import and export inventory reports?
E-Commerce Platforms
The list of e-commerce software providers gets longer all the time, but here's a good start:
Yahoo - If there's a default platform for small business e-commerce, it's Yahoo's Small Business platform. Mom and pops flock to Yahoo's e-commerce software because it includes most everything for one low price — it's the no-brainer solution. Some merchants complain, however, that Yahoo doesn't allow them to scale as they grow and the learning curve for its management console can be difficult.
Affinity Internet is a popular provider of web hosting solutions for small to medium-sized businesses. Its ValueWeb e-commerce package allows you to create a comprehensive Web site and on-line store capable of marketing and selling up to 100,000 products. ValueWeb incorporates tools like Miva Merchant and Macromedia's Contribute site building software.
NetSuite - Well respected in the e-commerce industry as an affordable, scalable package. The company gets a lot of buzz.
iCode - Considered easy to use, the company specializes in the small-to-medium e-business all-in-one solution, although there has been rumbling in our forums about poor customer service from them.
MarketLive - A robust solution that has garnered an impressive client list, including Encyclopedia Britannica and Keds shoes.
Venda For a monthly fee of $10,000, Venda handles everything, from deployment to hosting to maintenance.
Actinic - Used by a lot of small-to-medium sized merchants, the Artinic software interfaces with the UPS shipping system and the popular QuickBooks accounting software.
MainStreet Commerce - MainStreet's base cost is $15,000, with an additional ten percent license fee. MainStreet provides a complete e-commerce infrastructure, and its software is known to be highly configurable.
ProStores - an eBay Company (formerly Kurant StoreSense) - Geared for the smaller merchant, eBay's ProStores has solutions ranging from $30 to $250 a month.
LaGarde StoreFront - Along the lines of ProStores, LaGarde caters to the small merchant, with an array of low cost pricing options.
Miva Merchant - A popular solution aimed at the small business market, the basic Miva Merchant store building program retails for $1,000.
Websphere - Made by venerable IBM, Websphere is too pricey for a shoestring start-up, but if you have the finances it's a full-service platform will scale as large as you can imagine.
Microsoft Small Business - A similar all-in-one platform to Yahoo's, although a bit more expensive. One advantage: it's good to choose a vendor that's going to be around for a while, and it's safe to assume that Microsoft will be (won't it?).
Again, don't limit your shopping to this list alone. As you shop, you might also look at 1ShoppingCart, Shopsite, Mal's E-commerce, osCommerce, AbleCommerce, MonsterCommerce and many more...
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