Getting Started in E-Commerce

From AllBusiness.com

E-commerce technology has come a long way from the bare-bones Web sites that were common a few years ago. Today one of the biggest challenges entrepreneurs face is how to choose from so many e-commerce packages, which range from free do-it-yourself solutions to custom storefronts costing thousands of dollars.

Fortunately, it's possible to narrow your choices and figure out what works best for your business. Keep in mind that unless you're a technical whiz or expect to launch the next Amazon.com, it's better to start with a simple and inexpensive online store that can grow with your business. Before you get started, ask yourself these important questions:

Who will run your site?

Although some businesses operate and maintain their own Web sites, this can be an expensive and difficult process. You'll need to invest in hardware, a dedicated Internet connection and software, along with a Webmaster and programmers to maintain your site. This is an expensive process, and you can't cut corners - customers won't tolerate a buggy, unreliable online store.

There are two alternatives: hire a Web developer to build and host your site, or use an online hosting service that provides everything you need to build and maintain your own store.

A Web developer can build and maintain a deluxe, fully customized online store, but you'll pay dearly for the service. Do-it-yourself services, on the other hand, usually offer everything you need to launch a basic online store, and most charge either a small monthly fee or nothing at all. Many of these services are quite reputable, and they're a great way to get started in e-commerce without investing a huge amount of money up front.

Who will build your online store?

Even a simple online store relies on complex, behind-the-scenes technology. You can choose from a variety of "storefront" software to maintain your product catalog, track inventory, calculate sales tax and shipping charges, and perform other vital tasks. This software often costs thousands of dollars, however, and requires a great deal of technical expertise to operate and maintain.

In most cases you're much better off using a service that operates and hosts your e-commerce software, usually for a small monthly fee. Even if you operate your own Web site, you can build a storefront by linking to the service's e-commerce software. And as far as your customers are concerned, they're still dealing only with your business.

How do you collect your money?

Most storefront software doesn't allow you to collect money from customers. Instead you need to create an account with a transaction processing service. This service accepts a customer's credit card or other form of payment, debits the customer's account and transfers the funds to your bank or merchant account.

Whether you're building your own storefront or using a third-party service, you'll need a transaction processing service. These companies usually charge a per-transaction fee and take a percentage of each transaction. In some cases you'll have a choice of transaction processing services, although if you're building a site with a do-it-yourself service, you might have to use that service's preferred processor.

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