Posted on: 03 December, 2001
Author: Lisa Schmeckpeper
"How exactly does ... ... has to be the ... asked question I ... newbie clients. They know people are buying online andthey know they have to accept credit cards if th "How exactly does Ecommerce work"?This has to be the most-frequently asked question I receivefrom newbie clients. They know people are buying online andthey know they have to accept credit cards if they want tostand a chance in all the net-based competition, but beyondthat realization, most are clueless as to how it all works.I can't blame them, really. It's a confusing online worldout there and a lot of people who are trying to tell themhow it works are really just trying to sell them their ownsolution. It's kinda hard to trust the validity of what theysay when profit is a huge motivating force behind theirpersuasive suggestions.And to be sure, there is profit in this Ecommerce game!Money is to be made at many steps along the Ecommerce path.With that in mind, let's take a walk along the path toEcommerce, and take a look at the signs--or components--thatare necessary to take part in the Ecommerce excitement andpotential profits.1. The Merchant Account:This really is your first step towards Ecommerce, unlessyou have chosen to go through a payment facility and arewilling to give up a rather large portion of your sales infees. The up-front costs of a merchant account can be heftyfor a small business, but the long-term savings can besubstantial.This is especially true if you are selling big ticket items.For instance, on the sale of a $300 product/service througha payment facility you could pay between $20-$45 dollars ormore in fees. With your own merchant account it willprobably cost you about $9. With the typical fees andequipment for a merchant account startup costing about$1,500, you can recoup that cost rather quickly.A merchant account comes with a merchant identificationnumber. That is about all it gets you. In order to processtransactions you need either a terminal (the little box thatyou swipe your credit card through at retail outlets) orsoftware that runs on your PC and will dial up the merchantvia your modem, and then process the transaction and depositthe money into your bank account.2. The Shopping Cart:If you are selling just one or two items on your site youwon't have much need for a shopping cart. A site with avariety of products should use the shopping cart systembecause it's the easiest way for your customers to shop. Theeasier it is to shop, the more they will spend, which isexactly the psychology supermarkets use, and exactly howshoppers are similar whether in a supermarket or scanningthrough your website. And the nice thing about electronicshopping carts is that the wheels never go square, and youdon't have to send a clerk out after the store closes toround up all the carts that have been left scattered aroundthe neighborhood. So shopping carts are good. But how willthey work with your merchant account and the all-importantordering process?If the orders placed on your site are to be processed withthe customer's credit card as a sale through your PC orswipe erminal, then there doesn't have to be anycompatibility between your cart and your merchant account.The two will work completely independently, each doing theirpart of the job.If, on the other hand, you would like all of your incomingorders to be automatically processed for you as the customerhits the submit button, you will need what is called "realtime processing."3. Real-Time Processing - Almost every website company Italk to would like to have their orders processed for them(the vision of the owner of a website company turning on thePC and then stretching out in a hammock, watching the ordersget processed on the screen, comes to mind). However, mostweb company people, upon learning the cost involved, take myadvice to wait until they have a steady flow of orderscoming in before they use real-time processing. If you're ona tight budget the extra fees involved in real-timeprocessing might be better used to aggressively advertiseand drive customer traffic to your site. Processing a feworders per day doesn't take very long and until you find itto be more time-consuming to process the orders yourselfthan you like, you are probably better off processing suchorders manually.If you are starting with a healthy budget and an aggressivepromotion plan you will probably be better off implementingreal-time processing right from the start. Changingorder-processing methods can sometimes result in systemhiccups and you don't want anything to slow down yourmomentum once you've started. You'll also save money, nothaving to set up your ordering system twice.4. Web Hosting - The web host who is hosting your site cansometimes make a difference in how compatible your entiresite and ordering system are with each other. I say"sometimes" because for those of us not using real-timeprocessing, it doesn't matter who your host is or where yourmerchant account is located. They are independent of eachother. Orders arrive and you process them. No interactionbetween the two is needed.Problems can arise when you bring a shopping cart ANDreal-time processing into the picture. A shopping cart alonewon't cause problems but the cart you choose to use must becompatible with your web host. Some carts are designed torun on certain types of servers, so when choosing one becautious to make absolutely sure you can use it with yourcurrent host. Otherwise you had better be prepared to find anew one.If you want a shopping cart AND real-time processing thethree (cart, processing, and host) must work together well.Your shopping cart must be compatible with your host and thecart must be compatible with your payment processor. Withall the different shopping carts, hosts and paymentfacilities out there, putting together the right team can bea real challenge. This is especially true for the newbie whodoesn't understand how it all works and how it all has towork together, or understands imperfectly but thinks he orshe has it all under control when the decisions are finallymade.One Stop Shops -The easiest way to find a compatible solution is to choose aprovider who offers all you need under one roof. This iswhat I have done by partnering with Virtualis Systems. I amable to offer a great hosting solution along with acompatible shopping cart that works with almost any realtime processor. I have even taken this a step further bypartnering with a rock-solid merchant account provider,E-Commerce Exchange. Now I don't want to force MY "solutionof choice" on you in this article so I have set up anautoresponder with details on the Ecommerce solution Irecommend to all my clients. Please email our autoresponderat [email protected] for details.Your Website Designer:Asking your website designer to recommend a compatiblesolution is also a good idea. Most likely, he or she hassuccessfully set up shopping carts and payment systems thathave worked together for other clients and with thatexperience can confidently recommend one that will be rightfor your specific needs. There is also the added benefitthat your designer is comfortable and familiar with the cartand payment processing configuration. This will result inless time spent setting up your site, thus saving you moneyin design costs.Who to Choose?Choosing the right person for this task is perhaps the mostimportant decision you can make (in Ecommerce, that is.Choosing a dentist, a pet, and which TV show to watch alsorank high in importance). Nobody is an expert in all areasof Ecommerce because there are so many variables, dependingon which configurations of hosts, carts, and merchants youchoose. Find someone with whom you can talk to and who willlisten to YOUR needs with understanding. A web designer whohas created sites selling one product through mail order isNOT the best person to go to for Ecommerce advice. Just likea web designer trying to create a site that will sell andnot just look good, with no marketing experience, a designerwho doesn't know Ecommerce is going to be hard-pressed tojuggle all the components that must fit together seamlesslyand attractively to construct a truly effective Ecommercesite.The Most Common Mistakes?I've had clients come to me who have been provided ashopping cart by their web host but who then have purchasedanother cart, not realizing they already have one. They'veset themselves up with real time processing and thenpurchased a terminal even though they will never swipe onecard. They've had SSL enabled on their web host server eventhough it's provided at their payment gateway. I have beenon the sympathetic end of many, many more sad tales fromearnest folks who have told me their own personal accountsof throwing hard-earned money away on these kinds ofmistakes.Why? Cutting through all the technical jargon, it's allbecause they simply didn't understand how each componentcan, should, and must work in conjunction with one another.Ecommerce can appear simple (well, almost) once youunderstand how all the components work together. A merchantaccount allows you to accept credit cards, your web hostshows your website to the world, your shopping cart helpsyour customers order easily and real-time processingprocesses the orders in real-time and approved transactionsare credited to your merchant account. All are independentcomponents but they all function together to make Ecommercework. Find a designer or webmaster who can bring all theseelements together on your site & watch Ecommerce work foryou. Article Tags: Exactly Does Ecommerce, Exactly Does, Does Ecommerce, Merchant Account, Shopping Cart, Shopping Carts, Real-time Processing Source: Free Articles from ArticlesFactory.com