Want to know what is involved in selling your products online? This article will explain the basic elements that go into making an ecommerce site work.
E-Commerce opportunities on the internet are mind-boggling. Ecommerce transactions in the U.S. are projected to hit $198 billion in 2006 according to shop.org. According to eMarketer, Canadian consumers spent $3.8 billion online in 2004 and that number is expected to rise to $5.7 billion in 2006.
There are four main costs to setting up an e-commerce store:
1. Hosting costs/shopping cart software
Hosting costs for an ecommerce shopping cart solution range from free to $79.95 per month or more. Before you purchase a shopping cart system, there are many things to consider.
When choosing shopping cart software, you need to consider the number of credit card processors and shipping services it supports. Credit card processors and shipping services can change, so the software will need to be easy to update and be well supported to keep up with the changes in the market. You will also need to consider how easy it is to set up and add products and how easy it is for the customer to use. Shop in some the shopping cart’s sample stores before you make your decision. It is also important to determine if it can handle the tax system where you are selling and if it supports your chosen method of shipping, whether it is by weight, fixed amount, or both.
You also have to consider the company who will be hosting your site and/or shopping cart. If your shopping cart is going to be hosted by the same company that hosts your site, you need to ensure that it will be fully supported. You will also need to ensure that your order forms and shopping cart will be secure. Ask your web hosting provider if your hosting package includes the use of their secure server (SSL) or if it will cost extra. Most commercial shopping carts are hosted separately from your site, and the SSL is included in the montly fees you will pay for the software.
Some popular shopping carts are:
• X-Cart.com - A popular commercial shopping cart.
• Oscommerce.org - This is an open source based online shop, (so it’s free!) but it is not easy to set up for a 'newbie'. You will also need to find a host that supports it.
• Zencart.com- Another free open source program that is maintained by volunteer efforts. It is based on oscommerce, and a little easier to set up. Like any open source program, however, it does not have support staff to help you if you are stuck. To solve any problems, you have to rely on forums and other users to help you.
• Cartville.com
• Paypal.com - Paypal offers a free shopping cart, but it does not work with many tax systems, like the one in Canada.
2. Development Costs
Whether you hire someone to develop and customize your store or you do it yourself, there are costs involved. You will need to customize the color, logo, shipping, tax and addresses, just to name a few. You will also have to set up your products and product options.
3. Cost of a merchant account
The next cost involves setting up a method of receiving credit card payments on-line.
Setting up a Paypal account is the least expensive option (2.9% + $0.30 USD per transaction at the time of writing). Costs for your own merchant account are higher – there are usually set up fees ($500+), transaction fees (up to 3% per transaction) and a monthly flat fee as well. If you already have a merchant account set up off-line, an e-commerce account will be significantly cheaper.
4. Promotional Costs
You should also budget for advertising and search engine marketing to drive consumers to your site. After all, what good is having a store if no one comes to shop?
This article is by no means all encompassing, but it does cover the basics of selling online. An ecommerce site is an affordable way to sell your products to your customers. Compare the costs with setting up a physical store front – the cost of selling on-line is truly cost-efficient. But Beware! Even though opportunities abound in today’s market, if you try to run an ecommerce website on the cheap you will ultimately limit its potential.
Good luck with your store!
Colleen Happ provides insightful information about marketing and web design. She owns Happ Consulting, a successful Alberta web design company.
