The term “E-commerce” was originally coined during the dawn of the new Internet economy as an abbreviation for “Electronic Commerce”. Today, it may be more appropriate to think of it as standing for “Easy Commerce” considering how important it is to handle transactions over the Internet in a way that’s easy to implement, manage and use. Many Web hosting companies offer turnkey products and services designed to simplify your life in the world of E-commerce. Still, it’s important for you to have a good understanding of how it works so you can make the best choices for the specific types of transactions you will be handling.
One vital component to setting up your E-commerce will be accepting credit card payments. In order to do that, you basically have two choices – set up your own merchant account or sign up to have payments made to you accepted through a credit card payment facility. The big advantage of setting up a merchant account is that you will only pay 3% on each credit card transaction you process. The downside is that setting up a merchant account will cost you around $1500 upfront for the fees, equipment, and software for dial-up and processing via your computer. Your alternative is to process your payments through a payment facility which will cost anywhere from 6% to 15% per transaction. Depending on the dollar amount and number of transactions you will be handling, setting up your own merchant account could pay for itself quickly.
Next, you need to think about how users will shop on your site and how you will process their orders. If you are only selling a very small number of items, you probably don’t need to set up a shopping cart system. On the other hand, if you offer several items that customers will want to purchase with one transaction, then you want to make it as easy as possible for them – and that means using a shopping cart. If you want your ordering system to work in real-time either now or at some point down the road, then your shopping cart system will have to be compatible with your merchant account. On the other hand, if you will only be processing a few orders per day, you may want to save the additional costs of real-time order processing and process the orders manually. In that case, your shopping cart and merchant account work completely independent of each other and do not have to be compatible.
Compatibility is also an important consideration when choosing your Web hosting company. Again, if you aren’t going to be processing your orders in real-time, compatibility is not an issue. For real-time processing, your shopping cart will have to be compatible with the servers your Web host is using to host your site. Even if you aren’t planning to start with real-time order processing but think it is likely that you will one day upgrade to it, you should consider setting everything up initially to be compatible to avoid added costs and system headaches when that day comes.
With all of the compatibility issues between your merchant account, shopping cart, and Web host, it’s easy to see the value in the turnkey E-commerce packages offered by some hosting companies – especially for those of us with limited knowledge or experience in the inner workings of Web-based technology. As you consider your options for implementing your E-commerce strategy, just remember that “E” should stand for “Easy” – for you to manage and your customers to use.