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How exactly does Ecommerce work?
By: Lisa Schmeckpeper
This has to be the most-frequently asked question I receive from newbie clients. They know people are buying online and they know they have to accept credit cards if they want to stand a chance in all the net-based competition, but beyond that realization, most are clueless as to how it all works.
I can't blame them, really. It's a confusing online world out there and a lot of people who are trying to tell them how it works are really just trying to sell them their own solution. It's kinda hard to trust the validity of what they say when profit is a huge motivating force behind their persuasive 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 to Ecommerce, and take a look at the signs--or components--that are necessary to take part in the Ecommerce excitement and potential profits.
1. The Merchant Account:
This really is your first step towards Ecommerce, unless you have chosen to go through a payment facility and are willing to give up a rather large portion of your sales in fees. The up-front costs of a merchant account can be hefty for a small business, but the long-term savings can be substantial.
This is especially true if you are selling big ticket items. For instance, on the sale of a $300 product/service through a payment facility you could pay between $20-$45 dollars or more in fees. With your own merchant account it will probably cost you about $9. With the typical fees and equipment for a merchant account startup costing about $1,500, you can recoup that cost rather quickly.
A merchant account comes with a merchant identification number. That is about all it gets you. In order to process transactions you need either a terminal (the little box that you swipe your credit card through at retail outlets) or software that runs on your PC and will dial up the merchant via your modem, and then process the transaction and deposit the money into your bank account.
2. The Shopping Cart:
If you are selling just one or two items on your site you won't have much need for a shopping cart. A site with a variety of products should use the shopping cart system because it's the easiest way for your customers to shop. The easier it is to shop, the more they will spend, which is exactly the psychology supermarkets use, and exactly how shoppers are similar whether in a supermarket or scanning through your website. And the nice thing about electronic shopping carts is that the wheels never go square, and you don't have to send a clerk out after the store closes to round up all the carts that have been left scattered around the neighborhood. So shopping carts are good. But how will they work with your merchant account and the all-important ordering process?
If the orders placed on your site are to be processed with the customer's credit card as a sale through your PC or swipe erminal, then there doesn't have to be any compatibility between your cart and your merchant account. The two will work completely independently, each doing their part of the job.
If, on the other hand, you would like all of your incoming orders to ....[MORE]
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