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Important Decisions before Starting an Online Business

Your brightest idea will fail to attract profitable revenues if you are unable to create an ecommerce store that provides uninterrupted shopping with an assurance of a secure online transaction.

Your shopping cart software will largely define your viability for selling online. But there are other aspects to be examined before you start an online business.

Decisions for selling online before starting your online business:
Devoting quality time & resources in deciding the following will favor in creating a robust ecommerce store.

1. Hosting Provider:
Always look for a secure and reliable hosting service provider. Examine the ‘Uptime guarantee’ provided by the service provider. Also analyze the physical infrastructure where your ecommerce store will be hosted. Perhaps the most important component in scrutinizing the hosting provider is the ‘Back Up’ and the ‘Data Security’ system.

Calculate the minimum time required to reinstall you ecommerce store in case of total infrastructure failure on the part of hosting provider. This calculation will help in deciding the least possible business loss in case of emergencies.

2. Merchant Account:
The processing capabilities and the data security provided by a merchant account are the major aspects to be analyzed. A merchant account should provide faster processing and help in smooth transactions.

3. Shopping Cart:
Allocate your maximum time & resource in deciding a shopping cart for your ecommerce store. Choose a shopping cart that is easy to manage and provides maximum customization of your ecommerce store. Check a shopping cart for its capability to perform important functions like the inventory management, catalog management and store design & layout. Go for a shopping cart that gives simple and easy management with minimum investment.

Your choice for shopping cart decides your efforts in integrating payment gateways and shipping carriers. Certain shopping carts provide built-in integration facilities and expedite processes to start your online business. In such cases, you are only required to choose a shipping carrier or payment gateway and pay the required fees to start selling online.

4. Payment Gateways:
Map a payment gateway with your business needs. Ideally, a payment gateway should provide faster processing and should be averse to every possible security attack in transferring credit card details. The scale of transactions expected on your ecommerce store is also an important criteria in deciding a payment gateway.

5. Shipping Carrier:
The scope of distribution of products (globally or locally) besides the cost per transaction and the reliability may be important criteria in deciding the shipping carrier for your ecommerce store. Analyzing the feature of ‘online tracking’ may provide important insights in the distribution system of the shipping carrier

Starting an online business is risky and requires dedicated business analysis. Reduce your risks of selling online by considering the above mentioned points.

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Diversified Revenues with Distributed Responsibility

Unlike in other ecommerce transaction, Drop Shipping requires two entities to complete an order; namely an online store (where one accepts orders online) & a Drop Shipper (who actually delivers the order to customer). In Drop Shipping, online storeowner and Drop Shipper could be different individuals.

The operations:
a) Customer places an order (say of $100) on the online store.
b) A copy of the order details is sent to drop shipper, who ships the goods to the customer.

How does one earn in this process?
The drop shipper charges the online storefront owner for the goods shipped (say with $80) and the storeowner in turn earns the difference between the prices he charges from customer and pays to the drop shipper (in our case the storefront owner will earn $20).

Drop shipping helps both the online storeowner and drop shipper to diversify their sources of revenue and at the same time distribute their risks.

1) Benefits to Online Storeowner:
If you are an Online Storeowner, this can be a low risk Ecommerce business model. Drop Shipping is a sought after business model when you are risk averse and still want to fetch respectable revenues. Drop Shipping may have following benefits:

• Zero Inventory: You are saved of building a strong inventory of the goods sold, as you do not need to manage the inventory or shipping related issues. You pass on the orders to the drop shipper and he takes care of order fulfillment issues.
• Sell Unlimited Products: With no inventory to maintain, you can expand your business and sell unlimited products without getting bothered of inventory related issues.

Choice of Ecommerce Solution for online storefront will be one of the most important decisions in operating your business on Drop Shipping model.

2) Benefits for Drop Shipper:
If you are a Drop Shipper, this can be a low risk ecommerce model to earn through Internet without having an online store of your own. For you, as a Drop Shipper, contracting with web sites working on Drop Shipping model acts as a lower risk preposition. Drop Shipping has the following advantages:

• Expand your Reach: Contracting with multiple web sites selling merchandise through Drop Shipping, helps in expanding the reach of your business. You will be able to expose your business at various web outlets and as a result your sales may also increase.
• Accept online orders without a web site: You are only responsible to fulfill the orders received from the online store. You can earn revenues, without facing the challenges of selling online.

Selection of online store is one of the most important decisions for drop shippers. Other issues like the terms and conditions, the revenue sharing agreement, responsibility in case of goods returned, etc also need to be considered.

While into drop shipping, adequate caution needs to be taken in choosing products to be sold online, and deciding the terms and conditions. Besides, synchronized communication and complete coordination between online storeowner and drop shipper are other important requirements.

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Issues that affect your ecommerce business

ECommerce is not limited to a choice of a shopping cart or a good-looking product. Ecommerce is well beyond that and you have to ponder various issues that may emerge, specifically in the ecommerce environment. In the following section we have highlighted remedies to deal with few of the business issues in ecommerce.

Security & Privacy:
Ecommerce fraud is on a rise and visitors are very skeptical about revealing their financial details online. Your ecommerce store should build a climate of assurance for every new visitor coming to your store.

• Have a Spam free, Popup free ecommerce storefront.
• Secure all transactions with latest SSL security standards.
• Host your store in a secure hosting environment.
• Display a disclaimer during the checkout process and respect the privacy of the visitor.
• Keep a constant watch on the changes in Internet security environment and periodically test your store for safeguards against any security threats.

Compromise with security issues can cost you dearly. It is always recommended to be with the best in the industry when it comes to security of your ecommerce store.

Processing Capabilities:
The speed and accuracy of various processes that go in managing an ecommerce store are also very important. Your ecommerce store should be powerful, yet stable.

• Look for an ecommerce solution that gives you real time processing & inventory management capabilities.
• Accept all possible popular pay methods.
• Integrate with secure payment gateways for better payment processing.

The processing power of your estore will be the foundation on which your online storefront will work. Make the best of the ecommerce software that is behind the performance of your store.

Order Fulfillment:
Your major task is to deliver the orders placed on your online store within defined timeframe and above all, as shown on your ecommerce storefront.

• Place special importance on the order processing capabilities, as any mistake there will multiply further.
• Establish a powerful web of suppliers before you go online.
• Do not let your online store get overburdened with orders that cannot be fulfilled.
• Deliver goods through proven shipping carriers that reach to all locations within time frame.
• Allow users to track their orders online.

Successful order fulfillment is one of the necessities for any ecommerce store and should be given special attention.

There are many other issues like legal laws, state economic barriers and governmental provisions that also needs to be accepted. Since Ecommerce is not limited to geographical boundaries, you should always be cautious that you do not over-step any legal and economic restrictions.

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We have compiled a list of basic ecommerce terms in our ecommerce glossary section. This section may help you to strengthen your knowledge about ecommerce.

A/B Split: A test that is performed in a controlled environment which interchanges two pages to random groups of visitors with the goal of testing the performance of specific page variables. However, this simple method can only be used to test one variable at a time. Also see Multi-variable A/B testing.

Abandonment: When a visitor exits a page or process without completing the desired action. Also see Shopping Cart Abandonment.

Above the Fold: The part of the page or email that is initially visible to the visitor without having to scroll.

Acquisition Cost: The total campaign expense divided by the number of leads or customers it generated. Also see Return-On-Investment.

Acquisition List: A borrowed list of prospects who have requested to receive online communication about a specific subject.

Acquisition List Address Book Whitelisting: When a company’s email address or domain name is added to a particular individual’s email address book, this prevents unintentional filtering out of emails that the consumer requested to receive.

Acquisition List Address Verification Service: A service provided by the credit card companies to verify the given billing address with the address mentioned on the records of the credit card company.

Acquisition List Addressable Calls: A key metric in the Pay per Call search which consists of description of phone inquiries that may result in an action or sale.

Affiliate: A partner who is paid a commission on the basis of the results shown by marketing your products and services. An affiliate may simply place a link to the merchant’s site on their own site or create a site dedicated solely to promoting the merchant’s products or services.

Affiliate Program: A popular website promotion tool where a website contracts with other websites for driving visitor to its site. The revenue is calculated according to the traffic brought by a particular website.

Alert: An online message notification sent to subscribers to share important information. Also see Autoresponder

Application Service Provider (ASP): A web-based services provider wherein the clients need not install software on their own computers as all tasks are hosted on the companies ASP servers.

Attachment: A file of any format included with an email that is not part of the main body of the email message.

Authentication: Automated verification of an email sender’s identity.

Autoresponder: An automated email message sent to a new subscriber as soon as they trigger an event.

Batched Records: A delivery of files in large quantities, instead of in real time.

Bayesian Filter: A content based filter that works like an anti-spam program to evaluate header and content of incoming email messages to determine the probability that it is spam. Also see Authentication

B2B: Business-to-business

B2C: Business-to-consumer

Bill Me Later: A deferred payment method provided on purchase of a particular product or service.

Blacklist: A database of addresses that includes domains or IP addresses of an email sender suspected of sending spam. Also see Authentication

Block: Refusal by an ISP or mail server to allow your email message to go through to a recipient on the basis of suspected spam, viruses or violation of email policy. Also see Blacklist

Browser: Software Application program required to access and read the websites on the Internet.

Business to Business: A business model for business on Internet. Popularly called as B2B,it includes ecommerce transaction between two business organizations.

Business to Consumer: A business model for business on Internet. Popularly called as B2C, it includes ecommerce transactions between a business organizations and an individual.

Domain Name: The unique name given to every website. It is used to physically locate a website over the Internet. A domain name consists of three different parts with each separated by a dot. These are host server name, the unique name of the website and the third defining the purpose/type of the website.

Ecommerce: A methodology used for executing business – either wholly or partially – over Internet or a network.

FTP: File Transfer Protocol (FTP). A globally accepted set of rules used while transferring files from one computer to another computer of a network or Internet.

Gateway: A hardware or software that acts as a mediator between two distinct protocols and help in the transfer of information between diverse systems.

Hosting: A term used for storing and maintaining files, email or domains on a server that is connected with Internet.

Merchant Account: An online bank account required by a store to receive payments through electronic mediums like credit cards. It can be considered as a virtual bank account that receives electronic money.

Modem: Acronym for Modulator-Demodulator. It is hardware required to access Internet through a telephone line. Modem converts the format of information received from the telephone
line (Analog) into a computer friendly format (Digital) and vise-versa.

Network: Group of computers or devices connected with each other. A network is used to transfer data within the devices.

Order Tracking:The process of tracing the status of particular order placed by a customer in a web store.

Payment Gateway PCI Compliance: All online merchants processing, transmitting, or storing credit card data were required to act in accordance with the new Payment Card Industry (PCI) Data Security Standard developed by the major credit card companies as a guideline to help organizations that process card payments prevent credit card fraud, hacking and various other security issues.

Payment Gateway: A computer system that acts as a mediator between a merchant account and online storefront. Payment gateway is used in authentication of credit card information and real-time charging from a credit card.

SaaS>: Software as a service (SaaS) is a latest software application delivery model where a software vendor builds up a software application and hosts and operates the application for use by its customers over the Internet. In the SaaS model customers pay not for holding the software itself but for using it.

Shipping Provider: An organization that provides the services of physically transporting the goods ordered on the Internet, to the address specified by a buyer.

Shopping Cart: Software required for building an online store and accept orders online.

SSL: Secure Socket Layer. It’s a protocol designed for secure transfer of Information over the Internet. It helps to maintain security, reliability and privacy of the information and ensures that the information is not tempered with while the transfer is taking place.

Website: A collection of files organized in a structure that can be read through a browser. The domain name given to a website is the unique identification of a website in the World Wide Web.

Website Traffic: The number of times a website is viewed by a unique visitor within a stipulated time.

WYSIWYG: “What You See is What You Get” is a feature of an editor. Such editors show the exact appearance of the desired output while you are creating the document or a web page.

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Ecommerce…Be Fast to Be First

Internet offers a visitor the advantage of moving from one storefront to another, within few clicks. As a result, the online shopper has little tolerance to a slow & inaccurate service from any web storeowner. When you are into ecommerce website development, ensure that web store provides fast loading.

In the following points, we suggest few tactics for fast website loading:

Do not overburden your web page with heavy images and programming code
One of the reasons for slow loading websites could be the file size of a web page due to the type & quantity of images used on a page or the complexity of code.

Programming Code
Write a programming code that occupies least memory and offers manageable compromise to the display. Also, use search engine friendly code, as majority of your traffic would come from search engines.

Images
Reduce the size of all images appearing on your online storefront to minimize the loading time. Alter the file format and dimensions to minimize the image size.

Do not use heavy images or too many images in a single page. It is better to be less creative then to be less business oriented.

Host your web store with a powerful hosting company
Consider a hosting company as the entrance to your store. Imagine the loss to your ecommerce website development efforts if the entrance is small in size or frequently disallows visitors to enter the store.

It is advisable to host your web store with a powerful hosting company that can manage more than expected traffic and can consistently support fast loading of websites.

Ecommerce works 24/7 and your store should be ready to entertain orders, all the time. Ensure that you host your store at a location that is secure and provides strong resistance to all Internet aggressions. After all, you do not want to display ‘we are closed’ to your ecommerce clients and create a negative impression.

Understand the Bandwidth resources of the targeted visitors
Understanding of the bandwidth limitations of your target audience can be valuable statistics in ecommerce website development. Build a ecommerce store that works without any delays or breaks at a bandwidth that is largely used by your target audience. Reducing the dependency on the web server, for functions that can be easily handled by the client machine, will increase the flexibility of your online store.

Test Your Ecommerce Store Periodically
Frequently test your ecommerce store for its average download time. Calculate the loading time at a bandwidth used by your target audience. It is also advisable to test the traffic handling & order processing capabilities of your store, especially during peak season of online shopping. Lastly, ensure the store is error free and offers a smooth transit to a user within your store.

In ecommerce, you have to be fast & accurate in providing what the customer wants from your storefront. If you fail to provide fast loading website you may end up having unsatisfied customers and lesser business.

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