Ben Richardson - December 2004
Over the last few years there have been various claims regarding the amount spent online over the Christmas period. This year's no different. A recent study by AC Nielsen that caught my eye claimed that 84% of Americans said they will buy at least one holiday gift online.
This sounds a little ambitious to me, but nevertheless, I figured it might be a good time to have a look at the basics of selling online.
First and foremost, is your product or service suitable to be sold online? Sounds obvious, but there have been plenty of businesses that have spent a lot of money (and made very little) trying to sell products that shouldn't be sold online.
Air travel, consumer electronics and apparel are three of the hottest categories of consumer products sold online. Sales of some items are still limited by the "tangibility" factor, however. For example, consumer electronics is a hot category, but some electronics products simply will not sell online because customers need to touch and feel them before making a purchase decision.
Online sellability (is that a word) depends on whether a product is bought with qualitative or quantitative factors in mind. Televisions and stereos are a prime example of qualitative products that many customers want to test in person before buying.
Before you can start accepting credit cards from your customers you will need to setup a merchant account with a bank, which is basically a special account into which your customers fund are transferred when they make a purchase. You may already have a merchant account for your EFTPOS terminal, but this is different to the Internet merchant account required for ecommerce transactions.
Australian banks don't make the process of opening a merchant account easy, and several of our customers have had a very hard time obtaining one. Typical fees on your merchant account include a $250 setup fee, $33 a month and 2-3% on every transaction. With a fee structure like that it's a wonder banks don't give out merchant account to anyone who's willing to take one!
Now that you have somewhere to store the money, we need a way to check the customer's credit card, and transfer the funds to your account. This is known as a Payment Gateway, and there are several well established providers in Australia. We would typically guide you through selecting the appropriate gateway for your requirements, such as if you require customers to be able to make payments in their own currency. You can expect to pay a small setup fee, and 20-45 cents per transaction, depending on the number of transactions that are taking place.
This is where Switch I.T., or some other less experienced (and much uglier team) designs and develops your online store. The checkout process should be simple to use, and the customer should feel confident in the security of the store.
That's it, you're ready to start selling online. Well, technically you are, but there are a few other areas that you and chosen online store development partner should carefully consider before you start selling online, such as:
Order Management - How will you handle your orders when they start flowing in? Can packing slips and Tax invoices be automatically generated? Should confirmation emails be sent to the customer when there order has been processed and package has been shipped?
Product Delivery Strategy - Can you products/services be delivered electronically, or do you have a physical product that needs to be shipped to the customer? Can you just use Australia Post or will you have to use a Courier company? Do you have to calculate shipping costs based on product size and weight?
If you already have an EFTPOS terminal you can test the ecommerce waters by using a manual credit card processing system, developed by Switch I.T. This method does create a small amount of additional work for the store owner, but avoids the time and costs associated with a Merchant Account and Payment Gateway setup.
We've covered the basics of ecommerce, but if you would like more information on selling online contact the Switch I.T. team or check out some examples of online stores we have setup recently.