Shopping online has become so routine it seems consumers almost expect to be able to purchase virtually anything via the Internet. In 2016 the U.S. eCommerce market has become the second largest globally, behind China, and is expected to reach $482 billion in sales by 2018, that is about 8% of total retail sales, with $75 billion in mobile commerce sales last year alone. In fact, approximately 43% (and growing) of major retailers in the U.S. now offer a form of in-store pickup for eCommerce orders.
With that said, e-commerce is definitely a great way for any small business to reach more customers and sell more products, but good planning is a must because there are a lot of decisions and cost that go into creating a full e-commerce site. In fact most people who ask us to build them a full e-commerce site eventually decide to scale back and start initially with a more affordable option using PayPal or Stripe for only a few products. Hopefully this article will help you understand how e-commerce works, what decisions need to be made, and whether it makes sense for you to invest in this option. Also note that hiring a good e-commerce developer can help make the whole process go a lot smoother, as well as save you time and money so please consider this before attempting to do it yourself.
- E-commerce Platform & Website CMS
A typical online storefront doesn’t just have a store with product pages, it also has a couple pages about the company, a contact page, and possibly a blog/news/resources section or other pages. So when choosing the an e-commerce platform for your storefront you must also choose a CMS (Content Management System) for your website and your decision should be based on your needs. So knowing what extra functionality you need and if that platform or app/plugin offers this to you is pretty vital. For example, do you know what discounts/coupons/sales you want to offer, what kinds of product variations you will have, do you want to give return-shoppers the option of setting up an account to remember their purchase history, will you offer wholesale pricing to retailers, etc. This is the most important choice you will make because it builds the foundation for your site, yet it is not easy to figure out if you don’t know what the options are and how they work. There are hundreds of e-commerce options out there but I will recommend the two most user-friendly options based on the opinion of several articles as well as my own.
- For a self-hosted option, I recommend Woocommerce (free, hosting costs not-included) because it uses a very popular CMS called WordPress that is easy to use and gives developers full access to the server for easier customization. Tons of plugins are also available to add on functionality (free or at cost).
- For a hosted option, I recommend Shopify (see monthly pricing, hosting costs included) because of its cost, features, and ease-of-use. It comes with a built-in CMS but does not give developers access to the server and therefore limiting for developers to customize certain aspects, especially the cart/payment process. Also please note that Shopify will process the payments on their servers or charge you extra fees to use external payment gateways. However, this also means they handle security issues and updates to the software which can be nice. Tons of apps are available to add on functionality (free or at cost).
NOTE: Both options allow users to setup their own e-commerce websites without the help of a developer, through theme (for design) and app/plugin (for functionality) options, but it will require a web designer/developer to further customize the site if you don’t like what these options give you out-of-the-box. And because Shopify limits access to the server, it can limit the developers somewhat more.
To display your product there are several options – simple products (no variations), variable products (multiple variations like T-shirts that have different colors, sizes, etc.), grouped products, affiliate products, downloadable products, virtual products, etc. Regardless, you will need to display a price, photo, and a full description along with size/weight/material info. You can even categorize and subcategorize your products to simplify your navbar as well as offer a search so that people can find what they are looking for quickly.
- One-page Checkout & Cart Access
It is recommended that you make the checkout process as quick and easy as possible using a one-page checkout option (WooCommerce offers this option). This can help prevent cart abandonment issues and makes people happier overall with the process. Also, you need to make sure that shoppers can see their cart total and product listings at all times as well as checkout from any page.
Taxes and Shipping
There are many e-commerce settings that you have to setup but taxes and shipping are a necessity so be aware of what is required in your state.
- Setup sales tax rates (state and local) by downloading a sales tax table from www.taxrates.com that you can import to the site. Read more about this at www.salestaxhandbook.com.
- Shipping can be simple (with flat fees) or complex and costly (pulling in table rates from UPS, USPS, Fedex, etc via a plugin that can be $199/yr), so I recommend trying to keep it simple whenever possible. Table rates are based on weight or shipping box dimensions so that info will need to be entered for each and every product if using this option.
Payment Gateways & SSL (Secure Socket Layer)
A payment gateway is an e-commerce service provider that processes your payments and funnels the money into a merchant/checking account (see below). Below are several options that should help you decide which one fits your budget based on your expected income. Almost all of the following solutions charge fees of 2.9% + $.30/transaction.
- PayPal has no monthly fee but is limited to $10,000/mo or you will have to upgrade to PayPal Pro for $30/mo. PayPal does not require a SSL Certificate because visitors are taken away from your website to their servers to process the payment securely, either through their PayPal account or as a guest. However it is still recommended that you purchase this extra level of security to gain the trust of your clients especially with an ecommerce site that allows visitors to sign up for accounts to remember their transactions. To obtain the funds, you must transfer the funds manually into your checking account of choice which may take a couple days.
- Stripe also has no monthly fee and is the latest coolest open source payment gateway because your visitors don’t have to leave your website to make a payment, instead it will display an overlaid popup box for payment. Checkout how it works here: https://stripe.com/checkout However, Stripe will deposit funds automatically every 2-7 days and there is no limit to the amount of income you obtain. SSL is required.
- Authorize.net: $49 setup fee + $25 monthly gateway fee includes merchant account cost. No limit of transactions. SSL is required.
- Balanced (balancedpayments.com) is unique in that it allows automatic “payouts” to multiple parties for each transaction. You must transfer your funds manually. SSL is required.
See this article for more gateway comparisons: https://www.formstack.com/payment-gateway-comparison
Please note that some shoppers prefer to use PayPal so offering this solution in combination with another payment gateway is quite normal.
SSL Certificates add an extra layer of protection by encrypting your transactions and cost around $50/yr. With SSL installed the http protocol changes to https with a lock icon in the browser next to the web URL.
Merchant Accounts (fees may vary)
Some payment gateways don’t require a merchant account but some do, i.e. Authorize.net. Merchant accounts are meant to collects funds from your customer’s bank and deposit funds into your account automatically. International transactions may cost an extra 1.5% and chargebacks may be assessed a fee of $25 by your merchant.
- Security and PCI Compliance
Please be aware of your responsibilities for security and PCI Compliance. Read all about that here: https://www.pcicomplianceguide.org/pci-compliance-overview/
- Google Analytics
To track your success — where visitors are coming from, what keywords allowed them to find you, or what referring sites they came from, etc. you will want to install Google Analytics which is a free web statistics software that Google offers everyone. It also allows you to further evaluate how many people fall off from your site or complete the checkout process through the setup of goals.
If you would like Evolv to help you with an e-commerce site our normal price is $5000 for full customization, or $2500 for DIY. We would be happy to offer you a free 2-hour consultation to discuss your needs.
This article was written for Asheville SCORE so if you need consultation on other small business issues, just contact ashevillescore.org to ask for an appointment with a volunteer mentor SCORE. They are a nonprofit organization whose volunteers provide free, confidential business mentoring and training workshops to small business owners.