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Diving into e-commerce for the first time


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Blogged By: 
Jason Bowser, Featured Startup Business Expert

Happily, e-commerce is not the highly-specialized, expensive beast it was ten years ago. With the ubiquity of online shopping these days, just about anyone can easily set up an online storefront and begin selling almost immediately. Online shopping has become a multi-hundred-billion-dollar industry and, with that comes innovation and offerings that provide smaller businesses access to it.

Should I build my own online storefront or use a service?
That depends on a number of things like customer perception, overall cost, ease of use, scalability (will it still be suitable if your business grows) and if there are any limitations to doing one or the other specific to your business.

If you choose to use an existing service, there are several reputable ones out there that fit the needs of most smaller business that want an online storefront. For example, the major networks Google and Yahoo offer merchant storefronts to fit a variety of needs for a monthly fee. Typically services like this are simple for most anyone to use and feature-rich, including tools that help merchants track and measure sales performance and easily work with the storefront to manage products, shipping and inventory.

The drawback to using a service offered publicly like this is more an issue of perception to the customer (though its becoming much less important to most customers because the services are backed by major, reputable companies) that the business may be "too small" to support its own storefront which some see as a sign of weakness and may prefer a larger, competing merchant because the perception of an "in-house" online storefront is that of strength and dependability--in other words, there's peace of mind that if the customer has an issue the company won't be out of business the next day and they're stuck holding the bag.

The other side of using these publicly-available services is that their fees are typically high, sometimes charging not only a monthly fee but as much as 3-5% of each transaction on top of it all.  In essence, you end up "renting" the space and service from them at a modestly inflated rate.

That doesn't mean you have to invest millions into recreating the wheel and build your own system from scratch. There are many open-source technologies and tools out there that, with a little tinkering from a competent web developer, enable even smaller businesses to host their own e-commerce storefronts. For example, a platform called Wordpress (which is a content management/blog platform) is built not only to host web content but to integrate plug-ins that extend the capability of the platform to offer things like e-commerce in a way that is simple and easy to manage even by the standards of non-tech-savvy folks. What's more?  The license to use these tools is absolutely free! You should expect to pay to have a developer or web firm integrate these systems for you, but there is no annual or recurring fee for use of the platform and modules.

There are some fees that will be associated with plugging in the other necessary components that enable you to sell online, but you can expect that they will be significantly less than most public options. For one, you will need to work with a bank to enable your web site to process transactions and accept money. These days, many banks (from large to even the small local ones) offer some form of online merchant services that include providing the necessary tools needed to accept online payments (you will hear them use terms like "processor" and "payment gateway").  These too often come with some combination of monthly fees and per-transaction fees; but, again, you can expect that they're significantly more affordable in the long run and, often, you can shop around to find a bank with the best fees and services in this regard.

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