Beginning at the Beginning
In the last ten years, we’ve been immersed in a world where just about
everything has an electronically enabled variation, designated with the
letter “E.” Since it’s become so commonplace, it’s sometimes unclear
what “E business” is all about. What is e-commerce, anyway?
Originally, “electronic commerce” referred to the electronic facilitation
of commercial transactions. Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT) were introduced in the 1970s to
support the electronic transfer of commercial documents such as
purchase orders or invoices. The early days of e-commerce involved
better, faster ways of doing business, without changing the basic
business model. E-commerce as we know it today has revolutionized
the way businesses interact with their customers. In the world of
e-commerce, your company can offer its products and services to
anyone with an Internet connection. Physical geography is no longer
the key determinant of the marketplace.
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Most e-commerce sites require the security of HTTPS, a special
server protocol that encrypts confidential ordering data for customer
protection. However, smaller companies may opt to outsource that
activity to payment processing houses. And while e-commerce bears
some functional similarity to the traditional world, making use of
credit cards for payments and incorporating metaphors such as the
“shopping cart,” it’s really a new way of conducting business.
It’s clear that people like e-commerce, even though the business is still
evolving. In the latest American Customer Satisfaction Index (ASCI),
the e-commerce industry received a score of 80 on ASCI’s 100-point
satisfaction scale. E-commerce has not meant the end of the “brick
and mortar” retail sector, which some were predicting before the dot.
com boom went bust. In fact, a number of well-established companies
have adapted to the web and some now sell more on-line than they
do through traditional channels. Earlier this year, L. L. Bean reported
that for two years in a row, e-commerce has been its largest sales
channel, exceeding the company’s long-standing catalog business.1
L.L. Bean is considered an e-commerce star, with its success credited
to a strategy of simple and steady expansion of web operations.
Selling on the Web
Starting an online business is the same as starting any business;
first, you need to do some homework. You should check on the
requirements for forming a business in your area, and be clear about
local sales taxes. (Generally speaking, web purchases are taxed on the
“purchasing end” – you need to collect taxes on sales made within
your tax jurisdiction, but probably won’t need to on sales made to
people elsewhere.) You should outline a business plan, with some
targets for growth, and then design, build and launch your website.
The key to a successful e-commerce site is a design that provides
an enjoyable and rewarding experience for your customers. People
expect the web to provide value above and beyond the merchandise,
in terms of information, service and performance. Prospects and
customers alike want to know something about the goods, and the
web gives you an opportunity to say something about your company,
too. A good web site is an incentive for customers to buy, and to
come back and buy again. A company’s web site should be a selfservice
environment, easy to use without assistance. It can also be
a tool for collecting information about your customers’ preferences,
and can provide a sense of community, allowing customers to post
comments or interact via live chat tools.
For start-ups, there are some things to remember. You should pick
a web host with e-commerce experience, and with a credible track
record of up time and performance. Consider using an out-of-the-box,
commerce-enabled site template, which will save you the time and
trouble of building one from scratch. The most important thing is to
be sure your site is easy to use; customers spend more time on sites
that offer clear choices and simple options.
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You also need to consider the best approach for payment processing.
To accept payments directly, you need a Merchant Account Provider
(MAP) designation, as well as a credit card clearinghouse service that
will support it. You’ll also need to understand the various rules and
fees that apply to Merchant Accounts (regarding reserve accounts,
interest, refund policies, etc.). If you don’t opt to handle payment
processing directly, there are alternatives. Electronic payment services
like PayPal can bring e-commerce to any web site, for a nominal
fee. Depending on your business model, you could also use a site to
accept orders, and handle payments and fulfillment with traditional
process models. That is, you might take an order at the site, collect
the customer’s telephone number, and call them back to settle the
details. That was a fairly common approach in the early days of
the Web, although many satisfied customers might find it a little
unsatisfying today.
Promoting Your Web Site
Most of your prospects will find you through some kind of search
engine. Search Engine Optimization (SEO) refers to the process of
creating a site which the automated search engine crawlers will
consider to be of high value. The perceived value of a site determines
where it will appear in the search engines’ results. You can pay for
search engine ads that will place your business near the top of the
list, and the pricing arrangements for such “sponsored links” varies
depending on the search engine involved. SEO is actually a very
complicated area, both an art and a science, and will be addressed in
a future article.
You should also promote your site directly, in various ways. You should
include your URL in any printed collateral, and be sure to tell all your
existing customers that the site exists. It’s a good idea to include
some capability for collecting email addresses at the site, so you can
advise people of special offers or new products. You might want to
consider some direct marketing as well, either electronic or physical, to
attract new customers.
Remember that your web site is only one component of your
electronic business model. In addition to the “pull” exerted by the
site, develop some “push” tools (such as an electronic newsletter) to
keep in touch with your customer base. Make effective use of email
marketing, to create sales opportunities, but be sure you understand
the legal requirements related to spam, and be absolutely sure you
comply with them.
In Closing
E-commerce opens terrific opportunities for small businesses. With
the World Wide Web, any company can be a global enterprise. Ecommerce
can free your business from geographic constraints, and
let you reach entirely new territories. Bringing your business on-line
means the whole world is your customer.
Success in e-commerce is a matter of both technical and
organizational factors. You still need a good management team, good
post-sales service and a well-organized business structure. You also
need good technical support, the right hosting provider and a secure,
well-designed website. Finally, you need a solid business plan, based
on a realistic assessment of the laws of supply and demand. If you
can bring those things together, you’re ready to try your hand at ecommerce.
Sources
1. http://www.internetretailer.com/dailyNews.asp?id=21730
For more information contact your AT&T Representative or visit us at
www.att.com/business.