Setting Up E-commerce: Steps, Considerations, Recommendations

If you’re thinking about bringing your e-commerce operations in-house or setting up your online store for the first time, you may not know where to start or what questions to ask. Each time I walk a client through the maze of e-commerce setup steps, I’m amazed at how disjointed the process can be and how difficult it is to find good information and guidance.

I’m painfully reminded each time just how difficult my own I experience was when setting up our e-commerce years ago. In this article, I hope to share the lessons from our initial trial and error process, as well as subsequent (and may I offer - much smoother!) client e-commerce setups and site integrations. The ultimate purpose of this article is to walk through the considerations of setting up your own in-house e-commerce solution, so the tangential topics along the way will just be touched on for reference.

In a hurry? Scan the article for our recommendations. Look for blockquotes formated like this.

E-commerce: In-house vs. Hosted

Backing up just a bit, the first decision to make is whether your store or shopping cart software will be on your server or hosted elsewhere.

Hosted e-commerce examples include PayPal, Yahoo Stores, Ebay and other e-commerce providers that run the software application on their server.

Advantages: In some cases, selling within a larger e-commerce community like Ebay can provide instant exposure to a large audience. From a technical standpoint, hosted stores are all inclusive packages where maintenance and upgrades are covered in the cost.

Disadvantages: Hosted store platforms tend to be fairly ridge in design and functionality. That’s to say, the pre-designed templates and store features generally can’t be changed or customized. The store domain or URL is most often a subset of the host (i.e. yourstore.yahoo.com) which doesn’t provide much in the way of branding or company image.

In-house e-commerce solutions are software applications that are installed on your own hosting server.

Advantages:

Design freedom is at its greatest with the right in-house shopping cart software, where the entire shopping cart or select functions can be integrated directly into your site design. Shopping cart layout and design can most often be customized to meet your specific needs.
You control the advertising and can opt to have none at all or take advantage of the ability to sell advertising space on your own store.
Use your own domain name, which offers enormous SEO advantages. While some hosted stores offer custom domain options, you’ll generally find design freedom, advertising and additional server space to be lacking.
Additional server space on your own server or web hosting account along with the right back-end components provides the ability to integrate additional application like discussion forums, support ticketing systems, blogs and so on. These features paired with your shopping cart allow you to run a business through your site, never needing to send you customers off-site to complete a transaction, get help, voice their opinion or what ever is you feel will help increase conversions.

Disadvantages: Maintaining e-commerce software on your own server requires regular maintenance. Periodic software updates, security enhancements and the like need to be applied to the application by a developer. On the positive side, this is still less expensive than going with a comparable hosted solutions but does cost more than an Ebay type option. On the same note, technical glitches will need to be handled professionally and if you don’t have a reliable professional, you can find your store off-line or malfunctioning until it’s fixed. To be fair, this can and still does happen with a hosted solution including mega providers like Yahoo—it’s inherent in technology.

We often recommend going with an in-house shopping cart given the overwhelming advantages for small businesses (see above). In-house e-commerce solutions can be the most economical route. After the initial investment for setup and integration, ongoing maintenance is relatively low and monthly fees are a fraction of the hosted counterpart.

Hosting Requirements

Now that you’ve decided to explore setting up an in-house e-commerce solutions, what do you need in the way of a hosting server? First, don’t make any moves until you’ve selected a developer (or conversely have identified the software). Your developer’s technical expertise and perhaps preferred shopping cart application may dictate what type of server and database will be needed. Of course the search process could be reversed if you know what shopping cart software you need, whereas you then search for a developer to suite.

For the most part, hosting an e-commerce shopping cart will require database access. For secure transactions, a must for both your and your customers’ security, an SSL (secure sockets layer) certificate will be required. Not all hosts or hosting accounts allow for SSL and/or a dedicated SSL (as opposed to a shared SSL).

Per hosting companies, we don’t recommend the large mega hosts, like Godaddy, for two reasons: 1. Their servers are jam packed with sites, slowing yours dow and 2. Customer service is similar to calling a public utility - good luck. On the other end of the spectrum, we tend to avoid very small outfits because 1. the technology often isn’t up to speed and 2. again with the lack of customer support.

Hands down, we can’t say enough about the hosting company Emerging Markets Web Design (EMWD), which consequently does design as the name suggests. We have been with them for 8 years or more and have never been left out to dry. Keeping in mind that technology is bound to have trouble, the difference is the human on the other end. And when you need help, EMWD goes above and beyond . . . and with a smile.

If your head is spinning from all this new information, don’t be discouraged. You’re probably reading this article because you’re not a developer . . . and are probably questioning why anyone would want to be. That’s another discussion though. Feel free to bookmark this article and return to it for reference as you move along in the setup process.

Merchant Accounts, Gateways & Vendors

This is where your head can really start to spin. To sum it up in advance, everyone wants a piece of the pie. It’s helpful to understand the progression of steps when processing orders from a shopping cart.

An order is placed, credit card number entered and “checkout” is clicked
An Internet Gateway (i.e. Authorize.net) confirms the authenticity and capability of the buyer
Authorization for the purchase is returned to the shopping cart by the Gateway and presented to the customer in the form of a “successful purchase” confirmation screen
The Gateway simultaneously passes the authorization to the Merchant Account provider, who in turn transfers the funds from the credit card company (i.e. Visa) to your business bank account, less transaction fees (i.e. 2.5% + $0.25 per transaction)
The Merchant Account, charges its own monthly fees, as well as billing for corresponding Gateway fees if applicable.

That’s a rough description, with some flaws, but should give you an idea of how it happens. As far as selecting one of these third-party vendors, I can offer some tips and recommendations, but you’ll be well served to spend time researching what works for your business and volume level.

Merchant Accounts are a dime a dozen. There appear to be few barriers to entry in this industry so you will find thousands of options out there, with quite a few rotten apples. I found this out myself after going through the paces with A-p-p-l-i-e-d M-e-r-c-h-a-n-t S-y-s-t-e-m-s (hyphens added to negate any SEO benefits they would receive from this article). After several hundred dollars worth of fraudulent withdraws from our company bank account and legal intervention, the relationship was cut short. It was tough for them to lean on a service contract that failed to mention the “hidden fees” that they wanted to collect. All of that was to say, be cautious!
Merchant Account provider fees can vary greatly when it comes to setup fees. Large vendors that service high volume merchants can have upfront fees of $200-$500. For my small business clients, I don’t think you should pay an up-front fee, nor do you need the level of service that those vendors provide.

Transaction fees tend to come in about the same across the board and generally adjust downward as your volume exceeds pre-set benchmarks. On the high end, you could expect 3% plus $0.30 per transaction. Oh the low end, perhaps 2.25% plus $0.20 per transaction is achievable. These fees mentioned are for internet or virtual sales, where the credit card is not physically presented and swiped. Traditional physical transactions have a lower risk of fraud and appropriately carry lower rates.

It’s worth noting in our experience that the banks’ preferred or recommended Merchant Accounts have the higher fees. Perhaps this is to cover the referral fees worked into the partnership or they simply cater to larger businesses. But know that any Merchant Account can deposit funds into your bank account, you will not need the bank’s preferred provider.

We can recommend the Merchant Account provider Money Tree Merchant Services by CardPay.net. They offer no setup fees, competitive transaction fees and a corresponding traditional merchant account service if you have or are considering a physical point of sale. Additionally, they use the Internet Gateway Authorize.net, which is one of the most widely supported Gateways by shopping cart software applications.

Internet Gateways are the critical component between your shopping cart and authorizing a credit card transaction. Stay with me on this, it’s going to seem out of order here. The shopping cart software will be pre-configured to work with certain Internet Gateways. Merchant Account providers will use certain Gateways. Accounts with Gateways, like Authorize.net, can not be set up independently but are resold exclusively through the Merchant Account provider.

So with the above in mind, one scenario could be:

you know the cart software that fits your needs, find out which Gateways the cart supports
research the supported Gateways and find out from their respect websites which Merchant Accounts they list as resellers
finally research that list of Merchant Accounts, comparing prices, services and terms

Per above, we use the Internet Gateway Authorize.net and have been extremely satisfied. Authorize.net has a fairly intuitive web control panel, where transactions can be managed and voided. Additionally, they offer a virtual terminal than can double for on-site sales if you want to process transactions physically and outside of your website.

Shopping Cart Software

Even more plentiful then Merchant Account providers are shopping cart software applications, which come in all shapes, sizes and capabilities. A logical place to start your search is internally. Ask yourself if there are any unique requirements of your business as well as what the primary characteristics of the online transactions will be. For example, are you selling physical products that need to be shipped or virtual, possibly downloadable, products or services? Will customer need to create an account and go through an approval process before buying? What is the best way for customers to review your product - will you need extensive graphics or maybe dynamic image galleries?

After you’ve thought through the above internal questions, you should have a list of “must have” shopping cart attributes. A photographer would quickly learn that there are e-commerce solutions on the market specifically designed to present and sell photos. An international merchant would zero in on those carts that handle multiple languages, currencies and country shipping destinations. For those merchants with the least number of special needs, you’ll still be left with a large pool of options.

Before getting to our recommended shopping cart software, I would like to touch on free open source solutions, like oscommerce. These can be a viable option, but don’t choose this route just to save $150 or so—a fraction of your long-term costs. Fee open source carts can be incredibly versatile in functionality due to the large communities that develop add-ons and modules to meet the many needs of the users. Likewise, the code for these applications can get quite tangled with so many cooks in the kitchen. Another disadvantage that I have found is the lack of design flexibility that they have. I should preface the design inflexibility comment by saying that a specialist in a particular software would be able to accomplish much more than I could. Even still, significantly more time would be required to customize a free open source solution than our cart of choice.

Our preferred shopping cart software is EcommerceTemplates by Internet Business Solutions. Specifically we use their Ecommerce Plus PHP shopping cart version designed to run on a Linux server with a MySQL database back-end. This shopping cart is rich with features, but does an excellent job of performing those business critical functions well. There are plenty of solutions that try to do everything . . . and end up performing them rather poorly. I have spent a great deal of time working with this particular software and have increased my efficiencies, allowing for a smoother, more cost effective installation and maintenance.

Well, that pretty much sums it up. This article may have seemed a bit long-winded, but actually it just skimmed the surface of the e-commerce pond (or ocean). Additionally, it was written with a bias for our expertise and preferences so we were able to cut to chase pretty quick. We hope that you found the article helpful and invite you to poke around our site a bit more.

Applied Web Vitals is a web design and development company. Please feel free to contact us to explore your next design, redesign or site enhancement project.