As with any business move or expansion, considering an online presence can raise a sometimes dizzying list of questions for an entrepreneur. Exactly what must be put in place to make it happen? How does an online presence change the market for the business? What are competitors doing? How will people shop? What kind of security is required? How will customers pay online?
Why Go Online?
The most amazing aspect of e-commerce is its ability to impact sales and marketing efforts immediately. By going online, suddenly a neighborhood bakery or a home based consulting service expands its reach to a national, or even international base of potential customers. Web-based sales know no international boundaries.
Forrester Research, which analyzes online trends and statistics, projects the online retail market for U.S. businesses to be $230 billion by the end of 2008. That’s a full 10 percent of anticipated total U.S. retail sales.
Not only is the internet increasing the number of potential customers that a company can reach, but it’s also driving profitability, according to research from IPSOS, commissioned by PayPal. The survey discovered that, far from being an extra “expense,” internet operations boosted businesses’ bottom lines. Of small businesses that sell online,:
- 64 percent said the internet has increased their revenues or sales
- 48 percent felt the internet helped to expand their geographic reach in the United States
- 73 percent saved money by decreasing administrative costs
Cash flow is of significant importance to a new business–online or brick and mortar. The study found that small business owners who conduct business online feel it allows them to receive payments faster and conduct business easier.
When entrepreneurs move online, they establish themselves on a level playing field with larger competitors. On the internet, even the smallest online retailer can be as attractive and as functional as the largest big box store–without the need to have a physical presence on every street corner. Often, small shops project a “boutique” feel that attracts shoppers, who perceive smaller businesses as more distinctive than larger stores.
Turning Shoppers into Buyers
Online shoppers are finicky. Those who aren’t experienced customers–who haven’t yet discovered the convenience of two-day delivery or easy returns–tend to be skittish during the entire shopping experience. A well-planned, secure shopping cart should make the checkout process easy, clear and flexible for the shopper.
Jupiter Research found that 54 percent of internet shoppers have stopped buying from certain online stores in the middle of a transaction because they have concerns about service, delivery, shipping or handling. Other estimates range as high as 60 to 90 percent abandonment of shopping carts on some e-commerce sites.
Sometimes it’s because of confusion; other times, frustration over the process or lack of information. Some shoppers just use the cart as a place to hold items they’re considering and, in the end, never buy.
When setting up an online shopping cart for a business, consider the following tips:
- Don’t force the shopper to go through a lengthy process of logging in, creating passwords and filling out voluminous forms. Privacy issues and complexity of the process can lead the buyer to end the process before even registering.
- Include a link to a page detailing customer service policies, such as warranties, delivery guarantees, return policy, and shipping fee structure.
- Provide “help” tips, a frequently-asked-questions (FAQs) page and a toll-free phone number for consumers to use if they have problems or questions relating to checkout.
- Offer assurance that credit card information is protected through encryption and a highly secure online transmission process.
- Allow customers to call up information about the items being purchased without having to leave the checkout page, with links to windows that contain the product information page.
- Make it easy for buyers to add or remove items, change quantities, or select different models and styles of a product once they are on the checkout page.
- Indicate the progress buyers are making during the checkout process, revealing the number of steps involved, showing which step they are on at any given time and allowing them to return to earlier steps to make changes.
- Show the shipping costs at the front end of the checkout process. For some products, these costs determine whether the shopper will buy online and the quantity they will buy.
- Clearly indicate a button or link to move on to the next checkout step and make it more prominent than other links on the page.
- Provide multiple options for payment, including credit cards, checks or an online payment service.
Cash flow can make or break a company, especially in its early stages. That’s why many online businesses often encourage credit card payments, although it’s also helpful to give buyers alternative opportunities to pay with checks and money orders. Offering a variety of methods for shoppers to pay online increases the opportunity for these buyers to pay in the method they prefer.
Accepting payments online increases revenue and cash flow because money goes into the account immediately. Even more compelling is that there are more than 1.2 billion consumer credit cards worldwide. Credit card payments aren’t returned for non-sufficient funds–and credit card holders tend to do more impulse buying than those who write personal checks.
Businesses have several options when setting up an e-commerce function and accepting payments online, which include:
Processing payments through a merchant account. To accept credit cards online, a small-business owner must first apply for a bank merchant account and then find a way to process transactions. At a brick-and-mortar store, the processing takes place when a card is swiped through the card reader. At an online store, the processing is done when a shopper types in the credit card information, which is then verified by a merchant account processor.
During most online checkout flows, a shopper is asked which method of payment is preferred. If the shopper selects a form of credit card payment, he or she will be redirected to a secure page within the store to enter the credit card information. After the shopper selects “submit,” the credit card information will be sent to the correct merchant account, where it will be verified and either accepted or denied by the merchant account service provider.
Merchant accounts may have drawbacks for some small-business owners, however. Most charge set-up, monthly and per-transaction fees. Additional fees may also be involved if a business owner has a pre-existing account for a physical store, and wants to convert that account to accept payments online. Moreover, some banks won’t approve small online businesses for merchant accounts, considering them high-risk operations.
It may take 30 days or more for a merchant account to be approved and the integration process can be burdensome for business owners to do it themselves. Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant a merchant account and everything else needed to accept online payments.
Integrating an online payment service. If a business doesn’t have access to a merchant account or the fees are just too high, one solution is an online payment service, like PayPal. PayPal allows businesses to accept credit-card transactions and payments safely and conveniently. It also allows buyers to send payments directly from a bank account.
When a buyer indicates the desire to use PayPal during checkout, that person will be directed to sign into or sign up for a PayPal account to then complete the transaction.
For merchants there may be benefits for offering PayPal. There are no setup charges, monthly charges, minimums or gateway fees. PayPal charges a per-transaction fee, which ranges from 1.9 percent to 2.9 percent plus 30 cents per transaction. PayPal also actively fights chargebacks on behalf of online merchants. If a transaction meets all of the requirements of PayPal’s Seller Protection Policy, then the merchant will not be liable to for the chargeback by the customer.
Ensuring Transaction Security
Online entrepreneurs have a responsibility to do all they can to ensure their websites offer a safe shopping experience. But they don’t need to be information technology security experts to have a secure site–the techies already have developed security measures that any online small business can adopt.
There are services in this space that bring together all the security measures that an online small business needs to have in place. PayPal enables businesses to set up a website that accepts credit cards without seeing or having to store the account numbers of its customers.
This makes buyers feel even safer because they don’t have to share their personal or financial information online. Gateway services like Authorizenet.com, CyberSource or Chase Paymentech Solutions will also handle credit card and electronic check payments securely.
Consumers’ fears of identity theft and the aggravation over spam make privacy policies essential for online businesses. Customers expect merchants to boldly exhibit their privacy policies on their stores’ sites, with links from the catalog pages and the shopping cart.
Starting an online store may seem like a daunting challenge, but the reality is it’s never been easier. Today, many of the processes of moving a business online have become standardized and even automated. Business owners discover an entirely new meaning in their business lives when–through the process of building an online store–they realize they’ve optimized their new-found markets and won the trust of internet consumers.
The Internet, in fact, can work for any entrepreneurial personality. If an entrepreneur thinks life is just a bowl of cherries, we’ll find him selling cherry bowls. Never have entrepreneurs had such a clear, easy and relatively inexpensive opportunity to reach a global marketplace for so many products and services. It’s amazing how a business can thrive when its customers only need to lift a finger.
10 Steps to Move a Business Online
- Competitor landscape review. Look at competitors online and decide how you will differentiate yourself from them.
- URL. Register a domain name.
- Web development. Hire a web site developer or buy web development software, then determine site design and navigation.
- Technology. Buy a server or find an outsourced Internet service provider.
- Payment. Find a secure online order solution, including shopping cart and payment service.
- Protection. Fight viruses and protect the site and computers with anti-virus software.
- Marketing. Develop a marketing plan, which includes determining and publishing customer service policies.
- Contracts. Establish alliances with crucial partners, such as product suppliers, search engine optimizers, fulfillment services, shippers, web technicians, marketing or public relations firms.
- Product. Create an online catalog or listings.
- Maintenance. Keep inventory, catalogs and listings up to date for your customers.