This article aims to add detail to another article on this website, A Beginner's Guide to Setting Up E-Commerce on Your Website, which discussed options for small New Zealand businesses who want to add to their small website the option of selling products and services online.
As explained in that e-commerce article, conventional medium-scale shopping cart facilities with ecommerce payments can add anything from $1000 to $5000 to the set-up cost of a small to medium site, plus a few hundred dollars extra a year for secure site hosting. There are many people who cannot justify this sort of investment. Perhaps you may only expect to sell a few hundred dollars worth of goods a year initially, and although you hope this grows in time it's too big a risk to set up and pay for a full-powered "shop" from the outset.
In many cases, certain compromises or limitations are perfectly acceptable and are not a hindrance at all to sweet operation. A small, inexpensive piece of software or third-party processing service may be ideal. But by limiting yourself to this, what capabilities may you be missing out on?
A fully functional webshop caters for hundreds or thousands of products (if necessary), usually arranged in categories and sub-categories. It allows for variations in such things as sizes and colours (such as clothing). It copes with high-volume sales, and items that turn over quickly. It allows the site owner to add and update product details without involving their webmaster. It manages the updating of the shopping basket as the user adds things to it and removes things from it. It keeps a database of previous customers so they can have their own accounts. It automates the process of sending emails to buyer and vendor and tracks the status of the order during processing. It securely accepts and processes all sorts of payment transactions. And there are packages ranging from $1000 upward that manage all these things.
If you don't absolutely need most these capabilities, then there are other solutions in the $100 - $500 range that will probably suffice. If you DO need most or all these features then this article is probably not for you. In particular, if you want to be able to update your "shop" yourself - add products, change prices, etc - rather than getting me to maintain the site for you, then you need something more powerful than what follows.
First, let's identify the three main types of basic e-commerce capabilities, and the component elements that provide these:
- Security: The ability for the purchaser to send their credit card details to you, via e-mail and your server, with confidence that those details will not be captured by a hacker. An alternative is to use a third-party global payment processing system such as PayPal which processes transactions for you so you never need to see credit card information.
- A "shopping cart" enabling one or more products (on one or many of your website pages) to be selected and accumulated into a page (the "basket" or "cart"), with total cost calculated, unit numbers entered, etc, and then sent to you along with payment information.
- Credit cards: The ability to handle credit card payments and information.
Do you need all three? Not necessarily. Many websites (such is tourist accommodation or book publishers) need only the security. They have only one item (or a very small number), such as a room booking or the one or two books being published, and do not need a shopping cart function to collect items from around the site. And as mentioned, if you use a PayPal-like system then you needn't worry about credit cards.
Credit card handling
Let's deal with the 3rd item briefly before going on to the other two more substantial items. If you want to be sent credit card details rather than have them processed by a third party, you must set up some mechanism for accepting and receiving payments. For many, this is the ability to electronically "zipzap" credit cards, and to do this you'll need to set up facilities with your bank. For retail outlets or point-of-sale users such as motels, you will use whatever mechanism you have already for credit card sales; for new merchants not already geared for card payments, you will need to talk to your bank about how you will handle such payments.
The cheapest technique for receiving payments without worrying about handling credit cards is to become a member of a payment processing system and direct all sales outcomes to them. PayPal is probably the best known one in New Zealand and is very popular in the US and UK. Although this may slightly limit the number of customers prepared to use it (some buyers don't want to pay into PayPal, even though it accepts credit card payments from non-members if you're using their "Business" plan), it is often the cheapest and simplest solution.
PayPal is free to join as a vendor and takes only a small percentage (currently about 2-3% depending on volumes) of your actual sales revenues, plus some currency conversion fees. For simple operations, this is great value for money, and it removes all the worries about security and money handling.
Secure transmission of credit card details
If you don't want to use PayPal, then the vital information must be emailed to you. Most of you have some sort of "Contact Us" form on your website, enabling a visitor to enter whatever details you request (name, email address, etc). In theory, there is nothing stopping you including the entry of credit card details in that form. However, because of the fear of hacking into emails while they are being sent to the server or from the server to you or while sitting on the server, most Internet users will not enter such details unless they know the pathway and the server are secure.
To implement a secure server, all you need to do is a sign up to a secure server hosting service, which normally costs around $10-$15 per month more than static hosting -- a small price to pay if you expect to make some sales on the site. Some of you may already have your site hosted on a secure server but haven't been using that capability - check with your hosting provider.
To implement secure email transmission, you also need a method of encrypting the credit card number so that even if it is intercepted it is virtually impossible to be decrypted. You will need to contract a web programmer to implement such a system, but because it's so simple it would not cost much.
As mentioned above, an ultralow-cost method of ensuring security is to use a third-party processing system such as PayPal. All transactions take place within their secure facilities, and all you see are deposits in your member account, which you withdraw periodically into your own bank account. In this case, your own server does not need to be secure.
Shopping carts
Although there are many options available, I have had experience with the four types below which cover a range of simple applications. As I describe them and their features and limitations, I'll name some sites I've built which provide examples. In each case you can see how they work by going to their site, doing a pretend order and then backing out at the last minute before entering your payment details. I encourage you to do this.
1. No cart at all, just a fill-in form.
If you have a very small number of products or services (certainly less than five), you may only need a "Contact Us"-type fill-in form that many of you have on your site, but with a few fields included to indicate how many of which product(s) are wanted plus the 4 usual fields to enter credit card details. On the form you say how much each product costs, plus the fee you'll be adding for shipping, and get the buyer to tick an acceptance that you can debit their credit card for the amount to cover the purchase. To see this in action, look at the ordering system on the site of book publisher IPC (www.ipcltd.com).
The cost to set up such a form would be in the region of $100 - $200, or less if you already have a Contact form and just want to add these few fields. If you're on a non-secure plan, you'd need to sign up to a secure server plan and ensure you could process credit cards, and should have a card number-encryption facility (as mentioned above). And you have to conduct all post-sales correspondence (no automated emails are sent to the buyer).
My comments: The least expensive by far for me to set up. Some buyers may be wary of just handing over their credit card details without knowing for sure that you'll deduct only the cost owing, as there's no confirmation shown of the total cost. OK if you're well known as a trustworthy vendor and it's clear how to get back to you if there's a subsequent dispute.
2. An Externally Hosted Shopping Cart.
There are many services, mainly in the US, which provide this very cheap option. The only one I have actually worked with to date is called 2CheckOut. For this type of service you pay either a small initial fee (US$49 for 2CO) and/or a small monthly fee. During setup, I use an administrator's function to specify the products you have for sale, and I program into your website the resultant coding that the service provides to put a "Buy Now" button beside each product. If the button is clicked on, the buyer is sent to the service's secure server where all the transaction details are recorded and handled. 2CheckOut and such services are, in effect, selling on your behalf and taking a small commission on the way (5.5% in 2CO's case). They also handle currency exchanges and other messy details. You would also expect to pay around $150-200 for the work required to integrate this system with your existing website (depending on the number of buttons to add).
My Comments: It's relatively cheap, and you don't need to pay extra for a secure server hosting plan. But there are some limitation in what can be achieved for product presentation and what information is stored about each product. You become reliant on a third-party server usually somewhere in the US.
3. PayPal Shopping Cart and Processor.
Another cheaper but perhaps less flexible option is to use PayPal's service offering throughout. If you sign up as a "Business" vendor, PayPal provides "Buy now" buttons that can be associated with any product or service anywhere on your site, and collects all such clicked-on items into a Checkout Cart for payment through PayPal's processing centre. This includes payments for pseudo-products such as subscription services.
I haven't yet built a site using a full PayPal cart but have incorporated PayPal processing into two sites that sell single items (which is really quick, easy and cheap - around $50 - for me to do). See Malcolm Lane's Blues Harmonica Tuition site for an example of a single product, and Toni Tags for an example of an online subscription sign-up payment (click on 'Members' and then start to register before backing out).
My comments: Despite my lack of experience putting together a full PayPal shopping cart site, it looks like it would cost even less than the method 3 above, so for small operators it may be another very sound strategy, bang for buck. Also, you don't need to be on a secure hosting plan, but you do have to become a PayPal member (which some people may find unattractive even if free). Having it all run from within PayPal's processing facilities has benefits too in secure backup and a minimum of interfacing between different systems, but you are putting all your eggs in one basket. There appears to be a minimal amount of customisation easily available within a standard setup, so tailoring appearance and/or functionality to your needs will cost extra in my time for research and testing.
Extra considerations
This article shows that adding basic but effective online shopping capability to your website can easily cost less than $500 and perhaps under $200, as long as certain constraints are accepted. It must be noted, however, that you should also add into the site-upgrade budget perhaps $100 - $200 for associated additions to mould the shopping facilities in with what you have. In particular:
- You should advertise your new sales capability on the home page and elsewhere so potential buyers can easily find the products for sale. This usually includes a highlight box on the home page for a few months proclaiming the feature. You will also likely need explanations in several places (principally where products are displayed) as to what purchasing capabilities are available and how to use them.
- In order to help potential buyers gain confidence in you as an online vendor, and to protect yourself in a legal sense, you should also add in at least one page called "Policies" or "Fine Print" on which you spell out your policies on shipping, returns, and other disclaimers
Finally, to reiterate, if you need a shopping cart that you can tailor and maintain yourself, or a more complex "shop" than can be handled in a single-layered cart system, or a system that can automate back-office facilities such as order tracking, then you need a proper E-commerce package or a custom-built system: go back to read again my associated article, A Beginner's Guide to Setting Up E-Commerce on Your Website
