Developing an e-commerce site

(1)

(2)

Module Six: Developing an e-commerce site P a g e | 1

Developing an e-commerce site

What you will learn in this module:



How to make it easy for customers to buy



How to do business internationally



How to find the right shopping cart



How to deliver your products



How to get anxious customers to buy



How to automate your business



Protect you business from fraud



How to deal with chargeback’s and refunds

Welcome back!

I hope you are making good progress with designing and building your Web site. Remember:

 Choose and purchase a domain name very carefully and do this yourself

 Chose your Web host carefully… they are effectively your business partner

 Compel visitors to subscribe, click and buy with good design features

 Design your site yourself (even if you get help putting it together).

Marketing is not the same as design…

 You must accept credit cards if you want a high sales volume

In this module, I’ll show you how to accept other payment options, how to do business internationally in order to extend the reach of your business and how to practically double your sales by choosing the right shopping cart. We’ll also be showing you how to deliver your products and alleviate the concerns of anxious buyers. And finally, we’ll show you how to protect your business from fraud, and deal with chargebacks and refunds.

(4)

Accepting other payment options

One of your main goals when you’re setting up your Web site has to be making it as easy as possible for your customers to buy from you…

And while accepting credit cards online is by far the best way to do this, there are a number of other viable payment solutions that you may want to consider when you’re setting up your site to ensure you get the maximum number of sales. For example, these days’ people can make online purchases easily and quickly, with no hassle or security risk by using:

 Online checks

 Debit cards

 Digital cash

 Payments by e-mail

And there are other standard options which are still valid…

 Order form which is posted or faxed to you

 An escrow service

Choose the payment options that will fit in with your online business.

Offering one or more of these extra choices in addition to accepting payments by credit card, could become your secret weapon -- a competitive service advantage that you offer your customers that your competitors don’t. Don’t neglect the 7% of buyers who don’t want to or can’t pay by credit card online.

Accepting checks online

It’s interesting to see that traditional checks are still used in roughly 7% of all online purchases. Because these online shoppers are willing to go through the hassle of sending you checks in the post, you should offer them the option of paying by online check through your Web site. This should instantly boost your profits, provided you have a special section on your side explaining how online check payments work and that the buyer’s personal information is secure.

Online checks (or e-checks) are virtual checks that allow customers to pay by check on the Internet. The customer fills out a form (which looks like a check on the screen) with their banking information, date, and amount and then clicks the ‘send’ button. That information will then either go to your computer or to a transaction service, depending on which of the following two ways you choose to accept check payments.

(5)

The ‘print and pay’ method

This method is called ‘print and pay’ because you need to buy software that allows you to print the checks and deposit them in your bank to receive your money. This is a process just like using ordinary checks and you have to wait until each one clears to be sure of the money. This method is less expensive but more labor intensive and time-consuming than a transaction service.

A transaction service

Using a transaction service is similar to using the pay and print method for the buyer in that they enter all of their check information in an online form. That information is encrypted and transmitted directly to a clearing house and generally settled within 48 hours. The funds are then withdrawn from the purchasers account and deposited into the merchants account with a receipt e-mailed to the buyer and an online report available for the merchant.

Using a transaction service is faster than the print and pay method since the service confirms that all the required information is entered online by the customer at the time of purchase. For a fee, they will guarantee that the check is good for funds. Most services like this charge a set-up fee and a per check charge. Both the print and pay method and transaction service allow you to accept payment online, by phone, or by fax, since you can take the buyers account information and manually input it yourself. Make sure your bank will accept these checks and find out if you need to purchase any special paper for printing them on.

Accepting debit cards

When a payment is made through a debit card, the funds are immediately withdrawn from the purchaser’s bank account. The advantage to you, the merchant, is that you know the buyer has the funds to make the purchase and that it will not be charged back to you (like a check with insufficient funds). The advantage to consumers is that purchases are paid for straight away, so there is no ‘credit card shock’ when the statement arrives in the post.

The other advantage of accepting debit cards at your site is that you can do more to attract the teen market -- which according to a recent study, was estimated to be worth $10.6 billion in 2011. If your product or service appeals to a teenage market, you’ll definitely want to look into this option.

Contact your merchant account provider and ask them if you’re able to accept debit card payments as part of their service. While debit cards are still not widely used by online shoppers, this payment method is gaining popularity and is worth considering.

Using up a PayPal account

With over 100 million registered users, Paypal offers a number of different packages (including the credit card tools discussed in the last module) that makes them labour

(6)

appealing to online retailers, offline businesses, and buyers and sellers in online auctions.

But PayPal is most widely known for enabling anybody with an e-mail address to send and receive payments online.

The ‘send money’ side of PayPal allows you to use of funds from your credit card or check account to:

 Pay for an auction item

 Split a restaurant bill

 Pay for an online purchase

 Pay bills online

 Send money to another individual

Once the funds have been sent, the recipient will be notified that an amount is waiting for them, which they can then claim by going to www.PayPal.com.

(7)

The ‘request money’ feature is PayPal’s method of allowing individuals and businesses to request funds online. You can use this feature to:

 Receive secure, instant payments for auctions

 Sent an invoice to a customer

 Organize a charity fund

 Collect money for a group

The individual or business from whom you are requesting funds will be notified of your request via e-mail and instructed on how to make the payments through PayPal. PayPal is inexpensive to set up and use; in fact many of its features are absolutely

free – making it an attractive solution for start-ups and small online businesses. And

because you can get PayPal up and running on your Web site almost immediately, PayPal has become an increasingly popular method of payment online.

Using digital wallets (e-wallet)

The electronic wallet is a great concept whose time is not yet arrived: still, you should keep an eye out on this payment technology. Consumer confidence is sure to rebound as the initial security issues surrounding the e-wallet are addressed.

There are a couple of different types of e-wallets that can be placed into two broad categories based on their capabilities:

E-wallets that store card numbers

The easiest way to think of an e-wallet is as a virtual wallet that can store credit card and debit card information, passwords, membership cards, health information, and all the numbers of cards that currently get stuffed into a normal wallet. Software can be installed on a SmartPhone, Pocket PC, or Windows PC.

Some e-wallets make it easier for consumers to buy from you, since credit card numbers, for example can be copied from the e-wallet and pasted onto the online order form. To accept payments from this type of digital wallet you do not need to add any additional software or change your order form.

Other e-wallets automatically fill out the order forms with the customer’s credit card and contact information so that future purchases don’t require submitting the same information on the online order form.

E-wallets that store card numbers and cash

The second concept of digital wallet has been around for several years but has not really taken off with either merchants or consumers. In this version, consumers store digital cash, which has been transferred from a credit card, debit card, or virtual check to their e-wallet.

(8)

Digital cash is like having a virtual savings account where charges are made for ongoing purchases, particularly micro payments (small payments from $.01 to $10) that can be used to pay for access to digital information such as newspaper articles or software.

E-wallets that store digital cash require both the merchant and the consumer to download and use the same software. As a result, acceptance has been poor, so there is no need for you to be concerned about accepting digital cash at this point, but be aware of this payment method as it could become more widely accepted in the future.

Person to person e-mail payments

Person to person (P2P) e-mail payments allow individuals to use their credit cards or bank accounts to pay through e-mail. This process is similar to sending a greeting card over the Internet.

For example, when you send a greeting card, you select a card, add a personal message, then e-mail a link to the recipient to let him or her know where the card can be viewed.

You don’t actually send the card through e-mail. Likewise, with person to person, you don’t send a payment through e-mail, rather you send the link to a location from which the recipient can redirect the funds to his or her bank account or credit card.

For example, to transfer some money from a bank via e-mail, the sender completes the following steps:

1. Logs on to his (or her) online account at his financial

institution

2. Clicks the e-mail payment feature

3. Inserts recipients name, e-mail address, the amount, and the

credit card number or account where the funds are to be taken

from

4. Adds a personal note for the recipient, if desired

Once the center has accomplished these steps, the recipient performs the

following tasks:

1. Receives notification that the funds have been sent

(9)

3. Decides whether the funds should go to his credit card or into an

account

The major advantage of person to person e-mail payments is that neither party has to reveal their account information to the other party, nor is any money actually transferred through e-mail.

If you sell a service where your clients may wish to maintain their privacy (such as investment counselling for offshore banking) or if you sell a service where the client pays after the work has been completed (such as freelance Web design), this form of payment method might be especially attractive to your clients since it is less expensive than sending funds between banks.

Person to person e-mail payments are offered through PayPal and almost all online financial institutions.

Use an order form that customers can print out and fax or post to

you

It’s also important that you give your customers the option of ordering offline. Customers can be offered a form that they can print out and either post or fax to you so that you capture the orders of those people who may be uncomfortable giving their credit card number online and for those customers who may not have a credit card. Also when customers use the off-line order form, they are also given the option of entering their credit card number if they want to.

Although less than 10% of your orders are likely to arrive through the post or by fax, it’s still wise to offer these options. It’s better than turning down orders!

Make sure everything is explained very clearly to help make the customer comfortable with ordering from you. This is critical because it could mean that you lose the order if the customer doesn’t understand exactly what’s going on.

Using an escrow service

An escrow service is essentially a neutral, third-party money-handling service. Often used by online auctions, escrows provide protection for both the buyer and the seller in any monetary transaction – for a fee, of course, which may start at less than 1% of the purchase price.

The purpose of an escrow service is to make sure that all the terms and conditions of the seller-buyer agreement are met and that the transaction is taken care of quickly and properly.

Before paying through an escrow service, the buyer and seller have to agree to the terms of the transaction.

(10)

Then the buyer submits a payment to the escrow service, the escrow service verifies repayment, and the seller is notified that the product or service should be sent or enacted.

The escrow service then makes sure that the customer receives the shipments and subsequently pays the seller.

The advantage of using an escrow service is that both parties are well protected in the buying/selling process.

If you don’t necessarily trust your buyer or seller (as is possibly the case in an online auction where neither party has a prior relationship with the other) an escrow service can be a great option.

You can find an escrow service through the search engines.

Making it easy for your potential customers to do business with you is an essential ingredient of your online success. You don’t need to offer all of the payment options mentioned here, but it’s a good idea to match the payment choices you offer to your type of online business and your customers.

(11)

Do business internationally

How far reaching is your product or service? Is it something that has only local appeal? Or are you able to transfer it out of your immediate area, or even out of the country? Could you sell something that people in other countries will really be interested in?

If you do, it would be a crying shame not to take advantage of the worldwide market that is at your disposal thanks to the Internet.

There are a number of different ways to make your Web site welcoming to shoppers from around the world, without necessarily having all of your web pages translated into different languages and posted at a variety of URLs containing the appropriate country codes.

And frankly, you really shouldn’t spend all that time and money to do this unless you’re going after a strong market in another part of the world, and you know what you’re doing. Otherwise, you risk having your marketing message lost in the translation. For example, you can pretty much guarantee that if you simply take your site selling the British flag, translated into Japanese, and post it online, it won’t do very well!

However, having said that, they are a number of quick and easy things you can do to make your Web site more appealing to the global marketplace.

Use a currency converter

If you’d like to list your products in dollars, you may wish to simply post currency converter on your Web site so that online shoppers can calculate how much each item will cost in their own currency.

Of course, this isn’t the most hassle-free presentation of your offer to foreign shoppers. Shoppers from other countries will have to look at the price for each item they are interested in, then enter each price into the currency calculator, wait for the results, and then quite possibly start the process all

over again for another item. But at least offering the currency converter shows foreign buyers that you’re prepared to take their needs into consideration.

Of course, there’s nothing wrong with just listing your prices in the currency of your choice; if your foreign customers use their credit cards to purchase your product in the currency of your site, they’ll generally get a good conversion rate from the bank that issued their card.

(12)

Use PayPal to accept different currencies

If you plan to do a lot of business in other countries, you’ll want to get a little more sophisticated in your approach, making it as easy as possible for people from other countries to purchase from you.

Not surprisingly, PayPal is one of the easiest ways to accept some of the more common online currencies. With PayPal, you can send or receive payments in any of the following currencies:

 US dollars

 Pounds Sterling

 Euros

 Canadian dollars

 Yen

This is a very convenient payment method for your foreign customers, who can pay for their purchases in their selected currency and have their payments automatically converted into the currency that suits you.

It also extremely convenient for you, as you can accept your customers preferred currency without any interaction on your part. You don’t need to hold multiple currency balances, and you won’t incur any currency exchange fees when you deposit funds in your local bank account.

Even if you aren’t using PayPal at the moment, this could be a good solution that allows you to accept multiple currencies without any hassle for you or your customers.

Configure your shopping cart to accept different currencies

Some shopping cart systems allow you to include multiple currency options for payment, so you can send or receive payment in a number of different currencies. If you already have a shopping cart solution, look into what your package offers to see whether or not you are already capable of dealing with different currencies. And if you are not already set up with a shopping cart, now is the time to decide whether or not you will be dealing in different currencies.

If you have already bought shopping cart software that does not allow for multiple currencies, rather than going with an application service provider (ASP) you may want to look into hiring a programmer to rewrite your software for you. However, you’ll probably only want to do this if it’s really necessary, and if you can’t get away with a simple currency converter. Programmers can get very expensive!

(13)

If you’re really serious about selling to one country in particular, for example, if you think your clothing products might have a great audience in Portugal, you might want to create a separate page or even a separate Web site to address this market.

Whatever route you choose, make sure your ordering process is as uncomplicated as possible for both local and foreign shoppers.

Double your sales with the right shopping

cart

It sounds incredible but it is true: the right shopping cart has the potential to more than double your sales!

Many people don’t know this, but ‘shopping cart abandonment’ is a serious problem. About 55% of online shoppers have abandoned the shopping cart while shopping. The main reason that customers desert their selections before actually completing their purchase is that they are frustrated with the shopping cart itself. Shoppers abandon the cart when…



They can’t browse through your product freely



They can’t find pricing and product information easily



There are too many forms to fill in and the process takes too long



The cart loads too slowly

Obviously, if you want to streamline your ordering process by adding a shopping cart to your Web site, then it’s crucial that you choose one that will be user-friendly for shoppers.

The right shopping cart could result in a much greater number of shoppers actually completing their purchases.

(14)

The shopping cart

A virtual shopping cart is a lot like the metal shopping trolley at Tesco’s with a whole load of features added on. The virtual shopping cart collects products that visitors to your site have an interest in purchasing, and shoppers can ‘add’ or ‘remove’ items as they go along, just like a real shopping cart.

But then the virtual shopping cart takes on other duties. It first calculates the total of the customer’s order, including taxes and delivery costs. Then, when the customer is

ready to make a purchase, the cart passes all this information over a secure site – a

payment gateway – to your merchant account, where credit cards are approved or

(15)

Once the shopping cart hears back from the merchant account, it generates a receipt and e-mails it to your customer, then sends you a fax or an encrypted e-mail containing all the details of the order and all the customer information you need to send out the order.

If you only sell one or two items and don’t plan to add more, you don’t really need shopping cart – you can use a simple order form instead. But if your e-business is just a bit bigger than this, or if you plan to expand at any time in the future, you’ll want to have a good shopping cart in place.

Different kinds of carts

There are literally hundreds of shopping carts available for you to choose from; however, they typically fall into one of the following three categories:

 ASPs (Application Service Providers) provide the shopping cart as a service to

you. The ASP hosts the cart on their server and gives you everything you need to run it. Signing up with an ASP is like paying someone to take care of the whole process for you.

 Shopping cart software is just what it sounds like – software that you pay a flat

fee to license. In this case, you are responsible for installing and hosting the application yourself.

 Customized shopping carts are ones that you build yourself. In our opinion,

there is no need to write your own shopping cart software unless you have very specific needs and heaps of money!

The average small business Web site doesn’t typically need this level of customization. And given the wide range of cost-effective software and solutions that are now available, there is certainly no need to go through all the trouble and expense. So we won’t discuss this option any further.

Of course, knowing that you can choose between software and ASP shopping carts doesn’t really help you select the right one of your business. We will go over the other elements you’ll need to consider before you make a decision.

What’s included with a typical shopping cart?

The options that come with your shopping cart can vary greatly, based on the package you choose. However, both ASPs and software packages typically include:

 A shopping cart that takes the products selected for purchase by your customer and calculates total purchase price, including VAT and delivery costs

 A maintenance system that allows you to easily add new products, remove old ones, adjust prices, and set up special offers

(16)

 An order retrieval system that provides you with all the information you need to fulfil orders (like name, postal address, product ordered, etc).

On top of these very standard features, there are usually a variety of other options; some of which you may have to pay for, and others that may be included free as part of the package – such as:



Storage of customer information



Revenue tracking



Inventory management



Advertising capabilities



Permission marketing

One of the key differences between any ASP and software shopping carts is that ASPs also come with a merchant account and payment gateway (for which you may be charged additional fees) while software packages typically do not.

When you’re considering using an ASP or software, before you make your final purchasing decisions, you’ll want to make sure that your shopping cart is going to be compatible with your merchant account. This is absolutely crucial because not all shopping cart and merchant accounts will work together. If you already have a merchant account, contact your provider and ask for a list of the shopping carts that are compatible with it.

Customizing your own shopping cart

Some carts allow for customization and others do not. You want to make sure that you have the option of customizing your shopping cart software to include logos, graphics, and colors that match the overall look and feel of your Web site; a shopping cart that looks drastically different from your site may confuse potential customers -- which could cause them to leave before completing their purchases.

Whether you choose an ASP or software, you will be offered at least one, or a combination, of the following three options for customization:

 Web page templates that you can just fill in with your product information, prices, descriptions, etc. You don’t need to know, or even see HTML!

 Copy and paste HTML pages that have all the coding in place, so all you have to do is copy and paste the code, then add the details you need to create your web pages. You can usually modify the code if you want to.  An easy-to-use wizard that takes you step-by-step through creating and

(17)

Each of these options is fairly user-friendly; however, if you’re not comfortable working directly with HTML code, you should probably stick with the wizards and templates. On the other hand, if you plan to customize your carts beyond the standard options – i.e. if you want to integrate the software or alter the carts’ functionality to fit your specific needs – you may need access to the source code.

With software, you tend to have more control over customization than you do with an ASP. You usually have all the source code you could possibly ever want!

ASPs however may not offer you the option of customizing their source code, and even if they do, their code might be pretty complicated. Because ASPs use host carts for many different clients, it’s usually easier for them to maintain control over the way the cards work. This is something to watch out for if you are interested in customizing your cart to any great extent.

Making changes to your shopping cart

Obviously, your inventory and your offers will never remain exactly the same, so you’ll need to make changes from time to time. All shopping carts will provide methods of making changes to pricing and product descriptions, updating your inventory, etc. You can make the changes using either ‘browser based’ or ‘database’ maintenance, depending on what your package offers.

Browser based maintenance is the easiest way to go. With an ASP cart, you can make changes by logging onto the ASPs Web site and going into an administrative options page that allows you to update prices and inventory. With a software package, you go through your own ‘office’.

Database maintenance is a little more difficult. It lets you maintain a database on your desktop computer and upload revisions on a regular basis. While this can be convenient, it’s really only needed if you’re dealing with hundreds of products.

Making your shopping cart user-friendly

Your customers don’t care about the ‘behind-the-scenes’ function of your shopping cart – they just want quick, easy shopping. Keep in mind that many people are still a bit wary of shopping online, so you’ll want to lead the customer by the hand through the buying process, and all along the way explain each detail (such as site security when entering credit card information and how billing and delivery will work).

It’s a good idea to keep your cart as simple as possible. The last thing you want is to confuse your customers or waste their time. If your cart has all kinds of fancy images, it will take too long to load; if it has an array of pretty pages, it will take too long for the customer to get through. The net result is that you will lose your customers. Keep it simple.

 Provide plenty of product information and prices up front. In fact, make sure

your customers have all the information they need before they even get to your shopping cart. Your Web site should offer everything your customers need to

(18)

know, so that clicking the ‘Buy Now’ button is the last decision they make after looking through your Web site.

 Make sure your cart and your Web site are easy to navigate. Make sure your

shoppers can easily move back and forth between the cart and your Web site to browse through your products and add more items to their orders.

 Include plenty of payment options. When customers are ready to buy, don’t

limit their payment options! Most pay by credit card, but other methods are increasingly available, as we’ve already discussed.

 Keep in touch with your customer until the transaction is complete. Remain

in contact with each customer right up until the product is delivered. If something is out of stock, let the customer know when it will be available and how long delivery will take.

Your shopping cart should not only e-mail the customer at the time the order is placed, but also when the product is delivered. Amazon have this really well organized and it does inspire trust in the customer to buy online.

The key elements when choosing your shopping cart

Check out customer views of the shopping cart you’re interested in purchasing to make sure that people are satisfied with its capabilities. Make sure the cart you choose gives you:

 Control: the level of control you need will depend on your business and your preferences. Make sure the cart you choose offers the level of customization you need and allows you to make changes and adjustments without too much difficulty.

 Security: make sure the customer is always entering credit card information over a secure server (SSL connection). This can happen either at the payment

gateway, which is always secure, or in your shopping cart – which means your

cart needs to be hosted on a secure server.

 Flexibility: your cart must be compatible not only with your merchant account and payment gateway; it also needs to be flexible enough to accommodate other programs you may wish to run with it in the future. For example, you may have an affiliate program or are thinking about starting one. You want to ensure that your affiliate tracking solution is going to be compatible with your shopping cart.

 What you pay for: you may run into ASP carts that claim to offer total package solutions, but that actually outsource different aspects of their carts to other companies. For example, the cart, merchant account, and payment gateway could all be operated by different vendors, contacted by the ASP. In a situation

(19)

like this, if anything goes wrong and you need questions answered, you could find yourself being given the runaround.

Which is better: ASP or software?

Whichever shopping cart solution you choose, whether it’s an ASP or software, it must meet the needs of your individual business. Before you make a final decision, consider the following questions:



Are you selling a handful of products, with no plans for

expansion?



Are you planning to grow your business in the near future?



Are you comfortable looking after the technical details yourself –

like coding your own web pages?



Would you prefer that someone else looked after the design and

implementation?

ASP shopping carts can be a great solution for those who may not be technically inclined. They typically offer package deals that ensure you never need to worry about issues of compatibility such as whether or not your shopping cart is going to work with your merchant account.

However the drawbacks are:



ASPs generally offer you less control over the look and

functionality of your shopping cart.



They may also limit your growth to a certain size, which can be a

real problem if your business starts to take off.

Also, if you already have your own merchant account, you’ll be limited to the ASPs that your provider is compatible with.

Shopping cart software, on the other hand, typically gives you more control over the look and functionality of your cart and gives you greater flexibility to grow. However, because you won’t usually be getting a package deal, you’ll need to deal with issues of compatibility. You’ll need to make sure that your shopping cart, merchant account, and payment gateway will all work together… this will take some homework!

(20)

While software may not be as convenient as an ASP, it’s actually less expensive in the long run, as you pay a one-time flat fee for the software as opposed to a monthly fee for an ASP.

The cost of shopping carts

There are carts that are offered free by various online organizations – but beware!

Free carts can be surprisingly expensive in the long run. You’re likely to spend a fortune on programmers to make your cart usable in the first place – then, you lose out on the documentation and periodic upgrades that are offered by established carts. Plus, free shopping carts will limit you quite severely in size, and switching to a new cart can be quite a hassle.

With an ASP, you’ll pay a monthly fee of somewhere between $30 and $195, depending on what extra services are included, and sometimes an initial or annual fee. You may have to pay extra for your merchant account, depending on the package you choose, but you should get a slightly lower price through the ASP.

You’ll also need to set up a merchant account, which could cost anywhere from $49-$150, plus, very often, a small percentage of each sale.

Where to look for your cart

Have a look at a variety of carts and think about your specific requirements. The most elaborate carts can be impressive, but you might not need every option that’s available. Focus on the needs of your particular business and potential customers. Think about whether you want to have everything included in one package or want to put the components together yourself. If you want to have more control and a high

level of customization, then software might be your best option. If you’re not as

technically inclined and would prefer that someone else host your cart and take care of compatibility issues, then an ASP might be better choice. Consider taking advantage of total package solutions that come with a merchant account, payment gateway, and a flexible, easy-to-use shopping cart.

With the right system, you can set up your shopping cart so that it blends into your Web site almost seamlessly in a way that makes sense for your business and your products. Not only will this make it easier for you to manage your cart, it will also make it easier for your shoppers to purchase from you.

Don’t forget that for the online buyer, the shopping cart stands in place of face-to-face interaction with a salesperson or customer service representative. So make sure your cart represents you in a way that welcomes buyers and promotes your business. Make sure you keep that 55% of customers shopping!

(21)

Delivering your products

If you are selling a product rather than a service on the Internet, one of your key considerations has to be how you plan to deliver purchased products to your customers.

There are a few different approaches you can take to handle this part of your business, including:

 Simply do it yourself, and send goods to the buyer through the USPS or other delivery service

 Using a drop shipper to supply and ship your products

 Using a third party fulfilment house

 Where appropriate, delivering products electronically

Of course you consider these options have to take into account your business models, your shipping requirements, and the product itself.

If you're selling grand pianos, you will obviously have to rule out a regular mail delivery services as an option. If you're manufacturing your own products, you certainly won't need a drop shipper. And if you are selling kitchenware (or anything tangible) these items obviously can't be delivered electronically.

Here are the different elements involved with all of the shipping options to enable you to determine for yourself which model or combination of solutions best suit your business.

Do it yourself

There is absolutely nothing wrong with simply packing up your products and shipping them yourself if you have a few key things:

 A product that is easy to ship  The time to package and ship it

 Enough inventory on hand for a quick turnaround

(22)

If you're not moving much stock, or you don't need to warehouse a lot of inventory, doing your own shipping can be good solution. You can use services like the USPS or other parcel delivery services and simply package, label, and ship the orders yourself. Be aware, however, that if you plan to build your business to the point where it is no longer small start-up operation, you may want to consider other options. Fulfilling orders can be much more time-consuming than you might imagine, once those sales start rolling in.

Drop shipping

‘Drop shipping’ is simply an arrangement between you and the manufacturer or distributor of the product and yourself whereby the manufacturer or distributor -- not you -- ships the product to your customers and saves you the hassle of shipping your products yourself.

Choosing your drop shipper

So how do you go about finding a reputable drop shipper for your business? Well, here is where doing your homework will pay off! Whenever possible, you'll want to set up drop shipping arrangements directly with the manufacturer of the products you want to sell.

The fewer middlemen you have to go through, the bigger your profits will be!

Let's say you want to sell wooden toys on your Web site. After spending some time combing through the search results for ‘wooden toys’, you'll come up with a list of manufacturers of wooden toys that you might want to supply to your customers. From then, you'll want to contact the manufacturers directly and asked them if they drop ship their products.

Some will let you know straight away that they are able to dropship for you. Others will say they simply don't offer drop shipping. Smaller manufacturers may never have even heard of the concept!

If the manufacturer of the product agrees to dropship for you --

that's great!

You can be fairly confident that you'll be getting the best price possible. However, if they don't offer drop shipping, you'll have to keep looking for another alternative. This usually means tracking down the distributor.

The distributor is simply a company that maintains a large inventory of other company’s products and distributes those products to smaller companies.

The best way to locate a distributor is simply to ask the manufacturer of the product to recommend one. Most manufacturers have established relationships with at least a couple of distributors, and they should be happy to put you in touch with one of them.

(23)

Another great way to find a distributor for the type of products you wish to sell is by looking through related trade magazines. You will often be able to find listings of manufacturers and distributors advertising in the back of these publications.

What to expect from your drop shipper

Once you've tracked down a few manufacturers and distributors, you'll need to get on the phone and contact them directly. Ask what they need to enable you to set up an account with them. They may need things like credit references and your limited company registration number but ask them. You may not need any official documentation, particularly if you're not asking for credit to begin with.

Most companies that you contact will be more than happy to speak with you -- after all, you are going to sell their products for them. When you call, simply ask to speak with someone about becoming a vendor for their products. Have a list of questions to hand such as:

 What wholesale price they can offer you on their products? You need to

make sure that the wholesale price they offer is low enough that you will be able to generate a good profit based on what you will be able to sell their products for.

 Do they charge a handling fee for drop shipping? If so, how much? Most

companies who dropship simply add the cost of this onto your wholesale price but some will charge a separate handling fee. This is to offset their cost of packing and processing your order for you.

 Do they have a monthly minimum or maximum number of products they will dropship? Some companies will require that you sell a minimum amount of their

products each month. A few will also have a monthly maximum of units they will ship for you. If you think that you'll be selling more than this number each month, they will refer you to other distributors.

 How do they ship their products? Almost every company that drop ships

products will use a major nationwide delivery service. Ask them to include tracking numbers with the order confirmations they send. This will save you many potential problems when customers ask, ‘where's my order?’

 How do they invoice you? Most drop shippers will invoice you at the wholesale

price of the product plus shipping and handling as soon as they receive an order from you. With others, you may be able to set up a monthly cycle where you submit payments for all orders at the end of each month.

 How do they deal with product returns? Find out what their policy is regarding

(24)

on their products and will deal with returns for you. This way, if a customer contacts you with a return, you can simply tell them that the manufacturer will be happy to speak with them directly. If the manufacturer doesn't accept returns, be careful. You will be the one stuck with replacing defective merchandise for your customers!

You'll also need the manufacturer to send you product information, such as descriptions and images of the products for you to put up on your Web site. Many companies will simply tell you to take the images directly from their own site. Others will e-mail you a link to their product information. Companies with large inventories may want to send you a CD of their product images and descriptions.

When setting up an account with a distributor, ask lots of questions about shipping and order fulfilment, as these are the two areas that can potentially cause most problems. Make sure that they are able to confirm your orders quickly, and that they can provide you with tracking numbers. You need to be confident that you will be able to deliver your customer’s orders promptly.

How to avoid common drop shipping scams

Drop shipping can be a great solution for your business, but be warned: there is no shortage of crooks and scam artist just waiting to take your money in exchange for the promise of ‘instant drop shipping riches’ or ‘ready-made online drop shipping stores’. Here are a few things to watch out for when you're researching drop shipping:

 Companies offering to sell you lists of drop shippers for a couple of dollars. Remember that you get what you pay for. These lists are usually years old and basically useless.

 Companies charging you a monthly fee to be your drop shipper. Think about it -- why would a company charge you to sell their stuff? Their products are either worthless junk or they are marked up far too high. Either way they know your online store won’t be able to sell any of them, so they need to make their cash from you through a monthly fee.

 Companies offering you a turnkey online business. Beware of offers of a ‘ready to go business’ complete with Web site, wonderful products (that can only be purchased from them) and a merchant account that allows you to accept credit cards. The strategy here is to get you to spend your money advertising and selling their products that they are buying from real wholesalers, marking up, and selling to you. These companies usually also charge a one-time and/or monthly fee.

The bottom line is that no one is going to do your work for you. If you want to set up a real online business, you're going to need to do some legwork. Any company that seems to be making your job easier by providing you with lists of products to sell or setting up your site is just going to be eating into your profits. As always, ask yourself if their offer seems too good to be true. If it does, you can be sure that they will be taking their cut!

(25)

Common drop shipping problems

No business model is without disadvantages and drop shipping your products can lead to some serious problems if you're not very careful. Here are a few of the most common problems, along with untried, untrue solutions to help you save some serious time and money:

1. Shipping delays

Remember how we told you that the best thing about drop shipping is that you don't have to worry about shipping your products? Well, this can occasionally create problems.

Up let's say you sent an e-mail to your drop shipper asking them to send an order to your customer, and as it happens they are sold out of that particular item at the time. The longer it takes them to let you know that the item is unavailable, the longer it will be before you can pass that information to your customer, and the worse you’ll end up looking.

The solution is to insist on prompt order confirmations from your drop shipper. Ask them to send confirmation e-mail or faxes to you when they've processed your order, letting you know that the order has been shipped. If they find that they are out of stock, make sure they let you know immediately.

2. Tracking shipping status

Imagine your customer calls you up a week after ordering a product and asks what the status of their shipment is. Unfortunately, since you didn't ship the product, you have no idea what to tell them. And if your customer is demanding a refund for an order that has already been shipped, you'll be paying for it when your drop shipper sends you the invoice.

The solution is to use the online tracking of the delivery services themselves. If a customer calls to check the status of their shipment, you can instantly tell them where their package is by entering their tracking number on a Web site. Even better, include the tracking member in your confirmation e-mails to your customers and let them track their orders themselves. Just be sure to get your drop shipper to provide you with tracking numbers once your orders have been shipped.

3. The drop shipper backs out

Occasionally, the manufacturer or distributor will simply back out of their drop shipping agreement with you. They may decide that the work involved in packaging and shipping their products for you simply isn't worth the trouble. Unfortunately, you'll never really know how reliable your partners will be until you've placed a few orders with them.

(26)

When you are setting up your agreements with your drop shippers over the phone, you should be able to get a good sense of how reliable they are based on how they answer your questions. This is one of those areas of your business where you have to follow your instincts!

4. High shipping costs

Finally, you can run into problems with shipping costs if you work with a number of different manufacturers and distributors. For example, let's say a customer orders six products from your Web site, with each one being drop-shipped to them by a different manufacturer or distributor. They'll have to pay shipping and handling costs on each individual item, and that can add up to a lot of extra money. If your customers see that they'll have to pay an extra $40 to ship $80 worth of goods, they'll abandon their order every time.

You’ll avoid these abandoned orders by just using one manufacturer or distributor on your Web site. Keep in mind that many distributors deal with thousands of products, usually related to each other, so you can usually sort out all of your products with one distributor. Of course your site may never run into this problem.

If you focus on selling one or two niche products, you can reduce the likelihood of customers ordering more than one product in the first place.

Fulfilment houses

First of all, a fulfilment house is simply a company that has live operators ready and waiting to take your orders 24 hours a day, seven days a week. Your customer places an order and that order is send to your fulfilment house. The fulfilment house looks after the picking, packaging, and shipping duties, thereby fulfilling your orders for you. Choosing your fulfilment house can be tricky. Since the explosion of e-commerce, a whole range of fulfilment houses has flooded the market, attempting to cash in on the demand. Choose your fulfilment house carefully and try to find one that is within your local area.

Electronic delivery

If you have electronic products, such as an e-book, an audio presentation, or a video presentation, you're in luck. That's because electronic delivery is hands down the easiest and cheapest way to deliver materials on the Internet today.

In fact, when you set up your electronic delivery system, it's not only essentially free -- it's also automatic. When you set up your electronic delivery, you can get your computer to take orders and ship them to the appropriate customer without you even lifting a finger. And it’s all done for free.

It such a fantastic system that it would truly be a shame not to take advantage of electronic delivery on the Internet -- especially since information products are such a

(27)

hot commodity online these days. And don't limit yourself to e-books; your electronic products might include:

 E-zines  Newsletters  Audio presentations  Video presentations  Catalogues  Brochures

And lots more…

But the problem with electronic delivery of digital products is this one important points: if you deliver your products electronically, you must keep it safe from thieves.

It's a bigger problem than most people realize: information theft, copyright infringement, and fraud are now commonplace. And nowadays, with information so readily available online, it is a problem that is growing in leaps and bounds.

If you decide to market a product that will be delivered electronically, you must consider all your packaging options. There is a wide variety of formatting and packaging choices out there, each with its own benefits and problems, including:

 Text files: while text files are widely supported, they are very insecure. If you

send out your information in a text file, you can certainly expect it to be stolen.

 DOC files (Word documents): DOC files are not a very good way to distribute

information products, mainly because the file very quickly grows very large and they can take forever to download if a user has a slower internet connection. DOC files to allow for slightly more security than text files, as you can protect a Word document with a password so that it cannot be viewed until a password is entered. Unfortunately, you have no way of controlling whether or not this password is shared, or whether or not the user copies and pastes your information once they have the password.

 PDF files (Adobe Acrobat): PDF files allow you to add images to your

presentation and since they have great compression ratio, they download quickly. However, they provide only limited security through password protection. People can easily share your password, making it easy to distribute your product in large volumes.

 Custom-built files (Macromedia Director): custom-built files are great because

they are designed to your specifications and can be password protected. Unfortunately, once again, you have no control over whether or not people share

(28)

your password. What's more, unless you're a professional programmer yourself, you'll need to hire someone to design and building it for you, which can work out very expensive.

 HTML documents: if you decide to distribute the information in your package in

HTML files, you can use any of the Internet technologies that you see on a web page. The customer can literally surf through your document. Keep in mind, however, that HTML files can be extremely insecure. People can simply upload your files to the Internet to create their own site using your information.

These are the formats that most of us use or are at least familiar with. Most of us have seen and worked with Word files, PDF files, and probably HTML documents. It would be nice to simply use these formats for your e-book and electronic products wouldn't it?

Yes it would, but you are going to run into security issues. The fact is, passwords can be shared; documents can be posted on newsgroups, forums, and on Web sites; and theft and piracy on the Internet happen all the time. Unless you can encrypt your work, it is easy for thieves to copy your information.

Consider the following when choosing your electronic packaging software:

 Are people going to be able to share the password you give them? You

need to be able to limit the number of times a password can be used.

 Are people going to be able to copy and paste your information? If your

electronic product has no copy protection, then you should expect trouble. Anyone with a word processor will be able to copy and paste your information in large quantities.

 Do you have control of your product, even once it is in your customer’s hands? What happens when a customer requests a refund, or the payment

fails? Do have the way of disabling the product or are you forced to let them keep it?

 Does the software allow you to include hyperlinks, graphics, audio, video, forms, etc? Interactive products are very professional and give you a huge edge

over your competition. Make sure that your packaging software gives you the option of including technologies such as Flash, Shockwave, RealAudio, Real video, JavaScript, etc.

 Does the software ensure that your product is easy to package? How long

will it take? Is a going to involve weeks of frustrating trial and error or a few short minutes of point-and-click?

(29)

 Is the price fair? There is no reason for you to spend thousands of dollars on

expensive software or professional programmer's. Cheaper alternatives exist so take advantage of them.

Alleviate

the

concerns

of

anxious

customers

Surprisingly, there are still a lot of people out there who are having trouble adjusting to the faceless nature of e-commerce. For various reasons, many people are still uncomfortable or nervous about making online purchases.

In fact a 2011 study showed that 89% of purchasers over 16 years of age express some level of concern about the privacy of their personal information when they buy online. And only 11.5% of Internet users surveyed believe that information posted by individuals was reliable and accurate. Facts that can affect how receptive people are to offers from small, home-based business owners.

So how can you make a nervous buyers comfortable enough to buy something from your Web site? Well, there are some important steps you need to take…

Explain everything

Take your buyer by the hand and carefully take them through each step of the online ordering process. Tell them how to fill in the form, explain how the product is shipped, discuss any special features they may encounter, even be sure to explain that their order isn't processed until they click the ‘send’ button at the bottom of the screen. Particularly, explain that your ordering and payment system is completely confidential and completely secure (make sure, of course, that it is). Your customer needs to know that making a purchase from your site will not be security risk. The best way is to discuss each step, focusing on anything that a first-time buyer might be confused by or wary of.

Try to look professional at all times. A clean, professional looking presentation and ordering system will make the world of difference to how much your visitors will trust you.

Confirm the order by e-mail

Once your customer has ordered from your site your next job is to put the customer at ease by confirming their order via e-mail. This lets them know that you have received their order and you've begun processing it. Plus, it reassures some that their order information is not lost somewhere in the system.

Online marketing is not like a retail shop where you have a live cashier. Don't overlook the psychological impact that a simple electronic ‘thank you’ can have on the customer.

(30)

It will also reassure them to know that you have not just taken their money and run off with it. By confirming the order via e-mail, you assure the customer that you are a legitimate company. If you are using an automated ordering system, the confirmation can automatically be sent to the customer via e-mail, literally moments after they order.

If you are using a manual ordering system where the order is simply e-mailed to you, try to send an e-mail confirmation within 24 hours, or set up an auto responded that is ‘triggered’ to send a confirmation straightaway.

Privacy policy

You should include a privacy policy on your Web site. It is your company statement that it will protect and probably manage the customer's personal information. This allows customers to share personal information without the fear of it subsequently being given away or sold.

There are services online that will help you create your own privacy policy. Some companies use a firm of lawyers to draft their privacy policies, but this is not really necessary and can be very expensive. You can download legal documents from the Internet quite cheaply and adapt them to your own business. Have a look around for a company you like.

(31)

Acceptable use policy

You should also include an acceptable use policy, which is your company's official statement of policy governing the use of your systems or products. This is the document in which you state your position on issues such as spam, opt-in e-mail, and fraud. You particularly need an acceptable use policy if you will be entering into any business relationships with other people or companies.

If you are thinking about joint ventures, partnerships, affiliate programmes, or anything like this, put together an acceptable use policy before you proceed to ensure that your company is protected from allegations brought on by misuse of your tools, services, or resources. Don't forget that having your name attached to someone else's mistakes can be just as bad as making them yourself!

An acceptable use policy also gives of element of professionalism, credibility and security to your site. If your customers are aware that you are policing the use of your site and monitoring the actions of your partners and affiliates carefully, they will be that much more inclined to trust you.

Certification

You can help to establish trust and credibility online by showing your customers that you meet the standards of an independent, third party reliability monitoring program. Find a way of getting certification that suits your business.

Security information

Include security information on your order forms to help soothe the nervous buyer. A statement on your order form such as, ‘Welcome to our secure online ordering form’ along with any other security information helps quell the fears of nervous buyers. Also people look for the padlock in the address bar of a website they are visiting.

(32)

Follow-through on your promises

If you want your customers to trust you, and buy from you again, you need to make sure that you always deliver your end of the bargain and follow-through with your promises.

Support every claim, promise, and policy you make on your Privacy Statement and Acceptable Use Policy. Do everything possible to keep your site and your ordering process professional by observing the following:



Ensure that all additional charges, delivery costs, taxes etc are clearly

stated on your order page.



Always deliver the product to your customer within the time you have

promised.



Reply to customer questions and complaints promptly.



Make sure you honor returns and refund policies.



Do whatever you can to reassure your customer on your site.

More and more people are becoming comfortable using the Internet and buying online, but you still have to work at making your customers feel as comfortable as possible before they'll buy from you.

This is the same when you shop in a ‘real’ shop in the high street -- you wouldn't buy something from a tatty shop that was badly organized and didn't even have a proper cash register. There are just certain standards that consumers have come to expect.

(33)

Automating your business

Did you realize that 15% of your customers expect a response to their e-mails within an hour of sending the message? Another 15% expect a response within six hours, and 45% within 24 hours?

In reality, only 30% of online businesses are actually providing this level of response… of the remaining businesses:



7% respond within 24 to 36 hours



3% reply within 36 to 48 hours



9% respond after 48 hours



And

amazingly, 51% of businesses don’t bother to respond to

customer questions at all!

What this means is that, despite all of the technology available, nearly three-quarters of Web site owners have no idea how to manage their customer service -- and even fewer know-how to automate their customer service!

Automate your customer service

Although things could start off quietly with your new business, before you know it, managing your e-mail can become a full-time job. If you plan to develop your business, you can't afford to be spending your days chained to your computer, replying to e-mails and having to e-mail people individually… especially if you want to grow your business quickly.

The beauty of doing business online is that you can automate so many day-to-day aspects of your business, including your customer service. That means you can set up your site to automatically:

Developing an e-commerce site