Starting an E-Commerce BusinessSo you’ve decided to take the plunge and start an e-commerce business – congratulations! As you probably already know, there are lots and lots of choices to make. Choosing incorrectly at this stage will cost you time and money down the road, and once you get busy, time is not something that you will have in abundance.  I’ve seen too many businesses rush to get online, only to realize they made a critical mistake on their cart software, picked the wrong hosting company, didn’t secure their site correctly, and the list goes on and on. Hopefully this guide will help you navigate through those choices and avoid critical mistakes.

Please note that this guide doesn’t take into account all of the business questions that should be answered before you begin:

  1. What you are you planning on selling?
  2. Will you be selling domestically only or internationally?
  3. Are there any trademarks or copyrights that you need to be aware of?
  4. Who is your competition and do you stand a good chance of beating them?
  5. Are there any rules or regulations that apply to selling your product online?
  6. What domain name will you be using?

Essentially make sure that you have really thought your business out and taken the steps necessary from a legal and accounting perspective.  Once you have all of that sorted, it is time to get started!

Choosing the TYPE of Shopping Cart

The biggest and most important choice you are going to have to make is which shopping cart to use, as you can’t sell online without one of those!  First, you need to decide which type of cart is going to work best for you – hosted (Saas) or self-hosted.  Here are descriptions of each:

Hosted (SaaS)

A hosted cart, or Software as a Service (SaaS) cart is sort of an all-in-one service that is relatively new.  You pay a monthly fee to a company for the right to use their software on their servers. They are in charge of the code, security, upgrades and pretty much everything that has to do with the software and hosting.  The advantages of these types of carts is that they are exempt from PA-DSS regulations, and you don’t have to worry about any of the hosting or tech stuff.  They are also extremely easy to get started on, you could have your store up in a week.  The disadvantages are that you don’t have as much control of the software, and the monthly fees can get quite steep as you get busier and have more products online.  Some carts also take a small percentage (1-2%) of your sales in addition to the monthly fee.

These types of carts are best suited to sites that don’t require a ton of custom programming and someone who doesn’t want to deal with any of the ‘tech’ stuff.

Self-Hosted 

Self-hosted carts are much more powerful, but also require a lot more work to get up and running.  You purchase a license from a software vendor, download the software and install it on the hosting account of your choice.  The advantage of these types of carts it the flexibility they offer – you own the code so you can do whatever you want with it.  If the company goes out of business some day, you still own the license and your site will still function.  The disadvantage is that they have a higher up-front cost for the license, and you will also most likely need professional help to install the cart for you.  Upgrades are also your responsibility, and you will need to maintain a hosting account as well, and PCI Compliance factors into things as well.  You’ll need to pick a very good hosting account as well, as that is what will be powering your entire site.  It needs to be fast, PCI Compliant, secure and have a great server management team that can be reached 24/7.

Self-Hosted carts are best for businesses that want full control over their site and code, have a professional they are planning on working with, and want to develop custom features or functions.

Choosing the Shopping Cart Platform

Once you choose which type of cart you want to go with, you’ll need to pick a cart platform that you want to work with.  The rule of thumb here is to pick a cart that fits 75% of your needs out of the box. Don’t just think about what you need today, but think about how your business will be running in 5 years. If the cart is missing a key feature that you need down the road, you’ll need to switch platforms and that is no fun!  Also don’t pick a cart just because it is the current trendy thing or your friends are using it. This choice needs to be about your specific business and what works best for YOU.

Cart companies come and go, so we have a page dedicated to the current ‘top 3’ which you can find over here.

Payment Gateway

Now that you have chosen your cart it is time to decide on how your customers are going to pay for their purchases.  Since you can’t store credit card data on your server anymore, you need to utilize what is called a Payment Gateway to handle this for you.  Essentially a Payment Gateway is the software that collects the credit card info, processes the charge, and deposits the money into your bank account.  There are hundreds of processors out there, but there are two in particular that we recommend:

Authorize.net – probably the most popular gateway these days.  The monthly fee is about $30 and they will also charge a percentage of your transactions depending on your volume.  Easy to set up and integrate with either of the carts listed above.  The disadvantage of authorize.net is you also need a merchant account, or bank account, to deposit the money into.  Beware the hidden charges on these kinds of accounts, some banks will tack on a ton of them.

PayPal Pro – our favorite gateway, PayPal Pro works just like authorize.net but all of the money goes into your PayPal account instead of a bank account.  Fees are similar to authorize.net and it will also integrate quite easily into most shopping carts.

Stripe – this is a newer entry to the credit card processing game, and is the system that powers Shopify Payments.  Easy to integrate, no complicated setup or fee structure and it also includes Apple Pay.

In addition to your main credit card processor, there are a number of other ways customers can pay.  The goal is to make it as easy as possible for them to check out, so offer as many options as you can.

PayPal Standard/PayPal Express – this payment methods sends customers to PayPal to pay, either with their PayPal balance or a credit card.  This should not be your primary payment method, as there are some people who either don’t understand how PayPal works, or totally hate it.  Offering just PayPal as a payment method makes your site look amateur, and it will cost you a good chunk of your sales.

Amazon Pay – This lets your customer pay with the existing info stored in their Amazon account.  Since just about everyone uses Amazon these days, this makes it especially easy for mobile shoppers to check out without having to type out their credit card info each time.

Apple Pay – another service that lets Iphone/Ipad users check out with their fingerprint.  Doesn’t get much easier than that!

Bitcoin – if you aren’t familiar with Bitcoin, it is an ‘alternate’ currency that seems to fall in and out of favor quickly.  Most sites won’t want to offer this, but if you are selling tech equipment or computer gear, this may be a nice option.

Shipping

Shipping is probably the most complex piece of setting up your store, and which methods and options you offer will depend on exactly what you are selling.  The goal is to offer your customer as many choices as possible, both for the speed of the delivery service and the cost.  Many of our clients use USPS Priority Mail, as it not only offers competitive pricing, but free boxes!  You’ll want to offer at least one ‘economy’ method (USPS Priority, UPS Ground, FedEx Ground) as well as at least one expedited method (USPS Express, UPS Next Day, FedEx Overnight).

Most shopping carts offer real-time rates based on the product the customer is purchasing and the destination zip code.  Make sure you bump that price up a little bit to cover your handling/packaging.

You’ll also want to offer Free Shipping if possible, as Amazon Prime has made it so that customers almost expect it.  Plus, you’d be amazed at how much higher your average order value is when you offer it.  Customers will spend $20 more just to save $5 on shipping.  It isn’t logical, but it is true!

Once you get busy, you’ll want to consider a third party shipping service to help you with the logistics of packaging up multiple products per day.  You definitely don’t want to be cutting and pasting addresses into labels, or worse, writing them by hand!  There are a number of services who will automate this for you, as well as syncing your orders with your accounting software.  Here are the ones we recommend:

ShippingEasyshippingeasy.com – the name says it all, this service is extremely easy to use.  It will sync all of your sales channels (Amazon, Etsy, your Shopping Cart) as well as your accounting software (Quickbooks, Xero).  As an extra added benefit, you’ll get a nice discount on USPS shipping costs as well!

ShipStationshipstation.com – a very similar system to ShippingEasy, but with a bit of a different interface and slightly cheaper as well.  You’ll want to try both to see which one fits your business.

Webgilitywebgility.com – this used to be the go-to service for thsi kind of thing, but they are being beat out by the above two companies as far as price and servies go. This one gets expensive fast!

Stamps.comstamps.com – this is simply a service that lets you print pre-paid labels from within your shopping cart.  It won’t sync anything or provide the robust services that ShippingEasy and Shipstation do.

Taxes

This is probably the most misunderstood piece of e-commerce, as it can get really complex.  In a nutshell, you are responsible for collecting sales tax in any state where your business has a physical presence.  This means offices and warehouses, or anywhere that you regularly conduct business.  You only need to collect tax for orders SHIPPED to those states.  So if you are in New York and your customer gets their packages in California you don’t need to charge sales tax.  Tax rates and laws vary greatly by state, so you will want to talk to an accountant about your specific obligations.  Some states like Connecticut are simple, they just charge a flat rate tax no matter where in the state the package is shipped.  But states like Florida, California, Washington and New York all have state AND local taxes.  So the rate you charge will depend on the recipients zip code.  As you can imagine, this can be a logistical nightmare for a small business.  Luckily, there are some third party services that can help you out with not only the calculation, but the filing as well.  Here are a few of the big ones that can be integrated into your shopping cart:

Avalarawww.avalara.com

Taxcloudwww.taxcloud.net

Taxjarwww.taxjar.com

There has been talk of an ‘internet tax’ for years, as states are missing out on millions of dollars in tax revenue due to online sales.  Amazon.com is now charging sales tax in every state that has a sales tax as they have a warehouse in just about every state.  Many believe this will start to trickle down to smaller businesses as well in the coming years.  As it stands right now, you are not required to collect tax in states you don’t have a presence in, but keep an eye on the laws in the coming years!

SSL Certificate

An SSL certificate is what encrypts your web site’s pages, and is pretty much required for your whole site these days.  This helps protect your customers personal and payment data from prying eyes, and helps boost your Google rank as well.  SSL certificates can be purchased from a number of vendors for as little as $70/year.  Some e-commerce platforms provide one for you, others will require you to purchase and install it yourself.  But you should factor in this cost when planning out your budget.

Search Engine Optimization (SEO)

So we have covered all of the ‘tech’ stuff needed to get your store up and running, but how will you get people to actually shop at your store?  Unfortunately e-commerce is no longer a ‘built it and they will come’ endeavour.  It takes a lot of time and energy to build a site that Google will deem ‘relevant’ and start sending you traffic.  In addition you have to manage social media, blogging, backlink building, newsletters….the list goes on. That is on top of actually managing your store, making your products, dealing with customer service, etc. As you can imagine, this is not a one person operation!

We’ve put together a summary of what Google is looking for in 2017 which will help you understand exactly the kind of commitment you are looking at if you want to be successful.  While SEO is something you can do yourself if you have the time, we definitely recommend hiring a professional for the initial keyword/competition analysis at least.  The last thing you want to do is optimize your site for keywords that no one is looking for!  Luckily, we offer exactly those kinds of services here at Ryan Design Studio!

Ready to take the plunge?

If you are still here and we haven’t scared you away from starting your store, congratulations!  It can definitely be intimidating, but if you have a good product and a head for business, you can do this! E-commerce is definitely not for everyone, and it isn’t a part-time business either.  If you are ready to build a beautiful, successful e-commerce web site, drop us a line today and see what we can do for you!