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What is "E-commerce"?


E-commerce simply means Electronic Commerce. It is the buzzword for the new millennium, and for very good reason. The Internet is changing the way business is done with literally billions of dollars being made over the Internet. E-commerce gives you the ability to accept payment over the Internet by either credit card or electronic checks. Through E-commerce, you can sell products or services instantly to anyone in the world without having to constantly monitor your website.

What a typical ecommerce solution includes:

  •  An online catalog that lists the products/services you are selling and their prices.

  •  A shopping cart that collects the items a customer wants to buy.

  •  An order form that gathers their payment information, applies shipping/tax, and summarizes the pending order.

  •  Transaction Processing that subtracts payment from the customers account and applies it to your own.

  •  Real-time transaction processing is provided via a vendor.

  •  Offline-transaction processing can be done by a merchant using a credit card machine.

  •  Of course, order fulfillment is also an important element of ecommerce.

An HTML form posts all of the information needed to process a transaction to your vendor's transaction server. Once the transaction server gets all of the transaction information, the transaction is processed. After the transaction is processed, it communicates the result back to your website, which communicates with the customer, and makes appropriate changes to your database (if inventory control is used).

How Much is it going to cost?

There can be a lot of hidden costs to ecommerce -- and a lot of people try to take advantage of people's lack of knowledge. Here are some general tips:

Setup fees: Most merchant account providers will charge a setup fee. This could cost $150 or more. 

Transaction fees: This is typically a percentage of each transaction that is paid to the merchant account provider/credit card companies. Fees vary. A fee of 2.59% is good for online transactions. PayPal charges 2.2%. and no set-up fee. This has made it a popular choice for small businesses or those with only a small number of products to offer. 

Monthly fees: There is usually some "gateway fee" associated with online transactions. $25 or less is in the ball park. 

What do you need to get Started?

  • A web site
  • Ecommerce software
  • An Internet-friendly merchant account - Even if you have a merchant account for your business, chances are you'll need another one. Since Internet and telephone credit card transactions are viewed as a higher-risk than other transactions, they have higher transaction fees.
  • A Transaction processing vendor - You need someone to accept and process payments on your behalf. Typically, you'll have a credit card processing vendor -- In many cases, this vendor is determined by your merchant account provider.

All you need to process and manage transactions over the Internet is - The payment system, a credit card merchant account, and a computer with an Internet connection and a Web browser. You don't have to buy or maintain expensive hardware or software. You don't have to worry about security, downtime, or making sure electronic transactions are processed and settled correctly.

At this time, the only license requirements are local license requirements. If you sell tangible products from your local store, the same reporting and licensing requirements are in effect. You will be required to collect sales tax for sales made to buyers from your state and report those taxes the same as for your local business.

For the Customer on your site it should mean: See > Click > Purchase. A No hassle buying experience.

For you it also means a way to reduce costs and risks of doing business on line.

The primary goal of creating a successful e-commerce site is to "Simplify" the process for both buyer and seller. Users generally like a "one click" process. At any point in the buying process the customer should be able to "check out" or "check the account status" or click to any other category in the site (even the home page).

For larger sites "search capabilities" are a must. Your customer should be able to search by product, product number, and category as an example allowing for quick retrieval of information.


Information about the site's security methods is necessary to instill confidence in your customer. For larger sites, it is preferable to have a system that keeps track of users, greets them with a personal message and allows the ability to offer them related products either through email or by directing them to other areas of the website. This should be done so as to provide this as a helpful experience rather than annoying.

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Article details
Article ID: 19
Category: Knowledgebase
Date added: 2015-07-03 13:42:45
Views: 120
Rating (Votes): Article rated 3.2/5.0 (9)

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