Selling Online (E-Commerce)

The Benefits
  • Expand your market
    • Sell to the world, not just locally
  • Find new channels for marketing
    • Online marketing allows you to reach customers who do not use or have tired of other media
    • Target your marketing specifically to your ideal customer
  • Increase Sales
  • E-Commerce allows you to take credit card orders without manual processing and only a relatively small upfront cost
The Pieces
Website
  • Hosting (where the website is "located", who "runs" the website)
  • Domain name (e.g. mybusiness.com)
  • SSL Security Certificate/Encryption - needed to take credit cards (or take credit cards offsite)
Credit Card Orders
  • Gateway - takes credit card information from your site
  • Merchant Account - a bank account
Issues
Cost
  • Website
  • Hosting for e-commerce - starts at around $20/month
  • Domain Names: around $15/year
  • Web Design/Development
  • SSL Security Certificate: around $40-60/year
  • Gateway/Merchant Account vs. PayPal
      Gateway / Merchant Account PayPal
    % of Transaction (Typical / Default Rates): 2.2-2.5% 2.9%
    Per transaction fee: Varies, typically less than PayPal $0.30
    Monthly Fee / Setup Fee: Merchant acct.: about $20/month (often waived if enough transaction fees), plus setup
    Gateway: $20-30/mo., plus setup
    None, easy to setup
    Convenience to customers: More convenient, usually better integrated w/ website Less convenient
    Better Choice if: Moderate or high transaction volume Low transaction volume
  • Remember selling online can increase your sales!
Legal Compliance
  • Privacy
  • California Law requires a Privacy Policy
  • Sales Tax - Required for in-state transactions usually only on products (includes any state where you have a "physical presence")
  • Terms of Use
  • Disclaimer (of Liability)
  • Vary by Jurisdiction (e.g. promotional contests could be considered gambling)
  • Enforceable Online Contracts - vary by jurisdiction also
  • MCM Web Solutions, LLC does not provide legal services or advice (this document is not to be considered either)
Fraud
  • The merchant is legally liable for fraudulent orders placed on their site. This means that if someone fradulently orders a product or service from your website, you will likely lose the money or time you spent on filling that fradulent order.
  • Fraud is about 1% of all Internet orders, that means the other 99% are legitimate
  • Prevention
    What you can do -
    Don't ship to PO Boxes
    Match billing and shipping addresses
    Don't take orders from outside of the "developed" world (stick to N. America, W. Europe, Australia, etc.)
Theft of Intellectual Property
  • Give notice of copyrights, trademarks, etc. on your website
  • Registering them also helps in the event of legal battles such as domain name "squatting" (e.g. someone else registers a domain name with your company's name)
Account Freezes
  • If using PayPal, consider getting a separate bank account solely for PayPal use or at least avoid linking your sole bank account to PayPal as PayPal accounts can be frozen when chargebacks (e.g. a purchaser tries to get a refund from his/her credit card issuer) occur.
Other Options for Selling Online
  • Yahoo Storefronts
    Downside: commissions (1.5%), monthly fees, lock-in
  • Amazon
    Downsides: commissions (6% or higher), only products (no services), lock-in Upside: exposure (also for eBay)
  • eBay
    Downside: Only products (no services, though this may change in the future), transaction/listing fees, lock-in
Summary
  • E-commerce presents both opportunities and challenges.
  • When these challenges are properly managed, e-commerce is a useful tool for your business.

Feel free to contact us using the form at the above right or by phone at (931) 896-1313 for further information.