We’re starting a new series titled Tutorial Tuesday. Each week we’ll address an issue that is frequently brought up in our daily interaction with clients. We hope to shed some light on confusing subjects (whether they’re simple or complex).
For this first post of the series we’re going to address one of the most frequent questions we get on web development projects…How does e-Commerce work? People are always confused when I tell them they’ll need a merchant account and payment gateway in addition to the shopping cart system we’ve constructed for their site. This is understandably confusing the first time you come across the subject. We decided a simple breakdown of the e-Commerce components would be helpful for those of you considering projects.
Website & Shopping Cart: First and foremost, you need a website with a shopping cart. This is the part we build. The website and shopping cart are the crucial ingredients that introduce your product and convert the sale. A poorly constructed website and shopping cart can kill a sale. A well constructed website and shopping cart can actually generate additional revenue with features like suggested items and volume shipping discounts. We recommend you carefully select a website and shopping cart system to ensure that it gives you sufficient control over your site. Everything from your informational pages to your product information should be easily updated using a Content Management System. You’ll also want to be sure that the system is scalable (meaning there aren’t limits on the number of products or site pages and that it is capable of handling high quantities of orders). Lastly, make sure the system has capabilities to properly calculate sales tax (where an item is shipped from and not where it’s sold), has a procedure to accommodate drop shipping, has flexibility in the way shipping is processed and that it has a very responsive customer support team.
Payment Gateway: The payment gateway comes into the picture once a website visitor decides to become a buyer. Your website and shopping cart will pass the order information to the payment gateway (we use authorize.net) where the credit card information is verified in a secure environment. Assuming all information is valid, the money is deposited into your bank account. You’ll receive an order confirmation that can trigger the drop shipping process, if you’re utilizing drop shipping. If not, you’ll know to send the order yourself. The payment gateway charges a small fee per transaction.
Merchant Account: However, before we can tie in a payment gateway like authorize.net, you must be approved for a merchant account. The merchant account allows you to accept credit cards and handles the distribution of credit card fees. All credit cards charge a fee per transaction and the merchant account distributes the credit card percentage, your money into your bank and takes a little cut for their work. The exact per transaction amount for a merchant account is based on volume. The merchant account is usually associated with your bank. Even if it’s not your bank, your bank will have a preferred merchant provider for you to call. Whoever you use will require that your website and shopping cart be complete before they approve anything because they must review the products your selling, your shipping policies, return policies and privacy policies.
Here are the steps for setting up an e-Commerce site:
- Website and shopping cart constructed with actual product information (usually a couple sample products for approval), shipping policies, return policies and privacy policies.
- Merchant account provider of choice reviews and approves you for a merchant account.
- Payment gateway account is set up and associated with the site for card processing.
- Test transactions run through the system to ensure proper function.
- Site goes live.
Why We Don’t Use PayPal: We prefer not to use PayPal because it cuts down on the amount of data we can maintain in your site admin. Using a merchant account we have the order info, customer info, shipping info and a payment confirmation all inside of our framework. This allows our clients to easily access all of the order information within their site admin. Bottom line, we can make your system more robust and also more simple to use going the merchant/payment gateway route.
This post gives you the basics on getting an e-Commerce site up and running. It’s important to know the parts before you start considering systems. We’ll go into the steps for success with an e-Commerce site in future posts. This isn’t Field of Dreams….If you build it, they won’t necessarily come running.
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