Building E-Commerce Websites

Prior to the "dot-com" crash of 2000, the marketplace was filled with businesses that wanted to sell online. Many ill-conceived business plans were enabled by venture capital with the primary motivation of getting their companies to an I.P.O. Perhaps the most detrimental result of all that hype was that genuine businesses with solid products and markets got caught up in the rush and made many costly mistakes (paid out of their own earnings, not from venture capital). After the bubble burst, e-commerce companies closed their doors. At that time companies that invested their own money realized that the online market wasn't as easily grabbed as they'd hoped. Additionally, the expensive and complex e-commerce systems that they hastily built, trying to keep up with the "dot-coms," were extremely buggy and undependable. Many companies were seriously hurt and their expectations were entirely unmet.

Today the dust has mostly settled and businesses are looking again to the web for opportunities to expand their market. Fortunately, expectations are much more realistic today than they were a few years ago. Businesses have more realistic expectations about the profits an e-commerce site may provide. However, they still tend to have unrealistic expectations about the relative ease and expense of building an e-commerce site. While it is certainly possible to create a relatively simple and inexpensive e-commerce site, there are some factors, unique to e-commerce that can be complicated. This newsletter will define and describe some of these factors and provide some guidance in determining the relative complexity of building an e-commerce site.

One overarching reason why e-commerce sites tend to be more complicated than other kinds of sites is that they need to mirror offline business structures, processes, and practices. Because e-commerce sites are usually database driven they need to be logically organized. This presents a problem. Some companies are not consistently organized in their daily offline business operations. Representing inconsistent sales practices with a database presents many difficulties. In fact, the effort to built e-commerce sites often leads to a company realizing that they have problems in their offline processes. While this can be a good thing, such company-wide reorganization is usually well beyond the scope of a simple e-commerce website project. There are a few specific ways that these kinds of problems commonly present themselves.


An e-commerce site usually starts with an online product catalog. One of the difficulties encountered in building web-based catalogs (for both e-commerce and non-e-commerce catalogs) is in establishing a consistent categorization of products. Inevitably, we encounter products that don't fit into the categories we've established for the site, or products that can fit into several categories. What's worse is when a particular product needs to be broken down into additional sub categories that were not represented in the database's structure. Outside of database development such nuances to a product catalog can be overlooked. But a database driven product catalog requires consistent categorization.


Another example of how daily business practices tend to be unfriendly to logical database structures is pricing. It's amazing how the pricing of many products change based on subtle attributes or conditions. In one instance we developed a site that sold clothing. After the site was built, we discovered that XXXL shirts required $1.00 to be added to the cost of the item. Suddenly the pricing structure we had built for the site no longer worked. This pricing nuance was something sales reps handled manually on a case-by-case basis. They just knew that such orders added a dollar and they added it in by hand. Translating this practice into an online structure required their database to be reconfigured.


Related to pricing is the practice of maintaining unique SKU numbers for every product in a catalog. While this is a common and appropriate business practice, many small retailers do not maintain unique SKUs for every product. This is understandable since doing so can easily turn a product list of 100 products into a list of over 1,200 products. Take a company that sells shoes as an example. A particular shoe might be listed as one product with a single SKU number associated with it. In reality, however, each size of the particular shoe should have its own unique SKU number to differentiate it from other sizes of the same shoe. When we factor in color and width attributes of each shoe, what was originally considered one product could actually require over 100 unique SKUs to represent all combinations of size, width and color. Because of this, many small companies do not maintain unique SKU numbers for all their products. It's much easier for them to simply write down the color and size and manually find the correct product on the shelf. Databases though, need unique numbers for each variation in order to properly process orders. Database catalogs without unique SKUs easily become convoluted making them harder to build and maintain.


We have looked far and wide for the most popular inventory and fulfillment software packages so that we could integrate aspects the NewfangledCMS shopping cart with them. What we have discovered is that there is no dominant product. In fact, it seems that each business niche has its own software solutions. Some retailers builtd their own systems for inventory, fulfillment, tracking, and accounting. Since there are no standard tools, integrating with such systems usually requires significant customization. The result is that most e-commerce sites are detached from the internal databases that companies use for inventory control and fulfillment tasks. This limits the real time nature of inventory status on the web.

Another approach to the problem of integrating inventory, shipping, and fulfillment is to perform all three functions through the e-commerce website itself. There are some out of the box systems on the market that provide tools for this purpose. This approach usually requires the business to rework how they do business offline to match how they do it online - no small effort.

Understanding the differences between an order taking and order processing e-commerce site will help avoid some common difficulties. The differences between an order taking site and an order processing site are invisible to site users. Their online shopping experience such as adding items to a cart, checking out and providing payment information is the same in both cases. The difference is that once the order is submitted, an order taking system simply alerts the company via email that an order has been placed. After that point, an employee will download the order from the system and fulfill it using their standard offline practices (though the credit card transaction would still happen online). In an order taking environment, a website is simply responsible for collecting order information. On the other hand, order processing sites not only verify and process credit card transactions they also interact with inventory systems and send details to the fulfillment and shipping center. Generally, unless a company expects to receive hundreds of orders per day, an order taking system is sufficient and the most economical place to start.


When a client's product can be delivered to a customer electronically, as is the case with downloadable software and subscriptions to online content, full online processing is necessary. In these cases users will expect access to the files or information immediately upon providing their credit card information. A delay can cause frustration and fear that they have been ripped off. Because fulfillment is electronic, the typical complications of integration with inventory and shipping systems are greatly simplified.

Use the following checklist as a guide for asking appropriate questions in anticipation of building an e-commerce website.

√ Is the current product catalog consistently categorized? What exceptions are there for these categories?

√ How many sub-levels are there for each category? For example, in the case of a shoe catalog there might be three levels before actual products would be listed (men's/dress/loafers/product).

√ Are their individual SKU numbers for each unique product including variations of color, size, etc.?

√ Does the existing merchant account allow for processing credit card orders online?

√ Are there any irregular pricing rules for the site? Does choosing certain attributes add cost? Do some products offer accessories or packaging options that would add cost to items?

√ Is the product catalog in database form (get copy of the database file).

√ Are there any special tax issues with selling the product online?

Consider these details when building an e-commerce site.

1. SSL encryption certificate. In order to accept credit cards online through a secure encrypted page, an SSL certificate will need to be purchased. We charge $849 to purchase and install this certificate ($349 to VeriSign, $500 Newfangled admin fee). This certificate will need to be renewed every two years.

2. Batch uploading of product databases. When there are a large number of products or unique product SKUs it may be easiest to batch upload the database into the e-commerce site. This can be done as a one-time upload or, to do this regularly, a database upload bridge can be customized for the site. Getting a sample database file before development is critical to ensure batch uploading compatibility.

3. Store Policies and Procedures. An e-commerce site usually requires policy statements on the site. These will need to be defined, written, or adapted for returns, privacy, cookie usage, order status checking procedure, and out of stock terms. These policies may need to be approved by their legal counsel.


One of the reasons why e-commerce sites tend to be more complex than other sites is that there are simply so many details that need to be explained and discussed when building an e-commerce site. Working through this checklist and reviewing these questions will help minimize these complexities and identify any potential problems before they become a real problem.