Newfangled works with independent agencies to create lead development web platforms for their clients.

Newfangled works with independent agencies to create lead development web platforms for their clients.

What You Should Know About Ecommerce



Imagine you decide to quit your job, move to a cozy, small town, and set up a shop of your own. It'd be great. Nothing flashy, of course; something nice, like a fine hats shop. Yeah, that's the ticket. You've always liked hats, and really, there aren't enough hat shops out there. Your new community will thank you for bringing hats back, not to mention a little slice of the good old-fashioned American dream. Of course, you'll make new friends. They'll stop by your shop to shoot the breeze over coffee around the hat counter and you'll join them for weekend picnics in their back yards. Hats all around, of course. That'd be the life...

That is, after you wrote up a plan, registered your business, opened a merchant account, secured funding of some kind—whether that means draining your saving or convincing some other hat-enthusiast to invest—found a location, signed a lease, found and purchased furniture, storage, shelving, counters, a cash register, and all kinds of other materials, picked up inventory, worked out your schedule, hired some help, did some advertising, and then, you know, sold some hats. Phew! By then, if you still could stand the sight of a hat, you would certainly know you made the right decision.

Ok, so maybe you'll start small. Something online. That would definitely be easier, right?

Wrong. It turns out that setting up an online business can be just as complicated as setting up a traditional bricks-and-mortar store. There sure are just as many details, and since many of them are technical, they're often misunderstood—which, of course, leads to the misconception that ecommerce is easy. Well, that's what this article is all about. I'd like to give you a survey of ecommerce, from the details—the checkout process, data security, calculating sales tax and shipping, discount codes, etc.—to the big picture. Let's get started...



Comments

Anne Hainsworth | May 23, 2013 12:12 PM
Chris, I'm so glad I found this article! It's exactly what I needed to demonstrate our dairy's e-commerce challenges to our owner and funders. As always I will look to Newfangled for guidance on the ins and outs of effective website building and commerce. We started with ample funds and a product in demand, but as it is perishable, we have to have the capacity to meet chef and public demands, etc., it's not just any old e-commerce challenge. Thanks!
John Smith | July 23, 2012 1:42 AM
No one could have possibly written a more extensive resource on
eCommerce. Though I have been into this ecommerce business for quite some time now. But the points raised in this article have opened whole new worlds to me. I can't thank you enough for this post. It has greatly enhanced my knowledge base in eCommerce.
Martin Duggan | September 1, 2011 4:21 PM
Fantastic resource Chris, thank you again for such helpful insights. There's a growing misconception in the wider business community that developing an e-commerce website is just a matter of integrating existing software, and that designers and developers now have very little to do.

Because this article is so objective and factually presented, I can route clients here so they 'get the idea' that there's a lot of process involved.
Stella Fayman | September 1, 2011 8:26 AM
Great article! To provide a resource for the "how to accept credit cards" section, here is a comprehensive ebooks that explains credit card processing and gateways. Most online merchants don't know what they're looking for when they choose a gateway and processor and end up paying a lot more than they should.

http://feefighters.com/ebooks/what-is-credit-card-processing
jorge | August 31, 2011 6:27 PM
awesome! thsi is a must-read for anybody who wants to sell online.
Luiz Roberto Meier | August 31, 2011 11:27 AM
Nice article and tips. Thanks. I hope you talk about some e-commerce applications (like Magento) soon. Thanks.
Christopher Butler | August 31, 2011 9:21 AM
Rand, J.T., and Courtney: Let me first say that I'm a lover of debate, especially when it gets heated. With that said, I'm going to be a bit short because I already stated my opinion in the article.

As you might imagine, I don't have a ton of sympathy for Rand's position. The idea that with enough volume it's ok to offer a lousy user experience as long as somebody buys is, frankly, pretty hard to respect. I'll have more to say on that in response to Maggie's comment below. J.T.'s comment is the kind of rant I often compose in my head but thankfully have learned the good sense to not publish anywhere. Surely I've kept some friends as a result of my temperance ;-) But, as a reader, I can't say I disagree with any of it. Courtney, surely there is some way to make money off your wit.

Maggie: That's a great question. My personal sense is that there is a very real connection between the simplicity of a page's design and its effectiveness. However, I don't have the data to back that up. On the other hand, I could also imagine that as traffic volume increases, the more options a page presents the more likely it is to gain some kind of action. My guess is that the high-traffic, data-driven, statistical argument for complexity wins out more often than not. This concept has been central to several articles I've written in the past year. Check out Simple Design is Good Design and Designing for Attention and The Folly of the Flock, my first column for Print Magazine, in which I wrote this:
Allowing users to read, by the way, isn't always the central consideration of the design of a website. Nor are many other things that designers may hold sacred. In fact, one of the biggest errors in following the lead of a big, established website is that the leaders often can afford badly designed websites. The big players on the web receive such a large volume of traffic that crowding their pages with as many opportunities to click makes statistical sense.

When hundreds of thousands of users access a web page on a daily basis, it’s highly probable that a significant number of them will click a link (any link will do) that either continues their visit or sends them elsewhere via a paid advertisement. Either scenario is valuable to the site’s owner. A click on an ad, well that’s just easy money. And a click to another page on the site just increases the chance that the visitor will eventually click an ad. At this level, it simply doesn’t matter if the visitor’s experience is satisfying. It is, quite simply, about volume, that’s all. The more visitors a site like this gets, the more money it makes. This is shock and awe. The special ops go on behind the scenes, and there’s no hero stuff going on. It’s number-crunching and content farming all the way up.
But, all these articles have been mostly focused upon the relationship between design simplicity and attention, not necessarily commerce—although I did use Amazon's badly design pages as an example in Simple Design is Good Design, noting that "just because we're used to it doesn't mean it's good." Here's that passage:
Just like the mass media sites I looked at earlier, Amazon offers significantly more peripheral content on a product detail page than information about the product itself...The most important button on the page, the "buy" button, is lost in the noise of hundreds of other links. Yes, Amazon wants me to buy this book, but they also see the big picture: the longer they can keep me in the store, the more likely I am to buy something. So, they inundate me with other opportunities to buy. It's really rather obnoxious.

Fortunately, I know exactly where that "buy" button is, and if I'm certain I want to buy something, I can make a break for it and be checking out in seconds. But what if I'm interested in buying something but I'm not yet committed? All the extra information on this page—the lists of related books, other formats, reviews, and the like—could be very helpful to me provided I felt guided through the page. But I really feel like I've just been dropped in the middle of a ransacked Walmart. I can find my way out because I've learned how they lay out their store, but that doesn't mean they couldn't do it better.

...The crowded and unstructured page is the result of years of ad-hoc development, not a thoughtful or human-centered design. But because we've all grown used to Amazon's page layouts, a complete redesign—even a very good one—would probably create more confusion for users returning to the site and cost millions in losses. In the meantime, Amazon likely spends large sums on usability testing, but all of that is pretty meaningless unless they can consistently test users whom have never seen the site before. "Ever heard of Amazon.com?" Um, ever heard of McDonald's?
Ok, all this is to say, yes, I think that good design and simplicity are synonymous. But, I'd have to defer to experts who have done enough A/B testing on product detail pages in order to know that my belief is verified by data. I'll see if I can dig up any resources on that.

Thanks, all, for your comments!
MaggieB | August 30, 2011 8:51 PM
Great stuff, as usual, Chris.

You've put together a strong resource for anyone heading in to an ecommerce project, that's for sure.

There's some good stuff at the link, but I'd be interested in your take on how the design of store pages make for stronger sales.
courtney | August 30, 2011 6:43 PM
this was helpful, thanks.

on the recent points, my 2¢: leave me alone, I'll buy. follow me around the store, buh-bye.
J.T. | August 30, 2011 6:11 PM
Good article.

But about preventing cart abandonment. Listen, if shoppers are going to bail on buying, they're going to bail on buying. IMHO.

The whole email thing is desperate and typical of a marketer's tactical approach to what should be relational. I'll never understand why marketers love email so much. They're like the consummate voyeurs. Marketers shouldn't be allowed anywhere near the UX planning for e-commerce websites. I mean unless you want to make something lousy.

Make it easy. Don't create a system to gloss over the reality that someone isn't buying probably because your product or website fails to entice them, not because you didn't stalk them right.

@Rand, really? You have no other choice?

The persistent cart and helpchat options are far more likely to catch sales that would otherwise be lost due to confusion.

Think about it. If someone gets confused, they're probably going to hit the home button and give themselves a cleanslate. If they see their cart is still there, bingo. And anyway, if your site's that confusing to use, bringing a shopper back in there with an email isn't going to fix anything.
Rand | August 30, 2011 5:51 PM
I get that collecting email addresses and contacting users that abandon their carts is not exactly liked, but so many outfits are doing it anyway, and with the pressure that marketing and sales teams are under to make numbers, can you blame them? Sure, you'll piss off a few people, but if just a handful of them come back and buy it's worth the trouble.

Those of us who work for larger companies feel a lot of pressure from the top to squeeze every last dollar out of the thousands of people that come to our sites. If we're going to do our jobs, we can't always be warm and fuzzy, you know?
Christopher Butler | August 30, 2011 5:33 PM
JR: That's a great point. I know that I often will go as far as I can in the checkout process in order to see what the total cost will be. Some websites, though, offer the user the ability to enter their zip code on the product detail page in order to preview the shipping fee, which is a great idea. Right on!

CoreAn: Glad you enjoyed it. Good luck with your projects!

Francis: You know, I probably am not in the best position to make a recommendation since I really haven't had much experience with any besides PayPal. That said, the basic Payflow Link or PayPal stores seem to work just fine and be very inexpensive. I've also heard good things about Google Checkout.

Kelly: Thanks so much for taking the time to leave such a nice comment. I've gotten a few others today via email and they've really made my day!
Kelly | August 30, 2011 5:25 PM
Wow, this was outstanding! Thank you for having reliably good newsletter content! I look forward to your stuff every month and count on it to teach me something new. Most of the resources I've signed up for are straight up commercials or copied from someone else. Yours is the opposite: always original and thorough and honest.

Just wanted to say thanks, Kelly
Francis Boudreau | August 30, 2011 1:11 PM
Thank you for this really useful article!

What are the best third-party solutions for a small ecommerce website? Which one do you recommend?
CoreAn_Crack3rZ | August 30, 2011 12:36 PM
informative! I am a web developer about some time already but I never get a touch in e-commerce.
JR | August 30, 2011 11:43 AM
I think a major cause of shopping cart abandonment is not letting the customer see the whole price, with shipping, taxes, etc. before being required to provide payment info. Just this morning I ordered an item and looked at two different vendors. The first didn't allow me to calculate shipping until after adding my personal details. I kept that site open for a moment and went to a competitor on another browser tab. They allowed me to enter my ZIP code at get the shipping charge right up-front. They got the order; the first vendor got an abandoned cart.
Christopher Butler | August 30, 2011 9:11 AM
Judy: I'm glad you enjoyed the article. To your questions:

  1. Yes, I think there are a few clear pros and cons to think about in advance of launching a store and beginning to receive payments. Queuing payments in a batch can make sense if you already have someone lined up to handle fulfillment and a process to follow. If that person goes through the orders, say, once a day, they can get everything together for shipping and then process that batch once they are sure everything is good to go with those orders. The advantage here is that if something isn't right—like an incorrect shipping address that causes the shipping cost to be calculated incorrectly—the fulfillment person can catch that, contact the customer, and correct it before that person's card is charged. So, that's a pro. But, for online stores that are expecting a much greater volume of transactions, they probably have a more distributed fulfillment system. In this case, if the orders are queuing up in a batch, it's not beyond the realm of possibility that nobody has been assigned to manage capturing those orders. I've seen this happen before: hundreds of orders queue up in the gateway and are meanwhile fulfilled by the existing systems, but the customers are never actually charged for their purchases. Once a certain amount of time passes, those charges are too old to capture and the business loses a ton of money.
  2. The one gateway that I know of that requires you to offer Paypal as a payment method is Paypal's Website Payments Pro. (It's the one we use for people ordering books from our website.)
  3. PCI compliance is only required for scenarios in which a customer's order is submitted through your website (even if encrypted). In a situation in which you are just linking off to a contained system—like a separate Google Checkout store, Paypal Store, or an Ebay, Amazon, or Etsy shop—you would not be required meet PCI compliance.
Hope that's helpful!

Joshua: Thanks for the link!

Abhishek: So glad to hear that. Best of luck!

Lisa: Great! I'm glad you found this helpful. As for your question, do you mean a shopping cart platform or a payment gateway platform? I don't know if I know enough about the various shopping cart tools out there to recommend one in particular. We've built our own module that works off of our own CMS and have configured it to play nicely with several gateways. As far as gateways are concerned, I'd recommend Paypal's Payflow Pro, Website Payments Pro, or Chase Paymentech.

Barry: You are absolutely right. As I wrote this, I really struggled with that—just about every point on this list could be an in-depth article of its own. But I really wanted to first provide a comprehensive overview so that people planning a project would have the right sense of scope for this sort of thing. Perhaps I'll follow up at some point with a deeper look at a few of these points.

Thanks, all, for your comments!
Barry Pekin | August 30, 2011 8:54 AM
Excellent article for opening ones eyes to eCommerce. As someone who has setup multiple custom eCommerce solutions, including one for an MLM Sales company with sales consultants in every state, I can say that in the area of sales taxes (and some other areas, too), you've just begun to scratch the surface. For example, sales tax rates can vary from town to town within a single state, and can also vary based on what is being sold, and oh, let's not forget sales tax holidays!

For anyone looking to setup an eCommerce solution, the best advice possible is to find someone who has experience and expertise to help you get started.
Lisa Hazen | August 30, 2011 8:52 AM
EXCELLENT article. I'm going to make this required reading for my ecommerce clients.

One question I have for you is if there is a platform that you recommend above others for ecommerce. I have tried a number, only to be disappointed. I haven't found that perfect platform for the mid-range site that can't afford a custom build-out.
Abhishek | August 30, 2011 8:30 AM
This is one of the best post I have read on e-commerce. We are building a marketplace like Etsy for our client right now and this will definitely help make him understand the e-commerce business! Thanks for writing this.
Joshua | August 30, 2011 8:15 AM
To see everything of these in one place. Check out Actinic
http://www.actinic.co.uk
Judy Trolley | August 29, 2011 9:04 PM
Chris, thanks for this. you've presented a ton to think through. it's definitely a more complicated thing than I'd taken it to be. I do have a couple questions:

1. you said in question 1 that are pros and cons to either capturing funds in a batch or at the time of the transaction (which I take to mean individually?). I'm a bit confused as to how this all works and would like to take you up on your offer to expand on that here…

2. which gateways require that you offer paypal as a payment method?

3. the pci compliance stuff seems overwhelming. how does this apply to the third-party checkout tools that you briefly mentioned? I have to assume that people selling things on places like ebay or etsy don't bother with this, right? is it only for those that use payment gateways?

↑ top