Online Business Basics: 2

Stephen Yagielowicz
In part one we looked at planning your business, assembling a support team and other pre-launch issues. Today, we'll look at choosing a billing mechanism, building your website and beyond...

  • Choose a billing mechanism. The foundation of any e-commerce website is its ability to process customer transactions. The methods that you choose to process these transactions will have a direct impact on your website's profitability. Options include having your own merchant account allowing you to directly process credit card and check transactions. Third-party processors also can provide these services as well as password management and customer support.

    A variety of alternative billing mechanisms also exist to handle transactions from customers who are either unable or unwilling to use a credit card or checking account to make their purchases. Several telephone-based billing schemes are available, including premium-rate (900) number, voice-call, SMS and dialer services. Intermediary payment systems such as e-gold and innovative membership website options such as PayAsYouClick also are attractive vehicles.

    The best bet for serious e-commerce websites is "cascading billing," in which customers are passed from one billing option to another until the transaction is successful. Reasons why this is necessary range from having declines due to fraud scrubbing to having inadequate reserves on credit or debit cards or being in a location where traditional transactions are refused.

  • Build your website. In today's highly competitive e-commerce market, it's no longer a case of "build it and they will come." Amateurish design skills, overused templates and confusing navigational structures all serve to hamper your website's effectiveness - and unnecessarily so. High-quality website design is now a commodity, readily available at reasonable prices, making the do-it-yourself approach a poor substitute for professional services.

    For online businesses, the website is the business. Shortcuts should not be taken nor expenses spared in developing the best product and presentation possible. Having a "pretty" website isn't enough, however. Remember that you are trying to develop an e-commerce platform that is effective at making sales, not a showcase for the designer's talents. As such, a design team that is well versed in sales and marketing, rather than just a kid with a copy of Photoshop, is needed.

    Other factors that must be considered when selecting a design team include database and custom programming, product photography and shopping cart setup, ongoing updates and design changes. Basing your choice on cost alone is truly "false economy."

  • Consider customer privacy. Consumers, while becoming more comfortable with e-commerce, still are hesitant about making purchases online, especially at "unknown" websites. Among their concerns are the safety of their billing information and the privacy of any personally identifying information that you might gather from them. These concerns can be addressed in part through a comprehensive and conspicuously posted privacy policy.

    The online OECD Privacy Statement Generator located at will allow you to easily make a privacy policy statement for your website. Having a privacy policy statement is not just a good idea, it's also the law, at least for websites available in the state of California.

  • Consider customer service. Customer service is another area that deserves careful consideration. While many e-commerce operations leave most customer service to their billing companies, these companies will not be able to address every concern that your customers may have. Although there are call center services that can handle customer support inquiries on a 24/7 basis for you, there is a great deal to be said for the information and experience that one-on-one contact with your customer base can impart.

    Consider having a toll-free number that you or a staff member can be reached at during normal business hours. An online contact form, ICQ and email support, an interactive forum (message board) and other venues also can bring you closer to your customers and increase sales.

  • Evolve your marketing efforts. Traffic is the lifeblood of every website, commercial websites most of all. Once your website is launched, you must make every effort to ensure an ever-increasing flow of fresh, qualified visitors. Develop search engine strategies and reciprocal linking arrangements. Cultivate opt-in email lists and explore pay-per-click options.

    Your investment in traffic acquisition can pay bigger dividends if you properly market your website and establish a recognizable brand. Planting your URL and unique brand into the mind of the consumer while encouraging bookmarkers and repeat visitors ensures that your offerings will be remembered. Just because a visitor does not become a customer on the first visit, doesn't mean that he won't on the next - if there is a "next" visit.

    For many online businesses, how to handle departing visitors is nearly as important as how to handle arriving ones. Monetizing exit traffic can add a significant, often double-digit increase in revenue to your operation, as well as provide a source of fresh traffic in exchange for those leaving your website.

  • Develop your customer base. Once you have a steady flow of visitors to your website and an increasing number of paying customers, think about how to keep those customers. It's a lot cheaper and easier to maintain an ongoing customer relationship than it is to develop a new one, so emphasis on "keeping in touch" is vital.

    Offering discounts and specials for repeat customers, a newsletter or other opt-in mailings to keep customers informed of your latest products and services is a great way to maximize your per-customer revenue.

  • Reinvest your profits. Improper capitalization is one of the principal reasons that new businesses fail. Even with a great product or service, if you do not have enough money to run your business, it will fail. While the uninitiated might think, "I want to start a business in order to make money, not spend it!" the old axiom "it takes money to make money" becomes quite clear when operating a business.

If you have poor capitalization and still wish to start an online business, all may not be lost, however. What you may be lacking up front financially can often be mitigated on the backend by heavy reinvestment of your profits. Strategic partnerships might help with hosting and content costs, or marketing and distribution costs, with any balances being covered by any profits. There's always a way to "work it," especially if you heed this sage advice (at least until the money is rolling in): "Don't give up your day job."

While space limitations have constrained this article to briefly touching upon a variety of important considerations when starting an online business, it lays a foundation from which you can build upon and provides a guide to areas of concern that should be explored more thoroughly. Good luck in your online ventures.