E-Commerce: Basic Concepts

Obviously we all know what Internet based commerce is all about ... you click on it and buy it, right? Well, yes and no. For the purchaser it should always appear that simple. For the seller it would be nice if it was that simple but there are a few important decisions to be made and some technical issues to overcome.

First you need a website to sell from of course. For the prospective e-commerce merchant that cannot consider the development of a custom Oracle-powered mega-store costing over $100,000 the options fall into three basic categories. Host a "store" with an "Internet Mall", work with a designer-developer (such as yours truly) to build a custom store with various technical and hosting options, or build it yourself on whatever host you like. Obviously the author is biased but also capable of stepping back and realizing that there are pros and cons to each scenario. Below is my best shot at being fair to the basic alternatives and providing some pros and cons.

Regardless of which form of development is selected, it will be imperative to accept major credit cards as customers payment. You can offer Pay-Pal or other alternative payment routes but many more people would prefer to simply pull out a credit card. A merchant account and payment gateway is required to enable you to process credit card transactions. Even if you already have a merchant account for point of sale transactions, you will either need to work with your current financial institution or open an appropriate merchant account to have transactions processed in real time over the Internet. As a personal referral, we have had much success dealing with a specific provider called Merchant-Store. An online application for their services is available from the link in the sidebar of this page.

The Internet Malls

Internet malls have become popular for two primary reasons, traffic and technology. A mall on the Internet is reasonably analogous to a physical shopping mall in the sense that it contains multiple merchants in one place. The traffic value is intended to be generated from that fact while the technology for the store is provided to the merchant as a part of the cost for participating in the mall. Yahoo, MSN, Amazon and many other shopping malls are available. Even eBay is now really a shopping mall.


Software that provides shopping carts and checkout functions are provided by the host, e.g. the mall. Most providers allow the merchant to login via browser and "design" their store by making selections from templates for page layout so there need not be any serious technical knowledge on the part of the merchant.


Any capable mall will provide access to a secure server for customer checkout and will provide access to some form of tracking for sales and visitors. The shopping cart and checkout functions of an e-store are the most challenging components of the technology. Having that functionality "ready to go" is a significant feature for many aspiring merchants.


The more sophisticated malls permit a more technically advanced merchant to upload imagery and customize the look of the store along with uploading product information (the store's inventory) in a database compatible format.


The problem with the traffic concept is that people do not browse an Internet Mall the way they do a physical mall. The requirement to properly market and promote your store is no less important from within a mall environment. Or to put it another way, being in a mall will not be helpful without a good store design, good items for sale, and good marketing. The cost to reward benefit of the traffic component should be weighed with care.


All store building software that utilizes templates in one form or another must in turn limit design and layout options. Along with graphical design limitations, the grouping of products and presentation capabilities are often limited or to provide flexibility, become quite complicated.


The very attribute that can be viewed as beneficial, the mall's technology, can become a hindrance. Many malls utilize a custom language to build the pages and user interface. Understanding that language where needed to make customizations can be time consuming and is not the same as learning HTML or Javascript which is applicable in many other ways ... the knowledge is seldom "portable" and only applies to that particular mall.

The Custom Built Store

Designers and web developers have been building websites and webstores for clients since the Internet became capable of supporting such undertakings. Among the web development community there exists a considerable amount of practical experience. But, the Internet is a merger between communication arts and technology. Hire a graphical designer with no technical understanding and the result is likely to be good looking but dysfunctional. Conversely, hire a programmer without design skills and the result could be undesirable but functional. Hire a kid willing to take peanuts that "knows computers" because of a game playing addiction and you will get exactly what you deserve. The correct proportions of design and programming skills applied to your unique requirements should be expected to turn what you think you want into what you need.


Creative and layout options are limited only by budget and good rules of design. Associating a web store with existing printed company materials and existing business practices can be accommodated from the start.


A good designer/developer provides insight and experience that may not exist from within a small or medium size company. Most successful businesses have intelligent and well-informed management. However, with regards to the Internet, management often derives information from from limited and non-technical sources. The Wall Street Journal may be the best source of overall business news but it is not a good source of technical information. A designer/developer is far more likely to be well versed in current e-commerce matters. If you chose to work with an individual or company, listen carefully because they are the best source of applicable information you might have.


All small and medium size companies (as well as some fortune 500 firms) that I have worked with need help with their internal technology capabilities. By choosing the right person or company to work with, your internal capabilities will also be assessed. A great store with a bottleneck in the processing department will only cause more problems that lead to lost sales and bad customer relationships. A custom built store can (and should) include making certain that the entire process is viable.


There are many competing technologies that can be used to perform database interaction, shopping cart functions, and interactive/dynamic content presentation. A list of the acronyms would be inappropriate here but it is fair to say that no developer can claim to be proficient with every scripting language or server technology available. Make certain that a discussion of preferred development technology is included in a review of prospective designer/developers.


The greatest "con" in this category is also the greatest "pro" because the choice of designer/developer to work with is crucial. There are many good "dog and pony" shows in the Internet services business. Rely most upon how well a candidate implemented past client requirements and realize that all client needs are different. To avoid a real "con job", make sure your prospective developer is capable of adapting their services and is able to be direct about your own own requirements to produce a successful end product!


The cost of developing a custom e-commerce solution must, by its own nature, cost more than a "canned" product.

A Build-it-yourself Store

To some extent, all e-commerce options include a degree of merchant involvement. You can do it yourself with a Mall solution and hiring a developer for a custom development will still require involvement in the process. But, to do it completely by yourself (assuming only general experience with common office applications like Word and Excel) there will be a learning curve that includes numerous ups and downs.


You will only pay for the hosting required and whatever software you may need to acquire along the way.


The experience gained in the process is yours to keep. The Internet is the second major modern world revolution in communication after the printing press. Ultimately, the skills required to prepare and post information to the Internet may be as common as using a toaster. In fact, that was the original design premise behind the original Macintosh computer in 1984 and contemporary software is helping to make Internet publishing a comfortable and intuitive experience.


You can make it whatever you want or whatever you are capable of.


Your time is likely valuable. Do not forget to include the learning curve and the various false steps into the cost equation. Also anticipate the purchase of a few good reference books in the real cost.


There is much good and detailed information available on this subject and the Internet itself is a tremendous resource but it is complex with a bewildering number of options and contradictions. It is often difficult to sort out the good advice from the bad. Most people try to aim too high because the ability to learn as you go is not the only requirement. Perspective and experience is very difficult to make up for in short order regardless of one's determination.

Summary and Suggestions

If you have a simple product or a small product line without complex shipping and payment terms AND you want to start selling on the Internet as quickly as possible with the least amount of cost up front, consider using one of the various shopping malls.

If you are putting the products or services of an established small or medium size business on the Internet, consider working with a designer/developer to make sure that your company's existing branding, customer relations, and technical capabilities are properly integrated with your e-commerce solution.

If you simply want to know how it is done or have people on staff that you can afford having devoted to the requirements, go it alone.