November 17, 2005 - ZDNet

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Introduction

Electronic commerce (or e-commerce) is the buying and selling of goods and services on
the web, including business to consumer trade (B2C), business to business trade (B2B),
online retail operations (e-tailing), and e-mail sales campaigns. Here we look at web
based business to consumer sales.

In spite of the global economic downturn, e-commerce is thriving, with US electronic sales
providing a bright spot, even as sales in general declined. The trend is expected to
continue.

E-commerce can be practiced at many different levels, from individuals selling artifacts in
their spare time, to major corporations providing durable goods to individual and other
companies. Each category of sellers has different needs, but they all have something in
common – following 'best practices' would improve their volume of sales. In this
document, we list some of these best practices.

The e-commerce universe
E-commerce is not served by a 'one size fits all' solution, but rather requires a whole
spectrum of products for different sizes and uses. The following description covers the
leading options, from low end to high, but is by no means exhaustive.

For the least demanding, in term of traffic, number of items and management tools, there
are linked solutions and plug-ins for web pages. For example, one can sell items through
Amazon.com by including html and scripts in the web page. Paypal and Google
(Checkout) also provide shopping carts that can be incorporated into web pages through
links and special code. The popular Wordpress blogging software has an e-commerce
plug in. There is also an ecommerce plug in for the Joomla! content management system,
recommended for low to medium traffic sites. Drupal users can install the Drupal e-
commerce package.

Of course, one should not forget sites that specialize in selling by individuals, such as
Craigslist or eBay. Both sites are extremely popular and allow individuals to buy and sell a
variety of items and products. Craigslist started as a listserver for local events in San
Francisco, and has grown to a multi-city bulletin board of items for sale, as well as jobs,
personal ads. Most sales on the site(s) are free for both buyer and seller. The site is most
similar to the 'Classified' section of many newspapers. eBay started as an online auction
site, but the addition of the 'Buy It Now' lets users bypass the auction and purchase items
immediately. eBay is famous for merchandise sold to the highest bidder in auctions at
discounted prices. eBay charges a listing fee as well as fees on transactions, both on the
seller.




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Many virtual shopping malls or online marketplaces cater to small vendors. These include
estores from Yahoo, MSN, eBay and other portals. Etsy (etsy.com) hosts vendors of
hand-made crafts and supplies. Other sites specialize in specific merchandise (clothing,
organic foods, coffee beans, cosmetics, etc.), or in particular geographic, demographic,
socioeconomic, or other groups. There are portals for producers of fair trade products,
female vendors, etc.

Shared web sites that use Plesk, cPanel (and other) control panels, often offer shared
versions of web stores or shopping carts. The shared nature of the sites makes them
suitable for lower volume traffic. Amazon offers aStores and Webstores, while eBay has
eBay stores, as well as ProStores.

Some web hosts specialize in e-commerce software, leased to their clients. Their servers
can be streamlined and optimized for e-commerce, increasing both performance and
security. The host may also provide customization and technical support. This is often
done in partnership with software vendors, who provide training, certifications and higher
level support to the hosting providers.

Another option for larger scale e-commerce is running a dedicated server with open
source or commercial e-commerce software. Zen Cart, Interchange, osCommerce are
example of open source applications, while popular commercial products include
Intershop, Miva's line of products, including Miva Merchant, StoreSense from Kurant (now
owned by eBay), and many others.

Finally, large organizations with middle-ware from Microsoft, IBM, SAP, Oracle and
others, may find a customized solution, integrated with their current software, to be the
best choice. Customized solutions are suitable for very high load sites, and offer granular
control on functionality, hierarchical management and data sharing with CRM, ERP or
other business systems. A statement from an IBM presenter explains the value
proposition: 'If you have 70,000 SKUs, with rotating promotions based on current and
projected inventory, customized for each user by their profile, tied in to your
manufacturing and supplier data base, you need to use WebSphere'. Surely SAP, Oracle
and large system integrators from Dell, HP, IBM, and others would be glad to offer
competing products and to integrate and support existing systems as well.

Selecting an e-commerce system

The needs of an artist selling music or photographs are different from those of a business
with a massive web catalog. Some important factors include the anticipated visitor traffic,
e-store size, inventory control and management requirements, and the available technical
skill level.




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Even more important, for the serious e-seller, are security and availability. If an e-
commerce site is a busily humming, mission critical money maker, one should make sure
the site is always available. This is when a high quality hosting provider can make the
difference. The ISP and data center should provide professional services such as server
monitoring and reboot, data back up and recovery, geographical mirroring from multiple
data centers, disaster recovery planning and support, denial of service (DoS) attack
mitigation and an availability SLA. Support should be prompt, and function 24x7x365.

Due diligence is advisable before committing to any one options. Make sure you choice
does not have use limitations or hidden costs, that the features of the software match
your needs, e.g. the ability to manage resellers, the payment processing options, the
pricing model (one time purchase fee or recurring subscription payments), the level and
cost of available technical support, the programming language used, the availability of
code and the permission to modify it (in case you want to fix bugs, add to or change the
software).

The following are general guidelines. Evaluate and test several solutions for each specific
situation.

• Owners of static web pages can use links and scripts such as shopping carts from
PayPal, Google, and other vendors.
• For a light load, shared sites with links to shopping carts are adequate.
• For an intermediate load a store in a virtual mall, shared e-commerce solution, or a
dedicated e-commerce server, are quite possibly a better fit.
• For a heavy load, a dedicated server or even a dedicated cluster is probably
required.
• Sellers on eBay or Amazon should consider using their respective stores. For
example, eBay sellers may consider a store from eBay or ProStores (an eBay
company), which is integrated with the site.
• If you use software to create and run a web site, the best solution for your situation
may be a product extension. Wordpress, Drupal, Joomla!, FrontPage,
Dreamweaver all have e-commerce plug ins, as do other site design/management
applications vendors.
• Shared site performance can be unpredictable and variable. If you require a
consistent performance, use a shared host which guarantee your quality of service,
consider a virtual dedicated (private) server, or use a dedicated server.
• Virtual malls aggregate vendors who target a particular market segment, and
attract customer to their sites. Vendors with unique products might benefit from
such an environment. Make sure, however, that you are not competing with many
other vendors selling similar products to yours, and that the benefits outweigh the
costs.



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• For higher performance, consider hosted or dedicates e-commerce servers. In
addition to higher performance, your software provides management and reporting
tools.
• Dedicated servers furnish more bandwidth, disk space, and CPU cycles, let you
tweak the software to your needs, and eliminate risks from other users activities
(e.g. spam that gets the server banned from some networks, security breaches
which lead to server vulnerabilities, or even bad code that loads the server).
However, they require a higher level of technical skills to secure and operate.
• Good e-commerce packages, whether hosted by specialists or installed through a
server management tool, provide the most sophisticated tools. Software vendors
often screen, train and support the ISP staff, providing a certain assurance of
quality. With companies that do not partner with hosting providers, and with hosts
using open source software, such as Zen Cart, Interchange, osCommerce, you
have to rely on the reputation of the host.
• Brick and mortar businesses, who wish to integrate operations with existing
applications such as databases, accounting software, operation control systems,
etc. may consider customized software from their vendors. Microsoft, SAP, IBM,
Oracle, HP, and others have the expertise in integrating such systems. In
particular, customized software solution can provide high level of inventory control
and e-tailing sophistication for the business, as well as cross-channel integration.

Best Practices and Practical Considerations

When customers visit often, buy quickly, and have a positive experience doing it, an e-
commerce site is successful. Each of following practices can move your e-commerce site
in that direction. Given the huge variety of web stores, not every practice is right for every
site. Try different practices alone and in combination to see which ones produce the best
results. Sometimes, even the smallest change can have a dramatic effect, and if you don't
try, you'll never know.

* Benchmarking and comparing

Benchmark against the leaders. To learn what works, seek out the leaders in your
category, and investigate their practices for inspiration. Take for example stores like
Amazon, Barnes and Noble, or Apple. These sites invest a lot of resources to study
consumer preferences and to quantify the impact of design elements on customer
experience and sales. By following their practices as they apply to your business, you can
improve your operations. If nothing else, be prepared to compete with their efficiency and
services.

Study the product literature of e-commerce vendors and adopt features that apply to your
business. Be sure to study a number of them, though, because each one emphasizes
different features and benefits.



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• Site/server performance and access

If customers can't reach your site, they can't shop there. E-commerce is a mission critical
application and own time translates immediately to lost revenue. Site performance
problems are strongly associated with dissatisfaction. Site maintenance is especially
crucial, as is monitoring performance and dealing with problems immediately.

Invest in quality hosting with reputable technical support and a stellar track record of
connectivity and stability. Make sure your server has ample memory and enough
processing power for fast response to customers. Fast page loading improves the
customer satisfaction.

• Site search and navigation

A robust site search, and clear, easy navigation are crucial to overall customer
satisfaction and to increasing sales. Even a basic search functionality which brings out all
products matching the search criteria is a very useful tool. In addition, easy navigation,
including hierarchical presentation of product groups makes it easy for users to view
additional products or locate the ones they want.

Place the search function above the fold and in plain view for easy access. Allow category
refinement by using additional search filters (e.g. brand, size, color, price range). This is
also a good way to display the categories of merchandise you are offering.

Use customizable presentation and ordering of search results. For example, let users
decide how many results to display on each page, and how to order them (by relevance,
cost (low to high or high to low), most popular, highest rated, etc.).

Automated spelling correction, alternative spelling suggestions, and proximity matching
(searching related products, similar colors or slight variations on brand name spelling)
improve the hit rate of searches.

If your e-commerce software does not include search, site search tools are available from
search companies.

Make sure shoppers know where they are on the site at all times. Facilitate movement
between sections with the side bar, the header and footer sections, or using a site map.

Place visible contact information and a phone number for customers who prefer to
research products or shop by phone or email. The contact information should be at the
same place on each page.





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• Personalization and customization

Use customer data, such as cookies, member profiles, and wish lists, to give each
individual a personalized shopping experience. Highlight items based on the shopper's
past purchases, recent searches, or items purchased by customers with similar interests
or buying habits. Amazon.com is famous for starting collaborative filtering - 'other
customers who bought X were also interested in Y'.

Needless to say, personalization requires collecting, storing and mining data about
customers, and linking shopping habits with customers characteristics. Such data
includes demographics and income information, gleaned from users' address and credit
information. This may be overkill for smaller sites.

One customization type is translating the site and making it available in a number of
languages. The presented language can be controlled by geographical detection based
on the IP number. Translation is a useful investment if you market to diverse or multiple
populations, but if your focus is local, it will slow your site and would not benefit you as
much.

Another kinds of customization bases product display and site design on geography. The
risk in such an approach is that populations are heterogeneous. A customer may access
a store from a country he/she is visiting, and neither be able to follow the local language,
nor have an interest in product for the local market. One way to address this issue is to let
the customer select his region, or change between the initial presentation to a different
one.

• Merchandizing and cross selling

Technology doesn't make the sale, the product does. Offer things people want, at a price
they can afford. Smart merchandising leverages the old rules, even in the brave new
online world. For example, 'Top Sellers' ('What's Hot') and 'Featured Products' ('What's
New') are still an effective sales technique.

Display related products and cross sell as soon as an item is added to the cart, and make
it easy for shoppers to add items related to what they have in their cart.

Use brochures and catalogs to present products. It is difficult to display thousands of
SKUs on a web site, and some customers like to leisurely review the product list. A PDF
file of your product catalog, or an electronic brochure describing the current items on
sales can be a good marketing tool. Make sure to clearly and prominently place contact
and ordering information on every page of the document, and let the users download it, or
sign up to receive it by email.




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• Marketing

The more visitors your site has, the more you will likely sell. Without proper marketing,
you will not get the traffic you need. Don't wait for customers to find you. Market wisely
with targeted ads and search engine marketing (SEM). Invest resources in web
advertising, affiliate marketing (referral and reseller programs), email campaigns (opt-in
only, avoid spamming at all cost), and loyalty programs (for example, coupons for the
next purchase, discounts for repeat customers, or 'buy 5 items get 1 free').

Search engine marketing increases web sites visibility in search engine result pages. It
includes paid search marketing, natural (unpaid) search, and paid inclusion. With paid
search advertising, sites bid on search terms relevant to their business and target market.
When users search for the term, an advertisement for the site is displayed in a strategic
location of the search results page. Site owners pay only when a user clicks on the ad
and is directed to their site, a process known also as Pay Per Click (PPC).

Natural (unpaid) search marketing aims to increase the ranking of a web site in the results
page (without paying for ads). It uses search engine optimization techniques to make the
site rise in the search engine ranking. With paid inclusion, the search engine company
guarantees, for a fee, the inclusion of the site in their search index. This service is offered
by most search engine companies, Google being a notable exception.

Gather data to keep track of customer activity, and reach out to customers who may have
lapsed, keeping the relationship alive. E-mail is a cost effective way to remind shoppers of
your store and to add sales. When a shopper has bought an item, offer a related item -
with a discount – to generate a second purchase. Or send a list of special offers to
customers who opted to receive it. Use web analytic services, such as Omniture
SiteCatalyst or Google Analytics, to measure web site performance, learn more about
your customers and increase conversions.

• Payment and shipping

Use as many payment methods (credit cards, debit cards, checks, prepaid gift cards,
money orders, PayPal, Google Checkout, eCheck, Bill Me Later, WorldPay) and shipping
options (USPS, FedEx, UPS, DHL, Airborne Express, etc.) as practical to increase
conversion. The limitation of the services (some do not delivers to post boxes, or to
certain countries).

For small merchants, a payment service like PayPal may be a cost effective solution.
Payment services allow merchants to accept different payment types without the cost and
hassle of opening a merchant account with a credit card company. Users of e-commerce
software will likely find it most convenient to use the integrated payment and shipping
options already in the package.



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When selecting shipping methods, keep in mind their limitations. Some services deliver
only to physical addresses, others have limited international exposure (or domestic, in the
case of DHL). Lastly, services vary in cost and delivery speed to different location. All
these considerations favor the use of multiple carriers.

• Customer Service

Customer service can set you apart from other stores. Provide as many ways as
practical to address questions and grievances. Chat window, Click for callback, voice
chat, email support, phone support and 800 numbers all help customers in trouble. Don't
rely on automation and selfservice exclusively, either. Some customers prefer in-person
service.

Make sure your staff is adequate to respond promptly to customers queries, and have in
place escalation and return policies to resolve issues promptly.

Quality customer service is not cheap. Many small merchants offer only a limited service
options, such as an email address or a web form. If customer service is beyond the scope
of your business, make it clear on your site, in a prominent manner, to avoid conflict with
customers. Shoppers are much more likely to accept a 'no refunds, no returns, no
replacements, no service calls' treatment if they are aware of it from the start.

One way to minimize the need for support is with a clear and intuitive design, and an easy
to use, informative, well functioning, site.

Customer feedback improves users' perception, and is a valuable tool for continuous
improvement.

• Don't compete on price alone

Competing on price is a race to the bottom. With e-commerce, compete on convenience,
selection, reliability, security and time saving, only then price.

Items that are hard to find or difficult to shop for can command a convenience premium.
Shoppers are often willing to pay extra for fast and hassle-free delivery.

Use good design to make the shopping experience fast, easy and pleasant. Display
security badges, trust certificates and an updated SSL certificate prominently, to assure
visitors that the site is secure.

Share your privacy policy to demonstrate your effort to protect customers' personal and
billing data, and any other information shared during a transaction.



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Use endorsements, testimonials and memberships in trusted organizations (Better
Business Bureau, Chapter of Commerce, etc.) to set you apart from other merchants, and
to form a bond of comfort and trust with your customers.

• Cross-channel integration

If you own a brick and mortar outlet, integrate online and offline channels, taking
advantage of the best features of each to move ahead of the competition. For many
companies, the ecommerce channel is a superstore, always open and never crowded,
stocking a much wider inventory than would be practical for any local store.

With services such a store inventory locator and in-store pickup of online purchases, the
cross channel synergy may drive sales even higher. Unique online and in-store special
offers can affect customer behavior, while integrating the two channels (e.g. gift cards that
can be used in either place) lets customers follow the path most convenient to them.

• Design for easy process flow. Inform early and often.

Make your transaction process easy and smooth from home page to checkout. Intuitive
site organization is what brings shoppers and products together. Place important page
elements, like cart updates, display refinements and cross-sell items where they are easy
to spot. Keep shopping cart contents visible and accessible at all times, and make adding,
removing and changing items and amounts easy.

Describe products well, using clear copy, and offer more details through links to popups
or other pages. Compelling copy in the right places helps and informs both search
engines and customers.

Let shoppers use the site without registering first. When they are ready to check out, use
the credit, shipping and billing information for hassle-free registration.

Show product availability on the product page, or as early as possible during the sale
process. If possible, use inventory management tools to remove out-of-stock items, or
clearly mark them as back-order. Don't wait till the checkout - it will frustrates your
customers, deter them from returning to your site, and lead to service calls (to find out
expected delivery time or product arrival). An alternative approach is to prominently
display promotional items as 'Sold out!' or prompt users to buy with 'Only few left' signs.

Allow shoppers to add items to a wish list that is clearly separate from the shopping cart.
Use 'add to wish list' buttons, distinct from 'add to cart' buttons. A wish list hints at
customer's preferences. Use it to make discount offers or purchase suggestions. Make
sure shoppers can easily see the items in their cart and wish list.




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Display product price, applicable taxes, money saved, cost of shipping for each item AND
the total as early in the buying process as possible.

Confirm the checkout upon completing a purchase, both on the web site and in a
subsequent email. Include a delivery tracking number, expected delivery date, shipping
and billing addresses, payment type, shipping method, item details and price, itemized
taxes and fees, discounts and savings. More information raises customer satisfaction,
and lowers the amount of service calls and inquiries.

• Words matter. Letters and colors, too.

Purchase and checkout buttons should be located within easy reach on each product
page. Direct users to the buttons with larger font, distinct colors or other visual cues which
make the buttons stand out from the rest of the page content.

Test, test, test! - constantly evaluate your site design and its impact on your customers.
For example, to check whether to use hard selling or soft selling techniques, rotate
between pages using labels such as 'BUY NOW!' or 'DON'T MISS OUT!' and pages using
'Add to cart' or 'Ready to proceed to checkout?', Find out which are more effective per
product line and customer group. Don't be surprised to find variations based on
geography and product price, or changes with attitude with time, as products move along
their life cycles.

For low pressure, use button labels such as 'add to cart' and 'proceed to checkout' rather
than 'buy now', 'order now' or 'buy.' Some customers are turned off by the latter,
especially when they are not yet ready to purchase. In contrast, for high pressure, bold
statements and intrusive placement are often more effective.

Changes in color, font, size and wording can increase sales, raise average order amounts
and helps direct shoppers in the buying process. If your site has plenty of traffic, analyze
design elements' effect on the process speed and sales.

Conclusion

E-commerce comes in many shapes, sizes and forms. But regardless where you fall in
the e- Commerce universe, following best practices (some of which are listed here) can
help you make your e-business more successful.