eCommerce
Commerce on the Internet, commonly referred to as ecommerce, is equal in importance to Content, Community and Communication. Beyond web site traffic, ecommerce -- actually transacting business as a result of your Internet Marketing efforts, is the one key success measurement that really matters in an effective e-Strategy.
Growth of eCommerce
The growth of ecommerce over the past two years has been staggering! According to recent statistics, 65% of all people using the Internet “shop” online. Remember, in the US alone, 54% of the population (2001 statistic, it’s grown since then) uses the Internet. 65% of that number equals roughly 105 million purchasers of goods and services on the web! That’s approximately one third of the total population of the United States!
How fast is ecommerce growing? Well, exponentially to say the least. In 2001 total worldwide B2B ecommerce revenues totaled $370 Billion, which was up from $180 Billion in 2000. To put this into perspective, that’s roughly equal to the U.S. Defense budget or, half of China’s GDP (Gross Domestic Product). The estimates vary, however, a safe number puts B2B ecommerce total worldwide revenue at $834 billion by the end of 2002. That’s well over a 200% growth, year over year!
PricewaterhouseCoopers estimates that 70% of businesses online will be using ecommerce by 2004. Online shoppers are expected to increase from 67 million in 2001 to 137 million in 2003.
Serious Business
As I’m sure you gathered from the previous paragraphs, ecommerce is serious business. Very serious business that requires your complete attention when you decide to start participating in “business online.” In your decision to enable ecommerce functionality, be sure that you factor in the very serious commitment you will need to make to this effort. Having done so, you have taken the first step towards your online ecommerce success.
It is probable that the Internet represents a vast untapped potential for you, as relates to ecommerce. The simple fact is the Internet allows you to exchange your goods and services without the limitation of space or time. At any time, day or night, your customers can visit your web site and buy the object(s) of their desire.
Be aware that the path to developing an effective and successful e-Store can be challenging if you don’t first understand the fundamental elements and principles that define ecommerce. The following will provide you with a well-rounded understanding for what is required to “do” ecommerce.
How eCommerce Works
First, the web surfer finds her way to your web site, as a result of your outstanding Internet Marketing efforts. She may have clicked on a link in your newsletter or she may be responding to a promotion that she received via email. She may also have searched on a particular word or phrase and received your web site in her search results. Whatever the reason, she is now at your web site.
Having arrived, she decides that she wants to purchase something from you and adds a product to the shopping cart. Upon doing so, she proceeds to the “check out” and is asked to enter her purchasing information. More than likely this will be her credit card information.
Behind the scenes, the information she has provided moves from your shopping cart to a transaction server where it is encrypted. The standard Internet protocol is 128-bit SSL (Secure Socket Layer) encryption. The encrypted information then passes through a private gateway and on to a processing network where the bank or financial institution that you have a merchant account with approves or denies the transaction. All of this typically takes place in less than ten seconds.
Digital Certificate
In order to take payments in this fashion you will need to obtain a digital certificate. This is not without its costs and challenges. A first time subscriber can expect to pay upwards of $700 for a digital certificate and spend a considerable amount of time (at least a week) ensuring that all the “t’s” are crossed and the “i’s” are dotted. Security on the Internet is no laughing matter and the organizations that dispense these certificates take their business very seriously. There is far too much liability for them to treat it any other way.
Merchant Account
Once you have your digital certificate, the next step is to get your merchant account. The merchant account is the relationship that you develop with a bank or financial institution that allows you to accept payment via credit card, etc. This is a fairly easy process but requires some homework on your part. There are numerous alternatives and many different providers for you to choose from. Your task will be to select the one that best meets your needs based on your business and the volume of transactions you anticipate.
I have intentionally left out the discussion of selecting a gateway provider because the majority of the merchant account providers now offer this service as part of their package.
Shopping Cart
A shopping cart is a software program that gives you the ability to display the products that you have for sale, keep track of your sales and tie together all of your ecommerce activities. Once again, this should not be entered into lightly as there are numerous options and alternatives for you to choose from.
eCommerce -- A Broader Context
It’s important to note that in describing ecommerce we take a broader view of the term than the process outlined above. Some businesses, entire industries in fact, do not lend themselves to this type of commerce. What I am referring to when I say ecommerce is either transacting a sale online through the use of a shopping cart, merchant account, etc., or, taking the next step in the sales process. By definition this later function is the generating of a qualified lead and needs to be treated differently than the sale and fulfillment of products on the web.
An appropriate application of ecommerce to your business is dependant on where you are in your customers’ Value Chain. What business you are in, and the types of customers you serve will dictate how you actually transact business on the Internet.