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A Ten-Step Primer for Selecting an Effective E-Commerce Storefront

By Kevin A. Jackson |

A recent article on CanadaOne outlined the risks facing small Canadian companies that do not adopt e- commerce, particularly in the retail sector.

One of the biggest barriers to e-commerce adoption is the difficulty in understanding the "how-to", rather than the "why" side of things. That is something this article will help with.

As a technology vendor who has helped many organizations implement e-commerce websites going back as far as the 1990's I have put together this ten-step guide to help Canadian companies overcome their fears and jump into the e-commerce fray.

  1. Select a system based on what you are selling.

    Do you have a bunch of products for sale, or just a few? Do you need to tie inventory tracking that is also connected to your off-line sales and have the option of showing items show as being "sold out"?

    A common mistake is to look at different e-commerce solutions first and then try to fit what you find to suit your business. In my view, that is the wrong approach. Defining the scope of what you have to sell and how the system will need to work will be one of the most important steps in getting your storefront up and running.

    Also, this approach will help you side-step a common tactic in technology sales, where companies try to overwhelm customers in their decision making process by presenting a list "features" that is so long that it overwhelms. When this happens it becomes difficult for the customer to compare products and sort out whether the product has the right features for his or her business. It's important to remember that having a lot of features you don't need can drive up the overall costs and more importantly, the maintenance costs if you are using an installed system.

    At its most basic, an e-commerce system will have a way for your customers to select a product, adjust any necessary details (like the size or colour of a shirt) and then either buy it at that point or put it into a shopping cart that can have other items added to it as well before check-out. Beyond that, you will want to make sure the extra features are there because they are needed by your business.

  2. Determine if you need a database and if you do, how complex it needs to be.

    The term "database" can seem like a scary word to some businesses, but it should not. With the rise of web technology databases are all around us. Blogs are databases. Company news, job postings, event listings, product offerings... all of these displays we have become use to seeing online are really small databases with a specific purpose.

    E-commerce is no different. At its most basic, an e-commerce database could be as simple as having a product name, picture, description and price. If you want to keep your costs down, you will want to avoid having dependencies in your order process. For example, if ordering a product then triggers a bunch of options that need to be selected, your database will become more complex (and most likely more costly).

  3. SaaS or installed e-commerce system?

    It can be difficult to make a smart selection without fully understanding some of the technical nuances of e-commerce systems. A significant point of consideration is whether you will "rent" your storefront through a Software As a Service (SAaS) hosted account or if you will purchase a system that requires you to download the code and have it installed on your web hosting account.

    For many smaller companies, SAaS option is the best option to get going quickly and if you select a web host that offers your preferred shopping cart for an extra monthly fee that is ideal. Many web hosts will offer a few systems that can be added with "1-click" to their standard hosting accounts. The advantage of this approach is that you do not have to pay for the extra programming time to get your storefront up and running.

    However, if you want a more sophisticated solution where you need to customize aspects of the shopping cart, and SAaS solution can be quite limiting. This is particularly true for Canadian customers if the software was developed originally for a US customer base. I recently encountered a situation where a company was selling something online, but could not do something as simple as marking certain fields as being required due to limitations of the SAaS e- commerce system.

    Regardless of what option you choose, you will need to make sure that you can download your data, preferably in a spreadsheet format, so that you have a local back-up of all your information.

  4. Flexibility impacts usability, which can impact sales.

    Your e-commerce storefront is an investment and it helps to look at the long-term opportunities and costs, as well as short-term issues. There can be a large appeal in using a preset system that can get you up and running quickly, but in the long-term if that system is not flexible enough to let you adjust things like the way a customer can browse through products for sale, you may regret your selection.

    Key features to look for if you will have a lot of products for sale are having "breadcrumbs" people can follow to explore product categories (e.g. Product category > sub-category > product) with each keyword representing a link to that product or category. Another good option is to let people refine their search by price or product feature or brand. Since discounts can be a strong incentive, you may want a system that can accept coupon codes or offer free shipping to customers according to your criteria (e.g. to all customer in Canada who spend more than $39).

  5. Consider how an order will not only be placed, but fulfilled.

    If you are looking to keep costs down, once again you may prefer to implement this as a semi-manual process. That option is easy if you only have a few products for sale and can realistically estimate the shipping costs for an order based on the quantity of items ordered. (Although as with all things, you would need to make sure that you can use that approach in the system you select).

    However the ideal scenario would be for you to automate the calculation of shipping costs.Some e-commerce storefronts have this option built in. Many e-commerce shopping carts will integrate with at least one major parcel shipping company.

  6. The taxing side of e-commerce in Canada.

    One of the real complexities of e-commerce is your obligation to charge the correct amount of tax on each order. This is one area where the Canadian government could do more to help, but unfortunately have not. It's up to each business to determine what taxes must be charged on each order and if you are purchasing a system from outside Canada you will want to make sure that it is capable of handling Canadian tax codes.

    While beyond the scope of this article, a simplified overview of how tax works on e-commerce transactions in Canada is that you need to charge the correct tax for the province you are shipping the goods to. That means that you will need to charge HST on some orders and a combination of GST and/or PST on others, based on the tax law for that province at the time the order is placed. It is noteworthy that Prince Edward Island switched to HST on April 1, 2013 while British Columbia reverted back to the older GST/PST system on the same day. (April Fools, anyone?)

  7. Make sure it's secure.

    Under Canadian legislation, when you collect confidential information, including credit card information or personal information from a shopper, you become the custodian of that information and are required to keep it secure. So in addition to obvious things like putting SSL encryption on pages where you collect data, you will need to ensure that the end-to-end chain of how that information is then transferred, stored and used is secure. This is one of your most important obligations in a decision to add e-commerce sales.

  8. Ask for permission to comply with new CanSpam law.

    The new anti-spam legislation, which seems overbroad and has particularly harsh penalties of up to $10 million per incident for corporations, requires companies to ensure that customers "opt in" before sending that person an email. This opt-in needs to be explicit, so you will want to be sure to include a way for customers making a purchase to do so if you want to email them about anything other than their specific, individual orders. While the law has not yet taken effect, it is advisable to implement compliance measures in advance.

  9. Integration with your customer database, accounting systems.

    Once again, the scope you define in step one should take into account the question of how you will capture critical customer information into your customer database - or whether the system itself should become your customer database. Some systems will also include an option to export transactions to your accounting software. Depending on the volume of transactions that you expect to see, this may or may not be important to you.

  10. Understand the true costs.

    The "total cost of ownership" will be a key concern to most companies evaluating e-commerce systems, yet this can be difficult to calculate. Here are a few cautions.

    1. Watch for embedded costs, like per transaction fees. While e-commerce systems that can get you up and running with little or no initial costs can seem attractive, they often have expensive per transaction fees that are a percentage, fixed amount or combination of both and apply in addition to your credit card transaction fees.
    2. True credit card merchant fees can be hard to estimate. There have been many complaints about how difficult it is to figure out just what charges are being levied on merchant transactions and unlike shipping fees that are passed on to the customers, these are fees that the business needs to account for in their product pricing.
    3. Also, an important consideration is whether you have to pay for your own PCI compliance testing. We have seen a number of organizations select one e-commerce provider (associated with a major Canadian bank) only to discover they must pay an unexpected cost ranging from $1000 to $3000 to properly address the PCI security compliance issues, a hidden cost that can be most unwelcome.
    4. Open Source does not equal free. There has been a lot of hype lately around open source, which is often mistaken as being "free" software. While it is true that the code base is free to use, it does not mean that purchasing an open source system is free, or even less expensive, than other systems. Our company uses a combination of open and closed source systems and it might surprise you that in many situations the time involved in using a large open source system is often much greater than that required for a smaller, more purpose-driven system.
    5. Consider your upgrade options. If you want to test out a system in the short-term, have a good understanding of what the costs will be if you then need to migrate to a more sophisticated solution. Sometimes the cost of migrating an existing system can be more costly than starting over from scratch.

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