E-Business - Exploring Your Options

This document introduces various aspects of E-Business and the Internet, but focuses on buying and selling products and services (also known as Electronic Commerce or E-commerce). For more general information on E-Business, which can include buying and selling products and services, providing customer service and collaborating with business partners through the Internet, please see the document The Internet - A Tool for Business.

Summary

Introduction
Just a few years ago, the Internet was something new that not many people knew much about. Now, it is changing the way we communicate and conduct business. The Internet provides users the opportunity to search for information at any time of the day or night and to communicate instantly with the use of e-mail and electronic forms. And now, with the addition of online shopping, the impact of the Internet is continually exceeding all expectations.

E-Commerce can allow existing merchants the opportunity to expand their client base. It can also be a cost-effective method of marketing products or services and displaying an inventory of products. Traditionally, merchants had to set up physical show rooms or produce costly catalogues to preview their products. Now, the Internet can provide an electronic vehicle to enhance this marketing strategy.

Whether you are using an electronic store in place of a physical one, or are using it to enhance your existing retail outlet, the decision to set up an e-commerce site should be based on solid plans and preparation and realistic expectations on investment and return. Just as you would develop a plan for your physical business, so should you for your online venture.

What Is a Web Site?
A Web site is a series or collection of Web pages or files that usually includes a starting file called a "home page". Each Web site has a specific Uniform Resource Locator (URL), which is the address of the home page accessible on the Internet. For example, most companies, organizations, or individuals often have a single address that they give you for their home page. From the home page, you can get to other pages on the site. When viewed by a Web browser (e.g. Netscape or Internet Explorer), Web pages can display text and graphics, and with the help of other computer applications, can play sound, display video and provide information search and retrieval options.

A Web site may be attractive, informative and entertaining, but may also be static. A static Web site is one that communicates only one way and does not allow for true "interaction". A truly effective business Web site provides some methods for customers to provide feedback, ask questions and search for relevant information within your site.

e-mail links
electronic forms which provide a method for customers to provide input
searching capabilities
connection to information databases for customer use.

What Is E-Commerce?
E-Commerce is a way of marketing and selling your products through the Internet. The Internet enables transactions to take place between your company and customers, and between businesses. Business-to-consumer is where an actual financial transaction takes place for customers to purchase products. Business-to-business e-commerce is when companies deal with suppliers online. It would be here that your suppliers would take orders, do their billing and get paid online. Business-to-business e-commerce is expected to grow faster than business-to-consumer commerce.

Should I Be on the Web?
The decision to get on the Web should not be taken lightly. There are many factors to consider:

The Internet can greatly increase your market base, and this means that your marketing will need a broad appeal to please customers from various geographical areas. You must be ready to meet growing demand, and consider whether or not your product line will be delivered economically and conveniently. There are some significant economic advantages to going online, such as lower rent, labour, inventory, and printing costs. Keep in mind that moving or expanding your business to the Web will not fix any problems. If your existing business is not working properly, going online may only compound the problem.

So, let us walk through a typical e-commerce transaction.

1. You must first develop a site that allows potential customers to find your products or services. A customer will browse through your electronic catalogue and select items to add to their shopping cart.

2. Once customers have finished selecting their items, they will fill out an online order form. This usually includes entering the customer's name, address, etc.

3. Order processing software will then calculate the totals, taxes and shipping information (usually based on delivery destination) - credit card number, expiry date and shipping address. This form must be secure.

4. Payment processing software encrypts the order total and payment information and contacts the credit card company to verify that the card number is valid and the total amount is within the cardholder's limit.

5. Once authorized, a message is usually transmitted immediately to the customer and the merchant verifying the order, and the order processed.

Customers may even be able to track their orders through the shipping process, depending on the sophistication of the storefront software, and whether the merchant has his or her inventory and other back-end systems integrated with the store.

The next section presents a process that will help you to develop a clearer understanding of the options that are right for you or, at least, a knowledge of the questions to ask the Internet professionals that you will be working with.

Questions to Consider
The following questions are important because the solution you will choose for your electronic store will be based largely on these questions. Let's go through each of these questions one-by-one so you can better understand their significance.

Well, you know what they say ... "you get what you pay for". This is not always entirely true, as you could certainly pay a high premium, hire someone who does not have your best interests at heart, and end up with an ineffective and poorly designed Web site. On the other hand, there are some solutions that will not break the bank and will do quite a nice job of selling your products. However, the most important thing about setting up an e-commerce site is to get all the associated costs up front. This means design charges, Web hosting fees, and transaction costs.

If you feel you are fairly technically inclined and have some of the basic skills and tools at your disposal, you may be able to develop the site, or parts of it yourself. With some of the browser-based solutions, you can point and click and select options that will create your online store. Your responsibility would be to scan images, convert them to appropriate file format (.gif, .jpg), include detailed product descriptions and prices and upload them to the Web server.

Charges for e-commerce solutions are often based on the number of items or products in your catalogue. Monthly fees are often based on these numbers and can rise rapidly if your catalogue begins to grow.

If you are planning to sell numerous items, you may wish to look at a more flexible type of solution that will not become too expensive as your business grows.

d) Are you looking to integrate a storefront into an existing Web site or are you starting the entire process from scratch?

You may already have a basic Web site and have decided to add a store component. If this is the case, you may want to begin by talking with your current Web host to see if it offers any e-commerce solutions. You may also have some existing database integration or technologies on your current site that need to be taken into consideration when selecting your storefront option.

Once you have considered these questions, you can get down to business. What options are available and what are the costs involved? To put it all together, let's go through the components of an e-commerce site and the options available to you.

Web Design/Catalogue Development
A good Web designer will be able to give you a professional looking site that is easy to navigate and expresses the nature of your business. With some of the storefront solutions that we will discuss, you may be able to create a site with little technical knowledge; yet, in many cases, it may not be appropriate for you to build your online store - you may need to concentrate on the business aspect of your store and leave the technical and design issues to someone else.

When selecting a designer to develop an e-commerce site, ensure he/she has significant knowledge and experience. In most cases, you will not only be contracting the designer to actually develop your site, but to assess your needs and recommend technologies and solutions that are right for you and your business.

Just like a physical retail outlet, your online store will need products to select, a shopping cart, and a check out. Although you could hire a programmer to build you these components from scratch, there are a number of software solutions on the market that have these components pre-developed. Many of these pre-developed solutions can be broadly described as either "template" services, which usually offer to host your online store for you and provide electronic forms and features that can be customized to a certain extent, or as "storefront" services, which are usually software packages that you install on your computer and use to build your e-commerce Web site.

For further information:
visit the Web site:
ebiz.enable

Template Services
Template services are browser-based (often referred to as an "online" service) and provide a relatively inexpensive solution for small businesses that want an effective online store, but do not require full control over every aspect of the site's merchandising and technical capabilities. It is most appropriate for small stores that do not have a large number of items for sale.

Merchants can create a simple store by selecting options and filling in items such as product description, company information, etc. You would also need to upload graphic files and logos that will be displayed on your electronic store.

Template Service Fees
The fee usually consists of a basic monthly charge plus additional fees. The additional fees depend on the number of transactions your store requires or the number of items your store carries.

Fees for template services range widely with more complex packages priced to reflect the services they offer. If you are interested in a template solution, you may want to browse the seller's Web site. There may be an option to test a demo version or create a "test store" prior to making a commitment.

Storefront Services
Storefront software is a tool that you or your developer can use to create your store. These range from very simple and inexpensive packages to more complex and scalable packages that are much more pricey. Again, the package that is right for you depends on the options you need.

Storefront software (often referred to as "off-line" software) varies in terms of sophistication and features. Some software is very simple and straightforward, others have enhanced features and options, (for example, product options, inventory integration and administrative options).

Storefront Software Fees
Fees for storefront software range widely with more complex packages priced to reflect the services they offer. The site developer would be required to load this software on his/her computer and would have to upload the completed files to a compatible server. Use of this software is often limited to people with some technical knowledge as even viewing the uploaded files in most cases requires the use of a server.

Also, the storefront package is just that... the store. Merchants will still have to pay fees to a Web host for their server space, set-up a merchant account and a payment processing service, and in most cases, a developer to actually create the store within the software framework.

Many storefront solutions offer the ability to download their software for a trial period so that you can evaluate the product features before you make your purchase.

Internet Service Provider (ISP)/Web Host
An ISP provides you a connection to the Internet and a Web host provides space on their server for your Web or e-commerce site. These companies are often one and the same and can provide both services. Customers are usually charged monthly fees based on factors such as site storage space, bandwidth, technical support, number of email accounts, and secure server (for credit card or confidential information collection).

Web hosts are starting to offer e-commerce solutions bundled with their monthly storage charges, where they might include a storefront development package, and maybe even Web development. Once again, this usually does not include the merchant account or payment processing fees.

Domain Name
A domain name is your Internet address and is sometimes referred to as a URL. It is what people use to find you on the World Wide Web. An example of a domain could be www.yourcompany.com or www.yourcompany.ca .

You obtain a domain name from a "registrar". The fees for the domain name can vary depending on the type of domain you choose (e.g. ".com", ".ca"). Your domain will have to be renewed periodically (for example, every two or three years) for it to remain valid on the World Wide Web. Registering your domain on the Internet is like registering your company and company name. There are also maintenance costs to consider to keep the site up-to-date and running smoothly: these costs vary depending on the size and scope of the site.

For further information:
visit these Web sites:

InterNIC
The InterNIC website was created to provide current public information on Internet domain registration services.

Internet Corporation for Assigned Names and Numbers
The ICANN is responsible for coordinating the Domain Name System to make sure that all Internet names and domain numbers are unique as well as ensuring that all internet users find valid addresses.

Canadian Internet Registration Authority
http://www.cira.ca
The CIRA is a non-profit corporation that administrates all registration of "dot-ca" domain addresses for Canadian organizations as well as other information on registering a domain name or number in Canada.

Dealing with Online Payments
In general, you can handle your customers' online payments either through a merchant account that you set up with each of the credit card provider(s) that you choose (VISA, MasterCard, etc.) or through an Internet payment service. The transaction and other fees for merchant accounts and Internet payments services will vary. In some cases, a security deposit may also be required, to cover potential "charge backs" (requests to reverse a purchase made on your online store). It is important for you to discuss the details of the service(s) you are considering and all possible fees with the provider(s).

Security
A standard Web site usually does not require a high level of security; however, an e-commerce site is quite different. Typically, when customers are shopping on your site, they are in a "non-secure" environment until they "Click to Pay". This is usually the point when they are directed to a "secure" server (one with all of the necessary security features). Once users begin the payment process, they start to give private information such as name, address and, of course, credit card information. This is where the encryption technology and other security features come into play.

With the use of SSL (Secure Socket Layer) or SET (Secure Electronic Transaction) technology and a digital certificate, the client's credit card number and private information is encrypted and sent to the payment processor for verification.

Information on security issues and encryption technology can often be obtained from your ISP or Web host.

Conclusion
An online store can provide an incredible opportunity for merchants to gain exposure for their products and sell them to a worldwide client base. However, it is imperative that the same considerations that would be given to setting up a physical store also be given to an electronic store.

Are your products/services conducive to being sold online? What is your competitive advantage: price, ease of use, delivery, accessibility? Have you instilled confidence in your site? Is it a secure site? Do you have a privacy policy? Do you have a return policy? Do you have delivery information?

And, of course, one of the key components: can buyers find you? Have you implemented a marketing strategy for your online store? This would include actions like registering with search engines and directories, printing your domain name on all printed material, and cross-promotion with other complimentary sites.

Also, it is important to remember that, just because you are selling in a virtual environment, it does not mean you can circumvent the rules for operating a business in your province. The same legal and taxation collection rules that would apply to a physical business, still apply to your online store. Although some of these areas are still a bit grey with this new technology, it is a good practice to operate the same as you would in the "real" world.

As e-commerce is a new and developing business arena, each country, state or territory will have rules you need to follow in order to do business within their jurisdiction. After all, the transaction may be done over the computer but, more often than not, you will at some point have to ship a physical product and therefore be subject to the rules and regulations of the exporting and importing countries.

So, as you make your plan, you may want to speak to industry specialists and surf the Web. Learning from other successful electronic stores can make your online venture a successful one!

E-marketing
E-Marketing is any form of advertising (i.e. banners, logos/pictures/graphics, Web sites, Web pages, pop-up windows, direct or indirect email distribution, newsletters, etc.) on the Internet.

ISP (Internet Service Provider)
An ISP gives you your actual connection to the Internet. Many ISP's offer Web hosting services as well.

SET (Secure Electronic Transaction) and Digital Certificate
SET verifies identities as well as encrypting the credit card information. It does this by introducing a third-party "digital certificate" that makes sure no customer or store can pretend to be someone else.

Credit card owners use an "electronic wallet" that sits on their computer hard drive as a browser plug in. Merchants also get a coded certificate provided by their bank, verifying that they are a legitimate business. The certificates generate digital codes called public-private key pair that decipher the credit card number and change with every transaction.

SSL (Secure Sockets Layer)
Most sites use SSL browser level standard, which was developed by Netscape Communications Corp. SSL is bundled with current Netscape and Explorer browser versions. SSL encrypts and deciphers all messages travelling to and from the server; however, a merchant will not know for sure that the card has not been stolen. For a higher level of assurance, you must turn to the SET standard.

Web Browser
Client software designed to facilitate travel across the World Wide Web. Typically, Web Browsers operate on a graphical user interface which is easy to use. The browsers are able to read HTML and translate it into an eye-pleasing, simple display for the end-user.

Web Host
The hosting service provides a certain amount of storage capacity for your site on their server. Your host can also keep track of how many people are coming to your site and how they have found it (referring sites). They usually charge a set-up fee and monthly space rental charges.

Web Server
A computer that delivers (serves up) Web pages. Every Web server has an IP address and possibly a domain name. For example, if you enter the URL http://www.cbsc.org/ontario/ in your browser, this sends a request to the server whose domain name is cbsc.org. The server then fetches the page named index.html and sends it to your browser.

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E-Business - Exploring Your Options

Summary