FastCommerce In Article on Shopping Cart Options

October 26, 2007

Shopping Cart Options for SMBs, Part 2

WWW.FASTCOMMERCE.COM

By Andrew K. Burger
E-Commerce Times
10/23/07 4:00 AM PT

“Businesspeople have precious little time to learn complex systems and then to use them so it needs to be easy and accessible. Whenever possible I try to use the following guide when designing the systems: You shouldn’t need to read a manual to know how to use it — it should be self-evident,” said Daniel Vidoni, e-commerce software consultant and proprietor of Vidoniweb.com and Storefinder.com.

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There’s a wealth of opportunities available for aspiring and small to medium-sized business (SMB) e-tailers looking for shopping cart technology, as Part 1 of this series points out.

While this makes it easier than ever to find this important piece of the e-tailing puzzle, it also means startup and SMB e-tailers face greater challenges when it comes to choosing shopping cart software and putting it to good use.Ongoing rapid growth in e-commerce, the emergence of standardized Web 2.0 technology and open source software packages, shopping cart and e-tail e-commerce tools have become cheaper, more powerful, standardized and chock-full of all kinds of interactive, multichannel and multimedia features. However, perceptions of just how easy they are to use — and how easy and cheap it is to get online and start an e-tail business — often outrun the reality.“There is such an enormous amount to consider when creating these systems that in my view it should be left to professionals. If not, a merchant can become disillusioned with Internet technology and determine — incorrectly — that it doesn’t work and that it’s all hype,” Daniel Vidoni, e-commerce software consultant and proprietor of Australia’s Vidoni.com and Storefinder.com, told the E-Commerce Times.

The Front End

There are essentially two sides to shopping cart sites, Vidoni continued: “The merchant’s administration area (the back end), which allows them to manage the products, pricing and freight and things like that; and the Web site front end where visitors can see and read about the products, place orders and make payments.”

Getting the front-end user interfaces right is one key to creating a satisfying customer experience. They need to be intuitive and facilitate a smooth workflow, Vidoni elaborated.

“From a sales perspective, it is vitally important that we help make the purchase experience a good one — and good means easy, pleasant and enjoyable — the opposite of frustrating. Remember the phrase ‘it’s been a pleasure doing business with you?’ That should be your target,” he said.

As important as it is, the shopping cart is just a part of an e-tail site; it needs to be part of a fully integrated e-tail platform, pointed out Charles Han, CEO of FastCommerce.com.

“Most shopping carts today have the basic function of managing products, calculating shipping and tax, and checking out with credit cards. Most U.S.-based shopping carts also support alternative payment methods such as Paypal and Google Checkout. That’s about what you will get from 99 percent of the shopping carts in the marketplace,” Han told the E-Commerce Times.

As competitive as the e-tail and software markets are and with so many good SMB shopping cart platforms on offer at small business prices, the shopping cart in and of itself doesn’t really add any significant value to an e-tailer’s business, he said.

“Like in a brick and mortar store, you are not going be successful if all you have is steel shopping carts and some check out registers. You are expected to have a fully integrated retail system to manage your merchandising assortment, inventory, promotion, marketing, customers, product returns and financials. Nobody expects to see a shopping cart and POS (point of sale) not being of a complete retail system,” Han added.

The Back End

Equally important to e-tailing success as getting a shopping cart site’s front-end user interface and navigation features right, the back end also needs to come together.

“The back end of the Web site is much more important and complex than many people realize,” Vidoni commented. “One would think that it is where products are managed and photographs of items uploaded. However, there is a great deal more that the administration area can and does do.”

Typically, sophisticated databases are used. “A lot of time is spent on getting the data architecture right. This flows from the needs of the business. Every business is different, therefore every database structure is different,” Vidoni continued.

Like the shopping cart’s front end, the back end administration area should be well-designed and easy to use.

“Businesspeople have precious little time to learn complex systems and then to use them so it needs to be easy and accessible,” he said. “Whenever possible I try to use the following guide when designing the systems: You shouldn’t need to read a manual to know how to use it — it should be self-evident.”

Ideally, databases should be able to be exported and connected to and from accounting software packages, which allows data such as stock levels and orders and sales information to be exported into accounting software packages for processing and reconciliation, something that is frequently overlooked, Vidoni noted.

“As with many things, you get what you pay for; there are no shortcuts to quality design and implementation and the extra time and effort you invest is returned many fold over the years during which your Web site operates profitably,” he commented.

Open Source Options

As in a growing number of software market segments, open source software solutions are making their market in e-tail and shopping cart software.

“There are many decent — and free — e-commerce solutions, such as osCommerce, on the market. These products allow very rapid development and are a great way for beginners to get into Web development. When these products are used by professional developers, the results can be sensational,” Vidoni related.

Professional, well-designed templates can be incorporated within a solid e-tail system’s architecture and provide very cost-effective, good quality solutions, he continued. Beautifully designed professional template’s can mesh together with the solid architecture of these well-designed products to yield very cost-effective quality solutions. In addition, Vidoni noted, “Because the software is in the public domain it is constantly under peer review and if necessary can be modified by the Web developer to produce more customized solutions.

“I have been involved in the development of similar shareware products in the past which were developed by the global programming community and the results were incredible. Everybody contributes small fragments and everyone ends up benefiting. The open architecture is beautiful to work with and there are so many forums where questions can be asked and answered sometimes within minutes that it’s just incredible.”

Making the Investment

For e-tail startups and SMBs to compete successfully in the increasingly competitive, fast-moving e-tail market means having the willingness and means to invest the necessary capital — and the capital required isn’t insignificant or shrinking.

“For small businesses that are just launching an online store or expect online sales to be under (US)$2 million, we usually recommend a shared revenue platform like Yahoo Merchant Solutions,” Sandra Fathi, president of Affect Strategies, told the E-Commerce Times. “There are quite a few companies that will provide their hosting services and e-commerce platforms for between 0.5 and 1.5 percent of sales revenue.”

Going with an established third-party e-commerce platform hosting provider offers startups and SMBs — particularly those with limited technology expertise — a number of advantages.

“This approach also provides merchants with peace of mind that tech support and maintenance of the platform are included in their agreement. Often, these platforms are well established and fully integrated with complementary services that the business may want to leverage as well,” Fathi explained.

Aspiring e-tailers can expect to invest $50,000 and upwards for a custom developed e-commerce platform while making use of an off-the-shelf offering may run as little as a few hundred to a few thousand dollars a year, according to Fathi.

“Many small businesses just don’t have the cash to layout upfront. Having a fixed percentage on top of their cost of goods sold allows them to have better cash flow and less volatility in operating costs if something should go wrong with a proprietary platform,” she noted.

BabyRide.com, one of Affect’s SMB e-tail clients, generates annual sales of more than $3 million yet still chooses to stay on the Yahoo Merchant Solutions platform, Fathi related.

“Although they are paying about 0.75 percent of each sale (or $22,500 annually), BabyRide.com has been able to avoid hiring a full time Web developer or technology expert to maintain and update the site. Having an e-commerce platform that is maintained, supported and operating 365 days a year is worth much more to the company,” she said.