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How exactly does Ecommerce work?

By: Lisa Schmeckpeper

This has to be the most-frequently asked question I receive
from newbie clients. They know people are buying online and
they know they have to accept credit cards if they want to
stand a chance in all the net-based competition, but beyond
that realization, most are clueless as to how it all works.

I can't blame them, really. It's a confusing online world
out there and a lot of people who are trying to tell them
how it works are really just trying to sell them their own
solution. It's kinda hard to trust the validity of what they
say when profit is a huge motivating force behind their
persuasive suggestions.

And to be sure, there is profit in this Ecommerce game!
Money is to be made at many steps along the Ecommerce path.
With that in mind, let's take a walk along the path to
Ecommerce, and take a look at the signs--or components--that
are necessary to take part in the Ecommerce excitement and
potential profits.

1. The Merchant Account:

This really is your first step towards Ecommerce, unless
you have chosen to go through a payment facility and are
willing to give up a rather large portion of your sales in
fees. The up-front costs of a merchant account can be hefty
for a small business, but the long-term savings can be
substantial.

This is especially true if you are selling big ticket items.
For instance, on the sale of a $300 product/service through
a payment facility you could pay between $20-$45 dollars or
more in fees. With your own merchant account it will
probably cost you about $9. With the typical fees and
equipment for a merchant account startup costing about
$1,500, you can recoup that cost rather quickly.

A merchant account comes with a merchant identification
number. That is about all it gets you. In order to process
transactions you need either a terminal (the little box that
you swipe your credit card through at retail outlets) or
software that runs on your PC and will dial up the merchant
via your modem, and then process the transaction and deposit
the money into your bank account.

2. The Shopping Cart:

If you are selling just one or two items on your site you
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