Alternatives to e-commerce
Despite all the hype regarding e-commerce, the major banks in Australia are reluctant to encourage businesses to use e-commerce websites. If you ring and enquire about the pricing of e-commerce transaction charges or setting up a website which has a direct gateway to one of the major banks,.it will take several phonecalls and faxes to find someone who you could speak to. Then you will need to negotiate with the bank, who may choose to refuse your e-commerce business proposal.
The fear of fraud and the high insurance costs associated with trading in real time online means that e-commerce solutions are expensive.
Alternatives to full e-commerce solutions include using secure order forms that send encrypted emails to a secure email box. Customer of details and credit card details are then processed manually via a merchant EFTPOS machine. The fees and charges for EFTPOS machines are around 2% plus a small monthly rental. Many merchants already rent an EFTPOS machine and processing customer purchases manually can have many benefits, which include;
- Not having to process refunds for out of stock items.
- Customers tend to be more accepting of a real person processing their order and being charged for it when the order is filled.
- Lower fees, charges and hosting costs.
Another e-commerce solution is to use a gateway, like eway. pay pal or paymate. Gateway services allow transactions to move to secure servers where credit card details and personal information is processed. The e-commerce provider transfers money to a holding account and then to the merchant's bank account. Although the fees for these services are quite attractive, the flat rate fee per transaction and percentage value of the entire transaction plus monthly or yearly service fees make the rates more expensive than using the merchant EFTPOS machine.
If you decide to use a payment gateway, you need to determine the value of the average transaction and the volume of sales per month, in order to choose the right plan. The fixed transaction charge means that for small transactions, the percentage of the transaction is quite large. Work the cost of each individual sale and then average the costs by the volume of monthly sales and add the monthly service charge (remember to average fixed yearly charges and add into the equation). The percentage of total sales will be determined by dividing the monthly charges by the value of total sales. Compare different payment gateway pricing.
A growing number of websites are encouraging customers to directly deposit funds into the company's bank account. The costs associated with using 'cash' are negligible and banks only charge for the transaction. However, this option is only available within your home country. You cannot transfer funds to the bank of a foreign country using internet banking.
Many businesses should be wary of spending too much time creating huge online catelogues without careful planning. Many shopping cart systems do not index well on search engines, if at all. If you do intend to promote your products online and you don't have lots of money to spend on print or television advertising, then you need to ensure that web pages are created for featured products and websites are coded to XHTML standards, with proper keywords, metatage, titletags and web page descriptions.
Many startup businesses can do well by using ebay to sell products online. If you have a feedback score of 5 or more(meaning you have had 5 positive feedback comments from ebay purchases or sales), then you can utilize the 'buy it now' option which effectively means that you can set your reserve price and 'buy it now' at the same price, thus avoiding the bidding process altogether. Ebay will allow you to build a virtual store and obviously this is not going to be the best alternative, but it is cheap. If you are selling a niche product, you can build up a list of email addresses and contacts that will help you when you set up your own website. Some businesses even use ebay as a means of cheap advertising and direct traffic from ebay items to their own website.
Other ways of marketing include encouraging existing customers to visit your website with changing website content, featured articles, specials, promotions and give aways and by using advertising in magazines, leaflets and brochures.