Assessing the Value of E-Commerce

Assessing the Value of eCommerce

Source: Enterprise Ireland 

Now, more than ever, having an eCommerce facility on your company's website is vital in order to compete. The web has become the first port of call for many consumers looking to either research a product or make a purchase. There are many advantages to implementing an eCommerce facility; being able to sell your products online means you are not restricted to a local customer base, for example. But is it a must for all firms? 

Phil Codd, managing director of SAP Ireland, certainly thinks so. "If you're not on the web, then you're not in the game," he says, explaining that, at the very least, the majority of consumers will use the internet to do some comparison shopping on prospective purchases. "SMEs need to understand how eCommerce can help them to make sure they don't miss out on any opportunities," says Codd.

Marc O'Dwyer, managing director of SAP re-seller Irish International Sales, agrees with Codd, and also advises SMEs to take their time when setting up an eCommerce facility, ensuring that they research all the options available to them.

"The most important thing is that the customer experience is good, otherwise [customers] will simply go back to their old ways and place orders over the phone, or they may even decide to do business with a competitor," cautions O'Dwyer.

This warning is backed up by a recent survey conducted by web communications provider Empirex in the UK, which revealed that 20 percent of web users said that if they had a bad experience with a firm's website, they never dealt with that company again, either online or offline.

First steps

So just what are the first steps an SME needs to take when considering implementing an eCommerce facility? Oliver Dempsey, managing director with Barrowvale, a website development and marketing firm, advises firms to sit down and work out the value of purchases they think will be made via their site; this is important in order to judge if the investment made will be recouped through online sales.

In order to work this out, Dempsey suggests conducting a pilot scheme whereby the firm allows users to buy products on their site, but all payments are processed manually (using offline credit card verification). Over time, the company will be able to assess the volume of purchases coming through the site, before they think about setting up an online payment facility. They will then be able to factor in the charges and costs associated with enabling online payments and to estimate their potential return on investment.

"In some cases, with smaller firms who aren't selling a large number of products online, they would be better off sticking with the offline credit card verification method initially," advises Dempsey.

Once a firm has decided to implement an eCommerce facility, they will need to speak with their bank about setting up a special "online merchant account" in order to be able to accept online payments. This type of account differs from an ordinary merchant account in that it caters for "card not present" transactions and will most likely include anti-fraud measures.

Set-up costs

Apart from the fees charged by the bank, companies need to take into account the initial set-up costs of an eCommerce system - which could include shopping cart functionality and a back-end system - along with monthly charges and transaction charges.

The initial set-up costs will vary depending on the number of products being processed and the complexity of the required facility, according to Patrick Henry, managing director of Template, a website development firm. "A simple cart and CMS (content management system) would start at a few thousand [euros] and go up to the EUR5,000-EUR10,000 mark, depending on number of categories and products, and the complexity of the database," he explains.

"If you are a small company, then there is no point splashing out for a huge [shopping] cart if you only sell small items sporadically. A simple PayPal button beside each product should suffice for this," says Henry. "PayPal was previously seen as a cheap and messy solution for selling online, but recently, because you no longer are required to register, the buyer can complete a transaction in three easy steps."

High volume

For those companies experiencing a large volume of sales through their site there are various options on the market. One solution is to use an online credit card verifier such as Dublin-based Realex or UK-based WorldPay. There are third-party costs associated with implementing these solutions, as well as an initial set-up cost and a monthly fee based on volume of sales and/or a percentage of each transaction.

Dempsey and Henry both advise firms to have a look around for a reliable company who will be able to help them with their eCommerce implementation. "I would suggest talking to two or three web developers, compare prices and balance your judgement on sites they have already worked on," says Dempsey.

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