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Ecommerce Guide

What is Ecommerce?

Business or commercial transactions that occur on the internet are classified as ecommerce. If you have ever purchased anything at an online store you have been a participant in an ecommerce transaction.

In person sales at stores have continued to decline and US malls are getting crushed everywhere by the convenience of online shopping. Brick and mortar stores aren’t going away completely, but sales of the largest retailers with a physical presence have decreased significantly as business to consumer ecommerce sales have grown to over 1.4 Trillion dollars worldwide.

As of Q3 2016, eCommerce sales only comprised 8.4% of all US retails sales and many analysts see that number hitting 20% in 10 years. Ecommerce has rapidly become the de facto standard for the transaction of goods and services.

The History of Ecommerce

There have been many developments throughout history that paved the way for ecommerce as we currently know it in 2017. There were some major technological breakthroughs that were necessary to allow us to order a pair of running shoes online and receive them the same day we order it.

The First Electronic Transactions

After World War II ended in 1945 the Soviet Union took advantage of the power vacuum created by a weak Germany and they annexed much of Eastern Europe. East Germany became a Soviet satellite state and in 1949 the Soviet Union cut off all access (road, rail and ship) to West Germany from the Allied control areas. West Germany was going to slowly starve unless the Allied Powers intervened and they did by air dropping food and supplies into West Germany by air. When these supplies landed in West Germany they needed to be trucked out to remote locations and tracking this all by paper was extremely difficult. US Army Master Sergeant Edward A. Guilbert helped solve this problem by creating a manifest (list) system that could be transmitted by radio teletype, telex or telephone.

If we fast forward to the 1960’s Edward was now working at Du Pont and he developed a set of standardized electronic message between Dupont and a transporter. These electronic messages could be transmitted via telex and then transcribed on the receiving end. Many transportation companies then started building their own electronic manifest systems, but there was a need for a standard communication protocol so EDI was officially released by the TDCC in 1975. Today there are over 100,000 companies that use EDI to send electronic messages to supplier and business partners.

The Dawn of the Internet

While Edward Guilbert was busy inventing EDI for Dupont, Joesph Carl Robnett (JCR) Licklider was documenting his vision of a galactic network. In 1960 JCR uttered the following words:

“It seems reasonable to envision, for a time 10 or 15 years hence, a ‘thinking center’ that will incorporate the functions of present-day libraries together with anticipated advances in information storage and retrieval.

The picture readily enlarges itself into a network of such centers, connected to one another by wide-band communication lines and to individual users by leased-wire services. In such a system, the speed of the computers would be balanced, and the cost of the gigantic memories and the sophisticated programs would be divided by the number of users.”

With the benefit of hindsight it’s easy to ascertain that JCR was imagining the Internet before it was born. JCR Licklider’s dream was eventually realized by the creation of the ARPANET, which was the precursor to the Internet that we know today.

The Birth of Browsers

In 1990 the first web browser was created by Tim Berners Lee. This first browser was originally called the WorldWideWeb (where we now get the “www” from) and allowed you to view information on remote computers. Netscape Explorer came along in 1994 and became the original browser standard until Microsoft launched Internet Explorer to kickoff fierce competition in the battle for browser supremacy. Today most people use Chrome, Safari, Microsoft Edge (formerly known as Internet Explorer) or Firefox. We are so used to our browsers that we hardly think of them, but they allow us to conduct ecommerce transactions every day.

Ecommerce Channels

Where do people go to buy things online? There are millions of small online retail stores, but there are only a handful of locations where you can are allowed to sell your products through their marketplace. Here are some of the biggest online marketplaces for selling products:

Amazon

The Amazon Marketplace allows 3rd party merchants to sell products directly on Amazon.com. With the Amazon Marketplace you can leverage Amazon’s massive customer base and sell your product right alongside Amazon’s products. Amazon customers win with the increased options of products to purchase and Amazon doesn’t have to maintain this 3rd party inventory (though they will manage it for a fee).

As a 3rd party seller on Amazon you have 2 options for delivering your products: Fulfilled By Merchant (FBM) or Fulfilled By Amazon (FBA). FBM products are kept in the third-party seller’s inventory, and shipping and customer service are handled by the third-party merchant. FBA goods are stored in Amazon’s fulfillment centers, and shipping and customer service are handled by Amazon.

Amazon charges its third-party merchants a referral fee for each sale which is a percentage of the sales price, usually 15%, but less in some categories. Additionally, sellers using Fulfillment by Amazon must pay FBA fees which include a pick, pack and weight charge.

eBay

Selling on eBay is straightforward to get started, first you create a listing for your item, then you ship your item and you get paid. You will want to take multiple high quality photos, create a description of your product and then communicate how you plan to ship your item. Before you ship out your item confirm that you have been paid by the buyer and then you can create shipping labels for your packaging. After the transaction is complete, give feedback to your buyer and also ask for them to give you feedback as well.

You can choose to sell your items on eBay in an auction style or fixed price format. Auction sales are perfect when you have a unique item and you are unsure of the price you should sell for. New sellers on eBay get up to 50 free auction listing per month. For fixed price listings the main benefit is that your customers can buy your product right away and don’t need to wait for the auction to run its course. If you have a large amount of inventory and you know the price point you want to sell at, fixed price listings are the way to go on eBay. eBay also provides a number of listing upgrades to attract customers: bold titles, scheduling options, international visibility, multi category listings and more.

Etsy

It’s free to set up your own shop on Etsy and if you decide to list an item for sale there are 3 types of fees: payment processing fee, transaction fees and a listing fee. Etsy is designed for artisans, artists, collectors and craftsmen (and women) that want to sell their own products. If your company primarily functions as a dropshipper for someone else that does the manufacturing Etsy isn’t the marketplace for you.

When you get started on Etsy there are a few things you will want to think about for your business. Do you have a name in mind for your Etsy store? Try to think long term and use a name broad enough that will allow you to expand years down the road if you start selling additional items. Take great photos. This advice really applies to all channels you sell on so invest time and money into creating fantastic and captivating photos, it will pay off in increased sales.

Jet.com & Walmart

Walmart recently purchased Jet.com and at some point in the future they might combine the 2 platforms, but for now you can sell independently on each one. You can start selling on Jet.com by applying to become a merchant partner. You have 2 options on Jet, you can either sell your items directly to Jet or you can list your products on Jet’s marketplace.

With over 110 million visitors a month to Walmart.com you have a huge audience for the products you sell. You can apply online to become a Walmart.com seller and if approved you will be able to sell your items next to Walmart.com products.

Developing your Own Ecommerce Store

If you have had success selling through a 3rd party marketplace, you next need to build your own store and sell direct to your customers. There are many options for creating your own online store and the features can vary from simple to complex.

Squarespace

If you are just starting out Squarespace can be a great option for setting up your ecommerce store. Squarespace allows you to pick from templates and you can add pictures, colors and text to create your customized store.

Manage inventory, process orders and print packing slips, offer coupons and collect taxes. You receive PCI compliant hosting with Squarespace which frees you up from self reporting or hiring expensive consultants to make sure your store is in compliance with credit card processing regulations.

Squarespace Ecommerce Features

Squarespace
Price $30/month
Hosted Solution Yes
Unlimited Products Yes
Product Variants Yes
Payment Processors Yes – Limited
Hosting Included Yes
Mobile Design Yes
Discount Codes Yes
Real Time Shipping Rates Yes – USPS, UPS and FedEx
App or Plugin Ecosystem No
Code Updates Yes – Limited
Enterprise Level No
PCI Compliance Yes

Payment Processors
Stripe is the default payment processor, but you can also choose Apple Pay or Paypal.

App or Plugin Ecosystem
Squarespace does not have a community building apps or plugins that help extend the functionality of your store. Magento, Shopify and WooCommerce all have have communities of developers working on additional features such as: customized reviews, wholesale ordering, loyalty programs, custom search and much more to help bring your ecommerce site to life.

Overall Comment
Squarespace is a fine platform if you are just getting started out with your ecommerce store. If you want to add advanced features, Squarespace falls very short because they lack the robust plugin or extension market found in other popular ecommerce platforms.

Shopify

Shopify has been around for over 10 years, but has really hit its stride in the last 2 years. With over 360,000 ecommerce businesses using the Shopify platform they have significant traction in the small and medium sized business market.

Shopify Ecommerce Features

Shopify
Price $29/month
Hosted Solution Yes
Unlimited Products Yes
Product Variants Yes
Payment Processors Yes – Many
Hosting Included Yes
Mobile Design Yes
Discount Codes Yes
Real Time Shipping Rates Yes – USPS, UPS and FedEx & 3rd party
App or Plugin Ecosystem Yes
Code Updates Yes
Enterprise Level Yes
PCI Compliance Yes

Apps
Shopify’s app ecosystem makes it stand out as a clear leader in ecommerce platforms. Shopify has over 1,400 apps available to help you customize your store. You can find apps to help you add reviews to your products, create a returns process, handle your shipments and much more.

Real Time Shipping Rates
Shopify just recently announced that carrier calculated shipping rates are now available on all Shopify plans. You can display USPS and Canada Post shipping rates so your customers can now see their shipping charges real time when they make a purchase.

Enterprise Level Software
Shopify Plus is Shopify’s enterprise level ecommerce platform. This is a fully hosted solution and offers many advantages over standard levels of Shopify: check out page customization, wholesale ordering, custom scripts and much more. In addition, Shopify Plus stacks up nicely against other enterprise offerings like Magento and WooCommerce, here is an in-depth analysis of Shopify Plus if you want to learn more.

Overall Comment
Shopify is a great place to begin your journey with ecommerce. In addition, you can scale your store up quickly by integrating apps that will allow you to connect other software to your store. Also Shopify has an enterprise level version of their software that is great for larger companies.

WooCommerce

WooCommerce is a self hosted ecommerce platform that runs on top of WordPress. WooCommerce is a plugin that can be fully customized to give your store exactly the look and feel you want. WooCommerce has an extensive plugin ecosystem that allows you to add a number of outstanding features to your store: reviews, payment processors, shipping, product bundles and much more.

WooCommerce websites are self hosted so you are responsible security of your store, setting up and managing your own server as well as PCI compliance.

WooCommerce Ecommerce Features

WooCommerce
Price Free
Hosted Solution No
Unlimited Products Yes
Product Variants Yes
Payment Processors Yes – Many
Hosting Included No
Mobile Design Yes
Discount Codes Yes
Real Time Shipping Rates Yes – USPS, UPS and FedEx & 3rd party
App or Plugin Ecosystem Yes
Code Updates Yes
Enterprise Level Yes
PCI Compliance No

Plugins
WooCommerce sits on top of WordPress and there are plenty of plugins you can use on your store. Yoast SEO is a hugely popular plugin to help you increase your organic traffic. Backup Buddy is great for taking a backup of your entire site and DB files. Gravity Forms is fantastic for managing all the forms and form entries on your site.

Self Hosted Solution
WooCommerce is a self hosted solution so if you don’t like doing server administration, database updates and managing PCI Compliance you won’t want to choose WooCommerce. The plus side of using a self hosted ecommerce solution is that you get to make any customization you want. There are no limits to the features you can build because you control your server and your database.

Overall Comment
If you already have a WordPress site and want to add ecommerce functionality, integrating WooCommerce is a fantastic option. WordPress is the most ubiquitous content management system (CMS) on the market and WooCommerce fits in perfectly. If you want the ability to do full customizations and don’t mind doing your own server administration, WooCommerce is a great choice.

Magento

Magento is powerful ecommerce software that comes in Enterprise and Community editions. Installing the community version of Magento is simple and free, but you will need to be able to create your database and maintain your own server. Magento Enterprise licenses are quite expensive, you can expect to pay $4,000/month + if you have a store doing $10M or more in gross revenue.

Magento Ecommerce Features

Magento
Price Free
Hosted Solution No
Unlimited Products Yes
Product Variants Yes
Payment Processors Yes – Many
Hosting Included No
Mobile Design Yes
Discount Codes Yes
Real Time Shipping Rates Yes – USPS, UPS and FedEx & 3rd party
App or Plugin Ecosystem Yes
Code Updates Yes
Enterprise Level Yes
PCI Compliance No

Extensions
There are Magento extensions that will allow you to create all the functionality you need on the platform. In addition, because you run Magento on your own server you can customize the workflow however you want.

Self Hosted Solution
Magento is a self hosted solution so you will need to be able to manage your own server and software. You can also use third party connector tools to connect Magento to your ERP system, inventory software, payroll and much more.

Enterprise Level Software
Magento Enterprise is software sophisticated enough to power the ecommerce stores of some of the largest merchants in the world. There are so many different options and customizations available that allow you to control your products, sales and communications with your customers. If you are considering Magento and want to compare a self hosted enterprise platform vs a fully hosted platform like Shopify Plus, check out our feature comparison.

Overall Comment
Magento is a powerful ecommerce platform that would allow you to control all the variable of the look and feel of your online store. Magento Enterprise is not recommended for merchants starting out, but if you have $1M in sales or more and want to manage your own server and site, consider Magento a viable option.

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