Taking Your Business to the Net

Feelings of Insecurity

Like it or not, entrepreneurs and experts report that one big impediment to e-commerce is still security, especially when tied to accepting online payments.

According to Ipsos-Insight's research, the higher the proportion of sales that came from a company's online activities, the more likely they were to have challenges associated with fraud prevention.

"Many people are still concerned about credit-card risk, security, credit-card fraud, or violations of personal information that people enter into a website," adds Grau of eMarketer. And every reported security incident exacerbates the perception problem, he notes.

Sami Laine, director of solutions architecture for CyberSource Corp., a provider of electronic payment and risk management services in Mountain View, California, says one of the online merchant's top fears-that customer data will be pilfered and purloined by an outside intruder-can be addressed through simple policies, such as storing profile information on a separate site.

Another challenge is verifying credit-card information submitted electronically via an Address Verification Service, without actually turning away real customers. "Merchants sometimes think this is safer than it is, but this is not a good predictor for fraud," Laine says. "Plus, up to 95 percent of the 'no matches' are actually real cardholders."

Auctions by the Bay found out firsthand how vulnerable you can be shortly after its first online auction, when it noticed that the Apple Power Mac G4 that hosts its site was running very slowly. Baffled, Allen called an outside technical expert and discovered someone had hacked into the site and was using it to store video files. An employee had given the intruder his opening after uploading new images to the site and failing to close down a connection.

Lessons Learned

Experts agree that amid juggling all the tactical issues an e-commerce entrepreneur faces daily-like keeping site content updated and optimizing search engines-there is one key strategy they should embrace: creating a more personalized experience for each customer.

"As marketing gets more expensive, you actually have to tune the message," says Offermatica's Roche, pointing to the rise of cross-selling practices such as offering complementary products when a customer is checking out on your site. "The aim is just to put the whole offer in front of someone."

And remember, the internet is especially kind to niches, so don't try to be all things to all customers. Says Richardson, "If you can get it at Wal-Mart, we don't sell it."

Construction Zone

Stay current.StoreSense from Kurant, offered through internet hosting companies, integrates with eBay, Federal Express, Intuit QuickBooks and UPS services, and supports payment options including PayPal. It links with online shopping search engines such as BizRate, Froogle and Shopping.com. StoreSense starts at $9.95 per month, depending on the service provider you pick.

Don't be scared.Monster Commerce is a single-source provider of storefront hosting services. A basic store that lists up to 5,000 products and handles 300 visitors per day is priced at $79.95, after setup fee. Like StoreSense, the software integrates with other small-business software applications and commonly used business services. It also offers features like free tax calculation and reporting.

Find a big brother. If you'd like to offload as much of the back-end work as possible, you may want to hitch your star to one of three e-commerce giants that has initiated programs to accommodate smaller businesses: Amazon.com, which extends the idea into services like gift registries; eBay, which lets entrepreneurs offer products at auction or for fixed prices; and Yahoo! Merchant Solutions, which claims to handle 1 in 8 online stores.

Heather Clancy, editor of technology newsletter CRN, has been covering the industry for 15 years.

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This article was originally published in the January 2005 print edition of Entrepreneur with the headline: E-Tail Therapy.

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