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A Guide to Online Shopping Carts

Four e-commerce tools for a variety of small business needs.
January 20, 2011
URL: http://www.entrepreneur.com/article/217950

Ah, the siren call of striking out with your own e-commerce website. You create the better mousetrap, find the right keywords, Facebook pages and Foursquare mobile tools, and then turn it loose online. Business beats its way to your Web door, and services from companies such as MasterCard, Visa and American Express do the rest.

The reality? That's more complex. Sure, hundreds of different tools let you customize your company's so-called "shopping cart." That is, the series of web pages and pop-up windows that show your customers, among other things, what they ordered, what they will pay for what they ordered, the total taxes and the shipping terms. Behind these pages is a blizzard of merchant-banking products, third-party transaction tools and other financial services that must work perfectly, and are often too confusing for most small firms.

But several midlevel e-commerce options offer even the smallest businesses powerful ways to sell online. These tools, from major companies like Amazon Inc., eBay Inc.'s PayPal and Google Inc., either host your shopping cart directly or work with your existing Web sites to connect to financial-services companies to broker sales.

Be warned: No matter what tool you use, e-commerce isn't a set-it-and-forget-it affair. It's a must to test how your customers use your check-out process, study when and why you may lose business, and then design new check-out procedures to stem any bleeding. Whether you do it on your own or hire a developer, you must be ready to change your sales process as you learn. Otherwise, you may be wasting your money and time.

Here are some options to consider for first-tier e-commerce products and who they're best for.



PayPal Payflow Link
Cost: $179 one-time start-up fee; $20 per month with a maximum of 500 transactions.

Best for: Websavvy entrepreneurs comfortable with the logic of the web.

PayPal is probably most widely accepted online commerce tool. It gets points for its all-in-one small-business product sales tool: Payflow. Pay a one-time fee of $179 for the basic plan, plus a $20-per-month service charge for 500 transactions per month. With a bit of web coding, such as cutting and pasting a few lines of script, you can place PayPal Payflow in just about any site. Don't worry, the instructions generally are excellent.

Payflow has its limits. The tool needs an existing merchant account, that is, a bank account that accepts credit cards over the web. The additional fees can be complex and expensive. And customer support, especially for small accounts, can be limited. Extras such as fraud-prevention services can reach $90 a month, which can sting. Still, for getting started online, Payflow can be impressive.



Checkout by Amazon

Cost: No start-up fees; transaction fees start at $.30 per transaction, plus 1.9% of the amount for accounts with $100,000 or more in monthly transactions n average, and range up to 5% of the transaction, with an additional $.05 per transaction, for transactions of less than $10.

Best for: Web commerce beginners

Checkout by Amazon is basically a shopping cart and payment system that is designed so that your customers feel as if they are shopping for the holidays at Amazon.com. For the do-it-yourself set, Checkout is impressive. Fill out the forms, follow instructions, configure your pages, and you are off and selling. Video tools and tutorials are reasonably well produced and easy to follow. And you are not limited to doing business on Amazon.com.

Be warned, being Jeff Bezos's "partner" can get pricey quickly. While there are no start-up fees, the service takes both a percentage of each transaction, which can touch 5% for sales of $10 or less, and a hefty $.30 per-transaction cost for most sales. Keep in mind these can be on top of any transaction, bank fees, or other costs you incur in your business to do business. So close monitoring of these fees is a must. But if you must do it yourself, Checkout by Amazon may be for you.



Google Checkout

Cost: No start-up fees; transaction fees start at $.30 per transaction, plus 1.9% of the amount for accounts with $100,000 or more in monthly transactions on average, and range up to $.30 per transaction with 2.9% of the amount, for accounts with a $3,000 or less average deal volume.

Best for: Businesses that already use Google tools Google AdWords, Google Analytics and Google Apps.

Google Checkout is Google's sales tool offering for small businesses. Being Google, it is not shy about making extravagant claims. In this case, the company says Checkout can boost sales by 10 percent, which may strike some as rich. The service is attractive for its solid Website integration and low upfront costs. Google Checkout can work with your firm's existing company identities and log-ins and can be managed from an easy-to-use central administration page.

On the downside, Google's, all-white, text-oriented interface doesn't offer the same ease of use of say, Amazon's service, and Google's customer service can be spotty. And be warned: Checkout, like Amazon and PayPal, Google takes a percentage of each transaction plus a fee, which again, can be on top of your other costs. So be sure to check your statements and know what you are paying for.



Authorize.Net Payment Gateway

Cost: $99 set-up fee, $20 monthly fee, $.10 per transaction fee, $.25 per batch fee. (Pricing can vary greatly by business type, deal volume and available promotions.)

Best for: Growing firms looking for sophisticated virtual sales tools.

Authorize.Net, which was acquired by credit card giant Visa in 2010, offers a sophisticated array of tools to manage transactions across the Web, mobile devices, and retail locations. Authorize offers everything from simple do-it-yourself tools, to more complex systems that require the support of certified developers. Working with a tech-support professional or a consultant to get the most out of the service can make sense. But if you are careful, some products can work for even the smallest businesses. And the breadth of Authorize products is impressive. Their mobile point-of-sale tools for example, can function with compatible smart phones.

But be careful: Authorize.Net can't seem to help itself when it comes to the upsell: Fraud protection, customer information management and other products are pricey. And actual pricing varies by customer and deal volume. So be wary of the costs of using Authorize. And make sure you fully understand the terms of any contract before you sign. But done right, Authorize.Net is a viable option for even the simplest of businesses.