Ecommerce is a term that is frequently thrown around in the digital age, but many people are still unsure about how it actually works. This article aims to demystify the world of ecommerce, explaining the key components and how they interact to facilitate online transactions. From merchant accounts to shopping carts and real-time processing, we'll walk you through the ecommerce path and help you understand how to make it work for your business.
A merchant account is the first step towards establishing an ecommerce business. This account allows businesses to accept credit card payments online. While there are payment facilities that can handle this for you, they often take a significant portion of your sales in fees. Therefore, having your own merchant account can lead to substantial long-term savings, especially if you're selling high-ticket items.
A merchant account comes with a merchant identification number, which is necessary for processing transactions. To process these transactions, you'll need either a terminal (like the ones used in retail outlets) or software that can process the transaction and deposit the money into your bank account.
If you're selling a variety of products on your site, a shopping cart system is essential. It simplifies the shopping process for your customers, encouraging them to spend more. The shopping cart system works independently from your merchant account, each performing their own part of the job.
However, if you want your incoming orders to be automatically processed as soon as the customer hits the submit button, you'll need what is known as "real-time processing".
Real-time processing is a feature that many ecommerce businesses desire. It allows orders to be processed automatically, saving the business owner time and effort. However, it does come with additional costs, so it's often recommended for businesses with a steady flow of orders.
If you're starting with a healthy budget and an aggressive promotion plan, implementing real-time processing right from the start can be beneficial. Changing order-processing methods can sometimes result in system hiccups, which can slow down your momentum.
The web host that is hosting your site can sometimes affect how compatible your entire site and ordering system are with each other. This is particularly important when you're using a shopping cart and real-time processing. Your shopping cart must be compatible with your web host, and the cart must also be compatible with your payment processor.
One way to ensure compatibility is to choose a provider who offers all you need under one roof. This can include hosting, a compatible shopping cart, and a payment processor. This approach simplifies the setup process and ensures that all components work seamlessly together.
Your website designer can also play a crucial role in setting up your ecommerce system. They can recommend compatible solutions based on their experience and your specific needs. This can save you time and money in design costs.
Some common mistakes in ecommerce setup include purchasing unnecessary components or services, such as an additional shopping cart or a terminal for swiping cards. These mistakes often stem from a lack of understanding of how each component works together.
Understanding the intricacies of ecommerce can help you avoid these pitfalls and make the most of your online business. By bringing together a merchant account, a shopping cart, real-time processing, and a reliable web host, you can create an effective ecommerce site that works for you.
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