First came a $50 discount. Then, $100 spot discounts at various outlets like Costco. Then the $100 discounts became permanent. It’s been abundantly clear that Hewlett-Packard’s TouchPad released last month isn’t selling too well, but no one has known the extent of the damage. Until now. READ MORE
As buyers, we are all too familiar with those little shopping cart icons on our favorite shopping sites. But, not all shopping carts are the same. It may seem that way for the person making the purchase. For the company on the other end of the transaction, the story is much different. When a customer makes a credit card purchase in a bricks and mortar store, he or she swipes their card to initiate a secure electronic transaction. This is called a point of sale system. In the online world, a payment gateway is the equivalent of that. The solutions available to facilitate those transactions range from one-click simplicity to the Byzantine. It all depends less on the payment gateway itself and more on which gatekeeper (merchant account provider) is chosen. Types of merchant account providers “For any small business starting up, the easiest way to go is PayPal. They’ve been around a long time and most likely your customers already have a PayPal account, which is a huge advantage.” says Michael Miller, author of Choosing an Online Payment Service: Google Checkout vs. PayPal (Pearson Education, 2007). Turn key solutions like PayPal or Google Checkout may seem like the obvious choice for the new online seller. But there’s another alternative: dealing directly with a credit card processor. Most credit card processing companies typically offer bundled in services like back end integration with your website and the shopping cart navigation. However, the costs charged back to the merchant can vary wildly; sometimes cheaper than the turn key providers, sometimes much more. Brenda Mize, owner of Beacon’s Glow, an online collectibles store and her newer ecommerce venture, The Toy Bench, skipped right over turn key merchant account services like PayPal and Google Checkout and started out with a credit card processor. In the five years that she’s been in business, she’s never looked back. “We’ve never had one bad transaction. Our Web designer picked out the credit card processor, who waived all the up front fees. Customer service has been great. We’ve even been able to negotiate lower percentage rates. We never even considered PayPal. Their fees were astronomical when we started,” says Mize. Miller would consider Mize an exception to the rule who cautions smaller businesses, especially those just starting out, to avoid credit card processors. “It’s very complex. With a credit card processor, fees can vary. Make sure you shop around,” says Miller. Clearly opinions are divided when it comes to weighing all options. Here’s a look at some of the more popular solutions and the advantages and disadvantages therein. Turn key merchant account providers PayPal charges 2.9 percent of the sale price, plus 30 cents per transaction. It used to be much higher in their earlier days. PayPal has more than 60 million customers worldwide, operating in 190 countries. A major part of its customer base comes from its parent company, eBay. However, it’s not just the merchant account provider of choice for small businesses. Delta Airlines, CompUSA, and Overstock.com are just some of the large companies that use PayPal. “Five years ago, there was a stigma that PayPal didn’t look professional. Now it’s so popular, it’s ubiquitous,” says Miller. Advantages: PayPal can be as simple as embedding one click from your site to theirs to complete the sale. However, it’s scaleable too. Merchants can integrate the entire shopping cart process within their own site. It only takes about a week to set up an account and get it up and running. Disadvantages: Although distribution of funds back to the merchant is immediate, it is also manual. Meaning, it doesn’t happen until the merchant clears his account. PayPal then takes its cut and transfers the rest to the merchant. Miller cautions businesses to clear their accounts on a daily basis. “PayPal, especially, is very consumer friendly. So, if there’s a dispute, they tend to take the customer’s side. It doesn’t happen often, but PayPal has been known to freeze accounts until a dispute is resolved and that means everything in the account. You don’t want to risk money from other sales getting tied up in the event of a customer dispute,” warns Miller. Google Checkout charges 2 percent of the sale, plus 20 cents per transaction. It’s a much younger service than PayPal, less than two years old and only been operating abroad for about a year. Because it’s Google, one can expect its growth to make quick gains on Pay Pal’s market share. Advantages: “Google Checkout is pretty much the same system as PayPal,” says Miller. However, its percentages and fees are slightly lower. Additionally if a business is already using Google Adwords, those fees are reduced, if not waived altogether. “They’re clearly using Google Checkout to drive business to Adwords,” says Miller. Disadvantages: Fewer people are using it than PayPal, so there’s the risk of more lost sales from first time buyers who don’t want to bother opening a new account. Though not measurable, there is also plenty of anecdotal information from former merchant account holders online complaining of technical glitches ranging from incomplete sales, funds collected by Google and then not distributed back to the merchant, poor communication notifying merchants of a sale, etc. Whether the complaints are valid or significant, perception is reality and a dicey reputation online is reason enough for merchants to think twice before they bite on that lower rate. Volusion is a much smaller (and newer) player in this market, with only 10,000 accounts to date. Percentage rates per transaction start at 2.17 percent of the sale with no additional transaction fees. This is a company to watch. Here’s why: Advantages: It’s the only ecommerce solution that integrates with MySpace and Facebook, to date. Instead of that 20 to 30 cent transaction fee per sale, Volusion offers a flat monthly fee based on the number of products for sale on your site, ranging from $20 to $100 a month. Disadvantages: No one’s heard of it. That 2.17 percent taken out for the credit card companies is a teaser rate. No word on how high that rate can go. Credit card processors There are too many companies out there to mention. However merchants basically have two ways to go: dealing with the financial institutions itself or hiring a company to do it for them negotiating the best rates and using its own economy of scale to do so. “Your bank is probably the worst place to go. You will always get the worst rate there,” says Miller. Miller, whose wife works for a credit card processor (in the spirit of full disclosure), offers the following advantages and disadvantages to going this route: Advantages: There’s the potential of negotiating a lower rate, especially as the business grows selling in higher volume. Many sellers, like Mize, simply feel it looks more professional to have a customized cart than a PayPal or Google Checkout button on a site. “We also have a SSL certificate button on our site. I think it helps give our customers peace of mind,” says Mize. Disadvantages: Rates vary and can go up without warning, depending on the contract. There are often up front costs and monthly fees. No two merchant account providers are alike. Business owners really have to shop around for the best deal. “It’s very complex,” says Miller. One last piece of advice for online merchants shopping around for a credit card processor, some of the likely places to get the best deals include: trade organizations, co-ops, buying groups, even Costco or Sam’s Warehouse.
As buyers, we are all too familiar with those little shopping cart icons on our favorite shopping sites. But, not all shopping carts are the same. It may seem that way for the person making the purchase. For the company on the other end of the transaction, the story is much different. When a customer makes a credit card purchase in a bricks and mortar store, he or she swipes their card to initiate a secure electronic transaction. This is called a point of sale system. In the online world, a payment gateway is the equivalent of that. The solutions available to facilitate those transactions range from one-click simplicity to the Byzantine. It all depends less on the payment gateway itself and more on which gatekeeper (merchant account provider) is chosen. Types of merchant account providers “For any small business starting up, the easiest way to go is PayPal. They’ve been around a long time and most likely your customers already have a PayPal account, which is a huge advantage.” says Michael Miller, author of Choosing an Online Payment Service: Google Checkout vs. PayPal (Pearson Education, 2007). Turn key solutions like PayPal or Google Checkout may seem like the obvious choice for the new online seller. But there’s another alternative: dealing directly with a credit card processor. Most credit card processing companies typically offer bundled in services like back end integration with your website and the shopping cart navigation. However, the costs charged back to the merchant can vary wildly; sometimes cheaper than the turn key providers, sometimes much more. Brenda Mize, owner of Beacon’s Glow, an online collectibles store and her newer ecommerce venture, The Toy Bench, skipped right over turn key merchant account services like PayPal and Google Checkout and started out with a credit card processor. In the five years that she’s been in business, she’s never looked back. “We’ve never had one bad transaction. Our Web designer picked out the credit card processor, who waived all the up front fees. Customer service has been great. We’ve even been able to negotiate lower percentage rates. We never even considered PayPal. Their fees were astronomical when we started,” says Mize. Miller would consider Mize an exception to the rule who cautions smaller businesses, especially those just starting out, to avoid credit card processors. “It’s very complex. With a credit card processor, fees can vary. Make sure you shop around,” says Miller. Clearly opinions are divided when it comes to weighing all options. Here’s a look at some of the more popular solutions and the advantages and disadvantages therein. Turn key merchant account providers PayPal charges 2.9 percent of the sale price, plus 30 cents per transaction. It used to be much higher in their earlier days. PayPal has more than 60 million customers worldwide, operating in 190 countries. A major part of its customer base comes from its parent company, eBay. However, it’s not just the merchant account provider of choice for small businesses. Delta Airlines, CompUSA, and Overstock.com are just some of the large companies that use PayPal. “Five years ago, there was a stigma that PayPal didn’t look professional. Now it’s so popular, it’s ubiquitous,” says Miller. Advantages: PayPal can be as simple as embedding one click from your site to theirs to complete the sale. However, it’s scaleable too. Merchants can integrate the entire shopping cart process within their own site. It only takes about a week to set up an account and get it up and running. Disadvantages: Although distribution of funds back to the merchant is immediate, it is also manual. Meaning, it doesn’t happen until the merchant clears his account. PayPal then takes its cut and transfers the rest to the merchant. Miller cautions businesses to clear their accounts on a daily basis. “PayPal, especially, is very consumer friendly. So, if there’s a dispute, they tend to take the customer’s side. It doesn’t happen often, but PayPal has been known to freeze accounts until a dispute is resolved and that means everything in the account. You don’t want to risk money from other sales getting tied up in the event of a customer dispute,” warns Miller. Google Checkout charges 2 percent of the sale, plus 20 cents per transaction. It’s a much younger service than PayPal, less than two years old and only been operating abroad for about a year. Because it’s Google, one can expect its growth to make quick gains on Pay Pal’s market share. Advantages: “Google Checkout is pretty much the same system as PayPal,” says Miller. However, its percentages and fees are slightly lower. Additionally if a business is already using Google Adwords, those fees are reduced, if not waived altogether. “They’re clearly using Google Checkout to drive business to Adwords,” says Miller. Disadvantages: Fewer people are using it than PayPal, so there’s the risk of more lost sales from first time buyers who don’t want to bother opening a new account. Though not measurable, there is also plenty of anecdotal information from former merchant account holders online complaining of technical glitches ranging from incomplete sales, funds collected by Google and then not distributed back to the merchant, poor communication notifying merchants of a sale, etc. Whether the complaints are valid or significant, perception is reality and a dicey reputation online is reason enough for merchants to think twice before they bite on that lower rate. Volusion is a much smaller (and newer) player in this market, with only 10,000 accounts to date. Percentage rates per transaction start at 2.17 percent of the sale with no additional transaction fees. This is a company to watch. Here’s why: Advantages: It’s the only ecommerce solution that integrates with MySpace and Facebook, to date. Instead of that 20 to 30 cent transaction fee per sale, Volusion offers a flat monthly fee based on the number of products for sale on your site, ranging from $20 to $100 a month. Disadvantages: No one’s heard of it. That 2.17 percent taken out for the credit card companies is a teaser rate. No word on how high that rate can go. Credit card processors There are too many companies out there to mention. However merchants basically have two ways to go: dealing with the financial institutions itself or hiring a company to do it for them negotiating the best rates and using its own economy of scale to do so. “Your bank is probably the worst place to go. You will always get the worst rate there,” says Miller. Miller, whose wife works for a credit card processor (in the spirit of full disclosure), offers the following advantages and disadvantages to going this route: Advantages: There’s the potential of negotiating a lower rate, especially as the business grows selling in higher volume. Many sellers, like Mize, simply feel it looks more professional to have a customized cart than a PayPal or Google Checkout button on a site. “We also have a SSL certificate button on our site. I think it helps give our customers peace of mind,” says Mize. Disadvantages: Rates vary and can go up without warning, depending on the contract. There are often up front costs and monthly fees. No two merchant account providers are alike. Business owners really have to shop around for the best deal. “It’s very complex,” says Miller. One last piece of advice for online merchants shopping around for a credit card processor, some of the likely places to get the best deals include: trade organizations, co-ops, buying groups, even Costco or Sam’s Warehouse.
Imagine selling on eBay without the headaches of storing all that inventory, standing in line at the post office five times a week or calculating shipping costs to Guam. The answer could be as simple as two words: drop shipping. Drop shipping, simply put, means not being involved with the product itself. As a retailer, you can avoid ever putting your fingerprints on the inventory. Here’s how it works. A buyer submits payment information. The order goes not only to your business, but also to the wholesaler who ships the order directly from the warehouse to the customer. The wholesaler, offering drop-shipping services, handles shipments, returns, and maintains your inventory. “If my business location is virtual, why can’t my inventory be virtual too?” points out Jeremy Hanks, author of Drop Shipping for Dummies and eBay Inventory The Smart Way. Hanks, whose company, Doba, is also a certified eBay developer, helps eBay businesses get off the ground. The trickiest part about using drop shipping is finding a trustworthy drop shipper. Companies, like Doba, can help you find a reputable drop shipper to trust with your business. If you can’t afford to go that route, Hanks offers the following tips: Search for wholesalers offering drop shipping services on Thomas Net, an online resource for industrial information, products, and services. Research the wholesaler’s website. Is the company a member of the Better Business Bureau? A professional-looking site doesn’t guarantee reputation, but an amateurish site is a red flag that you’re taking a big risk. Call them. Don’t just communicate by e-mail. Make sure that the 1-800 number actually works and get a feel for the company by who answers the phone. Drop shipping has allowed many entrepreneurs to streamline their businesses, so they can expand beyond the mom-and-pop level. “There’s been a professionalization of selling on eBay,” observes John Morgan, an economics professor who studies e-commerce at the Haas School of Business at the University of California, Berkeley. Is it right for my eBay business? There can be somewhat of a stigma attached to companies that drop ship. The bigger companies on eBay will sometimes criticize the smaller ones who drop ship, insinuating on message boards and blogs that drop shipping is for the less serious business owner. “Proponents for and against drop shipping are as vocal in their beliefs as are Republicans and Democrats. Go carefully here. Very carefully,” says Brad Schepp, author of the upcoming book How eBay Really Works. Jim “Griff” Griffith, Dean of eBay University, the online auction’s sanctioned school for newcomers, and author of The Official eBay Bible recommends drop shipping, but quickly adds that it’s not for everyone, particularly new sellers. A drop-shipping arrangement can be complicated to set up. A business has to be wary because there are some fly-by-night drop operations offering drop shipping. And if the drop shipper doesn’t ship promptly, mishandles a return, or sends a lower quality product than what was marked for sale, it’s the eBay seller that gets blasted in the customer feedback. “I’m always hesitant to recommend drop shipping to a new seller,” Griffith says. “You want to get comfortable with selling first.” Griffith does offer a piece of advice to those who do choose to drop ship. “Have a small stash of inventory around in case something goes wrong,” he says. “If the drop shipper is out of stock or fails in some way, you don’t have to fail your customers. Remember, it’s your reputation, not his, on the line.” Looking beyond eBay, tell that to Costco, a business known for its warehouse approach in retail. According to Hanks, seventy percent of what it sells online is drop shipped.
To keep up with the fast-paced changes in technology that are impacting U.S. companies, allowing workers to become more mobile and commerce to be conducted 24/7, business owners are going on a shopping spree. A survey published in February 2006 by Forrester Research of 700 IT decision makers at small and medium-sized businesses in the U.S. found that they plan on replacing an average of 26 percent of their PCs in 2006. More than a quarter of those new PCs will be laptops and many will represent a major upgrade over the firms’ current technology, the report found. The question is: where to buy? There are value-added resellers, a discount electronics stores or and a plethora of computer websites. The options are greater than ever before, but a growing number of computer sales will be researched and completed over the Internet. But even online, shopping requires multiple visits, specs checks, engine searches, slogging through peripheral paraphernalia, and eye-catching prices for products that may no longer be on store shelves. Before you start browsing for new PCs, check out these ten options. Yahoo Shopping filters sort price and offer “highest ranked” items on the search engine. While some “reviews” are written by ax grinders, they give a sense of whether a seller is legit. One key asset: ability to compare products side-by-side. Amazon or eBay are both great resources and a way to double-check prices. Amazon has better product pictures, but too many links. With eBay, it’s let the buyer beware – if inspection is out of the question, purchases are only as good as online promises. At the least, stick with sellers who garner the most positive feedback. Best Buy has brick-and-mortar stores nationwide, and online prices are backed up by in-store warranties. Online purchasers can pickup goods at store branches near you. The website has few filters, so have your hardware in mind before logging on. Circuit City offers to have online orders in a local store branch within 24 minutes of checking out. If not, you get a free $24 gift card. Not exactly free pizza, but with current gas prices, it amounts to a free trip home. Offers free shipping and “lowest price” guarantees. It’s worth giving their Web page a look to compare prices. Staples and Office Depot can both be found offline in malls across America. From furniture to hardware, their value is the weekly deal. Both websites are a bit of a slog, with too much information to make an easy decision online. It’s worth visiting the stores, if only to take a test drive. Frys, located in nine states, has been a cornucopia for gamers and tech geeks for years. What was once a parts store has turned into a bona fide bargain basement. Costco is a membership-only store offering everything from gas to bulk grapes, but it occasionally has tech bargains ripe for picking. The website offers more gear than offline stores. The trick is navigating to find them on a website that leaves much to be desired. CompUSA is a mega-retailer with stores nationwide, featuring Mac and PC deals and on-site repairs in many locations. Encountering epic repair lines makes you long for the Westinghouse repairman. But they frequently offer “package” deals on computer products that may suit your business needs. MacMall has only three locations nationwide, but its website bills itself as the ‘#1 Apple Direct reseller. Its sister site is PCMall, which offers 40,000 items online. Dell Computer was listed in the Forrester survey as the most popular computer and equipment vendor by small and medium-sized business IT executives. Dell, by and large, offers low prices on wide ranges of computer items. But many grumble about returns. However, they wouldn’t be one of the most successful online retailers if they didn’t deliver.
