4.1 Getting Started

Ten years ago the breezy advice offered to a small company setting up on the Internet would run something like this:

Test the Model

1. Decide what you're selling.
2. Acquire the appropriate domains if there's any danger they won't be available when you come to build your final site.
3. Consider building an elementary example of your 'final site' now and promoting it for free through the natural search engines. You'll have to modify the site when your business plan is complete, but the 6 month's lead time will not have been wasted.
4. Take a domain for testing purposes and start building or checking your business model. Use a third-party marketing platform, an 'out-of-the-box' shopping cart program, or an all-in-hosting service to build a micro-site and see what really works.

Website Aims

Websites are built for many purposes, and one design will not cover them all. The usual objectives are:

1. Sell your own products or services over the Internet.
2. Act as an affiliate by selling other people's goods or services on a commission basis.
3. Enhance an established brand identity.
4. Provide information to drive sales locally
5. Sell advertising.
6. Extend customer support.

Build the Website

You'll be familiar with websites — collections of HMTL pages grouped around some URL like http://www.companyname.com. Websites can be very ambitious, with stunning graphics, animation, sound, database search systems, customer recognition and a good many other features. But they don't need to be. Many successful ecommerce sites are half a dozen pages extolling the virtues of the product. More can be less, and 'wow' sites will only hinder customers getting to your products, and make promotion more difficult.

But your site still needs to look professional. How do you create something convincing? You can:

1. Hire a web design company. Thousands exist, conveniently collected into directories.
2. Build your own pages using HTML-editing software. Easy-to-use editors exist for all pockets, some of them shareware or even free.
3. Purchase an out-of-the-box shopping cart program that builds the whole site for you, including an online catalog with payment facilities in place.
4. Rent space on a web-hosting company offering site build online. Much like the out-of-the-box solution, the hosting company gives you templates and wizards to create a distinctive and professional-looking site.
5. Use a third-party marketing platform like eBay, Amazon Merchant Services or Yahoo Merchant Solutions.

Obtain the Internet Domain

The URL (uniform resource locator) is your address or domain on the Internet. You'll want something that identifies your company and possibly your line of business. How do you get a domain? You visit an online company offering domains for sale. As you're a commercial concern, you'll go for a .com, or possibly a .biz domain. You'll try possible names in the search box provided until you find a suitable one available. Suppose your company is Acme Diving Equipment Ltd. You find that acme.com has been taken, and so has diving.com, both a long time ago. But acme-diving-equipment.com is still free, and you therefore take that domain for a few dollars a year. An online credit card facility accepts your order, and an email a few minutes later confirms the purchase.

Hosting Your Site

You're halfway there. You have the site built, and a domain name to host it under. Now you have to upload the site to a web-hosting company that will display it on the Internet, 24 hours a day, seven days a week. Thousands of such web-hosting companies exist, and there are now web-hosting directories that enable you to select by cost, platform type, facilities, etc. — all of which are explained by on-site notes. You make your choice of hosting company, click through to their site, pay their hosting fee, and can then upload your site to that company's server. The hosting company will explain how. It's very simple, but you'll need a cheap or free piece of software called an ftp program. This you can obtain from any software supplier, and use it to maintain your site thereafter. Once uploaded, your site goes 'live'. You're on the Internet. Of course if your site has been built by a web design company, then they'll upload it for you. And if you've built your site online, then all you need do is email the hosting company that you're ready to start trading.

Taking the Money

In selling something you'll want to be paid as quickly, safely and painlessly as possible. Ecommerce now has many options. Starting with the simplest, these are:

1. Display your goods online, but take payment offline — by check, bank transfer, credit card details given over the phone.
2. Display your goods online and take payment online through some simple wallet system.
3. Display and take payment online, but employ a payment service provider. A link to your shopping cart or catalog will transfer the customer to the payment provider for immediate card processing, transferring the customer back for you to handle the purchase. The payment service provider will verify the credit card purchase, collect the payments, deduct the commissions, and send you the balance, usually by bank transfer monthly.
4. Display and take payment online, but use your own online merchant account, which you have obtained from your local bank or from a Merchant Account Provider. Wondering how to link your site to the payment process? Links will be built in automatically if you use an out-of-the box shopping cart, employ a web design company, or rent space on an online ecommerce-hosting site. Otherwise — if you've built your own site — you'll have to add code to the pages concerned. With payment service providers that's fairly easy: they'll supply a snippet of code for you to paste in. Using your own merchant account, particularly if you're hosting the site on your own server, will require liaison with the credit card processing company, and good programming experience. You may have to employ a professional.

Promoting Your Site

With hundreds of new ecommerce sites appearing every day on the Internet, it's getting mighty crowded out there. How is your site going to be noticed? By:

1. Getting out a press release.
2. Featuring in business directories, in online and offline versions.
3. Submitting to the search engines, perhaps employing a site optimization company to get a high ranking.
4. Using the pay-per-click search engines, which charge a few cents to a few dollars for each visitor that clicks through to your site with a particular search phrase.
5. Signing up other sites as affiliates, paying them a commission on the sales they achieve for you.
6. Featuring a free newsletter that provides useful information.
7. Adding a blog or social media page that gives your company a more human face.
8. Persuading other sites to link to yours, possibly through a non-reciprocal links directory.
9. Winning awards for your site.
10. Offering online competitions, introductory deals and promotions.
11. Providing free and helpful information on your site.
12. Advertising offline in newspapers and specialist magazines.

Will The Business Be Successful?

Now the vital question. Having followed these steps faithfully, a company can surely expect its site to be successful?

Possibly: if in an especially favorable position: the sole suppliers of spare parts for some particular machinery, or the only guest house in a popular tourist area. Yes, in those cases, the steps above may be all that's needed. But in other cases the answer is no. Success figures for ecommerce are hard to come by, but 1-5% is the figure bandied about the Internet for small companies that start from scratch, i.e. don't build on the back of a successful bricks-and-mortar operation. Ecommerce is not easy, and if companies follow the blandishments of advertising and ecommerce journalism they may not even get their expenses back. The early ebusiness casualties believed otherwise, of course, and many sites, books and ebooks still insist that ecommerce is entirely a matter of following certain procedures. It isn't, and the reasons are obvious.

1. Lowered barriers to entry have made ecommerce an extremely crowded marketplace.
2. Competitors will have acquired hard-won ecommerce skills, which newcomers will also have to learn or buy into.
3. It's easy to get locked into the wrong goal or business model, as the spectacular dotcom failures discovered.
4. First the site is built, and then it's promoted. Wrong. The site needs to be a selling machine, which means, from the very first, designing around some well-honed selling proposition. That in turn calls for careful thought, competitor research, traffic analysis and continual site improvement.
5. Case studies (PayPal, Open Table, etc.) show that even 'sure fire' businesses had a hard time, often requiring a marketing spend beyond the resources of a small company.
6. Ecommerce is not easy, and needs the business skills, contacts and experience of the particular market sector just as much any traditional business.
7. Most ecommerce ventures fail because the business model is faulty: the venture has no advantage over the competition in any vital element of the model.

Questions

1. Describe the recommended seven steps in setting up an online business.
2. Why will this approach generally fail today?
3. What can be done to increase the odds of success?

Sources and Further Reading

1. Starting a business. Entrepreneur. One of many articles packed with sensible advice.
2. Starting a business. US Small Business Administration. Focuses on financial and legal requirements.
3. Starting in Business. HM Revenue and Customs. UK Government advice.
4. How to start your own internet business by Esther Shaw. The Independent. August 2007. Sobering advice: creating a website is the least of your problems..
5. Starting an Internet Business. Emarketing man. Introductory but useful set of articles.
6. Starting a Small Business. Complete Business Startup. Basic checklist.
7. 4 Ways SMBs Can Compete With Larger Companies by Kevin Casey. InformationWeek. August 2011.
8. 7 Reasons to Start an Ecommerce Business by Armando Roggio. Practical Ecommerce. April 2012.
9. The E-Business Model. Prudens E-Report. Undated. Another business model for the larger company.
10. Failure and Success Rates of Approx 200 Web 2.0 Internet Startup Companies by Kevin Eklund. Mashup. June 2009. Survival rather than profitable.
11. Success Stories of the Great Business Leaders. PowerHomeBiz. Listing of successful home businesses.
12. Small Business Facts. Small Business Town. Cover 2005-2006 period.
13. Startup Failure Rates — the Real Numbers Startup Trends by Scott Shane. SmallBizTrends. Figures for and thoughts on small business start-ups (not necessarily online).
14. 16 New Ecommerce Books for the 2012 Holidays by Sig Ueland. Practical Ecommerce. December 2012.