• Companies must work out the why and the how
• e-commerce site hosting
• Should you automate your payment procedures?
• Whatever you do, it should be transparent
• The new bill
• The right tools for the right job
• Branding
• 101CD
• Dream on

Nothing is harder to separate than a small business person and a wallet. Rather than a derogatory statement, this is meant as a celebration of good business sense and cost effectiveness. Against this backdrop, small businesses are faced with a growing stream of information about electronic commerce and the Internet. While remaining clear-headed and realistic about the potential for such technology, it is also important not to dismiss it out of hand. Can it help your business by increasing revenues, driving down the cost per transaction and pulling in customers from further afield?

Companies must work out the why and the how

Certainly, says Richard Coppen, managing director of Internet marketing consultancy Bluegrass, but only if the company has a clear perspective of what it wants to do. "They have to work out the why, as well as the how," he advises. When planning an implementation, Coppen always asks his customers about their business objectives, and gets them to think about the impact on the business as a whole. Some companies may simply want a presence on the Web without dipping their toes too far in the water. Others may be looking at the Web as a potential significant revenue stream, in which case the issues are clearly more complex. Nevertheless, it is still possible to implement an e-commerce offering without breaking the bank.

Coppen asks that companies consider the type of product that they are selling during this brainstorming stage. Make sure that you are sensible in terms of the products and services that you are offering. If you are selling a highly specialised, very high value product or service, then this is not the sort of thing that can be automated over the Web. In this case, your site will probably focus on providing static marketing information and opportunities for further contacts. For a smaller company, which may not have the sophisticated in-house skills necessary for a transactional e-commerce site, hosted services are an attractive option. Outsourcing those processes that do not represent a core competency to the business can save valuable resource, and may also make your site more reliable and efficient.

e-commerce site hosting

There are a number of e-commerce Web site hosting services available to small businesses. NetBenefit (www.netbenefit.com) provides an all-in-one e-commerce service to customers who want an easy entrance to the world of online sales. Other companies are also jumping on the bandwagon. Sage, the popular accountancy software vendor with a big customer base in the small to medium enterprise market, recently repositioned its Sage.com Web site as a business portal in the UK, France, Germany, and America. Apart from taking content from multiple third parties that it thinks is relevant to a business customer base, David Errington, chief technology officer at the Sage Group, explains that the company is also ramping up an online hosting service aimed squarely at SMEs. The service currently enables companies to create their own Web sites using predefined templates. Errington has based the service on Sage research suggesting that only a quarter of his customers have an ISP in the UK.

At present, the facilities at Sage.com only cater for static Web sites and cannot be used to take orders for products over the Web. "Selling stuff will be the next stage," promises Errington. He is in a good position to meet his commitments, because the Web hosting service is only available to Sage customers. Therefore, it should be possible to feed orders from the site directly into Sage accounting software, thereby automating the process. One big advantage of the Sage site is that customers can add their own URLs, making them look more professional. However, they are restricted in terms of what they can offer on the site. For companies that want to have a crack at managing their own Web server, James Gardiner, deputy managing director of Redbus, offers an independent Web hosting facility called Interhouse. Companies can install single or multiple servers on flexible contracts, meaning that it is easier for smaller businesses to trial transactional Web sites. The site houses multiple ISPs, meaning that companies can switch between them if they are not happy with a particular ISP's service, says Gardiner. Prices start from under £200 per month excluding VAT.

If a company wants to host its own site linking into Redbus or a more traditional ISP, it will need to run its own Web server software and hardware. E-commerce servers range from the very simple to the highly sophisticated. At the bottom end, you will find such products as Actinic, which is a product that allows you to produce your own Web-based catalogues. The product works by allowing the vendor company to enter product descriptions into the catalogue, which is then uploaded to the Web site. Any orders that a customer makes are stored in an orders file on the Web site and then downloaded periodically to the vendor company's computer. The product also includes links to electronic credit card clearing services.

Should you automate your payment procedures?

This feature raises an interesting generic question for small companies wanting to become involved in e-commerce: Should you automate your payment procedures? Come to that, should you automate anything else? Much will depend on your existing IT infrastructure, if any. Extremely small businesses may rely heavily on paper-based processes, and may have no need to integrate with a back-end system. However, slightly larger businesses in the SME world may want to consider back-end systems integration to enhance the customers’ experience on the Web site. Such integration, for example, will enable you to determine stock levels online more accurately, so that customers will not be disappointed. According to Pip Jones, technical director at Internet consultancy Victoria Real, the difficulty of such back-end integration depends on the existence of predefined interfaces. Consequently, if your back end computer systems consist of older, legacy databases, then you may find that you need to make a more substantial investment when tying them into a front-end e-commerce server. "We simply fax some people text-based orders that they can then use whether they have a computer or not," he explains.

Whatever you do, it should be transparent

Bluegrass's Coppen suggests that whatever you do, it should be transparent to the end user. It must be very easy for them to enter their payment details, or they simply won't bother. Those companies that wish to go all the way and create automatic links between the e-commerce sites and credit card clearing systems face initially higher overheads unless they are careful, says Ian Slater, marketing manager at online payment company Protx. "I don't think that the people in my area of industry have encouraged companies. There are barriers in the way," he says. "Most companies in this area of the market, apart from ourselves, end up handing over a considerable percentage of their take for every product that they sell, which is unrealistic on the Internet because market share and the amount of profit that a company is making above their overheads tends to be small." With small businesses unable to absorb too many deductions from their margins, this could present problems.

Protx competes against other payment systems such as NetBanx and Worldpay. Slater says that he offers a considerable advantage over other companies because whereas they take a percentage of the transaction cost on top of the percentage that other companies are charging, he takes a flat rate fee on the transaction, starting at fifty pence and going down to 10 pence depending on volume. This makes it particularly cost-effective on orders above roughly £25, he says.

The new bill

A common concern for small business customers is security. This issue has been very much in use of late, with the introduction of the draft E-commerce Bill by the Department of Trade and Industry. One of the crucial elements in the bill was a U-turn by the government over key escrow. Previously, the government had proposed a scenario where encryption keys would be accessible by the government. This worried many companies, who felt that it represented a security risk. The latest draft at the time of writing did away with the need for such a system, leaving the way open for strong encryption. Nevertheless, there are still penalties for people who fail to disclose the encryption keys if asked by the authorities.

The right tools for the right job

Gerben Van Duyl, marketing director at e-commerce software company Intershop, explains that credit card authorisation is very secure on the Internet, as long as you use the right tools. "You must put security checks in place every step of the way," he says, pointing out that companies can use postcode checking to ensure that an address is valid. "You can also use online credit card authorisation, and use your commonsense." Reinforce your security mechanisms with instructions for the delivery company, he says. Stipulate that the company only delivers to the owner of the credit card personally, and ask that the recipient show the credit card before the goods are handed over. After all this, you must ensure that you are able to meet the logistical requirements associated with running an e-commerce site, says Bluegrass's Coppen. "If you have done this properly and promoted the site well, you could find yourself with an enormous volume increase that you are expected to serve," he says, reminding us about the Prudential's Egg online banking service, which suffered from unprecedented demand. "They got it so wrong that people were waiting between six and eight weeks to get an application form," he says. Also, be wary of the legalities of selling into a global market. For example, how do you know that the person at the other end of the Internet connection is old enough to buy a specific product, such as alcohol?

Microsoft, ever aware of the importance of small business customers, launched its Small Business Commerce Services offering back in March, along with its BizTalk framework, aimed at larger companies conducting business-to-business e-commerce, and its Commerce Server, which was an updated version of Site Server Commerce Edition Version 3. Small Business Commerce Services, scheduled to ship in beta by the end of the year, will be compatible with the company's FrontPage Web site creation and management software, which ships as part of Microsoft Office. The company has tied the small business-oriented service in with promotional services available as part of the Microsoft network (MSN). These include LinkExchange (www.LinkExchange.com), Microsoft's site designed to help you find resources for building, advertising and managing Web sites.

Branding

Finally, part of the marketing task associated with the site is the branding. Jason George, director at Victoria Real, says that the secret of good branding is making sure that your brand is appropriate for the medium. If your business is tailoring high-quality suits, then that is about individual, face-to-face service, whereas mass-market clothing from high-street retailers can be branded more easily for the large audience that you will find on the Internet. If your brand is not appropriate, you could invent a new brand for your Web site, or perhaps tailor the technology to suit your existing brand. Our theoretical Saville Row tailor, for example, could produce an ActiveX control that displays a 3D model with vital statistics entered by the visitor. This could use to visualise clothes worn by a customer with a particular build, for example.

Making sure that your business succeeds on the Web is about having a clear, defined purpose and knowing when to draw the line. If you were a very small business with little or no experience in IT, then perhaps third-party hosting would be best for you. Otherwise, make sure that you have the expertise in-house so that you can create the technical infrastructure to fulfil your goals.
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