Selling Online #3 : Budget

This month I’m going to begin address the process of deciding what type of e-commerce website we are going to have, and the best way to have it built.

The first step is to figure out your vision and the budget you want to set aside to get there. Too many projects fail because of caviar taste and a hamburger budget. Successful websites don’t just happen. They are the result of considerable effort and investment.

How fast do you want to leave the starting line and how far do you want to go initially? Keep in mind that not long after you get up and running, you will need to begin planning your next major improvement. The more robust your initial design, the lower the cost when it’s time to move to the next level.

Here are four major options to illustrate what you can expect for various levels of investment. The cost range is an estimate. Depending on your goals you could spend a lot less or a lot more.

Option #1:Two-tiered deployment

Start off with a small (3-4 page) professionally-designed static site with links to a third-party hosted sales or auction area. An example would be a link on your home page site that says, “Shop for Exhausts” and it links to your eBay auctions or Yahoo! store for exhaust systems.

Cost range: $X,XXX In the thousands of dollars

Pros: Lowest cost way to get a feel for how the whole e-commerce thing works. Works best for small shops with a small number of products for sale.

Cons: Even if you havewith a professionally designed site, most third party e-commerce stores (i.e. Yahoo Stores or eBay) that you link to have limited ability to be modified. It can be seen as amateurish to have this set up if great care has not been given during design to make the transition seamless. If you hire a competent designer to do solid design work on both sites, it’s not significantly less expensive in the long run than option #3 below.having the entire site developed using commercial software that’s completely under your control (see option #3 below).

Another gotcha is that the third party’s fee structures go up much more often than they go down. It’s not hard to find merchants via a Google search that have used third-party services for full scale retail operations that have become disenchanted with that as an this option. Do your homework.

Option #2: Turn-key, Template based e-commerce provider

The second option is a company that develops turn-key, template based sites that allows you to plug in various “catalogs” ofor products. Essentially your site is already “built” even before you sign up, because as most of your site is the same identical to as everyone else’s. Once you sign up, the look and feel of your front end is designed and design of your site is applied onto the template proving providing some visual differentiation to match your company’s visual identity and brand.

Cost range: $X,XXX to low $XX,XXX

Pros: Fast time-to-market as most of the backend is already developed and populated with products. You get a comprehensive product offering quickly as most of the backend is already developed and populated with products..

Some providers actually handle drop-shipping and some customer service. for the products being sold.

You get quite an impressive, large package for a fairly low entry fee, albeit one wrapped in a fairly generic brown paper wrapper.

Cons: Lack of differentiation: A downside to this approach is that your site is almost exactly like your competitor’s all the other sites built on this the same platform. A Google search for a common product results in several pages of results with exactly the same product name and description, all linked to competing pages that look very similar, except for their logo and color scheme of the merchant. When selling online, Tthere’s a direct relationship between the content on your site, web search, and sales. If you loose control of the content, you’ve lost control of your sales.

Another serious risk is that you’re You’re also risking putting all your e-eggs in one basket that you don’t have control over. If the turn-key provider goes belly up, your site goes with it! Imagine that you spend tens of thousands of dollars over a year in marketing to get a top result in Google. Then one day the company that runs your e-commerce site goes dark. Just like that, your site went poof! Since the entire product inventory and e-commerce functionality was based on a proprietary system that you no longer have access to; your replacement site has to be built from scratch! Keep this risk in mind.

Option #3: Hire a developer to build Develop a custom e-commerce site based on an existing, commercial, e-commerce software platform.

Cost Range: $XX,XXX to $XXX,XXX Tens of thousands to low hundreds of thousands of dollars($XXX,XXX hundreds of thousands would be a VERY ambitious effort)

Pros: There are several excellent e-commerce backends packages that are available that you can build your site around.can be completely integrated with your site. These range from completely free, open-source options like OSCommerce, to commercial systems that cost in the low thousands. An excellent package that is based on web standards and has a thriving community of veryseveral successful sites stores based on it is BV Commerce. Both of these packages allow an almost unlimited amount of customization and in the hands of a skilled talented and experienced developer can accomplish just about almost anything you could would ever need to do with your e-commerce operations.

Cons: While not necessarily a con, keep in mind that tThis option requires significant dedication in terms of time and money. However, if at any time one of your goals is to have “The Best” web store for the brands you are selling, this is the way to get there. The risk is that you may find yourself over your head quickly if all you want to do is sell a few products as easily as possible.

Successful To really succeed in selling online requires , you need to treat it like its own line of business in your shop. That can mean hiring a full-time person for daily administration, and someone to do on-going development and improvements. We’ll get into more detail about how to structure and operate this line of business in future articles, but for sake of comparison, keep in mind that this option can carry significantly more cost that the above two, but has more opportunity for long term success!

A potential downside is that you will most likely need to “load” all the products you are going to sell into your database by hand. This can be quite time consuming. However it also provides you with the opportunity to have unique merchandising for the products you are selling to improve the likelihood those products are found by search engines, and therefore actually sold.

Option 4: Hire a developer to custom build your website as well as the e-commerce backend.

completely custom build your site

Cost Range: $XXX,XXX to $X,XXX,XXX

Pros: Complete control over every aspect of your site.

Cons: With the quality of readily available e-commerce software today, and with the ability to modify it to suit just about any unique need you may have, custom development is not a practical option for most dealerships. If you’ve got several million dollars of venture capital burning a hole in your pocket and your goal is to develop an Amazon.com or Buy.com for the powersports industry, this may be a direction you’d want to go, however it is beyond the scope of this column. to address that scale of an operation.

This article has given you an overview of the various options that are available for moving into the e-commerce world. The real “sweet spot” for long-term, successful e-commerce is option #3, and therefore that will be the direction of future articles. However, that doesn’t mean if you try one of the other paths you won’t benefit from future articles by any means.

Next month we will address how to choose, and more importantly how to work with, a website design and development professional to begin transforming your goals into reality.

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