In this first article in our series on B2B eCommerce, you learn how, like the crafty Pirates of the Caribbean, B2B sellers lured by tales of gold on the high seas of the Internet need to be aware of the dangers lurking in ecommerce waters.
Just as Captain Jack Sparrow and Will Turner have different goals and fighting styles, each business has different needs. For example, typically B2B companies have comparatively few products posted online compared to thousands featured on a consumer site. That leads to different considerations when choosing the appropriate vehicle for sailing off into the profitable sunset.
So before you hoist your flag and open for business, let’s take a moment to understand the moving parts in a working ecommerce platform.
Payment Gateway: This virtual port is where an order is actually charged to a customer for a transaction. It is not part of the shopping cart! Payment gateways provide a high security Internet portal for each merchant for manual order transactions and account reporting. The gateway also offers an application programming interface, or ‘API’, for sending and receiving encrypted order transaction information.
This is the source of eCommerce, the passing of dubloons from one account to another electronically. A payment gateway does not need a shopping cart, but a shopping cart needs a payment gateway. The merchant pays a monthly gateway fee and a percentage on each transaction.
Merchant Account: A B2B seller needs a merchant account to accept credit card transactions from the gateway. A merchant account is generally an added option to an existing business account at the business’s local bank. The merchant pays a monthly fee and a percentage on each transaction. Many factors come into play when a bank calculates a merchant's various fees, so it’s important to keep a working relationship with your banker. Missing data like exact address match, as well as off-page factors like your business credit, can influence your rates. Take the time to shop around for rates. The points can add up faster than skeletons in a Disney battle scene.
Alternative Payment Methods: Be sure to examine both sides of every payment method. PayPal accepts credit cards from out-of-network clients; however they have a lifetime limit ($2,500) before clients are required to sign up. PayPal can hold funds from out-of-network (large amounts) or unverified sales. This is part of fraud protection and can take some time to clear. A merchant account, on the other hand, goes right into your bank account. You own it, not PayPal.
Shopping Cart: In its most basic form, a shopping cart is a specialized web application that allows a customer to add products, calculate prices, estimate taxes, and estimate shipping. The application will then bill (not charge) the customer, produce a nice receipt page and send an email confirmation.
Shopping cart websites are essentially the check-out part of a brick and mortar supermarket and a virtual product catalog rolled up into one. The idea is to make it work like a real shopping cart... where you walk around choosing stuff and putting it in your basket. When you're ready to pay, you go to the checkout and it's all added up. You pay by credit card or debit card, and your payment is verified electronically. On the merchant’s side all the payment transactions and approval codes are batched for payment at the end of the day via the gateway. Sales are compared to gateway transactions to reconcile the accounts.
Fraud protection: The online merchant is at a disadvantage with fraud, having both cyber gangs and the credit card companies against them. Specialized services provide card-not-present fraud protection for merchants at an additional cost.
The Whole Enchilada
A gateway combined with a shopping cart application provides the greatest flexibility in selling products by giving payment transaction and merchandising tools to the B2B company. With that flexibility comes additional learning and time requirements.
When evaluating services, don’t forget the cost of your time in managing a store and the daily clerk duties it entails. The simpler the flow, the easier it will be to utilize the resource.
Separate “must haves” and “nice to haves” based on your long-term business priorities. That’s where developing a written business plan around an online service or product line is so important. Mastering the mechanics of digital distribution and payment is far more important than trying to build the best B2B website at first. Small steps get you there quicker.
There is no one size fits all in B2B online sales. That's why it is important to get the right kind of help with B2B eCommerce.
I just want to take payments
Many times in the services industries there is no one set price for a product, or clients pay for time or by subscription. This can be difficult to handle with a standard shopping cart. That is where experienced sailors of the ecommerce seas can help keep you from getting seasick.
This is the first article in a three part series on B2B eCommerce. The next installment examines the pros and cons of different ecommerce solutions and how you can minimize the price of doing business online. Please share your experiences and ask your burning questions about how to protect your booty from the curse of too many fees.
This article is by Sam Chapple, captain of Ecommerce and Internet Marketing at B2B Communications.
