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How does E-Commerce Work?

E-Commerce is driven by the software, so the exact way it works depends on the shopping cart software you select. There are several components, however, that make up any online shopping cart solution:

• Web Hosting – The foundation of a good online store is a good Web server to host it on. Some shopping carts come packaged with a specific hosting provider or product. Others, such as ShopSite, can run on a variety of Web servers and are offered by a wide range of Web hosting providers. Factors such as support, reliability, bandwidth, features, and cost will drive your hosting provider selection. You may already have a Web site through a provider you are happy with where you can put your online store. If you're looking for someone to host your online store, check out our ShopSite Hosting Partners.
• Merchant Interface – The merchant interface is the tool you use to manage your online store. It's what you use to set up and use all the other tools. It's more important to have a usable merchant interface than having a fancy-looking complex interface. On the other hand, if your merchant interface is too simple, you lose flexibility. A good merchant interface has to strike a balance between these opposing requirements. ShopSite is an incredibly powerful and flexible Shopping Cart, but the merchant interface is kept as simple and straight-forward as possible. In addition, there are a variety of wizards and tools to optimize common or complex tasks.
• Product Catalog – Your product catalog is what your customers see, and how they find out about the products you're selling. It is the part of your online store where you want to invest the majority of your time and effort. Just like a printed catalog, your online catalog consists of products and pages. The pages create the structure of the catalog, but they also establish the look of the catalog. The pages are also one of the main ways you will present product information to your customers. The way you design your pages and how you present your products will have a significant impact on how potential customers perceive your store. We'll discuss this in greater detail when we cover how to create a product catalog in ShopSite later on.
• Shopping Cart – The shopping cart is what your customers will use to place orders. Customers add the products they want to purchase to the cart, provide information about shipping and payment, then submit the order. Like the product catalog, how the shopping cart looks has an impact on customer perception. More importantly, however, how your shopping cart works can make the difference between an abandoned or completed sale. One of the biggest turn-offs for potential customers comes from not knowing the final price until they've completed several tedious forms. ShopSite prevents this by presenting the final cost on the first Shopping Cart screen, after the customer provides only the essential information for calculating shipping and tax rates. ShopSite also has a number of other features to make completing an order as simple and straight-forward as possible. This topic is covered in more detail in the taking orders in ShopSite section of this tutorial.
• Payment Processing – Accepting payments is the backbone of any online store; without it, customers can't place orders. If you have a brick-and-mortar store, you probably already have a system for processing credit card payments. Online payment processing is a similar process; customers enter payment information, which gets forwarded to a payment gateway that validates the information and confirms available funds, then transfers the funds to your merchant account. There are many different payment gateway and merchant account providers, as well as online payment services such as PayPal and Google Checkout. How to do this will be covered in more detail in the accepting payments in ShopSite section of this tutorial. You can also learn more about accepting payments online, as well as what payment gateway and services are supported by ShopSite on the Payment Processing in ShopSite page of our Web site.
• Shipping – Once you get an order, you need to gather the products, prepare them for shipping, then send them to the customer. You will need to plan how you will handle the various costs and effort this involves. It's common practice for online merchants to pass this cost on to the customers — although offering free shipping is great incentive to get customers to buy from you. There are also different shipping services, such as next-day, second-day, and ground shipping, which you may want to offer your customers. With all of this, your customers want to know what their shipping costs will be before they place an order. ShopSite includes a variety of options for providing real-time shipping cost calculations. You can read about this in the taking orders in ShopSite section of this tutorial.
• Tax Calculation – Calculating, collecting, and paying appropriate sales tax is another part of your online store that you need to consider. How you handle it depends on the laws where your business is. In the United States, for example, you are currently only required to collect sales tax for orders shipped within the state your company operates from (your customers are responsible for paying sales tax in their home state otherwise). In Europe, you are responsible for collecting and paying Value Added Tax (VAT) based off your business location, your customer's location, and the type of product you are selling. ShopSite includes tools to automatically calculate and collect the taxes you are responsible for. These are discussed in the taking orders in ShopSite section of this tutorial.
• Advertising – Drawing customers to your Web site is a critical part of any online store, and good shopping cart software includes features to help you with this task. One key element of advertising an online store is making sure it shows up in the popular search engines, such as Google, Ask, and Yahoo!. Another excellent advertising tool is E-mail marketing, particularly to customers who've bought from you before. ShopSite includes a variety of tools to help you spread the word about your online store. These are discussed in the getting customers in ShopSite section of this tutorial.

These are only a few of the biggest components of shopping cart software that you will need to have a successful online store. If your shopping cart software does all these things well, you'll avoid unnecessary headaches and problems managing your online store.

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