E-commerce for e-products

Selling online is mandatory. The question is which way is best.

It's safe to say now that if you have products to sell, it's just plain dumb not to sell them online. 10+ million Amazon.com customers can't be wrong, right? With Web sites serving as marketing and advertising vehicles, forcing a late-night browser/potential customer to wait until normal business hours to order is like sticking up a big sign that says "GO AWAY - WE DON'T WANT YOUR MONEY." That's a bad message to convey...

Right now, there are a variety of ways to offer products for sale online short of hosting your own e-commerce servers and real-time payment processing. Many companies have already gone to that trouble, so why re-invent the wheel?

The automatic manual method

The easiest is to just collect customer and payment information automatically and process the sale manually. Many Internet service providers offer e-commerce packages that include Web-site hosting, catalogs, SSL encryption, and transaction reporting for low cost as part of your monthly ISP charges. Most even offer store builders that create the necessary HTML pages for you.

Though this method is simple -- Web orders come in like phone and mail orders and can be processed as part of a daily routine -- its disadvantages are numerous:

• If your product is software or something else that need only be downloaded, customers lose the immediacy that they've come to expect from the Web. Waiting a day or over a weekend just doesn't fit in with the immediate gratification that is so common on the Web.
• You can't offer feedback when the order is made. For example, if a credit card is declined, the customer can't find out until you process the order. If a product is back-ordered, the customer has no clue until you call or e-mail.

Immediacy is a big part of the appeal e-commerce has for so many online buyers. Processing transactions offline loses that immediacy.

The hands-off method

Shareware and other try-before-you-buy software led to a number of companies offering online registration services. These registration services are especially useful for very small ISVs that don't or can't handle credit cards themselves or for small ISVs who want to reach a world-wide audience. Registration services are generally catalog-like: You direct customers to their site when it's time to pay -- that's the one service they provide, so you don't tend to have much control over the appearance of the pages the user sees.

Registration services tend to batch payments received over a period of time, so you might receive a check every month for your registrations, minus processing fees and other charges. Registration services work best for software that is electronically distributed and licensed via serial numbers or codes; most registration services handle everything involved in an all-online transaction.

The mall method

Yesterday, Amazon.com announced its plans to offer hosting of e-commerce sites, joining other big names like Yahoo (and Viaweb, which Yahoo acquired last summer) and Digital River in offering similar services. Basically, they work like this: You build your Web site however you want to; when it comes time for the user to click the "Buy me" button, you point them toward your e-commerce site on your "store host." The store host provides the typical e-commerce site functions like catalogs, a shopping cart, and most importantly, credit-card billing and the management and customer service that come with it. (Yes, I'm oversimplifying -- some store hosts let you host your entire Web site from their servers, for example.)

Borland's getting into the act too. Our very own developer community offers online shopping and is now taking applications from third-party vendors to sell their products online as well.

Such online malls offer a more seamless approach to online selling, but it is usually clear that the company handling the money isn't your company. But that might be an advantage. If you're a small ISV, would a new customer feel better about handing credit-card information over to you or a more familiar name like Borland or Amazon.com?

The future method

Talk about digital cash is usually about micropayments, being able to easily and quickly authorize small transactions that aren't cost-effective with the current overhead of credit cards. But digital cash isn't limited to such transactions. If digital cash catches on in sufficient numbers, it should provide a convenient way for even the smallest ISVs to offer personalized e-commerce. I know, too many conditionals in that sentence. Digital cash clearly isn't an option until more people use it. But in this increasingly wireless world, something's bound to replace plastic cards with magnetic strips someday.