The e-commerce industry has seen tremendous growth in recent years particularly because of the change in shopping behaviours which the Covid pandemic has brought on. The US census bureau has stated that total e-commerce sales for 2021 were estimated at $870.8 billion. This is an increase of 14.2 per cent from the previous year. Tapping into the market is incredibly lucrative and requires far less initial investment than attempting to break into the retail space. This makes it a very appealing market for entrepreneurs. There are a wide variety of tools available to help entrepreneurs enter the e-commerce industry. The latest tools which are trending in this space are payment processors, carts and website builders.
Payment processors Payment processing is the process of an online store accepting an electronic payment for its goods or services. A payment processor is the company which handles the transaction. They transfer the customers' money to your business's bank account. They serve an intermediary function between your online store and your bank account. The payment processor serves three primary functions: transfer the data of the payment from the bank account of the customer to the bank account of the e-commerce store, give merchants the necessary physical equipment to be able to transact with cards and assist in the process of creating a merchant account for your business.
A payment processor differs from a payment gateway. A payment gateway is the most common type of interface between a business’s website and a payment processor. Payment gateways provide two primary functions: send the customers payment data from your website to the payment processor and accept the payment information directly from the payment processor without involving your website.
The process for e-commerce payments works in the following way. An e-commerce transaction begins when a customer enters their payment details at checkout. The payment gateway sends the encrypted customer information to the payment processor. The payment processor alerts the bank of the customer and then the bank will either accept the payment or reject it for insufficient funds. If the payment is rejected the customer and the payment processor will be notified. If the payment succeeds the payment processor will communicate this with the payment gateway. The gateway will then send a notification to the website of the merchant. The funds are then deducted from the customer's account and credited to the merchant's account.
Carts
A shopping cart in the e-commerce sense is the piece of software which facilitates the customer’;s ability to purchase goods and services. It accepts the payment which the customer makes and then communicates this information with the merchant and the payment processor. This may seem trivial but it is the bridge which connects shopping and buying. It is an extremely important factor of the online shopping experience and it is essential for any e-commerce business to have.
A shopping cart in the e-commerce sense has three primary functions: the storage of information about products, the management of an order, the customer and the catalogue of the store and the rendering of store information such as product data to display to the customer.
There are two basic types of shopping cart services available: hosted shopping carts and licensed shopping carts. A hosted shopping cart is a shopping cart which is hosted by a third party who takes care of the server capacity and the maintenance. This is beneficial for businesses which are just starting out or who do not have the resources for a licensed shopping cart. The main disadvantage of hosted shopping carts is that the customer will be redirected to another website for the purposes of payment processing. A licensed shopping cart is a shopping cart which is able to be customized to suit the needs of the business which uses it. This allows for far greater flexibility and functionality. However this also requires more initial outlay in terms of costs and of labour. This is rewarded with a superior service that also requires more maintenance and technical know-how.
Website builders
Website builders are websites which facilitate the creation of a website for your business or your e-commerce store. These services vary greatly in complexity and scope but there are many general themes which they all adopt. They allow their customers to build a website without any technical expertise on the subject and also facilitate the hosting of this website. These services are usually accompanied by some sort of subscription fee particularly for registering and hosting a unique domain name.
The main strength of these services is that you are able to build and host a professional e-commerce website without any significant capital outlay for server infrastructure or web design. This can allow you to focus on other aspects of establishing your e-commerce business such as marketing and product development. A potential drawback of these services is that they do not allow for the highest degree of customization and flexibility in the process of creating your website. This is of course mitigated by the tremendous convenience factor and the proficient customization options which they do offer. Website builders also place you in the driver's seat when it comes to design allowing for a greater freedom of your own creative expression and vision for your website. This is something which you will not receive in the same way when using a website design agency.
If you would like to use a website builder and are unsure of which option to try consider this Shopify review for more information.
Photo: TRUiCFinal thoughts
The e-commerce industry is one which is seeing fantastic growth and will continue to do so in the future. It is a ripe space for innovation and entrepreneurship and has significantly lower barriers to entry than the retail commerce space. Three trends which anyone wanting to break into this market should be aware of are payment processors, shopping carts and website builders. Each serving a vital function to the success of your e-commerce business.