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20 Mar 2001, UK

Dear Dr. Ecommerce:

We are a medium sized computer component company. We are venturing into ecommerce some time this year. What I would like to know is an estimate or idea of the costs involved in setting up ecommerce. We would ideally host our own site etc from our own in-house server. Could you possible breakdown certain areas of implementing ecommerce and possible costs??

Yours hopefully

Andy

Dear Andy:

Your hopes have come true! At least I hope so.

Unfortunately, without knowing a great deal more detail, it's hard to put specifications and price to your project. Costs could be anywhere from around Euro 2,000 (UKPounds 1,260) to Euro 2,000,000 per year.

If you are selling B2B, in particular, an e-commerce site could be as simple as an on-line catalogue and cgi-based order forms. However, if you want to accept on-line payment, have a large catalogue, want to integrate your on-line ordering system with other on-line systems (such as inventory, book-keeping, etc) or anything else beyond a simple web site, then you will need something more sophisticated.

If simplicity is your aim, there are some interesting options at the low cost end of the scale. Numerous on-line malls, such as Yahoo Shopping offer a simple do-it-yourself interface that allows you to put together a shop quickly and painlessly. But be aware, quality of on-line malls ranges from excellent to rip-off, so check carefully before committing yourself. Asking other merchants on the mall about their experience would be a sensible check.

Next up on the scale is an interesting product, by Advanced Communication Research, called eShop Master. Basically, they supply one or more servers which they plug directly into a rack, on their premises, which connected to the Internet. You get a CD ROM which allows you to easily develop and maintain your shop on your own computer. You then upload updates to the server. In short it's a scaled down version of what the big players use. The advantage here is that they maintain the server and Internet connection. And if business develops, they simply plug another server into the rack for you. I don't know of any similar services, but they must exist. If you know of similar services for small e-businesses, please let me know!

Next up in sophistication would be off-the-shelf software which you could configure for your server. This, at a minimum would include an on-line catalogue, some kind of shopping cart system and payment processing system (at least for B2C). More sophisticated systems integrate with enterprise resource management software. I find ZDnet has good reviews of e-commerce and other software. Costs start at Euro 100 and get higher and higher. And, you get what you pay for. Be warned, there will normally be a bit of tinkering to get the software working on your server.

The final step, is custom software coded specifically for you. This option is the most expensive and is only worth considering if you anticipate on-line sales worth millions every year. Costs, at a minimum, will be in the hundreds of thousands of Euro.

I'm sure you know a server and software isn't enough. You will need to market your site so people can find it and you need to test your site to ensure people are able to use it (a huge percentage of people visiting e-shops get confused and frustrated and leave without buying anything). Testing your site need not be expensive. In the beginning, Amazon, considered one of the most user-friendly e-shops around, simply invited less technical savvy friends to try out the web site. Amazon noted what worked, what didn't work and paid close attention to the testers' comments. This cost next to nothing, but clearly provided excellent feedback.

Marketing depends very much on whether you are selling B2B, B2C and whether you aim to develop new business on-line or intend to focus on encouraging your existing clientele to use your on-line site. The i-sales discussion forum is good for e-marketing and selling tips.

Geoff Thompson of ERIN contributed to this answer.

Good luck,

Dr. Ecommerce