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When you launch a new E-commerce web site - either as part of a multi-channel sales strategy or as a stand-alone operation - above all else there is one thing you need to be ready to face: Customers.

That might sound like a “Duh-uh” comment, but not every E-commerce operator is as prepared as they should be when their new store goes online and the first order (or ten or fifty orders) appears in their control panel. Turning those early orders into happy customers sometimes even proves an unexpected challenge for experienced retail business people.

Preparing a new online store for operation demands a lot of attention. If you’re not organized in advance, small details can be left undone. And it only takes a couple of small details to add up to a bigger problem.

Orders aren’t secrets

Does everyone you plan to have ‘in the loop’ have the appropriate access to your store’s control panel? For single-person operations it’s not a big deal, but in a larger business all of the people involved need to be able to see their part of the puzzle. For general site security, it’s not a good idea to distribute the main administrative login credentials to everybody - so the people who will be responsible for processing and fulfilling orders (and any other store-related functions) need to have separate login accounts that allow them access only to the functions they need.

A quick note: If third-party sources like drop-shippers or fulfillment services are critical to your operation, DO NOT depend entirely upon store-generated e-mails to deliver order information to them. If possible, they should have their own console access to the information they need and a protocol in place for regular account service. If that can’t be arranged, you should at the very least follow up by phone call to check on a summary of all orders placed each day.

Plan for the best

Are the items you have for sale actually ready to be sold? Do you (or your fulfillment partner) have your products in stock and do you have procedures in place for shipping? You and your staff need to be prepared for orders, just like a retail business has to be ready when the first customer walks through the door.

Take a moment to think about what would happen if you got 100 orders on your first day online. You’re tempted to think “that would be a great problem to have” - but I’ll point out that it IS a problem if you’re not prepared. If you can’t process orders accurately and ship products quickly, customer enthusiasm (and orders) might drain away before you know it - and then you’ll have a long haul to regain their confidence.

Get coordinated

Ideally, your site’s E-commerce engine will have features designed to interact with the systems you use for inventory management and customer care. Very expensive solutions may have some of these systems built in, but that’s atypical. E-commerce programmers tend to concentrate on E-commerce, and build in the common data interfaces that you need to exchange information with ‘off line’ programs dedicated to inventory, bookkeeping and marketing.

If you run a retail business in addition to an E-commerce site, then coordinating customer information becomes a more critical process. Centralizing contact information and purchase histories can be very helpful in the development of successful online marketing campaigns.

There are many different ways to build a successful E-commerce business, but they all have one thing in common.

Loyal customers.

I don’t mean ‘just’ happy customers. I mean customers who will come back to your web site and purchase from you again.

It’s not a revolutionary discovery. A lot of books and articles have been written on the same general business theme: Customer satisfaction means nothing; customer loyalty means everything.

One of the hallmarks of an experienced E-commerce developer is that they will push to keep a site project customer-focused. They understand that a web site which is too loaded down with bling and noise can distract customers from your essential business message and interrupt the buying cycle.

No tricks, just work

Building customer loyalty for your business’ web site isn’t a technology trick (although it helps if your E-commerce engine offers tools that support your goals). As with most things E-commerce, there’s no Easy Button.  Your web site should be designed with customers in mind. E-commerce isn’t about promotion. It’s about buying and you need to do everything possible to help your customers buy from you. Here are five things to think about that might help your customers in their quest to spend money with you:

1. No doubt you’ve encountered the phrase “user-friendly design and navigation” in many different places, but it’s an especially important concept for an E-commerce site. In a way, an E-commerce site is a lot like an airport: You want to get your customers into the landing pattern (your site), onto final approach (your product catalog) and then get them safely landed (”Thank You for Your Order!”). From the moment they enter the landing pattern, you don’t want to put anything in their way that distracts them from landing.

2. Your customers want a comprehensible (and comprehensive) product catalog. I mentioned this in a previous post. Detailed product descriptions are your primary selling tool. A logical category structure helps customers find your products. Also make sure that your chosen E-commerce engine has an easy-to-use search feature built in.

3. Your customers also want a checkout process that’s intuitive, stable and repeatable. In order to avoid the dreaded “dropped transaction”, checkout needs to be as streamlined as possible. Buttons, data entry fields, order details, shipping information and supplemental charges (like sales tax) all need to be clearly presented and easy to find. Any forms that customers need to complete should have all mandatory fields plainly indicated. Your E-commerce engine should utilize a database that saves customer registration information, which also offers automated password recovery for returning (and forgetful) customers.

4. Make use of the customer loyalty and promotional tools that are built in to your E-commerce engine. The big-brand E-tailers make extensive use of functions like wish lists, gift registries, reward point systems and discount coupon/codes. A number of commercially-available E-commerce applications offer exactly the same tools, and they are invaluable additions for both helping to build customer loyalty and enhancing your store’s promotional pricing strategies.

5. Above all, stay on top of customer service and feedback. Communicate quickly and clearly with your customers. Rapidly responding to their queries and complaints demonstrates that you’re focused on serving their needs and solving their problems. In addition to direct responses to customer contacts, also consider using broader communication tools to expand the reach of your service and expertise. E-mail newsleters, blogs and customer forums are all very handy tools for boosting your business online.

If you’re trying to create a multi-channel sales strategy for your retail or small business, one of the challenges you’ll face early on is what to do about product pricing.

There’s a popularly-held belief that online selling is all about discounting, price-slashing and under-cutting businesses that retail to the same market. It’s a belief that causes many retailers to hesitate about selling their products through an e-commerce channel. They don’t sell online because they think that in order to compete on the Internet, their web site pricing will have to be set below price levels found in their retail store.

Good news for you: That popularly-held belief is wrong.

True enough, some of the big-brand E-tailers make a lot of money selling to the discount market. But if you pay close attention, you’ll notice that even most of the biggest names on the Internet don’t offer consistently deep discounts on everything they sell. And they don’t sell everything, do they?

Profit is profit

In fact, pricing strategies for E-commerce differ very little from standard retail pricing strategies. Businesses that sell products all have to solve the same problem: They have to find that happy spot between the floor (what they pay) and the ceiling (what consumers will pay) where they can make money.

E-commerce only businesses (those without a bricks-and-mortar store) don’t have as many advantages in calculating their ‘floor’ as you might think. They don’t have to pay for a storefront - but most of them still have some sort of physical overhead for offices, computers, warehousing and the like. The small percentage of E-commerce sites that are truly garage or home-office businesses have to pay for somebody else to warehouse and handle product (drop-shipping or pick-and-pack, typically). They also have to pay additional overhead for many of the staff-provided and general business services that a bricks-and-mortar store already supports through retail sales. If you’re a retailer, there is seldom a meaningful difference between the total loaded costs of the goods you sell, and the loaded costs of the same goods to an E-commerce only storefront.

Perception is reality

So what is it about online pricing that creates the belief that the Internet is one big discount warehouse?

The broader picture is colored by well-known brand names like Amazon and New Egg that offer fat discounts on volume product ranges like books, videos, music and electronics. (The trick here is to avoid competing with the big E-tailers.) To an extent, the perception of pricing on the Internet is also skewed by something of a flash-in-the-pan syndrome - E-commerce start-ups that don’t really understand their loaded costs and quickly go out of business because they underprice goods and services.

Also, consider that the most successful E-commerce operations are masters of loss-leader marketing.  Typically, they’ll couple a product that’s highly-promoted at cost with a qualifying purchase of a set order amount or with a secondary product that is sold at a profit. The idea that they profit on loss-leaders by sales volume is pure myth - whether you sell retail or E-commerce, no matter how much of a product you sell at cost, you’re not going to make money on it.

In an earlier post, I cautioned that some E-commerce ideas fail because they run afoul of the multiple sales channels created by large manufacturers and distributors.

But a strategy that works for the ‘big players’ in E-commerce can also work for businesses with fewer resources. With the proper planning and investment, you can develop a multi-channel sales strategy that will help your business grow.

Since 1998, E-commerce in the U.S. has matured from around $8 billion in total sales into a thriving marketplace with over $100 billion in sales. The recent economic downturn has certainly had an impact, but the key number here is that the growth in E-commerce has only slowed to a projected rate of somewhere between 7 and 9 percent for the next couple of years. E-commerce is still an expanding marketplace that businesses need to utilize.

Three ’starter’ channels

A multi-channel strategy is especially well-suited for small-to-medium sized retailers who either serve a specific niche market or sell with expertise into a limited number of product categories. A typical approach involves three sales channels: 1) Retail (their bricks-and-mortar store); 2) E-tail (their own E-commerce web site); and 3) E-marketplace (sites like Ebay and Amazon).

Quite a few retail businesses take advantage of at least one of the other available sales channels. The struggle comes in adding the third sales channels - or, just as often, they wrestle with making their additional sales channels profitable. Over the course of the next few posts I’d like to share some ideas on how you can maximize the bottom-line impact of your own multi-channel sales efforts.

Retailers who want to succeed at E-commerce and on E-marketplace sites need to plan ahead before they jump into online selling. Because people aren’t walking into a store and interacting with your staff, when you sell online whatever you display about your products and services has to meet customer expectations in advance. Otherwise, you probably won’t be making very many sales.

Meeting expectations

The two customer expectations I see overlooked most frequently are depth of inventory and detailed product information. Four or five years ago those may not have been key considerations (people were more interested in finding sites that didn’t crash all of the time), but the technology and the market have both matured to the point where online shoppers have come to expect both.

Think along these lines: Even if you sell into a very limited niche market, surely you have more than 15 items in your store? Hobby widgets, rare books, specialized tools, miracle cosmetics - it doesn’t matter. Customers expect to have choices and selection. Put as much of your stuff online as you can. In some circumstances you might be able to succeed with a limited online inventory (maybe you really do sell only one item in your store…), but that’s becoming the exception rather than the rule.

With the E-commerce tools that are available now, there’s really no excuse for online product listings that lack detailed product information. Your regular retail customers may know all of the details about the “X-Widget Model 275″ - but when you sell online you’re reaching into a new (perhaps global) audience that might be just as interested in buying, but is probably less knowledgable. You can’t answer their questions face-to-face, so you need to have as much information as possible in your online product listing. Consumers tend to do more business with web sites that give them more information and establish credibility.

Here’s a clever idea: Build an E-commerce web site that you never really have to touch. Orders placed on the site are automatically forwarded to a larger distributor, who then processes the order and ships the product directly to your customer. You charge the customer money, pay the distributor their cost plus a shipping fee and pocket the difference.

That sounds like a great plan, doesn’t it? But there’s a problem. Do the math and you’ll quickly figure out that it’s not a very reliable way to make money.

A number of major E-tailers, wholesalers and distributors offer drop-shipping services to E-commerce providers. Some of them offer a broad range of goods, others serve fairly narrow niche markets. In a typical scenario, a drop-shipper offers a catalog of goods that are priced less than MSRP, most of which carry a fixed shipping fee of some sort or use a shipping fee structure based on the dollar amount of the order. The pricing that drop-shippers offer is seldom a ‘true’ wholesale price, but it’s usually good enough that you can offer products at a bit of a mark-up and still come in below retail price.

Eye on the bottom line

Therein lies the rub. What kind of margin can you build in to your products and still capture sales? Your customers are going to be looking at the total loaded cost – product price plus shipping (plus any applicable sales tax). After calculating for all of that, what can you reasonably expect to make from an average sale – and still price competitively enough that people will buy from you?

If that sounds a lot like a ‘real’ business question, that’s because it is. It’s the same question every store owner has to ask.

In addition, you need to consider the costs associated with your customer service loop. How does your drop-shipper handle returns, lost shipments and customer complaints? Do they charge an additional fee, or do you have to handle each of those issues yourself? When a customer calls with a problem – and they will, you can be certain – you can’t just tell them “I don’t actually touch the merchandise” and expect to stay in business very long.

It’s not impossible to make money by using a drop-shipping service for your E-commerce site – that’s not the point. But you need to be familiar with your target market, the prices and service offered by your competition and ALL of the costs involved before you start to turn your clever idea into E-commerce reality.

Spend some time surveying a variety of E-commerce sites (without spending money on them, that is…), and chances are you’ll come across some sites that offer name-brand gadgetry at incredibly good prices. Sites like this that I’ve come across recently sell items such as air-conditioning components, portable power equipment or computer hardware.

With a little bit of research you’ll discover that a number of those E-commerce sites sell in great volume and are quite profitable. For some private entrepreneurs, it’s tempting to try to jump into one of those niche markets with a deep-discount E-commerce site of their own.

Before you rush pell-mell into the discount E-tailing business, there’s one thing you have to understand: Most of the successful E-commerce sites that deeply discount name brand products are the online equivalent of a brightly lit storefront that stands at the end of a long and dark back alleyway. A large majority of them are dedicated outlets that are part of multi-channel sales strategies implemented by major brands and manufacturers.

It’s all about the relationship

Discount selling on the Internet is all about relationships. The most successful online discounters have the closest relationships with their manufacturers - and typically skip a ‘traditional’ distribution chain entirely. There are a number of companies that specialize in building multi-channel sales networks for large manufacturers.  Many of the discounter sites are even owned or partially owned by the manufacturers themselves, typically serving as outlets for slightly aged stock or refurbished goods.

You need to be aware of these ‘channel’ relationships before you try to sell into any given market niche, because you could be setting yourself up for some very stiff competition. It means, at the very least, you need to have a relationship with your supplier in place BEFORE you spend the first nickel on your E-commerce project.

Get it in writing

Here’s a tip about that supplier relationship: Get it in writing and get it for as long a term as possible. I’ve worked with a number of clients who were certain they had a good supplier relationship to build on, only to have the whole deal pulled out from under them after they had expended considerable time and money on their project. It typically happens when a manufacturer or distributor that a client has been working with (sometimes for many years) suddenly has a ‘light bulb moment’ and decides they can make more money if they dump their online partner and do it themselves.

I’ve seen equipment suppliers decide they want to build their own discount channel and announce that they’ll no longer provide warranty support for items that they don’t sell themselves. I’ve seen large material distributors scuttle a pending deal then proceed to implement a client’s concept on their own.

It’s a major peril (and expense) for the small business person who wants to build a supply relationship. Some of  the bigger companies in the game aren’t always entirely scrupulous. The sad fact is that unless you spend the time and money to get legal details like non-disclosure agreements, warranty and supply contracts sorted out in advance, you don’t really have a ‘relationship’ at all.

Multi-channel selling and supply relationships often inhabit one of the shadier back alleys of E-commerce. Make sure you have your details in place before you start spending money on technology, or you just might find yourself getting mugged.

Just like a bricks-and-mortar store needs somebody behind the counter, an E-commerce web site requires somebody behind the scenes to make things run smoothly.

Except in rare circumstances, your E-commerce site is not going to be a fire-and-forget operation. Somebody has to process the orders. Somebody has to insure payment has been made. Somebody has to manage inventory and pricing. Somebody has to handle fulfillment and shipping.

In a fairly standard small business scenario for E-commerce, a living, breathing person at your operation has to keep up with all those tasks (and usually more). It’s a lot of work that too frequently gets overlooked when people first sit down to develop their E-commerce concept. Very few things in E-commerce happen ‘automatically’. The Easy Button for it hasn’t yet been invented.

Most of the popular ’stock’ E-commerce engines (like Early Impact’s ProductCart or OSCommerce) are designed to a fairly simple operational model. You (or your staff) access an administrative control panel to view and process orders, manage inventory and keep the site’s catalog up to date. Most of them assume a single ship-from point (your business or warehouse). The best ones integrate shipping tools that allow your customers to get shipping rates from standard carriers like US Postal Service, UPS and FedEx - and some even provide admin tools that let you generate shipping labels and handle other details.

Remote inventory takes work too

Here’s an important point: The theme that successful E-commerce should be run like a ‘real’ business holds true regardless of your order fulfillment scheme. Even if you’re planning to use a Pick-and-Pack service, that only provides one link in the E-commerce chain - the handling and shipping of inventory. Your site still needs to have somebody minding the store.

In some ways, using a Pick-and-Pack can be more complex - simply because you (and your web site) are physically remote from your inventory. A lot of additional communications is required. Are payments working correctly and are your orders being transmitted properly to your handling service? Does the inventory in your online store match the inventory available at their warehouse? Are prices on your site updated when the warehouse service updates?

An experienced E-commerce development company can modify a stock engine or build custom programming to handle almost any special requirement you may have. The trick is to engage a proven developer early enough in your planning process so they can help you avoid common problems and unnecessary expenses. An investment in planning can provide considerable return in time and money by the time your E-commerce project is ready to launch.

So you have a top-notch idea for E-commerce. You even have a well-considered Unique Value Proposition. Here’s another question for you: How are your customers going to pay you?

It sounds like a silly ’small picture’ question, I know. But it’s really one of the most important and most problematic details your brand-new E-commerce project may encounter.

If you’ve got a good idea for an E-commerce web site, chances are you’ve used somebody else’s E-commerce site at some point in the past. If you paid by credit card, you’re familiar with the online payment process from the user’s side of things. But building that functionality into your own web site requires a bit of planning and some critical decision-making well in advance of your ‘go live’ date.

How transactions work

Online credit card transactions are a two-step process. First, a gateway service processes your customer’s credit card information, authorizes the charge for their purchase and captures the funds from your customer’s account. After that, the gateway service then sends those fund to your merchant banking account for deposit.

It’s really not that difficult a process to set up, provided you’ve done all of your paperwork and have your accounts established before your site is ready to go. Bricks-and-mortar merchants have a bit of advantage here, because chances are they already have a merchant account in place. If you don’t have a merchant account in place, you’ll need to allow for at least a couple of weeks to get one set up.

Depending on your financial institution, you may even be required to present your finished web site before the bank approves your account. Not all banks require this, but when you work with one that does it can cause an additional delay in your timeline.

Gateways hold the key

Gateway accounts are the second piece of the puzzle. Some banks have their own gateway service and require you to use it. Others are more flexible and allow you to use a feature-rich, service-oriented gateway service like Authorize.net. Either way, you’ll need your merchant banking account established before the gateway can be set up.

Of course, none of the services are free. Which means you need to budget for the additional cost of doing business. Merchant banking accounts make money off of their ‘discount rate’, a percentage-based fee they charge for each credit card transaction. Fees vary by bank, and you’ll typically get lower rates when you sell at higher dollar volumes. Gateway services also have costs associated with them, usually including one-time setup fees as well as monthly and transaction-based fees. Authorize.net, for example, chages a setup fee of $169, a monthly fee of $20 (for their basic service) and a transaction fee of $0.10.

Other payment options

Payment options other than credit cards are available. If you expect that your site will generate fairly moderate monthly sales (say, less than $3,000), a payment service like Paypal or Google Checkout make sense. You can accept both credit card and Paypal account payments through Paypal’s Web Payments Pro interface, for example, and the payments can be deposited into your business’ Paypal account - which means you don’t need a merchant banking account. The services still charge monthly and transaction-based fees, however. They are good options for smaller volume E-commerce, but if your site’s monthly transaction volume reaches the neighborhood of $5,000 ’straight’ credit card payments generally become more cost-efficient.

The moral of the story is this: Few elements of any E-commerce operation are more important than how customers make their payments. Weigh your options carefully, because the decisions you make about your site’s payment process can have a big impact on your business’ bottom line.