Starting an Online Business: Choosing a Storefront / Host

Lots of good ideas on my last post, thanks! Tonight I explored my options for hosting an online shop. Not exhaustive, but here are 3 main options.

1. Host it myself. I recently upgraded my Dreamhost account to their ‘Code Monster’ package, which includes a license for Miva Merchant, an e-commerce software product. When I read that it includes “built-in shopping cart and payment processing”, I thought great! I can take credit cards easily. Nope, it just means it integrates with many Merchant Accounts. Still, it’s pretty powerful – This would be the most customizable option, but it will have the steepest learning curve. Unfortunately, I didn’t upgrade to the next hosting level which includes an SSL Secure certificate and a dedicated IP address (both needed to properly accept credit cards).

Cost Estimate: $200/year for SSL License, $5/month for dedicated IP (Merchant Account: ~$100 Setup, ~$20 a month + % fees)

2. eBay Stores. If you’re looking for an instant audience, eBay Stores is one way to do it. That way, anyone searching for ‘dog toy’ has the potential of ending up at your site. No need for other advertising. Of course, you will be paying 3-5% of purchase price in eBay fees, PayPal fees, not to mention it’s harder to build a brand and a loyal customer base. Not sure how well PayPal would work as a full-service credit card processing provider. But, they do offer a free 30-day trial.

Cost Estimate: Starts at $15.95/month, Ebay % fees, PayPal % fees

3. Yahoo! Small Business. You see a lot of Yahoo Stores [example] out there as well. They tend to look the same (and ugly), although now there is more customization out there. But they do offer everything in one package – webhosting, shopping cart and order management, stats, etc. You also have to get a separate Merchant Account to take credit cards. Another annoying thing is that they charge a 1-1.5% transaction fee on all your purchases, which makes it like eBay.

Cost Estimate: Starts at $39.95/month, Setup fee currently waived, Merchant Account % fees

Nothing looks awesome out of those three, but we’ll see. I’m open to suggestions as usual!

Comments

  1. I’ll suggest to not go with ebay store. as you’ve mentioned, no brand, no customer loyalty at all. you also place yourself to compete directly with millions of ebay seller.

    you CAN list on ebay occasionally, and make referenc e to your site without breaking ebay rules. thats basically what I do.

    not sure about yahoo store too, the extra fee is a turn off.

    miva merchant is awesome, but its expensive (well not if you get code monster), its learning curve isnt THAT bad.. one thing I’ve read about it is that google doesnt like miva merchant that well..the search results arent that great.

    but there’s a huge community of miva merchant users, the community support is pretty good I heard.

    SSL certificate is also expensive, but I think there’s other more practical options out there.. you should check on the prices more, I had bookmarks before of providers but I cant seem to find it..

    I think going with your own storefront/host is the best choice, in giving yourself more control and flexibility. yeah there’s learning curve there, but I think its very useful thing to learn.

    me, I’m stickin with the free oscommerce. its not as feature rich as miva merchant, but I think its a pretty good package.

    good luck with that! i’m trying to get my butt in gear and finish expanding my setup too.

  2. I’ve done the eBay store thing, and I still use Yahoo store. I never tried your first option because I didn’t want to deal with the programming backend nightmare of managing a shopping cart. Maybe it has gotten easier since last I looked into it. Yahoo store gives you traffic from yahoo.com which is extremely powerful. I use eBay to sell off stuff I can’t normally move.

    The main issue with a business online isn’t what you are selling, it’s how you are going to move traffic to your website. It’s a lot harder than you think it is. To make any kind of money you will need at least 10,000 hits a day and 1% will convert into a sale. If you have to pay for the traffic in the form of PPC, how much are you going to charge your paying customer to cover the cost for all the others?

  3. Brian Katke says:

    I have set up merchant accounts for companies that I host on my web site. If you are semi-savy when it comes to development and what to host it yourself, check out cubecart. they have a package that ties into the paypal system that you can setup to accept credit cards with no recurring fee’s.

    best of luck, I enjoy the site.

    Brian katke
    Start From a Dream

  4. I get RapidSSL certificates for $19.95 a year through my howing provider (EV1Servers)

  5. I like your site. Good luck in getting the right hosting site. I hope you don’t mind me linking you to my blog

  6. I dont think traffic is an issue if you sell somewhat specialized products.. and search for the buyers yourself.

    you find the popular forums/online message board that pertains to what you’re selling.. strike a deal with the message board owner, and have them host your banner there.

    you can also make post there informing the thousands of forum users what you can offer them, and at a better price for forum members.

    etc. etc. I prefer placement ads at specific locations than paying per click.

  7. $200/yr for SSL seems pricey…I’m surprised that’s all Dreamhost has to offer…we got our business one for free from them (granted we got in on some ridiculous sale they had and have a really featured account for $9.95/mo)

    We’ve also had some issues with dreamhost stability (email server goes down at least once a month, etc) but I also think they are great at a lot of things. Maybe they have us on the cheap kids box ;)

  8. The sales pitch for Miva was great. Unfortunatly it was very frustrating to use. I ran an online store with some friends for two years on Dell’s now defunct service. Getting good formatting and integrating with non-shopping cart content was a real headache. If you find something you like better let us know.

    -Scott

  9. Mr.Delaney says:

    Great Blog.
    I thought i’d pop in and add a fourth option to your list.
    You could use a third party fulfillment company.
    There are a few companies out there that will take care of all of your needs (setting up the online store, merchant account, shipping, customer service, etc). All you do at that point is provide them with inventory. At the end of the month you get a check. Granted, they are taking a sizable percentage out of your net profits (I think 20-25% is about average). But, you’d still be making 75% of your net for doing virtually nothing versus 100% of your net for doing all the work.

    I guess it depends if this is going to become a primary source of income, or are you looking at it as a passive income stream for your home. If you’re looking for passive income, I would definitely look into online fullfilment companies. They already have the experience and infrastructure to deal with all these things.

  10. Mr. Delaney – yes this is true – drop-shipping can be a good passive income – IF you find a good one. But the key is finding a good one that 1,000 other people aren’t using. And of course nobody is going to share the one their using… Cap mention OSCommerce, which I will check out…

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