You need two basic things to start selling online:
- A storefront (shopping cart enabled web site)
This is a place on the web for people to go to see what you have to
sell. It can be your own website, a 3rd party site (like yahoo, or an
eBay store) or even just a temporary page on an auction site like
eBay’s. - A way to accept payment
Most
buyers want to use a credit card to buy online. To accept credit card
payments you need a merchant account. A merchant account is not a
business checking account. It is a special facility that allows you to
process card transactions.. In many cases you will have to pay higher
rates than offline businesses such as shops or restaurants who obtain a
signature from their customers. Another alternative that I explore in
the table below is Paypal. Think of it as quasi-cash that can only be
used online.
The combinations to
achieve these two are virtually infinite. Some providers have low
initial set up fees but high monly costs, or high transaction percent
costs, others are the reverse. Here is a look at several different ways
to meet these two requirements.
Click on the store logos to read more about their services.
 |
 |
 |
|
| Setup |
0
|
0
|
Currently waived
|
| Monthly |
$15.95
|
$20
|
$29.95
|
| Per Sale % |
8% of initial $25 ($2), 5% of remaining
|
2.9%
|
0.5%
|
| Per Sale |
$0.02
|
$0.30
|
0
|
| Merchant Account |
*Effectively Paypal
|
Included
|
Included
|
| Setup |
0
|
Included
|
Included
|
| Monthly |
$20
|
Included
|
Included
|
| Per Sale % |
2.9%
|
Included
|
Included
|
| Per Sale |
$0.30
|
Included
|
Included
|
| Storefront |
Included
|
None
|
Included
|
| Domain |
Included
|
$20/yr
|
Included
|
| Hosting |
Included
|
$90/yr
|
Included
|
| Web Design |
$90
|
$150
|
$150
|
| Comments |
Proprietary eBay website
|
Paypal heavy on branding
|
eBay company
|
| Total First Year Costs |
$212.55
|
$256.60
|
$266.55
|
| Recommended |
.
 |
 |
 |
|
| Setup |
$50.00
|
$49
|
0
|
| Monthly |
$39.95
|
0
|
$25
|
| Per Sale % |
1.5%
|
5.5%
|
|
| Per Sale |
0
|
$0.45
|
|
| Merchant Account |
Paymentech
|
Included
|
SellIt!
|
| Setup |
0
|
Included
|
$99
|
| Monthly |
$22.95
|
Included
|
$4
|
| Per Sale % |
2.69%
|
Included
|
|
| Per Sale |
$0.20
|
Included
|
|
| Storefront |
Included
|
None
|
Included
|
| Domain |
Included
|
$20/yr
|
Included
|
| Hosting |
Included
|
$90/yr
|
Included
|
| Web Design |
$150
|
$150
|
$150
|
| Comments |
Many Extras
|
Checks only once per month
|
Many Extras
|
| Total First Year Costs |
$349.5
|
$285.60
|
$447
|
| Recommended |
This
is just a start. As you can see the fixed and percent costs vary
considerably. To make a more informed decision on which route to take,
you need to have some idea of volume of sales and item prices. Then you
can do an analysis by $ sales. This starts showing up the high percent
cuts in vendors like 2checkout.com (who have the lowest startup fee).
We recommend Paypal for the fact that it has the lowest costs of a
“real” store front (as opposed to an eBay store) and BuildIt for its
sophisticated collection of web marketing and search engine
optimization tools.
Analysis Process
To come to these conclusions, we actually didn’t just grab what we thought might be the best paying affiliate links, but did a real detailed analysis.
The first step was to create a spreadsheet and pick some arbitary values for sales and volume.
This allwed me to zero in on the real costs of running an online store and plot some comparison graphs. Its much easier to see trends in this way.
You can grab the files I used in the ecommerce section of the file library.
Comparison of cost to set up online stores
A detailed analysis of first year costs for online stores
I strongly recommend you use these files with your own projected values to find the best solution for you.