Monday, March 9, 2009
I'm Dan Engel, CEO of FastSpring E-Commerce. From time to time, I'm asked about the specific benefits of outsourcing to a full service e-commerce payment solution vs. utilizing a basic payment service like PayPal or setting up your own merchant account. Here are my thoughts...
* Focus on your core business and on growing your revenue rather than investing your company’s time, money, and resources into building and maintaining a commerce platform, a platform that will need to be constantly updated and improved as your business grows and your needs change.
* Eliminate chargeback fees (typically $15-$40 per occurrence) and chargeback management. Let your e-commerce service handle them for you.
* Avoid the order-related customer service work, let your e-commerce provider handle this on your behalf. Some e-commerce firms assign a Dedicated Account Manager to you who provides hands-on help with anything you need which can be quite helpful. Gain access to a support staff trained for software product and software delivery issues as opposed to customer service representatives who are not trained specifically for handling software vendor issues.
* Get support for delivery issues specific to software products incuding delivery of download links, customized emails, generation of registration codes, and other items.
* Avoid tax compliance issues by state or country by having a full service solution handle tax collection, compliance, and payment on your behalf, including management of the European Union's Value-Added Tax (VAT), California and New York state sales taxes, and more.
* Save time and avoid hassle by using an e-commerce service to minimize the volume of fraudulent sales. Software focused e-commerce firms offer fraud prevention tailored to software sales.
* Increase international sales by displaying your order page text in each customer's native language, displaying prices in localized currencies, and settling your transactions in the appropriate currency for each customer.
* Utilize multiple merchant accounts for payment processing. No need to obtain your own merchant account, which typically costs 3.5-4% of every transaction (card processors routinely talk about rates being around 2%, but check your statements and you'll see it's more because of the surcharges applied to your international transactions and higher priced American Express processing costs, fees for items such as chargebacks, etc.) Many full service e-commerce firms utilize multiple merchant accounts for backup security and the merchant account cost is included in the price of the service. Avoid working to obtain different accounts for different payment methods you want to support, doing technical development to setup and support those payment methods and to support multiple merchant accounts on an ongoing basis (the methods and accounts require periodic servicing due to updates and issues that arise), avoid paying monthly fees to merchant providers, turning over personal financial records, being personally liable for certain bank account funds, etc.
* Accept customer payments through as many methods as possible to maximize sales, including Visa, MasterCard®, Discover®, American Express®, PayPal™, JCB, check, and money order, payment methods offered by many e-commerce services.
* Gain access to a marketing distribution network and online marketing guidance offered by some e-commerce firms.
* Increase revenue through utilization of cross-sells and upsells on order pages which typically increases your average revenue per order by 15-45%.
* Utilize order pages branded with your site's look to reduce cart abandonment.
* Increase revenue through sub-product listings (i.e. drop down menus for add-ons) and data collection throughout fully customizable order pages, an option available through some full service e-commerce solutions.
* Ensure your customers’ transactions occur on secure servers.
* Utilize valuable 3rd party marketing tools like Google Analytics for site traffic analysis, online ad campaign tracking, and affiliate programs for growing affiliate marketing revenues.
* Increase revenue by offering your customers the option to receive your product in physical format for an additional customer charge via an on-demand CD/DVD physical fulfillment network.
* Convert more traffic into paying customers by testing between and choosing from a selection of different order page and product layouts and offerings.
* Increase revenue by utilizing product discounts, coupons, bundles, volume licenses and other pricing adjustments.
This is a sampling of some of the many benefits to outsourcing e-commerce to a full service e-commerce payment solution.
- Dan from FastSpring.com E-Commerce
Dan is the CEO of FastSpring, the next generation e-commerce payment, merchandising, and fulfillment solution for software publishers which is focused on customer service, flexibility, and reasonable pricing. Prior to running FastSpring, Dan led online marketing and customer acquisition at Google, Picasa, and Citrix's GoToMyPC.