Sunday, July 10, 2005

Starting an Ecommerce Business

I shall cover several aspects of an ecommerce business here.

First comes cost estimates.

There are so many options for Merchant Accounts and Credit Card Processing companies.
I like Andy Quick's article about Choosing and Internet Merchant Account. for understanding all the hidden costs involved. I'd recommend using this to project the costs to evaluate whether the big idea that you see is really as big you think. Finally, cash flow will decide if you continue in business or make compromises to exit or take VC terms that you don't like later on.

Another article that gives all the hidden costs is here

You have to find the best option based on your projected sales volumes because what makes sense for you may be different from what works best for another site with different business peaks.

Another note from my personal experience is about being able to retreive the monies out.
In Coola, we setup credit card processing right when a customer was ready to pay. It worked out fine as customers charged and paid online. The difficulty came when we wanted to take the money out to manage our own cash flow. Different companies have different rules for taking the monies(that you have rightfully earned) out based on their own payment cycles which may be once a month.

1 comment:

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