Ecommerce: All that Glitters…
Tuesday, April 29th, 2008
One of the more frustrating development topics I regularly encounter is ecommerce, specifically when and for whom it’s an appropriate venture.
Let me start by saying that given the right set of factors an ecommerce solution can undeniably reap benefits for a business. Over the past few years I have seen some online ecommerce businesses thrive and have seen quite a number fail. There are definitely commonalities for each scenario.
The Good
Most successful ecommerce ventures, that we have dealt with at Pleth, LLC, are businesses that either manufacture their own products, have their products manufactured specifically for them, or are able to rely on a keystone markup for the bulk of their product lines. Essentially what these businesses are able to create is a margin great enough to overcome the costs of delivering their products. For an ecommerce business these costs include:
- the actual cost of site hosting and maintenance
- shipping charges (on both sides of the transaction)
- marketing costs (such as traditional media, pay per clicks, paid inclusions, etc…)
- credit card processing fees (including chargebacks and fraud).
Another positive ingredient in this ecommerce stew is a site that exists as a compliment to an existing business. I see this as an especially important point since this allows a client to devote the extra time and resources that are necessary for a site to mature alongside the internal logistical components required to support a healthy ecommerce site. In this type of situation the site is not asked to generate an unrealistic revenue stream immediately in an effort to support the client’s external financial needs.
The Bad
When I begin a conversation with a perspecitve ecommerce client I often find myself monitoring the dialogue for these ecommerce red flags:
- the client is in a reseller situation (typically 20-30% margin before any product is sold, shipped, or marketed)
- the client is paying full shipping on individual products on each end of the transaction
- an integrated credit card processor is not desired (usually to control costs)
- outside marketing efforts are deemed unnecessary or too costly
Although none of these characteristics will leave me fleeing a meeting, none of these exist in a vacuum either. They usually come bundled together and tend to leave us a little hesitant about initiating a project when these flags are thrown.
The Ugly
As I mentioned above, we often find ourselves in situations where our comfort levels begin to go south. Then there are projects that cause us to start looking for the nearest exit. These tend to posess the following:
- expectations for revenue generation are unrealistic, especially in the short-term
- unrealistic about the amount of client-side work and logistics necessary to support an ecommerce project
- urgency at any project phase (this is a big one)
- multiple failed project attempts (often with subsequent data migration from those failed attempts)
Anyone who comes to us expecting to get rich quick with little to no effort is in for the long hard fall back to reality. It simply doesn’t happen.




































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