3 August 2007 162 views 7 Comments Print This Post  Email This Post

Selling products online requires product sourcing, as we covered in How To Find Drop Ship Suppliers, as well as a means to reach consumers and process sales. Back in ancient 1997, when the internet was a new marketplace, selling items online was a daunting task for small businesses and home based entrepreneurs. Creating a website required a lot of technical skill or expensive web designers and marketing was for the most part based on trial and error. Luckily, the internet has come a long way since those days. Now there are more e-commerce solutions than you can count. While I won’t list every single solution available, I will talk about the basic types of e-commerce platforms available and how they differ.

Basically you have three platforms; auction based, hosted website based, and self-contained website based e-commerce. Each has different startup costs, long term maintenance costs and various other factors. We’ll explore these different platforms and the pros and cons of each.

Auction Based
The auction based selling format is perhaps the easiest to start. Your starting costs are very low and you’ll have instant traffic of ready and willing buyers. Of course the most popular auction site is eBay. What’s bad about eBay based businesses is that because the barriers to entry are so low, there is fierce competition. If you’re dealing in a competitive area like electronics, jewelry, or media items it will be hard to get started as more than likely the prices on eBay auctions will be the same and sometimes lower than your wholesale costs, leaving you with little to no profit after eBay fees.

Auction based pros

1. Ease of startup. Anyone can sell on eBay.
2. Low cost of startup. Just the listing and ending fees essentially.
3. Instant traffic.
4. Tools and support. There are tons of free tools and guides to help new sellers succeed on eBay.

Auction based cons

1. Fierce competition due to ease of startup.
2. Very limited customization options.
3. You are at the mercy of eBay rules and regulations.

Hosted Website Based
Hosted e-commerce solutions are prepackaged e-commerce software that includes hosting. You’ll usually pay a monthly fee, usually around $50 and up which includes hosting and support. A few popular ones are Yahoo Stores, Monster Commerce, Instantestore, and Volusion. These services include a simplified back end administration panel which lets you add products, edit text, change templates, upload pictures and more. There is absolutely no technical or HTML knowledge required. These services are best for anyone new to building websites.

Host website based pros

1. Ease of startup. No experience or HTML knowledge required.
2. Access to templates and some modification abilities.
3. Free technical support. Messed up your site? Just send Yahoo an email.
4. Credibility of a big name, like Yahoo store.

Hosted website based cons

1. Expensive ongoing costs. Most cost $50+ each month whether or not you make money.
2. Customization is limited to what the service allows.
3. No choice of hosting. You get what they give you.

Self Contained Website Based
The self contained website based platform is when you obtain your own hosting, and use a 3rd party e-commerce script or software to run your store. A popular one is OScommerce, which free software that comes with most hosting packages. Others include Zencart, and ViArt Shop. The ongoing costs with a self contained store is the lowest since you pay for only hosting and the technical support when you need it. The startup costs can be a bit higher than the other choices depending on your level of customization and how flashy you want your website to be. The key with a self contained website is to hire a good developer through a freelance sourcing website like elance. You want to have someone to turn to when you need technical support, but you don’t pay for it unless you need it. The self contained website is the most customizable of all and you or your developer have control over every little detail.

Self Contained Website Pros

1. Low ongoing costs. Hosting can be as low as $5/mo.
2. Full control. Highly customizable.
3. Software is mostly free, including modules to add custom features.

Self Contained Website Cons

1. Technical support quality based on your particular developer.
2. Hosting quality is limited to the particular host you choose.

Whats the best?
The best solution for you will depend on your specific needs. I recommend those with very limited knowledge of building a website to use a hosted website solution like Yahoo Stores as well as ebay to test the market on you particular products. For more adventurous folks, go with a self contained website. I prefer my own self contained website, running the OScommerce free software because that platform gives me the lowest monthly fixed expenses. My hosting is $30/mo., which hosts five of my websites. My developer is overseas and takes care of most of the back end customization and maintenance if I need it, they charge by the hour. I have tried Yahoo Stores , Monster Commerce, and Instantestore before, but I was not pleased with the lack of customization options and the ongoing costs. I would have much rather used the extra ongoing costs for marketing as every dollar counts. I also operate an eBay business, which specializes in custom Rolex watch accessories. The niche is not saturated, and I like the instant traffic eBay brings. So there is no best solution, only a good choice for a particular situation. Think about your long term needs and you’ll find a good solution for your business.