Web Week: The Biggest Challenges for Ecommerce Businesses

Web Week: The Biggest Challenges for Ecommerce Businesses

Getting an ecommerce site up and running is anything but a small feat. There's products information, descriptions and photos, pricing considerations, not to mention the typical stuff you need for a Web site (policies, company profile, awesome landing page). It's easy to get caught up in the excitement of launching and forget to plan for the things that come after.

I came across a great article about operating an ecommerce business recently and, in this increasingly digital world, it's the physical reality problems that offer the biggest challenge and can be overcome with some simple planning. In the article, Anand Srinivasan, mentions shipping rather prominently and it's the most overlooked and complex aspect of operating an ecommerce business. Over the past 19 years I've been a professional developer, I've seen it go one of three ways:

  • The business owner tries to make it easy with flat rate or free shipping, then loses a significant amount of money on shipping costs.
  • The business owner tries to make up their own method of calculating shipping.
  • The business owner doesn't know what the local tax regulations are and doesn't want to charge tax on the shipping fees.

All of these can lead to big problems. Offering free or flat rate shipping on top of discounting products is a recipe for disaster and the fastest way to fail. Coming up with your own method usually ends up missing some important part of the calculation (or doesn't understand how the consumer is purchasing) and grossly overcharges them - leading them to call and inquire or abandon the purchase altogether. Tax regulations have been interesting and I was surprised the number of times I had to have the discussion with clients about sales tax and why it had to be charged on the order total inclusive of shipping costs.

I have two quick tips for those operating an ecommerce business:

  1. Calculate shipping by weight (or better yet, use a calculator that ties into the carrier you want to use). The carriers are going to charge you by weight and/or volume. If you're not planning to absorb the shipping costs, charge your customer the same way. You can easily add a small handling fee to cover the cost of labor to package it up. It's more work up front since you'll need to plan what shipping supplies you need and determine volume and weight for all your products, but in the end it will save you from trouble with shipping costs being too costly.
  2. Check your state's sales tax regulations. One thing you definitely don't want is your the state department of revenue breathing down your neck for back taxes because you were supposed to be charge tax on the shipping fees. Conversely, you also don't want to pay the state more than what they're owed. Unlike income tax, there's no refund for overpayment on sales tax.
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