eCommerce In Ireland - an overview
As featured in The Sunday Business Post June 2006
This guide to
eCommerce has been written over the last few years as a response to
customer queries. It aims to inform you, the businessperson, of the
intricacies of trading online.
Dovetail has an established track record of implementing
eCommerce solutions, not just as development partners, but we also
run our own eCommerce site, an Irish Hotel,
Restaurant and Spa Instant Gift Vouchers Site called
www.GiftVouchersNow.com
Here
are just a few of our clients, through Dovetail and
GiftVouchersNow:
You may also download this article in PDF format here
(803Kb): eCommerce in Ireland - an
overview
If you are looking for a payment solution, or have any questions
or queries, please contact us at info@dovetail.ie, call Martin at
01-4100774, or use our contact form here.
eCommerce in Ireland - an overview
So you want to start your own online business? Here are eight
points that you will need to consider before you start selling on
the Internet.
1. Know your sales
process, market and product
Think about your product and your target markets. Determine your
sales process, mapping out how the customer will purchase from you.
Here are some example questions which can be of relevance:
- Consider if the Internet is a suitable channel for sales of
your goods. People will certainly buy clothes and books online, but
will they buy your product?
- Research the competition - is the market saturated, who are the
big players, what do they do that you like?
- What information will you need to collect from the customer?
For example, do you need a telephone number for confirmations?
- Are there quantity/shipping restrictions? Will weights and
dimensions affect shipping costs?
- How many currencies and territories will you need to
support?
- Are transaction fees and shipping costs included?
- What is your VAT exposure? This will depend on the origin and
destination of the product and whether it is classed as goods or
services.
The sales process also includes the following:
- Your returns policy
- Your fulfilment strategy - who is dispatching orders and
how?
- Your security policy (i.e. where/if to store members logins,
passwords, etc., if any of these are relevant)
- Your privacy policy
Although it is not necessary to formalise these processes in the
early stages, you should walk through each item in your mind and
ensure you understand what you are aiming to achieve.
2. Consider your
brand
If you are in business already, you will already have a logo,
corporate colours and you may have a website or sales literature
and an Internet domain for email (such as yourcompany.ie).
Your new eCommerce system should incorporate the look and feel of
this existing corporate style.
On the other hand, if you are starting a whole new business, or
revamping an existing one, it is good to start thinking about
branding early on: if there are lots of different stakeholders,
each with different opinions, branding can soon find itself on the
critical path towards launching your new site.
3. Payment Systems
There are two main approaches to taking payments on the
Internet. These are:
- Direct to your bank account
- Using Third Party Processors (including PayPal)
Direct to your bank account
If you want payments to go directly into your bank account, you
need a special kind of merchant account that will allow you to
trade online. If you are expecting high turnover this is the best
option for you. Money will go directly into your bank account
within three days. Transaction fees are generally lower than those
for Third Party Processors.
To trade with credit cards (either offline or online) you need a
Merchant Account (also called an Merchant Services Agreement). To
obtain one of these, you contact your local branch and they will
put you in contact with their Merchant Services Department or their
"Acquiring Bank". It is the acquiring bank which provides retailers
with the ability to process credit and debit cards.
The following diagram shows how a transaction on your website
gets through to your bank account. It depicts a buyer with an AIB
card purchasing from a vendor who has a BOI account.
The following table shows who provides acquiring in Ireland:
| Bank |
Acquirer |
| AIB |
AIB |
| Bank of Ireland |
Euroconex |
| NIB |
Streamline |
| Ulster Bank |
Streamline/Worldpay |
Even if you already have a merchant account from your bank for
retail or mail-order channels, you will still need a merchant
account for the Internet.
This Internet Merchant Account provides you with the ability to
accept online payments and the mechanism to settle them directly to
your bank account.
The types of credit and debit cards you can accept from
shoppers, and the currencies in which you can trade, depend on your
agreement with the acquiring bank.
Bear the following points in mind when you considering your
Internet Merchant Service Agreement:
- All potential customers must fill in an application form prior
to the granting of a Merchant Services Agreement. This
questionnaire elicits comprehensive information on your business
which is passed on to a Risk Assessor. The process of obtaining an
Internet Merchant Agreement has been known to take up to four weeks
and it is not guaranteed that the bank will give you an
agreement.
- Pricing is completely individual but sample charges for Irish
banks are:
-
- 1.75-2.75% per credit card transaction
- 25c per debit card transaction
- Please note that the amount your business pays will depend on a
number of factors including turnover, average transaction value and
market sector. Market sector is particularly important as this
impacts the assessment of risk.
- You may be asked for a deposit to secure your account - do not
over-hype your turnover in order to get a better deal on charges,
as the bank may turn around and ask for a deposit based on the
inflated price!
- If you wish to take Internet and telephone orders into the same
bank account (even if your internal staff and your online customers
are using the same computer systems to take the orders) then you
will need two Merchant agreements, one for Internet and one for
Mail Order/Telephone Order (MOTO). (MOTO transactions are not
charged by the bank as heavily as Internet transactions, again
because they are considered less risky).
Payment Processors
Your "payment processor" will provides you with a facility to
accept both credit and debit cards on your website and will allow
you to process these in real time. Your payment processor also
helps you manage your exposure to fraud by employing automated
detection. (See point 8.)
This section is by no means an exhaustive review of the
operators in the Irish market but it does highlight some of the
most prominent solution providers.
Realex - Payment Processor
Realex Payments are Ireland's leading Payment Service Provider
processing for some 1,500 online traders across all the major
banks. Realex Payments have an 'Online Trader' package that caters
for small to medium sized businesses who wish to transact via the
web.
Dovetail recommends Realex Payments as the payment processor -
we have partnered with them for many projects over many years and
have found them thorough, professional, friendly and not least -
good value
Notes:
- Realex charges are in addition to your acquiring bank
charges.
- Realex are Irish-based and have excellent customer service.
They offer a web-enabled console allowing you to view and download
your transaction history.
- For telephone/postal sales, Realex rent out a "console"
application for fast payment processing.
- Realex has a comprehensive fraud-detection system built into
its processing system.
- Realex can deposit money directly into your NIB, Ulster Bank,
AIB or Bank of Ireland bank account.
- Realex also offer full enterprise solutions for corporates with
extensive requirements across multiple payment methods and
channels.
Worldpay
Associated with the Royal Bank of Scotland, Worldpay is an
alternative to the Realex partner selection, and it is an Acquiring
Bank and a payment processor combined. If your start-up has
difficulty obtaining a Internet Merchant Service Agreement through
AIB or Bank of Ireland, then Worldpay (based in the UK) is a
fallback. They claim that 90% of applicants are signed up.
- If you have an Ulster Bank account (which is a subsidiary of
RBS), Worldpay can deposit directly into your account. If you bank
with any of the other an Irish banks, you will need to transfer
your money into your bank account.
- Worldpay is UK based and support is not in Dublin.
- Commissions can be high (one Worldpay customer I spoke to last
week is paying approximately 3.9%). But again, pricing will vary -
it is based on your merchant profile, and will depend on the risk
associated with the sector you operate in and your trading history
and background.
- Monies may not be transferred to your account as quickly - you
are initially paid one month in arrears, then up to 4 weeks in
arrears from then on.
- Worldpay offers a console for telephone orders.
Third-Party Payment Processors
If you do not want to go through the hassle of obtaining an
Internet Merchant Account, you could opt for a Third Party Payment
Processor. Many of these provide full shopping carts and are quick
and easy ways to get your shop online.
There are many Third Party Providers on the Internet which get
around the necessity for you to have an Internet Merchant Account
by acting as a middle-man in the transaction. It is illegal for
them to use their Merchant Account on your behalf (termed
"factoring") so instead, they effectively buy the goods from you
and sell them on to the end customer.
There can be significant delays in receiving payment from Third
Party Payment Providers. Furthermore using a third party processor
is often very expensive - 5% (or more) commissions not being
unusual.
PayPal
PayPal is the eCommerce wing of eBay and using it is a fast and
cheap way of getting your payment systems up and running.
To get a PayPal merchant account you simply sign up on the
website, providing your credit card number. Once you get set up,
all payments received from your customers will now go into your
PayPal account and you will have to transfer this money to your
bank account.
PayPal has its detractors: On a practical note, PayPal does not
take Laser cards, which is important if you are selling to an Irish
market. Other issues exist with PayPal's perception: Until
recently, you had to be a PayPal member before you could purchase
from a PayPal-based site. This extra hassle turned people away and,
though it has now been addressed, PayPal can still evoke a negative
reaction from the potential buyer. Customer confidence is another
issue - it is so easy to set up an account, many people will simply
not buy from a PayPal-only site.
On the plus side, PayPal is widely used in the United States and
if this is one of your markets, it is definitely worth adding a
PayPal option to your site. Because of the fast setup and low fees,
PayPal is ideal if you are a small trader or if you want to test
the market.
Afterword
Choosing your eCommerce partners is very much a function of how
your business will operate - how many transactions do you expect,
what is the average cost of these transactions, how quickly do you
need the money to go into your bank account and what territories
you are operating in.
4. Backend systems
Ecommerce
The public ordering system is only one part of a potential
eCommerce solution. Depending on your turnover, product set and
staffing levels, you may need other business process support
systems for the "backoffice".
Most hosting providers now offer an off-the-shelf eCommerce
package, and other alternatives are eBay (particularly if you are
using PayPal) and Yahoo Shop. Buy.ie is an Irish turnkey shopping
cart provider.
As well as providing a customer-facing shopping cart,
off-the-shelf eCommerce systems generally provide facilities to
perform the following operations:
- Stock Levels/Special Offers
- Catalogue changes - prices, descriptions, photographs
- Sales order processing
- Sales Tax /Shipping configuration
You must consider the features, functionality, expandability and
general "fit" of such an off-the-shelf solution compared with that
of a bespoke development. All businesses are unique, but most have
core common practices.
Sacrificing desired business processes and protocols and
accepting a generic solution can save you money at start-up, though
may cost you in efficiency as the system may not do things exactly
as you may like. Some businesses are so different that no
off-the-shelf solution will exist (specifically, any system that
encodes your unique business processes or interfaces with
third-party or legacy systems). In this case an entirely bespoke
system will have to be written by a development house.
A mixture may appeal as a compromise: buying an off-the-shelf
system and getting a developer to tweak it to your needs. This is
not necessarily any more cost-effective than building from the
ground-up, however, as a developer can be much slower amending
someone else's code.
Whether you are building your own system or using an
off-the-shelf package, you should never store credit card numbers
in your database. If you do need access to credit card numbers (for
recurring fees or for customer convenience) then your Payment
Service Provider will provide you with a solution.
Content Management System
If your website also stores a lot of textual copy, which changes
regularly, you may need to invest in a CMS, which will allow you or
your staff to alter web pages, without having to learn HTML. Such
systems range in cost and complexity: simple webpage editors can be
a few hundred Euro; large complex publication engines can cost
hundreds of thousands of euro.
Book-keeping
A backend accountancy system, such as Sage or Pegasus, may be
needed in order to keep your books. Ideally, you would like your
sales system to automatically interface with this package, but such
functionality will depend on your budget and choice of
software.
5. Hosting
Your website will need to be hosted and, if you are taking in
credit card details, will need a Secure Sockets Layer Certificate.
An SSL Certificate is a file which is stored on the server and
which ensures that the website belongs to who it is claiming to
belong to (the padlock icon appears in the browser when SSL is on).
It also provides security by encrypting any information that the
user submits.
Budget â'¬300-â'¬500 euro for year one, â'¬200 for ensuing years
for this (depending on how many emails you need, how much
disk-space, if it is Windows or Unix, if there is a database, etc.
- your developers will tell you more when the system is sized).
If you do not want a the expense of a secure server, your
Payment Processors may offer an alternative. Instead of taking in
credit card details on your site, you can redirect the customer to
a secure page on the Payment Processor's site. One disadvantage of
this is that the URL in the address bar will change to the URL of
the Payment Processor. Another is that you may not have full
control over the data that is collected or the look and feel of
this secure page.
The physical location of your hosting company could be
important: if your primary market is Ireland, you should host your
site in Ireland as search engines can prioritise local websites
when executing a search. If you are registering a new domain name
use a .ie domain if you are targeting Ireland.
6. Internet Marketing
Finally, your website is up and running and your stock is ready
to be sold. Now you need to attract the customers.
Internet Marketing is a complex job and there many Irish
companies who specialise in this area such as Inspiration
Marketing. Unless you get visitors to your site, you won't do
any business, so it is a good idea to set aside a budget of at
least â'¬1,000-â'¬3,000 at the beginning of your project.
The four major methods for attracting visitors to your site are
now explained.
SEO
Appearing high in search engine rankings can make a monumental
difference to your site's revenue potential.
Search Engine Optimisation (SEO) is the process of gearing your
website content and structure so that it appeals to the ranking
algorithms of common search engines. Generally, target keywords are
repeated in prominent parts of the HTML page copy, the theory being
that a search engine will return your page when those keywords are
used in a search.
SEO also includes a strategy for getting links to your site.
Incoming links - particularly from popular sites and sites which
are related to yours - will greatly increase your site's "page
rank", particularly if the text on the incoming link includes your
target keywords.
Note that the ranking algorithms used by search engines are not
in the public domain and may change at any time, so any SEO
strategy employed at one moment in time cannot be guaranteed to
succeed or to last.
When people in Ireland mention search engines, Google most often
springs to mind. Ireland is indeed Google-centric and countries
like the US and UK have large Google usage however this does not
mean Google is the only option and if you are drawing customers
from around the world you will be able to attract people from a
multitude of engines and directories more easily than spending
endless hours trying to crack Google.
We recommend that good HTML, good copywriting and good content
are the best principles to adhere to when optimising your site for
search engines. The technologies applied by the major search
engines are improving constantly and it is now more difficult and
more dangerous to attempt to fool (or "spam") them: what is a nifty
trick today may get your site "blacklisted" as spam tomorrow. Good
copy, good content, good referrers and good code all add up to a
good site, which will, by its own popularity, end out high in the
rankings. So ancillary informational content should be sourced,
which will complement your shopping portal, bulk up your site,
drive inward links and bring in new visitors.
Pay-Per-Click (PPC)
PPC or "Pay Per Click" refers to the text-based advertising you
commonly see on the sides of search result pages and blogs. If your
advertisement appears, and the surfer clicks it, you will be
charged for the click.
Where you appear on this advertising strip, and how often you
appear is down to how much you are willing to pay for the
"keywords" which trigger your advertisement. Be warned that you
must monitor and restrict your spending carefully when you set up a
PPC campaign, as costs can spiral rapidly.
Banner advertising
The most popular form of advertising on the Internet's World
Wide Web is currently banner advertising. This is the clickable
graphic that you see along the top and sides of most popular web
sites. Rates vary depending on the target websites and are usually
quoted in CPMs (cost per thousand).
Many banner advertising companies (such as SalesOnline.ie,
Doubleclick) offer a portfolio of websites over which your ads will
run. Your banner advertising partner should provide
"click-tracking" so you can monitor your campaign and ensure you
are getting what you paid for. Banner advertising can be expensive
and there are concerns by marketers regarding the over-exposure and
effectiveness of this type of advertising.
Email marketing
Your existing customers are already "warm leads" - they are
obviously interested in your products so you should keep them
abreast of additions to your catalogue, any special offers you may
be running, and general news about your business.
To do this, ask your site visitors to opt-in to receive
newsletters from you, then periodically (but not too frequently)
send an email to those who have subscribed. Keep the newsletter
concise and always include call-to-action links ("click here for
more").
Make absolutely sure that all your recipients have explicitly
consented to receive emails from you and always include an
"unsubscribe" option, or you could potentially be prosecuted for
sending unsolicited commercial emails under EU and Irish law.
Special software is available which will allow you to monitor
the success of your email marketing campaigns - how many people
opened the mails, how many clicked each link. Your Internet
Marketing partner will be able to provide more details.
Conversion
After spending all that effort getting someone to your site, you
really want to convert this potential customer. Thought must be put
into the site design, its message, its style and its ease-of-use in
order to ensure that baskets are not abandoned and customers are
not driven away by a confusing site. Every page, even
informational, should at least try to elicit an email address off a
visitor, so at least the lead does not simply die.
7. Data Protection
Commission
As you will be keeping personal information in your order
database it is highly likely that you will have to register with
the Data Protection Commissioner as a data controller.
According to the Data Protection Commissioner, you must register
as a data controller if you can answer "yes" to the following
question: "Do you keep or process any information about living
people?"
If you are unsure if you should register, please review the Data
Protection Commissioner website at www.dataprotection.ie.
8. Trading
Once your shop is up and running, there is still plenty to
do!
Fraud
Your payment processor has sophisticated fraud-detection systems
which engage every time someone makes a purchase on your site. But
fraud is unfortunately a fact of life on the Internet and at some
stage it will reach you.
Always apply common-sense to orders you receive: if something
looks wrong it probably is. If you receive an order for five
hundred sweaters from a third-world nation, you shouldn't dispatch
the order, you should rebate the transaction and notify your
bank.
Fraud prevention techniques
Your payment processor applies a multitude of sophisticated
fraud detection techniques, searching for patterns of usage which
indicate suspicious card activity. There are also some security
measures built into the card itself. The CVV/CVN code (the 3 or 4
digit code on the back or front of the card) provides an extra
check and you should ask your Payment Provider to enable this.
3DSecure (3D) is a new initiative by all the major credit/debit
card players and it is good news for merchants. At the moment if a
merchant dispatches goods for a fraudulent order, the real owner of
the credit card can query the transaction, forcing a chargeback,
and the merchant is out of pocket for the dispatched goods. Once 3D
is implemented, it will put the responsibility for fraudulent
transactions with the originating cardholder and the issuing bank.
The liability has now moved from you and your bank to the purchaser
and their bank. During a 3D transaction, the customer will have to
enter a personal ID code (a PIN or a passphrase) which is known
only to the customer and their credit card company. It is the
responsibility of the issuing bank and the consumer to ensure that
the personal ID code is kept private.
Chargebacks
Chargebacks occur when your customer queries a payment with
their credit card company. It can be very frustrating as a vendor
when you have fulfilled an order and then the payment is taken back
from your account.
When a chargeback occurs, you will be notified by post, so be
very diligent about opening all correspondence from your bank. To
reverse a chargeback, you will have to go through a tedious process
of contacting the buyer, getting them to contact the credit card
company, possibly getting a signed letter from the customer,
compiling the original invoice/receipt and then persuading the bank
that the transaction was legitimate.
To keep chargebacks to a minimum, you should ensure that the
reference on the credit card statement is the same as the brand
name used for the purchase - even if you are using a Trading-As
name. For example, your company may be ACME Ltd, but your website
may be IrishGoods.ie. Make sure IrishGoods.ie appears on the
customers' credit card statements. Set up IrishGoods.ie as a
Trading-As name through the CRO and ensure that you specify this
name when you are applying for your Internet Merchant Account. If
you are using a Third Party Provider you should ensure that it will
not be the Provider's name that appears on the customers'
statements
Internet Marketing Redux
Sales on the Internet is much like sales on the High Street - it
is one campaign after another. When you are over the busy time at
Christmas, you will be planning for Valentine's Day, then Easter or
Mothers Day. You will be monitoring your PPC statistics, trying to
reduce abandoned baskets while increasing visitors through further
SEO and newsletter campaigns. You will expand and experiment with
your catalogue, set up an affiliate scheme, a loyalty scheme, a
referral system and perhaps even try viral marketing. You will be
surprised how quickly you learn new tricks and techniques and one
year into your new online business, you'll be an expert on trading
on the Internet.
Martin Wallace is a Director of Dovetail Technologies, a
Dublin-based business solutions and software company. Dovetail
Technologies has built custom eCommerce systems for many Irish
businesses including RPA/LUAS, GiftVouchersNow.Com, Highlife
Adventures and dozens of Irish hotels and restaurants. Other
clients of Dovetail include EI, MPO Ireland and ERC.