Understanding E-Commerce

by Frank Robinson Union Bank, N.A. Vice President, Community Affairs Manager

July 20, 2011

Electronic commerce or “E-commerce” is a term for any type of business or commercial transaction that involves the transfer of information across the Internet. In its simplest form, e-commerce is the buying and selling of products and services over the Internet. The growth of the Internet has made business opportunities available to nearly everyone, as e-commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. While opening a “brick and mortar” business generally requires signing a lease or obtaining financing to purchase a location, many entrepreneurs opt to start an online business that can be run from home.

If you are thinking of starting an online business, here is some basic information to help get you started: Develop Your Business Idea Whether you are starting a traditional store-front business or an online business, it is important to determine if your business idea is commercially viable before investing your time and resources. Develop a business plan and research your competition by visiting the Web sites of similar businesses. File the Proper Paperwork As with any venture, in order to conduct business you will need to establish a business entity and obtain a sales tax ID.

Establish the legal structure of your business and obtain the proper permits and licenses to prevent tax penalties and other glitches down the road. Establish Your Web Presence In order to conduct business online, you will need to establish a Web site. Your Web site is the first and often the only impression your visitors will have of your business, so be sure to develop a professional site that is user friendly. Ask friends and business associates to recommend Web site designers who can develop a custom site for you, or investigate turn-key templates that walk you through the process of creating one yourself.

Choose a Domain Name A domain name is the address your customers will use to identify and locate your Web site on the Internet. Domain name addresses end in suffixes such as “.com” or “.net” and no two organizations can have the same domain name. If possible, choose a domain name that is easy to spell and remember and includes words associated with your business. Select a Web Host Investigate your options for a company to host your Web site on their servers. Discuss their reputation and track record and the services that will be included in your monthly fees, such as technical support and domain- specific email accounts. Obtain a Merchant Account A merchant account is required in order to process credit and debit transactions. PayPal or Google Checkout may be an option for smaller e-commerce sites, or your bank may offer merchant account services that offer a host of services in addition to debit and credit card processing.

Market Your E-Commerce Site Once you are ready to start doing business, investigate ways to drive traffic to your Web site. Write informational articles related to your products or services to post on your Web site that potential customers may find when searching for information on those topics. Join social networks where potential customers can link to your Web site. Find forums where your target customers spend time and participate providing useful information and a link to your store. Or, if your budget allows, purchase banner advertisements on other popular Web sites to drive traffic back to your site, or buy keyword advertising on popular search engines to reach customers as they are searching for information on those products. Visit www.unionbank.com for more information.