by Dr. Ralph F. Wilson, E-Commerce Consultant
Web Commerce Today, Issue 44, March 15, 2001
706 Philadelphia Pike, Suite 5-B
Wilmington, Delaware 19809
For small online
retailers who either can't easily obtain a merchant credit card
account or only have occasional sales, CCNow has a lot to offer.
Merchants outside the US can now sell in US dollars with no investment
at all. Though the shopping cart and shipping features lack some
sophistication, CCNow fills a very important niche for small e-tailers
in the US and abroad.
the Online Retailer
Merchant Credit Card Account can be a major hurdle for US small
businesses and even more difficult for companies outside the US.
An account typically costs several hundred dollars in application
fees, and you are assessed monthly minimums whether or not any products
are sold. To obtain a Merchant Account, businesses outside the US
typically must set up a corporate presence in the US and pay US
They handle the credit card transaction, and pay merchants the money
they collect minus their 9% fee (8% in November and December). They
walk a thin line to do so. Credit card association rules specifically
prohibit credit card factoring, that is, taking a credit card payment
on behalf of another company. The way CCNow stays legal is to function
as the online retailer of their "clients" products. If
you sign up with CCNow, you agree to the legal terms that when a
customer places an order, CCNow buys the ordered product(s) from
you for immediate resale to the customer. CCNow is the actual retailer,
and the credit card purchase is in their name. You act as a wholesaler
who is paid to ship the product on CCNow's behalf. Confusing? Well,
maybe a little.
But CCNow is
serious about staying on the right side of the law. They prohibit
you from taking phone and fax orders and then filling out the online
form on behalf of these customers. That is illegal, they tell you,
and they'll suspend your privileges if you do this.
CCNow does provide
a toll free number where customers can call if there is trouble
with the order. They interface with customers regarding billing
inquiries and other questions. They handle all major credit cards
and welcome buyers and sellers from anywhere in the world. Since
CCNow is the actual retailer, and they are located in the State
of Delaware that has no sales tax, customers won't owe sales tax
on any US order.
In order to
provide this kind of service, CCNow is selective about the kinds
of products you may sell. Only tangible products are allowed, products
that you would physically ship to the customer's address. They don't
allow you to sell downloadable software, services, subscriptions,
memberships, information, etc. They've found that tangible merchandise
incurs a much lower rate of inquiries, disputes, and fraud than
service-based sales and electronically delivered products.
themselves from unscrupulous merchants who don't ship products by
a delay in payments. For example, if a purchase was made March 16
through 31, payment would be delayed half a month until April 16.
If you're a new merchant and have sales over $1000 in that period,
a reserve portion would paid on June 1.
e-commerce systems, CCNow merchants need to have their own website.
The product information is shown on the merchant's website, but
the "purchase now" links take your customer to the CCNow
order system where the purchase is completed. Your website doesn't
need to provide SSL security, since the security is provided on
CCNow's secure order form.
I see this approach
as an advantage for the merchant. Since you control your own domain
name, you can use CCNow for the earliest stages of your online business.
But when your volume increases you can move to a more cost-effective
system with your own merchant credit card account and payment gateway
without losing your customers. Fortunately, website hosting is widely
available in the US for $12 to $20 per month.
You use a standard
webpage design program such as FrontPage 2000 construct your website,
provide product information, and place product photos on your pages.
You add the shopping cart feature to your website by copying HTML
code supplied by CCNow for each product, and pasting it into your
webpages. This requires that you have some HTML knowledge, though
not a lot.
Cart and Products
For many small
merchants, the shopping cart system included with CCNow will be
sufficient for some time. It functions just like shopping carts
on much more expensive systems. When your customer clicks on the
"add to cart" or "purchase now" link, the coding
contained in the link transfers this information to the shopping
cart on CCNow's site, which displays what she has just clicked on.
products using a simple web interface in their own password-protected
area on the CCNow site. Each product contains five pieces of information:
- Product number
- Product name
- Price (US
- Weight (optional)
for shipment or backordered
each product can contain one or more attributes such as size or
color. For T-shirts, for example, your customer could select Extra
Large size, Red color. None of these attributes alter to the unit
price (as in some more sophisticated systems). If you have a monogrammed
product, you can give instructions for what information your customer
needs to fill in. When the customer places an item in her shopping
cart, she is asked to indicate the size (or whatever) at that time.
If you have
many products in your online store you can save time by maintaining
those in a database off line. It is possible to upload a tab-delimited
text file containing product number, name, price, and weight for
each item, though items with product attributes must be updated
separately from the web interface. Unlike store systems that generate
their own product pages, uploading a new file of prices and products
for the shopping cart is only half the task. You'll still need to
manually change prices on your own website's product pages.
cart and ordering system pages can be configured in several ways
to meet your own specifications. Your can indicate a URL for your
company logo that will appear on each of the ordering pages. In
addition you have the option of adding a "company name"
field for customers. You can allow or disallow US residents to give
separate billing and shipping addresses. After the order is completed,
you can indicate a URL on your website to which the customer is
redirected. The style of the "add to cart" buttons or
links can also be customized.
When a customer
completes an order, CCNow e-mails the customer a confirmation, and
sends you a copy so you can fulfill the order. Since you don't handle
the credit card transaction and never see the credit card number,
the order with the customer's address can be safely e-mailed to
you without compromising sensitive information. You can also look
up orders on your password-protected interface on the CCNow site.
As the merchant, you can also generate two reports: (1) Gross Sales
by Month and Card Type and (2) Net Sales by Month. A special feature
of the CCNow ordering system allows them to act as the payment system
for any orders you may have secured through an auction on eBay or
elsewhere. If you have an affiliate program through Commission Junction
and some other systems, the CCNow ordering system can also take
the HTML code to track sales through your affiliate's links.
shipping system of CCNow's ordering system is a weak link. At this
writing, they provide only a "basic shipping option."
This consists of a single amount to be added to the order for shipping
(no matter how large the order) -- one amount for US customers,
another amount for Canadians, and another for other international
customers. As a work-around, CCNow tells you to build the shipping
costs into your price, but doing that would decrease sales to domestic
buyers for competitive items.
CCNow has developed an "extended shipping" option. They
promise that it "includes the ability to compute shipping charges
by weight, by region or country, and by delivery method. Also supports
other options such as percent of total, free shipping for large
orders, and minimum/maximum shipping charges." As for now,
it's not available.
For small merchants,
CCNow allows you to get started with a very low initial investment.
All you need to provide is your own website. For foreign merchants
who want to sell in the US market, CCNow is especially welcome.
However, I see two drawbacks to CCNow. First, the 9% service fee
(8% during November and December) is substantially higher than the
average 2.5% discount rate you would pay with a US Merchant Credit
Card Account, so if you have a lot of sales, you're better off obtaining
your own merchant account. 9% is a pretty stiff off-the-top fee.
It will require you to price products with a fairly high mark-up
to allow you to make a profit. Second, the "basic shipping
option" is pretty weak. Until the "extended shipping option"
is available, this limits your ability to receive accurate shipping
costs depending upon customer location. This, in turn, affects your
ability to compete effectively with lower online prices. Fortunately,
there is no set-up or monthly maintenance cost with CCNow, so there's
nothing to lose in getting started. For many small merchants, CCNow
is a great place to start.
Contact us for a free quote:
Simply fill out out Inquiry Form or email us at firstname.lastname@example.org
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