E-Commerce 101: Choosing an E-Commerce Host
A TopHosts Web
marketing report
Most small and mid-size online businesses aren't candidates for
hosting their own sites in-house -- the setup costs for server
hardware, bandwidth capacity and software development are beyond
the means of most. And once the server is set up, ongoing
maintenance can be challenging and costly.
Fortunately, there are alternatives. Companies specializing in Web
hosting abound, and enable even the smallest e-business to gain an
online presence quickly and inexpensively. But as an online
business, you have a number of special needs that someone running
a personal home page does not. That's why free Web hosting bundled
together with your basic monthly fee from your ISP, or free home
pages through services like Tripod or Yahoo! are generally poor
choices for sites that generate transactions.
Ten key issues
should be on your checklist as you select your e-commerce host:
1) Bandwidth
"You need your site to be easy for people to download," says New
York-based e-commerce consultant Jon Bednarsh. "And you need to
capture information that your site visitors send to you -- like
registrations, orders and credit card data -- as quickly as
possible." That means that you need a host with bandwidth to
spare. Your best bet is to find a provider with a minimum of one
T-3 (45 mbps) line connection to the Internet's backbone, or to an
"upstream" provider. This is 28 times faster than the T-1s used by
many smaller providers.
"Don't be fooled by
the sheer size of the connection," says Bednarsh. "You'll also
want to find out what percentage of their bandwidth is being
utilized by existing demands on the system. The average bandwidth
utilization should not be greater than 30 percent of the available
total, and peak bandwidth should be no greater than 60-70
percent." Beyond that level, performance across the network begins
to deteriorate. You might even want to write in a guarantee of
bandwidth utilization limits when you prepare a contract with your
host.
2) Proximity to
Backbone
Many hosting companies connect to larger Internet connectivity
providers, running a commercial phone line "upstream" to the
larger company, who in turn might be running a connection to yet
another "upstream" provider. The further "downstream" your
provider is, the more chances there are for things to go wrong, as
your data is handed off with each upstream connection.
Ask potential hosts:
"How many hops are you to the backbone?" A "hop" refers to each
server or router location Internet traffic must travel through
before continuing on to its destination. Ideally, you want a host
with few hops -- or whose machines actually sit on the Internet
backbone itself. Don't discount companies based on size -- even
small companies can pay to "co-locate" their computers at a site
that feeds directly to the Internet's backbone.
3) Server Setup
Make sure the host you choose is using top-of-the-line hardware,
preferably multi-processor server machines. Bednarsh points out
that they don't have to be name brand; in fact, many of the best
Web hosts build their own equipment.
4) Redundancy and
Reliability
"As we all know from experience," Bednarsh says, "nothing ever
works right all of the time. A vital measure of a reliable host is
its preparation for the unexpected." Your host should have
multi-homed Internet connections. This means connectivity provided
by more than one backbone provider to ensure maximum reliability.
Hard drives should
be backed up daily and you should have access to them at any time.
Your host should also have a back-up uninterruptible power supply
onsite, like a generator, that is programmed to kick in
immediately in the event of any power failure or flicker.
5) Disk Space
As a general rule, you won't need as much as you think. Most
hosting packages start at 25 MB of hard disk space -- enough for
500 typical Web pages. But the important thing to inquire about is
the ability to easily increase your disk allocation.
6) Site Creation
and Commerce Tools
Many commerce hosts incorporate easy-to-use software for building
online catalogs. This will enable you to maintain your storefront
without the need of an outside developer. Some of the most
widespread and easy-to-use packages are:
· SoftCart, by
Mercantec
· ShopSite, by
ICentral
· Commerce
Publisher, by iCat
Be sure to find out
which software packages your host recommends and supports.
7) Security
The current standard for the security of online transactions is
Secure Sockets Layer (SSL) encryption. This protocol encrypts the
transaction data as it passes over the Internet. However, a
digital certificate is needed to verify the merchant's identity.
You will most likely want to obtain your own certificate from one
of the two largest and most widely supported issuing authorities
-- VeriSign and Thawte. Verisign's pricing schedule is somewhat
higher than that of Thawte, but the VeriSign certificate is
supported by a larger number of older browsers.
8) Payment
Processing
To accept credit cards online, you will need to acquire the
service of a payment processor. A payment processing service
handles credit card transactions between a Web business and
merchant account in real time. Your payment processor choice will
depend on which shopping cart solution you choose, since most have
at least one payment processing component built-in. Three of the
most popular payment processors are:
· Authorize.net
· Segue Systems
· ICVerify
Also check with your
merchant bank, as it may have relationships with one or more of
the above processors. Important: You will need to apply for a
merchant account on your own, as any business accepting credit
cards must. These companies will help you use your merchant
account for your site, but they are not banks, and cannot offer
accounts themselves.
9) Back-End
Integration
Many site owners will want to feed data from their Web sites
directly to their existing accounting, inventory and consumer
database systems. A top-shelf host will offer some degree of
integration assistance. While you might not consider this an
important issue as you start up your site, if you succeed in
building a business online, integration of your systems will
become a significant issue, so inquire about the scalability and
service a potential host offers.
10) Cost
Last, but certainly not least, is the cost of getting started and
maintaining your online presence. Many smaller site owners receive
excellent service from their hosts for as little at $100 per
month. But the more success you have, the more support you'll
need. Large companies often pay their hosts as much as six figures
per month. How much will you have to pay? Here are a few ballpark
costs to keep in mind:
Expect to pay
anywhere from $50-$150 for setting up a plain vanilla commercial
hosting account.
If you don't already
have your domain name registered, you will most likely pay between
$100 and $200 for your host to register it for you, as well as $70
for the first two years' fee to Network Solutions, the official
registrar of .com, .net and .org domains.
Software licenses
for e-commerce catalog applications range from $249 to $3,500 at
the low end, and can cost many times that if you need
customization, or serve a very large number of customers. (Some
providers have negotiated special agreements with software vendors
-- it's worth asking about).
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