The views and answers to this FAQ are contributed by various CNSG corporate members, consultative partners and consultants. If you have any queries relating to FAQ, you may send your queries to firstname.lastname@example.org
|| The most important point
when starting such a venture is the business idea. You need to determine
what you want to do, who would be your customers, why would they buy
from you and not from a physical store or from a competitor and how
you can bind those customers to your site. Determine the probable
size of the market, how you plan to deliver the goods or the services
and how best to collect the payments.
The easiest and cheapest way to do online sales is to join one
of the shopping malls that are already operational. Different malls
offer different services. But in general, you can enter your products
into a database, you can enter your prices and you can collect money
through a payment system that uses a common merchant account that
is already set up. The money that is due to you will be paid to
you from the operator of the mall. In this case you do not need
to worry about buying hardware, getting it connected to the Internet.
All this are done for you.
The above approach is mainly for startup companies. If you have
an established business, you might want to have a web site that
blends in with the company's image and style and you might want
to offer features that might not be available in a shopping mall
that serves many shops. In this case, the easiest approach is to
look for one of the off-the-shelf merchant products available from
a number of vendors. Each of these products is capable of being
customized and the prices vary from a couple of thousand dollars
up to a couple of hundred thousand dollars. Please be aware that
you may need to spend the same amount on customisation as you did
for the software.
Where would you put up such a system? You probably need to get
your own hardware system. For connectivity to the Internet you could
get yourself a leased line to one of the ISP, which can be expensive
(about S$1.500 per month for 64 KB, twice for 128 KB). An alternative
option is to place your server either with an ISP (co-location)
or with a web hosting service that already has an Internet connection.
The advantage is that you can share the line cost. In the case where
you set up your own web server, you also need to take care of the
payment services yourself. Please see below for more details about
If you are setting up your own server with Internet connection,
you have to be concerned about security as much as you would for
co-location. You need to look seriously into the issue of a firewall.
You will store confidential information about your company and your
customers which needs to be protected.
CommerceNet Singapore has setup a program called ConsumerTrust
where they certify the quality of electronic shop fronts. Security
is one their criteria, however there are many other criteria in
addition, such as how you deal with complaints, how you handle disputes
and how transparent are your policies and procedures etc.
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|| The main techniques for
that are the presence in search engines and the references from other
web sites. In order to be picked up by the search engines you can
connect your website to their websites and fill out the appropriate
forms that they provide for this purpose. Alternatively, there are
available services that is chargeable for a fee. References from other
websites are probably more effective. This means that you will cross-link
to your web site with those of others.
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|| Very probably, you may
not have the skills necessary to setup and run such a shop front yourself.
If your company is big, you may want to consider hiring the appropriate
skills. However, another option is to ask a system integration company
to set up the whole system for you. In this case you can avoid the
long-term obligations of hiring your own staff. The system integrators
will charge you for the service. If you determine that you need a
rework of the site, you can ask for a quotation. If you are happy
with how things are going (or you determine to give up the service),
you have no further cost.
If your company is big and established, you may want to consider
a bigger project where the shop front is directly talking to your
back-end system, e.g. an MRP/ERP system. This way changes in prices
and products offered are immediately available on the web site without
further maintenance. Also, using this back-end integration, the
stock status can be checked before promising delivery dates.
If your project is of massive scale, even if you want to use external
consultants services (which might be very advisable if your IT-department
has no eCommerce experience), you will probably need some in-house
skills so as to monitor and interface with the team from the integration
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|| Well, that ranges from
a couple of thousands dollars (such as sharing a shop front with others)
to multi-million dollars (such as competing directly with big corporations
like Amazon.com). There is plenty of venture capital available in
Europe and the U.S. Such companies are constantly looking out for
promising business ventures. If your business idea is promising, funding
on the order of several millions can be available.
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|| There are several options
- Credit card payment.
Credit cards are the obvious choice in many cases, though they
may not be the only and best option.
This is the PizzaHut method. The person who delivers the goods
also collects the money. Very safe option - goods delivered, money
- Conventional invoice-based billing scheme.
This is feasible in all cases where you already have a business
relationship with the buyers. You send out the goods and you send
out invoices separately. In this case, the web is just a different
way of receiving orders which otherwise would have been accepted
- Inclusion of amount in other bills that you send out.
This is for companies that already have an ongoing regular billing
implemented, e.g. utilities, phone companies, other regular services.
- Subscription schemes with up-front payments.
This is a very good method. You collect money up front and then
you supply goods as you go along. Very suitable for regular services.
This can also be implemented using Giro deductions.
- Cash card.
For users in Singapore and for smaller amounts, using cash cards
is a very safe way to pay, both for the buyer and the seller.
It requires the buyer to have a smart card reader, though.
If you want to accept credit card payments, you need to talk to
your bank first and get a MOTO account (unless you join a shop front
that allows you to participate in an existing merchant account,
see above, question 1). If you have a MOTO account, you still have
two options. The first and simple one is that you can save the credit
card information into a file and process the credit card billings
just as the way you accept orders over the phone ("signature in
file"). This option is feasible in all cases where you need to pack
the goods manually and your traffic is not very high. The second
option is to handle credit card transactions online. That option
is definitely needed if you want to sell information or software
automatically without user intervention.
If you want to process the credit cards online, you need to check
with your bank the kind of services they provide. These services
are still quite limited in Singapore. When you find a bank that
is willing to handle your payment requests, you need to buy, install
and configure the payment gateway software. The bank will probably
tell you what software to use. This software connects to Network
for Electronic Transfers (NETS) for authorisation and also to the
bank for the actual payments. Again, a system integrator might be
helpful to get you started. You can shorten this path somewhat by
using a payment service that handles most of the technical issues
for you. In this case, you get professional help in setting up the
payment process. A few of such services are available in Singapore.
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|| It depends on who is asking.
For the buyer, credit card payments over the Internet are pretty safe
- i.e. if the server is set up using the Secure Socket Layer (SSL)
protocol for those pages. SSL provides authentication of the server
system and encrypts the data stream automatically. SSL used outside
the U.S. only supports a limited encryption of 40 bits. However decrypting
40-bit encryption would still require expert assistance. It is much
easier for anyone who intends to fraud to pick the credit card numbers
from the physical payment slips of restaurants or shops. If the buyer
disputes the purchase, he or she will get the money back. Different
companies have different policies. Some return the money immediately
and investigate later. Others keep the money and investigate first.
But in all cases, the buyer needs to produce evidence that the exchange
of goods or services took place. That leads to the second part of
this answer: how safe is the credit card process for the merchant?
The answer is that it is much less safe. The SSL process does not
provide any authentication of the buyer, so the merchant has not proof
of the identity of the buyer. To overcome this problem, another protocol
- Secure Electronic Transaction (SET) - has been developed by credit
card companies like Visa and MasterCard. However, this protocol requires
the buyer to install a piece of software called an electronic wallet
on his PC. This software needs to be obtained from the credit card
issuers. The flip side is that there are very few potential customers
out there who have obtained these wallets. Thus the use of SET restricts
the size of the potential market. The challenge is faced by the vendor
on how to overcome any potential disputes. If you are selling physical
goods, the best way is to obtain some form of delivery confirmation.
If you are selling software, music, videos or information that people
can download after the payment, you have no sure means to prove that
the download was completed successfully. Your server logs will show
the download. However you cannot prove that it is completed.
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|| That depends on a number
of factors such as the size of your company, how you want to maintain,
control and own the server yourself, how much customisation you think
you will need and if there is a need there to integrate with your
other back-end systems. Customisation with back-end systems and the
need for tight control and access would favor setting the system up
at your own place.
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|| Please refer to question
5 above. In order to defend yourself, you need to produce some evidence
that you delivered the goods or the services. Your legal options depend
on a number of factors, including the country that your customer resides
in and the evidence you have regarding the transactions. These issues
can be avoided if you do cash-on-delivery. And it is easier if you
can perform your transactions on a subscription basis. Event then,
there can still be disputes about services rendered after you got
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"The above is the view of the author and does not in any way represent the view of CNSG. CNSG will not be responsible or liable for any discrepancy whatsoever, nor liable for any claim whatsoever arising from the information presented herein."