PAYMENTS
Cash Not Accepted
Credit cards are still used to pay for more than 98 percent of online retail transactions. But alternatives - particularly person-to-person systems and micropayments - are gaining traction.
One p-to-p option, PayPal, started on eBay but is now accepted at a number of online stores. Its main advantages: simplicity and security. Some buyers still get the willies when asked to type in their credit card numbers at an e-store. PayPal lets them avoid that anxiety. Once they set up a PayPal account, they just click the Pay button on a PayPal-enabled checkout page, enter a password, and they're done. PayPal handles the behind-the-scenes payment processing.
Micropayments - transactions too small for standard credit card systems to handle economically - make up a minute portion of online payments. But more and more merchants are experimenting with them. Amazon.com, for example, recently started letting buyers pay a couple of bucks to download individual songs. Micropayment systems come in two main forms: Some vendors, such as Flooz.com, issue what amounts to private currency; you buy a batch of tokens or scrip with your credit card, then use it to pay for items. Other e-retailers use brokers such as eCharge and iPin that attach micropayments to phone, utility or ISP bills.
RETURNS
If The Shoe Doesn't Fit
Smart vendors know that what they do after a sale is as important as anything they do before. Today's CRM tools have the potential (at least) to make customer service and after-sale marketing more effective than ever.
But the fanciest customer-retention marketing campaign and friendliest follow-up service in the world won't do much good if an e-shop can't handle returns. According to the Gartner Group, "reverse logistics" - the process of accepting customer returns - will cost e-vendors $3.2 billion this year. For some merchants, processing returns can eat up 100 percent of their profits from goods sold.
But there are ways to reclaim some of those lost profits. For example, Gartner says e-retailers can cut costs from returns by up to 73 percent simply by adding an "I Want to Make a Return" button to their storefronts. Customers selecting this option could then select the order they want to return. The site would authorize it and help arrange shipping, the customer would be happy, and the merchant would save the cost of the endless rounds of customer calls most returns entail.
Sites are increasingly outsourcing the returns process. Established shippers like FedEx, Genco and UPS, as well as startups like e-RMA, Managize.com and ReturnBuy.com, offer reverse logistics services. This is one area where brick-and-click merchants have the advantage: Online buyers can return goods at their offline stores.
