Internet Commerce Solutions

Internet Business opportunities are growing today at an amazing rate. Communities On Line.com Inc has several plans to suit your needs to take advantage of opportunities in this exciting area of Internet Commerce.

In the Fall of 2000 we will be opening our North Jersey Lakes Communities Shopping Mall. This will be an on line Microsoft Commerce Server based Shopping mall. Imagine what it would be like to have your store open for business 24 hours a day, 7 days a week!

Typical families in our area have dual income. That creates a generation of shoppers with no time to shop. The solution for this situation is simple. On line shopping from the convenience of their own home. Up till recently the cost of putting up a commerce site for a medium to small size business has been cost prohibitive.

Lets examine a typical cost for setting up a Commerce Web site from start to finish:

Commerce site estimated startup costs
Item Description Cost
Microsoft NT server Optimally 2 required (one for SQL server and one for Microsoft Commerce server (site server) 5 user license. $6000.00 each, totaling 12,000.00. Price includes Microsoft NT operating system software and Microsoft Internet Information Server. And hardware.
Microsoft Site server Microsoft Site server. Includes Microsoft Commerce Server for Commerce site development, Microsoft InterDev production suite and Web site reporting tools. Estimated Cost $4500.00 for software
Microsoft SQL server Microsoft SQL server with 5 user license. Estimated cost $1500.00 for software.
Microsoft SQL Internet connection license. Licensing for SQL server access through an Internet connection. Unlimited user limit. Estimated cost $2500.00 for license.
Microsoft Site server Internet connection License Licensing for Site Server access through an Internet connection. Unlimited user limit. Estimated cost $2500.00 for license.
VeriSign Secure site registration and engineering setup. Secure site registration with encrypted key for packet encryption of site. One time registration fee and engineering setup of approximately $700.00
Credit Card Pipeline transaction clearing software. Provided by Bank or 3rd party vendor for handeling credit card transactions. Estimated one time cost of $800.00 includes software licensing, bank setup charges and engineering costs.
Website Production Actual creation and engineering and testing of Commerce website. Includes Graphics production, HTML editing, and ASP / CGI programming involved in creation of website Estimated cost of Producing Commerce site with merchandising interface ready for product and display setup.

$10,000.00

  Total Costs 30,000.00

There you have soup to nuts turnkey setup of an Internet commerce server. The estimated annual fees associated with maintaining this site are outlined in the table below: For a single commerce site you could trade off performance and scale this down to a single NT server, thereby saving approximately $6000.00. This would bring the total setup costs down to approximately $24,000.00, however under heavy traffic conditions performance will be impacted in a negative manner.

This is obviously no small undertaking and some market research might be prudent to be sure that you have a product line that will sell. Many businesses have the illusion that they merely need to post a web page to the internet and the world will beat a path to their site cash (or credit card) in hand. There is no such thing as a "get rich quick scheme" and all of the hype of the Internet Commerce opportunities cleverly hides the age old fact that there is no replacement for good hard work to make a buck. Getting traffic to your site through search engine submissions and co-advertising bundling is a real necessity and those costs should not be overlooked in your planning stages for a Commerce site. Banner advertising on related websites will also bring traffic but that too comes with a price tag. In short, the undertaking of Internet Commerce requires long term commitment to the media and Advertising consulting is often a prudent startup expense consideration.

Consider what it would cost to place a storefront in a highly trafficked shopping mall as a financial yardstick of comparison. Consider the cost of bricks and mortar, store fixtures, lighting, etc as a comparison. It could easily cost over $100,000.00 to startup a new storefront in a popular shopping mall. Consider also that such a storefront is usually not open 24hours a day, 7 days a week and that it requires sales and management personnel to operate such an establishment.

The following outline the annual costs of maintaining such a Commerce site on the Internet:

Estimated Annual Maintenance costs to maintain a Commerce Website
Item Description Cost
T1 Connection Internet connectivity for Commerce site, connected full time to the Internet Based on a monthly fee of $1400.00 monthly the annual cost of maintaing the site can be estimated, totaling approximately $16,800.00 annually
Secure site registration Annual renewal licensing for secure encryption key for webserver Approximately $300.00 annual fees.
Bank Charges Annual fees for ability to accept credit card transactions via the Internet. These do not include the approximate 2% per transaction fee for transaction processing Estimated at $50.00 monthly this would total approximately $600.00 in annual costs.
Merchandising Updates Sales merchandising setup time estimated in staff hours to add, remove, update products, setup sales and special offerings based on seasonal trends, etc. Merchandising staff hours estimated at 20 hours weekly calculated at a rate of $10.00 per hours totaling $200.00 weekly or 10,400.00 annual cost.
  Estimated Total Annual Costs 28,000.00 annual cost of maintaining commerce server site.

Compare this cost with maintaining an actual storefront in a popular shopping mall as outlined below:

Annual costs of Maintaining a shopping mall based storefront.
Item Description Estimated Cost
Rent Rent for approximately 1500 square space of retail space. Calculated at a cost of 1.00 per square foot the monthly cost would be $1500.00, totaling $18,000.00 annual costs.
Utilities Electricity, Heat and Air conditioning for retail storefront. Calculated at a cost of approximately $250.00 per month this would total approximately $3000.00 annually.
Sales staff Staffing and management for storefront based on a 7 10 hour days a week with a staff of 3 all paid an average wage of approximately $10.00 per hour. Weekly salaries totaling approximately $2100.00 (not including SUI or FICA contributions) would total approximately $109,200.00 annually.
  Total estimated annual costs $130,200.00

Of course during all of these comparisons we are assuming that there is the necessary amount of sales going on otherwise the life expectancy of these business models would be rather short. As you can see by our comparisons the overhead of maintaining a commerce server is significantly less that maintaining a storefront. We should note here that we have not calculated in any advertising costs for either model, we are looking at bottom line operational costs of keeping the storefront open for business. Actual traffic through the store and sales will depend largely on advertising strategies and merchandising skills of sales staff.