Yahoo! Store
http://store.yahoo.com

You might think that because it's owned by Yahoo! that their online store system is a sparse-featured, dumbed-down version of a "real" e-commerce platform. But you'd be wrong. I've watched Yahoo! Store since the days it was developed by Paul Graham as ViaWeb in 1995. It has always been a good e-commerce platform for beginners. Today it is great for beginners and has much to offer medium-sized companies, too.

Well-Priced

When you first compare Yahoo! Store to many low-end e-commerce programs, it seems a bit pricey. There is no set-up charge, but a small store of up to 50 products costs $100 per month. However, this price includes:

• All software costs,
• Secure site hosting ($20 to $40 per month elsewhere for small sites),
• A payment gateway ($30 to $65 per month from other vendors), and
• Exposure on Yahoo! Shopping (difficult to monetize, but probably equivalent to hundreds or thousands of dollars a month in advertising).

Single product stores may not find the pricing attractive (consider Bigstep.com http://www.bigstep.com or CCNow http://www.ccnow.com) but for small businesses with a number of products, Yahoo! Store is well-priced.

Larger stores of up to 1,000 items cost $300 per month, and $100 per month for each additional 1,000 items. But Yahoo! Store is a bargain for larger companies, too, since it includes a fast, scalable, high-transaction-capable Internet platform, and advanced features such as real-time inventory, automatic order handling, very sophisticated shipping calculation, and much more. Companies with in-house servers know that their costs for hardware, connectivity, and system administrators far exceed this kind of monthly fee. Using purchased e-commerce software hosted in a shared environment you can beat the monthly price, but you lack the scalability and rich feature set that Yahoo! Store offers.

Webpage Design

Yahoo! Store can be friendly for both novices and professional designers because it offers a choice of three different levels of webpage editing sophistication -- simple, regular, and advanced. The "simple" mode provides only a few options, and is ideal for those just learning and setting up a store for the first time. Merchants can read a brief tutorial that explains the basics. Then the merchant selects one of 14 different color schemes ("looks"), plus any number of "random" choices that mix and match background colors, headline colors, and navigation buttons colors.

As merchants become more proficient and want to fine-tune the pages, the "regular" editing mode provides an increased number of options for each page. For those who know HTML, you can paste basic code features into some of the online form's text boxes to get boldface, tables, etc. In the edit mode, a toolbar sits the bottom of each page, offering:

"Advanced" editing allows access to a sophisticated menu-driven option system that allows the careful user to set an overall site template, upload comma-delimited product files, etc. The site lists a number of designers in the US who specialize in custom design of rather sophisticated Yahoo! Stores for merchants. http://store.yahoo.com/partdir.html

Store Manager

"Store Manager" is the main Web interface to the store's many functions and is divided into: Edit, Process, Statistics, Order Settings, Site Settings, and Promote, plus quick graphs of traffic and performance over the last 120 days. A merchant could assign several employees to manage the online store, since permissions for each employee can be set for: "all," "only edit content and see statistics," or "only retrieve orders."

Product Structure

Yahoo! Store's product data structure is similar to many online stores. It includes these fields:

The product options feature is fairly flexible. You can specify multiple options, such as size and color, and you can indicate price differences for options (a higher price for "extra large," for example). The option feature also handles monograms and inscriptions easily. Larger stores will want to maintain their stores by uploading a product database from a desktop spreadsheet, allowing them to designate sectional and subsectional pages on which the products will appear.

Order Processing

Order processing may look simple, but it is one of the most sophisticated systems available anywhere. The order form allows a good deal of customization. Wording can be displayed in a choice of English (US, Australia, UK, Canada, Singapore), Chinese (Hong Kong and Taiwan), Korean, Japanese, Portuguese (Brazil), French, German, Italian, and Spanish. One of seventeen different currencies can be selected in which to display prices, though US dollars are the basis of exchange in the US version of Yahoo! Stores.

Credit cards payment options include: American Express, Carte Blanche, Diner's Club, Discover, Eurocard, JCB, MasterCard, Optima, Visa, and en Route. Merchants may also allow payment by Purchase Order, invoice, or COD. Others payment options can be added manually.

A gift wrapping feature enables a gift message from the customer to the recipient, and customization is available for a number of points throughout the order system, such as shipping information on the website, e-mail order confirmation, etc. Order notification can be either by e-mail (using PGP encryption, if desired) or fax, immediately or at specified times. The merchant then goes to the merchant interface to view the orders and begin fulfillment. Alternatively, orders can be transmitted immediately to the merchant's secure server in one of three formats: Yahoo!, XML, or OBI/1.1 (Buying on the Internet) formats. I know of NO similarly priced e-commerce systems that allow direct posting to the client's server, much less with this variety of useful formats.

Yahoo! Store still doesn't provide a full e-mail system for merchants in the form of POP e-mail boxes, but e-mail sent to the merchant's domain can be forwarded to the merchant ISP's POP e-mail box. Merchants that sell through Yahoo! Auctions can automatically configure the ordering system soauction customers can use it.

Real-Time Credit Card Processing

Taking credit cards directly over the Internet has gotten easier, but it usually requires two expensive elements, (1) a merchant credit card account from a bank, and (2) a payment gateway that securely transmits the credit card information from the online store to the credit card processor, which then either authorizes or rejects the transaction.

A payment gateway system, such as VeriSign Payment System, Authorize.net, CyberCash, or CyberSource, can cost $25 to $65 flat fee per month (and sometimes a per transaction fee). Yahoo! Store has a direct connection to the largest credit card processor in the US, First Data Corp., so there is no need for a separate payment gateway. So long as your merchant credit card account can use First Data's Nashville/Envoy platform, you can use your existing merchant account with this system.

One weakness, especially for more active merchants, is the absence of a viable fraud detection system, such as eFalcon, that most payment gateways now offer for an additional fee. While Yahoo! Store merchants can view AVS (Address Verification System) information for purchasers within the US, there is no way to monitor customer IP addresses that give clues to the purchaser's location. Merchants that offer downloads, such as software and information products, are especially vulnerable to fraud.

I am disappointed also with the prices charged by Yahoo! Store's preferred merchant credit card vendor, Paymentech. You have to telephone to find out actual fees; there is no full disclosure on the website. If you don't already have a merchant account and decide to obtain one through Paymentech, you'll pay $175 set-up fee (read "commissions"), an outrageous $45 monthly "service" fee, plus a typical 30 cents per transaction. The discount rate of about 2.5% is good for an online store. The minimum merchant contract is for six months. My advice: shop around.

One vendor I trust is Heartland Payment Systems . They offer an application fee of $95, a very good 2.39% discount rate, 30 cent per transaction fee, $7.50 monthly statement fee, and a monthly minimum of $22.50 (made up from the discount rate, which translates into about $1,000 in sales volume per month in order to pay no minimum fee). http://www.heartlandpaymentsystems.com/

Order Fulfillment and Inventory

E-commerce software is gradually getting better about providing for the missing "middle" component for online merchants -- order fulfillment software. Yahoo! Store's built-in system is good if not great. When orders arrive they are marked "new." Orders you have seen are marked "old" or "changed". Orders identified by the merchant as "bogus" can also be marked so they don't throw off store statistics. You can also view orders by date, or print out the full order, an invoice, or a packing slip. You can also search all orders by main fields. The report function allows you to summarize orders by a number of factors. Small merchants can probably use the built-in functions to keep track of orders.

However, Yahoo! Store allows you to download orders for tracking using your own software. Data formats include MS Excel, MS Access, Generic CSV, M.O.M. (Mail Order Manager), QuickBooks, PC Charge, XML, and Plain Text. While the QuickBooks connection is good for small merchants, QuickBooks isn't really written to be a mail order management system with thousands and tens of thousands of orders (though I use it happily for my own non-mail order business). http://www.quickbooks.com/ Much better -- though priced in the low to mid thousands -- is Dydacomp's Mail Order Manager (M.O.M.). While Dydacomp's e-commerce software SiteLink software was sorely lacking the last time I viewed it, the various components available in Dydacomp's Mail Order Manager system are excellent for a small to medium size mail order or Internet retail business. http://www.dydacomp.com/

You can also sign up for seamless accounting, inventory, shipping and payment methods, order history, and customer contact for your online store by NetLedger.com for $4.95 per month, with a 60 day free trial.

Yahoo! Store allows two forms of inventory tracking. The merchant can periodically upload to the online store the current in-stock inventory from a database or spreadsheet, which is then automatically decremented as products are purchased. However, Yahoo! Store also offers a real-time inventory system that can query the merchant's online server to give real-time inventory data. That kind of high-end feature isn't available anywhere for this price.

Customer Service

Merchants can provide instant chat with customers who have questions by placing a Yahoo! Messenger icon on their webpages, indicating whether the merchant is online or not. If the customer also has Yahoo! Messenger, she can click on the "Messenger" icon to communicate with the merchant in real time.

Customers are able to view the status of their orders online by clicking on a unique URL e-mailed them whenever the order status changes. The merchant can also prepare a list of customers for e-mailing announcements about special sales and events.

Shipping and Tax Configuration

Yahoo! Store provides Federal Express, First Class Mail, and a wide range of shipping options for UPS. In addition, other shipping channels can be created. Shipping rates can be calculated from the shipping tables that drive the UPS Quick Cost Calculator, from a percentage of the sales total, from a flat rate charge for matching address regions, or from a shipping table can be constructed based on number of items, weight, or number of shipments. The shipping table configuration, which you can walk through with a set-up wizard, can be configured to match country codes, state and province codes, and a range of ZIP codes. This is the most sophisticated system I have seen in a shopping cart program. Even the countries from which orders can be placed can be customized. Specified countries can be selected for ordering, or selected countries can be removed from a complete list. If, for example, you want to exclude certain countries with high fraud rates, that could be easily accomplished.

Tax can be calculated as a percentage of the total order (either before or after shipping charges), or as a specified amount for matching address regions.

Marketing

Though many online stores offer various features that promise a marketing edge (such as registering with search engines), Yahoo! Store has features that can make a significant difference in store sales. Placement of a merchant's products in the Yahoo! Shopping search system, for example, provides a tremendous marketing advantage, since Yahoo! is one of the highest traffic sites on the Web. Participation in Yahoo! Shopping costs merchants 2% on monthly sales (driven by Yahoo! Shopping) of over $5,000. Lower monthly sales from Yahoo! Shopping do not incur an extra cost to the merchant.

Merchants can opt to use Yahoo! Wallet, which stores a customer's credit card, shipping, and billing information and makes purchasing fast for customers. Yahoo! Shopping customers can browse at dozens of stores, place their products in a single shopping cart, and pay with a single payment (which is then distributed by Yahoo! between the various merchants). Yahoo! Points incentive program provides a strong customer loyalty plan to merchants who understand its power and will work with it. Yahoo! Gift Registry enables couples to pre-select products at a merchant's store for purchase by their friends and family.

Yahoo! Store allows merchants to offer various kinds of sales and offers. Each product can be given a sale price. Merchants can also offer a coupon that the customer can redeem by placing the coupon number on the order page for the merchant's choice of a fixed amount off, a percentage off, or free shipping for a particular type of carrier.

Retail vs. B2B

While Yahoo! Store includes some functions needed by B2B stores, it is really designed for the retail environment. However, smaller B2B businesses may find Yahoo! Store adequate for their needs. For example, a store can be set up to require a password to enter, allowing for multiple user IDs and passwords. However, online access to customer order history is not available, nor is there any easy way to display a separate pricing structure to different customers.

B2B merchants can offer quantity discounts that reflect pricing to customers who purchase a particular SKU in bulk. Suppose, for example, you want to make an item cost $10 for one, three for $25, or ten for $75. Discounts on the total order cannot be calculated on the basis of price. One approach, however, would be to issue specific customers a special coupon number to be entered on the order form. This would trigger calculation of a certain percentage off the entire order, based on that customer's negotiated price. That way you could offer you highest volume customers 50% off list prices, while other customers might receive 40% or 45% off list.

International Implications

Unfortunately, Yahoo! Stores and the US version of Yahoo! Shopping are limited to US-based merchants who can ship from the US. While sales to other countries is made easy through foreign language and currency options, transactions are still made in US dollars and transacted through a US merchant credit card account. However, Yahoo! is beginning to offer Yahoo! Store in countries outside the US. Currently Yahoo! Canada http://ca.store.yahoo.com/ and Yahoo! Australia and New Zealand stores are available, and others are expected. http://au.store.yahoo.com/

Recommendation

When you weigh the costs of Yahoo! Store vs. its features and benefits, I see Yahoo! Store a clear winner for both small and medium-size merchants. Since they offer a free 10-day test drive, you can check it out without obligation. Yahoo! Store compares well with the very best off-the-shelf store building systems available.

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