What exactly is e-commerce?

The term is a short cut for electronic commerce. E-commerce is a term given to a business activity conducted electronically and commonly undertaken with the use of electronically driven devices like computers. Most of these activities are done via the Internet. The general term for this activity is also called e-business.

You may want to read one the Department of Commerce's "The Emerging Digital Economy" at http://www.ecommerce.gov/ede/ 

Does a person starting an e-commerce business have to know a lot about computers?

In order to be involved in e-commerce, you definitely should have a Web Site where you can conduct your e-business. You need not know a lot about computers, but it is preferable that you should have a basic understanding of computers and Internet. Knowing about how a web site works and the various requirements of e-commerce can save you a lot of time and money.

If you are not familiar with computers and the Internet (and you can afford it), you can hire Web site designers and programmers to develop and maintain the site for you. This can be costly; as you would need to seek outside help every time you update your web site and add/change the content. Some web designers also charge clients on an hourly basis for routine maintenance procedures that someone with some knowledge of computers can do in a few seconds. It is important that the person begin to understand and learn how to operate a web site before venturing full blast in e-commerce.

Can a small e-commerce business be started by just one person?

Of course. That is the big advantage of the Internet. No one knows that a business is conducted by one person or a thousand. Nobody even cares. If you have the product and you know how to promote the product in the Internet, no one will ever know that you are operating SOLO in an obscure unknown island and making money while you sleep. Definitely, it requires a tremendous amount of hard work on how to get the business known but it can be done.

Our Making it Big on the Internet series at http://www.powerhomebiz.com/SBP/intro1.htm  is full of success stories on the Web of one-person home-based Internet businesses.

Is it very expensive to start a small e-commerce business?

Starting an e-commerce business can be expensive, depending on the bells and whistles that you put in your site.

You need to have the basic computer equipment. You also need various software, including web authoring and file transfer program (FTP) that would allow you to upload files from your computer to the Web easily. If you are doing your web page, you need to have web authoring software such as Dreamweaver or Microsoft Frontpage (if you know how to hard code a web site, then all you need is Notepad).

The more costly e-commerce components include shopping cart, payment transaction software, merchant account, and secure server connection. You may want to read the article "Critical Components for E-commerce on the Web" at http://www.powerhomebiz.com/vol13/components.htm 

If you are getting a domain name, domain name registrations cost anywhere from $10/year to $60/two years.

You need to pay for web hosting fees. The amount will depend on the features offered by the hosting companies, from the size of the bandwidth, number of emails using your domain name, number of FTPs you can do in a month, web site statistics, and other factors.

However, while not recommended for an e-commerce site, you can get a free web site from free hosting companies like Geocities and Tripod. Many people started their web sites as personal sites, but later on developed them for e-commerce. The drawback, however, is that people usually do not take an e-commerce business seriously if the business uses a free hosting service. There is that air of doubt that if you cannot afford to pay for a hosting service, how can I trust you.

Some entrepreneurs use services such as Yahoo Shopping to host their site, provide e-commerce infrastructure and tools to create, manage and promote their web sites. These services allow merchants to easily create online storefronts, even without any HTML programming knowledge. Merchants have to pay a monthly hosting and variety of other fees (e.g. transaction fees, insertion fee, even revenue sharing fees).

About the PowerHomeBiz.com Guide: 

Isabel M Isidro is currently the Managing Editor of Power Homebiz Guides. 

The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.