As e-commerce expands, there is one basic tenet that you should understand: not all products can be sold online. Many dot-coms had the mistaken notion that they can sell anything and everything on the Internet, only to realize that it just not true. Some products lend well to this medium, but there are many products that are hard, if not impossible, to sell on the Internet.

Reasons vary: shipping costs may be too high for the product (e.g. sofa and other furniture items); need for customer's personal evaluation of the product (e.g. shoes that need to be tried on); high product liability issues (e.g. breakage for wine and spoilage for cheese); and need for personal salesmanship.

Both studies and experience have shown that there is a strong demand on the Internet for products that have high value and not easily found in the Main Street. Products that lend well to shipping without incurring too high a cost have also found a strong market on the Web. Information-based products and services, such as books, and software, are natural choices for the Web.

Before opening your online store, make sure that your product are suitable for the Internet. First, investigate where in the traditional world are your products being sold (e.g. neighborhood supermarkets or upscale boutiques) and compare their prices with yours if you add shipping and handling costs. If your price still comes out lower, then you have a strong advantage. However, if the price of your product comes out higher than the price of the same product in the supermarket, you need to ask yourself: "Why would a customer order from me with all the risks of a shipped product (e.g. breakage, wrong size, etc) than drive for five minutes to the local mall?" Will the convenience that online ordering provides suffice to attract buyers?

An objective assessment of your chances of success online can save you a lot of time and expense in the long run.

Once you have your e-commerce site up and running, with good traffic levels and high sales conversion rates, your next concern will be preparing for your growth. Success on the Internet can come quickly - if you are lucky and do things right - that you may find yourself ill prepared to handle the growth.

Successful online businesses grow at phenomenal rates. When success arrives, you'll face far greater expansion costs if you neglect to do some planning now. Consider in advance how you'll add additional capacity to your site to avoid traffic and bandwidth problems.

High traffic levels mean traffic jams. You may need to upgrade your web hosting plans to secure additional bandwidth and ensure that your web pages load quickly no matter how many users are accessing your site. You can also consider buying your own server and getting a high-speed Internet connection.

Right from the start, you must plan for growth. Some smart e-tailers install high-capacity hardware and e-commerce software as early as the start-up phase. This approach may be expensive for a shoestring entrepreneur, but it can save money by delaying or eliminating expansion costs later on. You also need to think about the peaks of your business (e.g. Christmas season), and plan for them accordingly.

You may have heard of horror stories about dot-coms' failure to deliver products on time -- Christmas presents arrived after New Year; birthday presents reaching the customer after the party ended, among others. Your site may not be as big a story as Toys R' Us 1999 holiday debacle to warrant media coverage, but the inability to fulfill delivery is the fastest way to destroy your online business. Products delivered late can destroy customer loyalty and thwart any remaining willingness to repurchase from your site.

To avoid disappointing customers (who are already wary whether their orders will arrive or not), clearly state on your site when and how they can expect their orders - and stick to that. If preparing for the order and delivery takes up to two weeks, state clearly in your web site early on in the ordering process that the product will arrive in two weeks time. You need to explain in detail at your site when an item can actually be expected to arrive.

If you expect the product to arrive late, be sure to inform the customer either through email or phone and the reasons why. You may also give them options to either cancel or change the order, should they be unwilling to cope with the delay.

If you expect demand to increase significantly either for the holiday season or as a result of business growth, consider outsourcing your fulfillment.

Your level of capitalization will dictate the focus of your online business. If you are able to get investors to finance your business, you can target a broader product category for your business. You can aim to be like Wal-Mart of the retail world, or the Amazon.com of the Internet.

Alas, if you are operating on a shoestring budget, it is harder for you to compete with the Amazons of this world. It is best to focus on more specific product categories and try to become the best e-tailer for that sharply defined niche.

Niche marketing involves carefully targeting pinpointed market segments to deliver your product or service. It is a strategy that works well for small businesses, but is also used even by the country's largest manufacturers.

The key is to be able to select a niche that offers potential for growth. The market must be focused, yet large enough to generate your planned sales volume. If the market is very small, it may be costly and difficult for you to find where the potential customers are and how to entice them to visit your site.

Be sure to check out your competitors, and study their products. Evaluate how your customer could possibly be enticed to switch to your competitors - is the competitor using a more robust shopping cart, or is their web design much more appealing? Beware of extremely specialized markets that offers no competition - others may have already found that the niche is too small to be profitable or hasn't found a way to entice the market to respond to product or service offerings.

As indicated above, credit card security is still a main impediment to online shopping. You need to seriously consider the growing threat of electronic theft and sabotage when you design and start your online business. Security should be a top priority even before your site goes live.

Look for a back-end system that will making sure that the credit card information of your customers is as secure as possible. This allows your customers to make purchases in confidence.