Choosing an E-Commerce Host
A TopHosts Web marketing report
Most small and mid-size online businesses aren't candidates for hosting their
own sites in-house -- the setup costs for server hardware, bandwidth capacity
and software development are beyond the means of most. And once the server is
set up, ongoing maintenance can be challenging and costly.
Fortunately, there are alternatives. Companies specializing in Web hosting
abound, and enable even the smallest e-business to gain an online presence
quickly and inexpensively. But as an online business, you have a number of
special needs that someone running a personal home page does not. That's why
free Web hosting bundled together with your basic monthly fee from your ISP, or
free home pages through services like Tripod or Yahoo! are generally poor
choices for sites that generate transactions.
Ten key issues should be on your checklist as you select your e-commerce
"You need your site to be easy for people to download," says New York-based
e-commerce consultant Jon Bednarsh. "And you need to capture information that
your site visitors send to you -- like registrations, orders and credit card
data -- as quickly as possible." That means that you need a host with bandwidth
to spare. Your best bet is to find a provider with a minimum of one T-3 (45
mbps) line connection to the Internet's backbone, or to an "upstream" provider.
This is 28 times faster than the T-1s used by many smaller providers.
"Don't be fooled by the sheer size of the connection," says Bednarsh. "You'll
also want to find out what percentage of their bandwidth is being utilized by
existing demands on the system. The average bandwidth utilization should not be
greater than 30 percent of the available total, and peak bandwidth should be no
greater than 60-70 percent." Beyond that level, performance across the network
begins to deteriorate. You might even want to write in a guarantee of bandwidth
utilization limits when you prepare a contract with your host.
2) Proximity to Backbone
Many hosting companies connect to larger Internet connectivity providers,
running a commercial phone line "upstream" to the larger company, who in turn
might be running a connection to yet another "upstream" provider. The further
"downstream" your provider is, the more chances there are for things to go
wrong, as your data is handed off with each upstream connection.
Ask potential hosts: "How many hops are you to the backbone?" A "hop" refers to
each server or router location Internet traffic must travel through before
continuing on to its destination. Ideally, you want a host with few hops -- or
whose machines actually sit on the Internet backbone itself. Don't discount
companies based on size -- even small companies can pay to "co-locate" their
computers at a site that feeds directly to the Internet's backbone.
3) Server Setup
Make sure the host you choose is using top-of-the-line hardware, preferably
multi-processor server machines. Bednarsh points out that they don't have to be
name brand; in fact, many of the best Web hosts build their own equipment.
4) Redundancy and Reliability
"As we all know from experience," Bednarsh says, "nothing ever works right
all of the time. A vital measure of a reliable host is its preparation for the
unexpected." Your host should have multi-homed Internet connections. This means
connectivity provided by more than one backbone provider to ensure maximum
Hard drives should be backed up daily and you should have access to them at any
time. Your host should also have a back-up uninterruptible power supply onsite,
like a generator, that is programmed to kick in immediately in the event of any
power failure or flicker.
5) Disk Space
As a general rule, you won't need as much as you think. Most hosting packages
start at 25 MB of hard disk space -- enough for 500 typical Web pages. But the
important thing to inquire about is the ability to easily increase your disk
6) Site Creation and Commerce Tools
Many commerce hosts incorporate easy-to-use software for building online
catalogs. This will enable you to maintain your storefront without the need of
an outside developer. Some of the most widespread and easy-to-use packages are:
· SoftCart, by Mercantec
· ShopSite, by ICentral
· Commerce Publisher, by iCat
Be sure to find out which software packages your host recommends and supports.
The current standard for the security of online transactions is Secure
Sockets Layer (SSL) encryption. This protocol encrypts the transaction data as
it passes over the Internet. However, a digital certificate is needed to verify
the merchant's identity. You will most likely want to obtain your own
certificate from one of the two largest and most widely supported issuing
authorities -- VeriSign and Thawte. Verisign's pricing schedule is somewhat
higher than that of Thawte, but the VeriSign certificate is supported by a
larger number of older browsers.
8) Payment Processing
To accept credit cards online, you will need to acquire the service of a
payment processor. A payment processing service handles credit card transactions
between a Web business and merchant account in real time. Your payment processor
choice will depend on which shopping cart solution you choose, since most have
at least one payment processing component built-in. Three of the most popular
payment processors are:
· Segue Systems
Also check with your merchant bank, as it may have relationships with one or
more of the above processors. Important: You will need to apply for a merchant
account on your own, as any business accepting credit cards must. These
companies will help you use your merchant account for your site, but they are
not banks, and cannot offer accounts themselves.
9) Back-End Integration
Many site owners will want to feed data from their Web sites directly to
their existing accounting, inventory and consumer database systems. A top-shelf
host will offer some degree of integration assistance. While you might not
consider this an important issue as you start up your site, if you succeed in
building a business online, integration of your systems will become a
significant issue, so inquire about the scalability and service a potential host
Last, but certainly not least, is the cost of getting started and maintaining
your online presence. Many smaller site owners receive excellent service from
their hosts for as little at $100 per month. But the more success you have, the
more support you'll need. Large companies often pay their hosts as much as six
figures per month. How much will you have to pay? Here are a few ballpark costs
to keep in mind:
Expect to pay anywhere from $50-$150 for setting up a plain vanilla commercial
If you don't already have your domain name registered, you will most likely pay
between $100 and $200 for your host to register it for you, as well as $70 for
the first two years' fee to Network Solutions, the official registrar of .com,
.net and .org domains.
Software licenses for e-commerce catalog applications range from $249 to $3,500
at the low end, and can cost many times that if you need customization, or serve
a very large number of customers. (Some providers have negotiated special
agreements with software vendors -- it's worth asking about).