Many exaggerated claims have been made about the extent to which e-commerce is going to revolutionise our shopping lives. At Room101, we think it's important to cut a swathe through the hype, and to appreciate the value of being able to take an order online, whilst keeping the subject of online acceptance of credit cards in its proper perspective.

The beauty of e-commerce is that it allows your customer, having visited your website and learned about your product, to complete their transaction with you without putting any impediment in their way, such as the need to get through to a busy sales department, or to start from scratch with a sales assistant who may need to ask lots of details that the website already knows about the client.

In an increasingly hard-nosed internet world, websites have moved well beyond the gimmicky boardroom fashion accessory, and a modern website must continually justify its existence, and demonstrate a tangible return on the funds allocated to it from the company's promotional budget. E-commerce is a simple and unequivocal way of doing this - being able to total up monthly orders taken electronically is a simple means of measuring the effectiveness of the site, and an excellent guide to the level of future investment which should be made in the website.

For the retailer, online transactions are a highly useful way of cutting overheads. Such a transaction obviously bypasses the sales department, removing the unknown factor of what a salesperson might say about the product, eliminating the need to pay commission on a sale, and passing the order directly to the fulfillment department. Indeed, a whole new generation of online retailer is dispensing with a sales hotline altogether, thus making them extremely competitive compared with cumbersome call-centre based vendors.

When judging how successful an online ordering website can be, it's important to examine the nature of the merchandise or service being transacted. It's well known that books and CDs make excellent internet mall products - they're cheap to ship; you can form enough of an impression about what the product is directly from the web site; they're easy to keep in stock, and around about the right price for customers to feel confident about buying online. (Logically, the transaction amount doesn't affect how likely your credit card details are to fall into the wrong hands, but perception rather than reality is what counts here.) Of course, some products and services work even better, when the need for delivery is bypassed. For example, selling an MPEG3 music file which is then immediately downloaded, or selling a cheap calls account where a PIN number is revealed after payment is received. These special types of product require a slightly different approach, involving live authorisation. Below, we examine the two types of e-commerce supplied by Room101, and evaluate how each is suitable to a different vendor requirement.

Many people who contact us regarding e-commerce already have a merchant services account with their bank, but if you have one, it's worth checking with them to make sure that you are permitted to conduct internet transactions through it, because some banks require that you apply for a separate merchant number for internet. If you do not currently have a merchant services account, you have the option of applying for one (this is usually a formality if your company has been trading for 2 years or more), or using a bureau service, such as WorldPay.

Example Click here for an example of a simple e-commerce form. More complex forms, including multi-stage forms, and forms linking to shopping baskets, are also possible.