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eCommerce, an Interview with Ben Hoban


Interviewer: Tim Martin, November 2014. Episode #03 from the NET:101 podcast.


Podcast Transcript


TIM: Welcome to another episode. With me today I have Ben Hoban. Good morning, Ben.


BEN: Good morning, Tim. How are you today?


TIM: Good. Thanks for popping along nice and early.


BEN: Thanks for having me.


TIM: Ben, you’re from Brown Paper?


BEN: Yes, it just launched just the other day, actually. But I’ve been working on building up Brown Paper for a few months now, since I left my corporate position, and now I’m just looking to get back into the small business services sector.


TIM: Excellent. Now, you have a background in a number of areas, but your specialization is eCommerce, yeah?


BEN: Yeah, I started off doing small business services back when we actually called it multimedia, and we were doing CD-ROM interfaces back in the late ’90s. I sort of worked my way through the ad agency scene doing digital services and marketing for them.

Fell in love with eCommerce working for the Factory X group, which is a large retail concern that includes Alannah Hill and Dangerfield and Gorman, a few popular clothing brands. Set up their first Magento website for them, and just I really love the end-to-end process of everything from photographing the clothes to doing the marketing side of it and fulfillment. I had a lot of different skills, I guess, that you could pick up during that process.

From there, I moved on to a corporate gig setting up a major multinational to get into the direct market via eCommerce. Never quite got there, so here I find myself back looking forward to actually dealing with the small businesses again, where you can make a little less waste.


TIM: So you’ve come full circle.


BEN: I have, I have, yeah. Hopefully know a lot more this time. I guess one of the issues last time was getting a website up, and people would ask you where it was on Google or why they weren’t selling things. At the time, I was a website builder, so I didn’t really know a huge amount about marketing.

I’m so happy to be able to come back into that area with a good marketing knowledge now, and good knowledge of how to get them selling. That’s really the Brown Paper’s approach, to get that end-to-end solution.


TIM: Okay, so the pointy end of the business, and what I really want to talk about today, is eCommerce. There are different options out there for owner/operators right up to your multinationals.

Let’s start at the start. I think I’m pretty good at some oil paintings; I think I can make a go of that, sell some stuff online. I want to get up and running as quickly as possible. What would you advise?


BEN: The bare bones of eCommerce is really it can just be a squeeze page. You can just have one HTML page up there with a payment button down at the bottom that links you to PayPal or another third party processor, and at its bare bones, that’s what eCommerce is: just the ability for somebody to pay online for one of your products.

So getting a website up and running is not a major process. I think a lot of people are hamstrung by the thought that it’s going to be a long and expensive and laborious process, but I think the model that we look at a lot more now is to prove the market. So get on there with something that’s raw, that’s easy, and see if you can make a buzz and get people to start turning it over.

Once you know that the market’s out there and people are prepared to spend, depending on how many sales you think you could be making and how big you see that market being, you could pick a platform to sell on from there.

The three major platforms that we deal with is Shopify, which is very easy for the retailer or the small business –


TIM: When you say platform, you’re talking eCommerce platform?


BEN: That’s right, yeah. Different softwares that you can use to sell online that integrate that product catalog on the front end. They’re searchable. It’s got all the basic eCommerce user interface and functionality that we’re used to dealing with when we see a shop. So you can integrate a payment gateway with that, and it’s easy to go into the backend and generate reports, find out who’s visiting your site, how many products are selling, and so forth.

WooCommerce is another easy one that’s in WordPress, just a plug-in. Shopify is about the same level as that. And then if you want to get a little more into it and you’re selling a bit more, or you need to integrate with a warehousing system or you’ve got a current wholesale or retail concern, Magento might be another platform you could consider there.


TIM: Okay, so we’ve got the software, the virtual shopfront, but what about the mechanics of actually taking payments? do I need to go to my local bank and get a merchant account, for example?


BEN: You could. There’s two approaches that people take. One of them is to go and get a merchant account, and then you need what’s called a payment gateway to go with that merchant account. The merchant account is what you’re going to hook up with your bank. You can also use it to take EFTPOS payments. It’s just a general bank account that most traders are going to need nowadays if they’re trading in the real world or online.

You need to pair up a payment gateway with your merchant account. Two of the bigger ones that we deal with in Australia is eWay and Secureway. That basically facilitates somebody entering their credit card details and you receiving that money into your merchant account, into your bank account.


TIM: So that’s nothing to do with the bank at all. I’ve got now to talk to two parties. I’ve got to open a merchant account with my bank, or credit union, building society, and then I’ve got to get a payment gateway up and running.


BEN: That’s right, yeah. The fees involved with that, a merchant account, probably NAB is one of the cheaper ones out there at the moment. They all have an establishment fee, a monthly fee, an annual fee, and a processing fee. NAB, for example, your establishment fee, is $80, your pay is $7 a month, $28 annually, and they’ll sting you between 1% and 2% per transaction.


TIM: Right. And they take all credit cards?


BEN: They take all credit cards. The payment gateway is the actual facilitator, so they’ll decide what payment, what credit cards you’ll be able to take. On the whole, your merchant account with a bank will accept everything, but it just depends on the gateway as well, what they accept.


TIM: And what’s the commission model with the gateway?


BEN: Gateway is a per-transaction model. They’ll never take a percentage of your sales. It’s usually an annual fee plus anywhere between 30 and 50 cents per transaction that goes through. You can pay monthly fees to buy in bulk, 1,000 transactions or 2,000 transactions. It’s all very scalable, depending on how busy your store’s going to be.


TIM: Okay, going back to my oil paintings that I want to get up online. Maybe I’m not that sure about the market, and opening up a merchant account might be a big ask for me at this point. What are my other options?


BEN: The other option is a third party payment processor, and we’re all familiar with PayPal, but there’s also quite a few new ones coming on the scene such as Pin and Stripe.

These allow you to set it up just with – you’ll need a bank account to link it to, but you won’t need to go through the processes that the banks would probably put you through as far as needing to see your ABM and needing to see your figures and needing to verify that you’re an actual proper merchant and have got the ability to trade online correctly. With a PayPal account, anyone can pretty much open one up and put a button on your website, and you can accept payments.


TIM: I’ll come back to PayPal shortly, because I’ve got a few war stories which I’m happy to share. But I use Pin in my business, in NET:101. As you say, that was a pretty easy setup. I didn’t need a merchant account, and don’t have one with my bank. What Pin charges me is a 3% transaction fee and 30 cents per transaction. There’s no monthly fees, no setup or exit fees.

The only probably downside there is that there’s a slightly more expensive transaction fee of 3%, where you were talking 1% to 2% before. I also have to wait 7 days to get paid out on the credit card transaction.


Now, PayPal. Do you love PayPal, hate it? Tell us.


BEN: I like it just because it’s easy to set up. It’s got a trusted name out there, and implementation for websites, it just plugs into all of the shopping cart platforms that are out there. I have heard a lot of war stories, and there is a lot of venom out there on the web. Doesn’t take you too far to actually find it.


TIM: Some may have come from me.


BEN: (laughs) Tell us your story. What’s the beef with PayPal?


TIM: A couple of issues. You said it’s easy to set up; I mean, literally within 5 minutes you can establish an account and take payment. But I find the user interface clumsy. I don’t think it looks particularly stylish when people have to check out through it.

I also had an issue a couple of years ago where somebody had put a couple thousand dollars into my account, and they wouldn’t release it until I had given them a whole lot of supporting documentation that I was who I was, documents from AZAC [sp] and all sorts of things, which took about 3 or 4 weeks to round up. All that time, they’re sitting on my money and I couldn’t get access to it. So I wasn’t very impressed with that.


BEN: Yeah, that is a good point. It’s a lot more geared towards small payments. So if your oil paintings are $10,000 a piece, then PayPal may not be the best way to go, simply because they will ask for a lot of documentation, a lot of payment to be able to take out large amounts.

But if you’re dealing with $30 to $50 payments and selling fairly average products through the web, it’s not a bad way to go.

One thing to note, that if you do try and transfer any money that’s under $150 out of your PayPal account and into your bank account, they will slap you with a fee for that. So you will have to wait a little while and leave the money sitting in your PayPal account if you want to be able to get the full amount out.


TIM: Now, correct me if I’m wrong, but in Australia PayPal can’t process American Express.


BEN: It actually has been able to since April this year. So it has come in at the moment.


TIM: Oh, all right. Good.


BEN: You can now also add an American Express card in the backend. If you have a PayPal account, it allows you to pay through it. But yeah, you can do it now.

But like you said, the interface will always encourage you to create a PayPal account. In fact, they make it very hard to just pay via credit card without that. So you have to go through the process of signing up. Like you said, it’s not the slickest of interfaces, but from a merchant’s perspective, just the ease of use I guess puts it up there.


TIM: If you look at the workflow, somebody goes to buy something and is actually taken offsite, right? They go over to the PayPal gateway away from the website?


BEN: That’s correct.


TIM: They transact and then they come back to the page that they were buying from.


BEN: That’s right. That can be a fairly jarring experience. There’s a lot of different stats out there as to how much abandonment that leads to, so how many people don’t complete the transaction as a result of being taken off-page. But PayPal also has some high level services that allow you to stay on that page, much like Pin and Stripe, where the transaction is completed via the gateway on-page.


TIM: I would imagine that one of the biggest strengths of PayPal is the fact that it’s global and you can transact in different denominations?


BEN: Yep. There will be, again, fees associated with changing currencies in purchase, but if you have a look at some of the stats for cart abandonment, they’ll find that not having the multiple currency thing is actually quite a factor in people leaving a website. So they can’t see the price of goods in their native denomination, and that’s something that leads them to not completing the checkout process.


TIM: Let’s extend that idea out. Does it make sense to have different websites in each country that you’re hoping to transact into? Or just have one website to serve the world, with the ability to toggle through the currencies?


BEN: I think there’s a couple of things there, domain name being one of them. If you’ve got a .com, I think that’s fine to open up the single site to an international audience. Most of the shopping cart plug-ins now will have a translation plug-in, so the user can select what country they’re from. We’ve probably all seen the flags in the top right corner, and the denomination and the language on the side will change depending on what they click on.

There’s also the ability, if you want to get a little bit more technical, to find out what IP address that they’re visiting the site from, and they’ll be able to work out what country they’re coming from. Then you can at the start say “We think you’re coming from France, so we’re going to serve up a site with francs and in French.”


TIM: Or Euro now.


BEN: Or Euro now, of course. You’d be able to hopefully keep them on the site longer because of that trick.


TIM: Yeah. Differential pricing, so different markets can see different pricing?


BEN: Absolutely. That’s another ability of it. Again, if you rely on the IP address, then you can get yourself in trouble, because a lot of people also route via different countries. So if you work for a multinational, for example, all of the computers on the network may be coming out of a central hub in Sydney even if you’re in Singapore or Hong Kong. They get to the site and they can see a different price than what you actually want to sell it for in that region. So that can get a little bit sticky.

But for the most part, it is easier to have one site with the different languages and the different prices built into it than trying to build a range of different websites for different areas.


TIM: Some of the storefront providers you were talking about before like Shopify have the ability to price in different currencies? Differential pricing, to show stock or not show particular stock for different countries, that sort of thing?


BEN: I think there will be plug-ins – like there’s a large app market for Shopify in particular where people are building different plug-ins for it. Out of the box, it doesn’t really come with a huge amount of smarts, but out of the box, it’s quite cheap. You’re only paying $30 a month to keep your average Shopify store afloat.

You’ve then got to start looking at, I guess based on our marketplace, which one of these add-ins you might want to add. Some might have a set price of anywhere between $20 and $200, depending on what the plug-in does. Or they may have an ongoing monthly fee, the third party app builder for Shopify.


TIM: Right. I’m assuming these plug-ins include pairing up the different payment gateway options? I’ve got Shopify, I’ve got my merchant account, or I’ve got my payment gateway with eWay, for example, or I’m using PayPal – I just plug it straight in, yeah?


BEN: That’s right, yeah. All these party payment providers will usually provide a free plug-in and put it in the Shopify store so it obviously encourages you to use their service.


TIM: Nice.


BEN: Easy to integrate.


TIM: That actually doesn’t seem that complicated, when you think about it – obviously when you know what your options are. What about the website, though? The experience of landing on a website, deciding you want to purchase something, to the point that the transaction actually goes through this eCommerce funnel, how important is that to get right?


BEN: It’s very important. At the moment, an average conversion rate is 2%, which means that 1 out of 50 people who land on the average website, depending on how they get there, will buy something. It can drop as low as .05% for really high volume fashion sites to 30% if you’ve got a really honed niche and you know exactly who you’re hitting.

But as far as what happens on the website, cart abandonment is one of the big issues. The current stats quote that 67% of people who start the shopping process, so they put an item in the cart, won’t go on to actually pay for that item. There’s a lot of things that can be done to alleviate that 67% and bring it down as much as possible.


TIM: Give me some examples as to why people might abandon halfway through.


BEN: The biggest cited problem is unexpected charges. This is why free shipping has become such a massive thing in the website world – the world of eCommerce, at least. When you get to the cart and you’re expecting to pay $65 for something, and then suddenly it’s plus $20 shipping or plus 10% GST or whatever, and there’s an international charge and things like that, people generally use that as their first excuse to jump off. That’s where you lose most of them.

Another big thing is speed. This is especially relevant when you come into the world of mobile commerce. People on their phones have got a very, very limited capacity to wait around for anything. It’s usually about 4 seconds is what they cite you’ve got on the phone. So if anything takes longer to load than that, you’ve pretty much lost them on the mobile.

But just generally going through the process, if it takes too long – a lot of checkouts, you find it’s got a 4-step process. A lot of people find that quite annoying. Every time you’re asking somebody to do something else, it’s another chance you’re going to lose them. I guess it’s keeping it consistent, it’s keeping the flow smooth and quick, and just creating that frictionless purchasing funnel.


TIM: What are some points of credibility, social proof that this is a legitimate site, a legitimate business? Is it the layout of the website or the SSL certificate, badges, those sorts of things? Do they make a difference or not?


BEN: Depending on who you listen to, they say 4% to 8% improvement if you’ve got those SSL certificates and you’ve got the padlocks on the page. People want to know it’s secure. I think it’s getting less important as people get more comfortable shopping online and the eCommerce world is growing, obviously, at a rapid rate. But it doesn’t hurt to have them at the end of the day.

I think consistency of user experience and user interface is a really important thing. One thing that they cite is keeping the look and feel between the front of the website, where most of the design goes on, to the shopping cart, where a lot of the times the design there is overlooked. Because the shopping cart platform will have a standard look and feel for the cart, and for the most part the designers who were doing a lot of work on the front end to make sure the colors and the fonts and all the images look great and the descriptions are there, the shopping cart sometimes gets left out of that equation.

If there’s inconsistency between the look of the frontend and actually the cart, that can be quite jarring for the customer, and that’ll lead to them I guess doubting legitimacy of the entire purchase flow – and again, give them another excuse to abandon the cart at that point.


TIM: Sure. With Shopify, for example, I can customize that cart experience for the user experience?


BEN: Absolutely, yeah. Shopify has got some quite easy to modify themes which you can get off the shelf. There’s a lot of free ones which are quite good, but you can also have a look at a big theme gallery where you can purchase ones that you want. You will need a web designer with some skills in CSS if you want to customize it a lot and get it looking exactly the way you want. But for the most part, you’ll be able to find a theme that’s 90% of the way there and just maybe some formatting, adding your logo, fonts, colors, and so forth.


TIM: I understand the pro version of PayPal, you can actually integrate that within the site and customize it to the look and feel of your site. Is that right?


BEN: Yeah, that’s correct. The pro version attracts a slightly higher monthly fee; you pay $30 a month to have that, but it’s a lower per-transaction fee. Where the standard one is 2.7%, this is 2.2%. And you get the added bonus of not having to take them off your page and go through that fairly ugly and uncustomizable PayPal payment page.


TIM: I think it is ugly. I’m not a big fan of PayPal for a couple reasons, but that’s the #1 beef that I’ve got, is that it just looks – I don’t know, it looks low rent. It looks clunky, I think. And I’m not overly impressed with when you go to pay through it, that it prompts you to open an account, which obviously you don’t need to open a PayPal account to transact through PayPal, right?


BEN: Yeah. I think once you’ve got that account, though, life is so much easier. Just to be able to put in your username, your email address and your password and hit “go” instead of having to enter your full credit card details, it’s just that ease of use, I guess, that’s made it so popular.


TIM: I have to admit, I do use PayPal regularly for small transactions, say for example buying something off Fiverr for $5. It’s one click, as you say; I don’t need to put credit card details in. The $5 comes out of my account, no big deal. So maybe it’s the value of the purchase, as that goes up, people’s demands are a little higher in terms of their expectations for the experience and the reassurance that it’s going to work properly.


BEN: Yeah, I think that’s a valid point. I think if you look at the stats, as the price of the product goes up, you’ll find that credit card is definitely the preferred way to go. Even if you’re A/B split testing when people have the capacity to pay directly via credit card or use their PayPal account, I think you’ll find that as the pricing goes up, the credit card will definitely take the lead in that.


TIM: Yep. What about the ability to process through mobile? I’m at the event, someone gives me a credit card, or I’ve got credit card numbers that I can go and put in somewhere – that’s becoming larger, isn’t it?


BEN: It is, yeah. There’s quite a few players coming into that field, and PayPal was one of them. They released something called PayPal Here. It didn’t really get off the ground; it got beta tested in Australia. I’m pretty sure it’s doing well in the States.

But you may have seen some of the triangular-shaped plug-ins that go into a phone jack on your smartphone, and that basically allowed you to swipe a credit card through it. It took the credit card information and changed it into audio data, so it just basically fed it through the phone jack of your phone, and then it had an app on the inside that converted that into a credit card number. I’m not sure whether there was problems with the hardware or just a slow uptake, but that never really took off.

You can use something called PayPal Here, which is quite clunky. You still get an app on your smartphone, but you’ll have to take somebody’s credit card and just manually punch in the number via a keypad.


TIM: Right.


BEN: There’s a couple of other players, Stripe and Square. Both have plug-ins for the smartphone where you can swipe a credit card and take a payment that goes directly into the payment gateway as well.


TIM: It almost seems like these app providers are turning into point-of-sale providers. The traditional way of having a cash register or an EFTPOS machine is being superseded by just having an app.


BEN: Yeah, and it makes a lot of sense. Shopify recently also released their point-of-sale software, which is usable on iPads and Android tablets. The beauty of that – I mean, it’s a bit of a no-brainer. It’s surprising it’s taken this long to get to that point.

But if you have a retail store, you put your inventory into your Shopify store once, and then if it sells offline out of your shop, it actually takes the stock off the online store as well. So you don’t have that problem with double selling, of having to manage stock or split out stock and saying “This I’m just going to sell on the website and this I’m just going to sell in my store.”

That’s a big step forward, and I think that’s going to really put Shopify ahead of the competition in the retail space or the market store space, where you’ve got the capacity to create a website and run your physical store off the same software.


TIM: For example at a farmers market, I could just pull out my smartphone, I’ve got the point-of-sale app, I can take someone’s credit card and transact $2 for a bunch of rhubarb, and we’re away.


BEN: That’s it, absolutely. And if you’re selling that rhubarb online, you could take an order at the same time online straightaway.


TIM: Of course, you can only sell the bunch of rhubarb once, right? (laughs)


BEN: That’s right.


TIM: Depends on how fast you can grow it.


BEN: The next step for this is probably not too far away. It’s using the same technology that we’re seeing with PayPass. Near field communication is being built into a lot of the Android tablet devices, which means that the next step up from this is you’ll just be able to wave your credit card over a smartphone and it’ll basically perform the same action as the PayPass EFTPOS thing that we’re used to.


TIM: I would imagine with these apps, or even with the internet gateways, that we’ve got some fairly sophisticated analytics around what’s happening or not happening, where the traffic has come from? Google Analytics would be the most popular, I would imagine, on most sites today?


BEN: Yeah, absolutely. It’s pretty much a must nowadays that you get into Google Analytics. I think its integration with AdWords, especially for eCommerce, is one of the main factors you’re going to need it. You can find out which AdWords are converting, who’s clicking on them, and how they got to your site, and then you can actually track them through the payment process.

So you set up your funnel in your site, and the you go, “Okay, from the home page, we know that they came from clicking on this ad, so that ad’s doing well so far.” Then we can track them to they looked at this product, they added that to the cart, they checked out, and we can find out whether we lost them along the way, along that process.


TIM: So the Analytics will actually tell you at what point people are bailing out of that payment process?


BEN: Absolutely. If you set up your funnel correctly in Google Analytics – and it’s getting easier and easier; a lot of the Shopify and Magento type things, you just need to plug in your Analytics code now, and it’ll automatically work out the process for you.


TIM: So we don’t need to hit code or get a consultant? It’s just a plug-in.


BEN: Yeah, for the most part. It’s all being set up to integrate with Google Analytics, so it makes your life quite a lot easier now than before. You had to go through and pretty much track every page individually and stick it into Google Analytics to say “Okay, they’re there now; track them when they go to the next step.”


TIM: Right. So that’s where we’re able to come up with stats like 67%...


BEN: Cart abandonment? Absolutely.


TIM: Is that a specialization in itself, that you go out and look at somebody’s gateway and try and analyze where the leaks are?


BEN: It is, yeah. It all comes under the banner of conversion optimization. That’s a service that you’ll find more and more of. Now the marketing side I guess is fairly well-documented; what happens when they get on the site all comes under the umbrella of conversion optimization, so there’s a lot of people specializing in that area now.


TIM: Oh, fantastic. Is that something you guys do?


BEN: Absolutely, yeah. If you check out the Brown Paper website at, under our services, conversion optimization is one of the ones that we list there. It comes in a lot of the packages that we do for small businesses as well. So we’ll definitely take a look at how the website’s set up and just make sure that it follows those base rules to eliminate cart abandonment at every opportunity we can.


TIM: So in 2013, moving into the new year, is this pretty much a given now that if we’re selling stuff and we can electronically get it to someone or we can put it in the mail, that we’ve got a global marketplace? That the tools to get a site up and running, to get these gateways happening, the plug-ins and so forth, the barriers are getting fewer and fewer?


BEN: Absolutely. There’s no reason why you shouldn’t be looking at the global marketplace for your site. I guess shipping is probably the biggest thing that we’re yet to solve, especially for product that we’re warehousing or that we’ve got here.

There’s drop shipping options if you identify a product in China and you can talk to someone in a warehouse there that can control the distribution globally. That’s probably your best way to go if you want to sell international. But there’s no reason why – and you do see a lot of these niche stores set up in Australia who are sending soaps or teas or all sorts of – growing fashion labels in Australia are off to London or Paris or things like that.


TIM: When you say drop shipping, the order comes in from the U.S.; we’re based here in Australia, and we get the product shipped directly from China, for example, over to the U.S.?


BEN: That’s correct. The order will come through your site, and then it will go directly to whoever your distributor is, and that’s usually as close to the manufacturer’s point as possible. China obviously, being the manufacturing hub, is a popular choice at the moment.

And you’ll find that shipping out of China is quite cheap at the moment. It’s quite amazing getting things brought in from there, you’ll find that the postage seems extremely cheap. There must be a lot of subsidies going on, I think, to get the product out of China.


TIM: Or Australia is very expensive for shipping.


BEN: It is, yeah. We are at the obtom of the world, and it’s quite a large land mass with quite a small population, so you can imagine it’s a bit hard to get things in and out effectively.


TIM: Is that the real reason, Ben? Or is Australia Post enjoying their monopoly?


BEN: Yeah, it could be that as well. There is a bit of that involved. On that, the Australia Post, I think they’ve got a long way to go. They’re getting to the eCommerce shipping space with their eParcel product, but they’ve definitely got a ways to go to automate it with a lot of the shopping carts. You find a lot of the small players and freight brokerage companies and so forth rising to the fore just for domestic stuff in Australia.


TIM: Yeah. Watch the space?


BEN: Absolutely.


TIM: That website address for Brown Paper?


BEN: It’s


TIM: Thank you very much, and we’ll see you next time. Ciao.


BEN: Thanks, Tim.




Brown Paper website
WooCommerce (WordPress)
Pin Payments
Google Analytics
Australia Post eParcel