March 29, 2022
by David Goodale
What is shopping cart software for e-commerce?
(Slightly edited from video transcript for greater readability)
Key Takeaways
Hello, David here at Merchant-Accounts.ca. Today I'm going to tackle a pretty simple topic. What is a shopping cart or what is shopping cart software? Stay tuned, we'll dig in in one second.
Shopping cart software
Shopping cart software is needed for an e-commerce website. If you've been on an e-commerce website and considering it's 2022, you probably have. You will usually encounter it when you're navigating and there's an add to cart button. Let's just work with the example of an online clothing store. You're buying a large t-shirt and the colors black, and you want two of them. There's probably a dropdown box for quantity, color, size, then add to cart. When you click that button the website remembers: "Hey, this guy wants to buy this shirt here", then you'll continue shopping. You'll click on a baseball cap or whatever else you want, then you will click proceed to checkout. The shopping cart is a software that's keeping track of all that information. When you click proceed to checkout, the shopping cart has a couple of jobs to do. See figure 1 below.
Figure 1
Shoping Cart Software Example
It says, "Hey, this Dave, he has a large t-shirt and that's $20 bucks. And the baseball cap is $15. So he owes us $35". But wait, there's more, there is tax Dave's in Ontario and HST is 13%. So the shopping cart figures out how much tax is due. And then it says, oh, and he wants it next day, FedEx. He must not want to do laundries out of t-shirt it's okay. Overnight shippings another $20. The total is I can't do it in my head $52[$59.55]. I have no idea, but the whole point is that shopping cart software has figured out how much I need to pay for this stuff. Then at that point, the shopping cart talks to the second component of an e-commerce transaction, the payment gateway. So the shopping cart says, Hey, payment, gateway. I have this guy, Dave, he wants to buy this stuff.
The amount is $52 [$59.55]. Here's his credit card number. Can you go ahead and process it for me? And then the payment gateway receives the request, it approves the transaction is approved and the money is deposited into the merchant account. This presentation's not about the gateway and the merchant account it's about the shopping cart because the shopping cart is then in the same way, the shopping cart asks the payment gateway to process the transaction. The gateway responds: "Hey, shopping cart, we just approved that transaction, all in one second." Now this is where it gets interesting. The shopping cart has a whole bunch of jobs to do. It's doesn't just keep track of what you wanted to buy. You bought it, therefore it's gotta do stuff. It has to send the receipt out to the customer, has to send the order notification to the merchant. See figure 2 below.
Figure 2
E-Commerce Components
Order Fulfillment
Maybe you have an automated shipping system in your warehouse, it would possibly make a database query to your inventory management software for your business. It knows to take one t-shirt and one baseball cap out of the existing inventory. If you have an integrated accounting system, maybe the shopping cart then sends data to your accounting platform, maybe QuickBooks or similar. QuickBooks updates your bookkeeping records to show another sale has been made. I'm not intending to make this too complicated, but picking shopping cart software is an important choice. Going with the first one that you look at because it looks easy, actually is fine. If you're a young e-commerce business, but if you have a more established e-commerce business you'll know things that could be improved. You'll know there is room for improvement because you're probably pretty frustrated about some things, some menial tasks or chores that take up a lot of your time.
Also, something to keep in mind is I told you that when an order needs to be processed, the shopping cart talks to the payment gateway. Here we will talk about integrations or compatibility. That means the shopping cart knows how to talk to the payment gateway because the payment gateway listens. It is reactive in the transaction flow, which means the shopping cart has to be integrated to the payment gateway. The payment gateway sets the standard the shopping cart integrates into it. I don't want to make this complicated suffice to say that when you're picking a shopping cart software, you should already know what payment gateway you're using. This is a really important point that people overlook because sometimes people will set up an e-commerce website and then attempt to establish payment processing. Unfortunately it turns out that shopping cart software isn't compatible with many payment gateways. In fact, that's kind of a a real problem, and it happens more frequently than you would expect.
Conclusion
At Merchant-Accounts.ca, we do a lot of consulting on issues related to shopping cart platforms and integrations. For example, on our website, we have a list of approximately 150 compatible shopping carts, which is completely impossible to keep up to date. It's really impossible. My advice to any e-commerce merchant, unless you're very sophisticated and you just know your stuff, either you have a development background, or you've just been in e-commerce for a long time. If you don't have that expertise, you should talk to a payment processor. It could be us Merchant-Accounts.ca or another payment processor, but you want to make sure that your infrastructure will work together very well. And there's even other considerations such as I'm not trying to make this complicated, but on your shopping cart software, do you want to charge in Canadian dollars and US dollars and Euros or is all your pricing going to be in US dollars? I set out to demystify this and make it easy. I feel like I've just been stacking complexity on top of it, but I hope I've demystified a little bit of what shopping cart software is if you want any more information, if you want a free consultation, reach out to us at Merchant-Accounts.ca we'd love to help you out. Thanks for watching and have a great day there. Bye now.
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My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.
Toll free: 888-414-7111 ext. 5
Direct: (905) 901-2254
david.goodale@merchant-accounts.ca