Some customers might start salivating as they learn about free shipping; it doesn't mean it is the right approach for your business. If your product is small with a shipping cost of only a few dollars, free shipping may be easy to justify. An online jewelry store, selling high-ticket items can easily justify free shipping. An online bookstore, on the other hand, selling books at an average price of $19.95 can unlikely justify free shipping.

Free shipping is more of an art than science. One of the reasons consumers? love free shipping is that it resembles their offline shopping experience. When they buy in a store they are not charged for a shipping fee, and may expect the same online. It is something you have to test on your own customers. Try offering free shipping, but build it into the price. You should also try offering discounts instead of free shipping, and see how your customers respond.

The bottom line is that there is no such a thing as free shipping. Someone is going to pay for it one way or the other. You may decide to build the shipping charges into your prices, or you may offer free shipping over a certain dollar amount. The concept of free shipping is a topic all e-commerce businesses have to face. With careful testing and consideration, you can determine if free shipping is the best option for your business.

Unfortunately, returns and refunds are part of online business too. The key is to have a clear policy posted on your website. Don't hide it from your customers. The more visible it is, the easier it is for your customers to understand your policies. Encourage your customers to read your return policy.

The most important aspect of dealing with returns is to not to take them personally. It is just a part of business. Dissatisfied customers, if handled right, can become your best customers. To create a quick and efficient system, encourage you customers to contact you through e-mail. Explain to your customers that handling returns through your website simplifies the process.

Simplify the return process. If you create a return process that is complex, slow, or inconvenient you will alienate an already unsatisfied customer. A pleasant return transaction builds trust. You may lose the original sale, but you might gain a loyal customer.

Payment fraud is a more significant issue for online merchants than for bricks-and-mortar businesses for, unlike a face-to-face sale, an online transaction does not require a signature or credit-card imprint. "It's a damnable problem for Web merchants," said David Robertson, publisher of The Nilson Report. The trade publication figures the rate of credit-card fraud to be 18 cents to 24 cents per $100 of e-commerce sales ? three to four times higher than the overall rate of payment fraud. As an online business, you can take several steps to reduce the amount of payment fraud.

1. Only ship orders to the billing address.

2. Don't accept international orders. Since address verification is not available for international credit cards, you can't verify if the shipping and billing address are the same.

3. Require signature for all orders, and post it clearly during the check out process.

4. Require CVV (Card Verification Value) number. The CVV number is a 3- or 4-digit number printed on the front (AMEX) of the card or signature strip (VISA, MasterCard).

5. Use real time credit card verification processing service

6. Check the IP address of the buyer. If the IP address is outside of the USA, reject the order.

7. Do not ship to PO Box addresses

8. For unusually large orders, call the customer to confirm the order. Make sure you can reach the customer. Leave a message if you have to, but talk to a live person prior to shipping the order.

9. Do not accept e-mail addresses from free e-mail providers such as hotmail, yahoo, etc.