SaaS is new concept and my general marketing techniques for startup company is facing the following road blocks
* Search traffic volume is low (300/month all) so SEO alone is not enough
* Merchants are afraid because their data is under someone else control, i was thinking to merchant be able to download database backup for his site, but can non-tech savvy merchant be made happy with that?
* Trust building measures like dedicated server, top brand SSL and Security software seems necessity but they are too costly, something that a low wage SaaS business with moderate number of clients is difficult to afford.
* Do email marketing work? i mean collect all email address and send mass message here high chances of domain marked as spam.
Merchants are afraid because their data is under someone else control
This is a positioning issue. While I'm not extolling the virtues of third-party or self-hosted data, if you are targeting very small business you may consider taking the position that you are solving a real and serious security issue (PCI Compliance). By providing a hosted solution you are able to manage and tighten data security better than a non-expert small business with limited resources and IT savvy.
Search traffic volume is low
Though it doesn't sound like you are, but when carving out a new category you have to strike a balance between dominating the new, unknown category and pulling traffic from traditional key phrases. The cart segment is substantial so capturing an audience is possible.