A Beginners Guide to e-Commerce: Tools for Profit

Kimball P.Marshall, Ph.D., Alcorn State University kimball.p.marshall@netzero.net

Ilya Smolyaninov, Alcorn State UniversityIgor Georgievskii, Alcorn State University

Leigh Junkin, Alcorn State UniversityMarch 15, 2008

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Introduction - What is e-Commerce?• e-Commerce – Any activity by which people sell buy and sell

products on the Internet.

• The Internet has created opportunities for people to offer products they make to a world market with very little cost.

• The trick is to know how!

• In this workshop we will show you examples of food, jewelry, music, art, and crafts products being sold on the Internet by people like you, ANDWE WILL SHOW YOU HOW!!!!

• To begin, let's look at our training objectives!

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Training Objectives• Recognize the challenges to be faced

• Show opportunities to develop a rural home business using the Internet - Success Stories

• Show how rural life skills can be turned into e-Commerce products by rural people – rural life skills have value!

• Explain how to get free Internet access and the steps to be followed that lead to successful sales on the Internet

• Explain how to keep the records to show if you are making a profit or not

• Help you to get started

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Challenges We Face• What is needed?

– Information and experience– Knowledge about similar people with similar

products– Personal goals for an e-Commerce business– Understanding of the steps needed to begin basic

e-Commerce sales– Belief that the steps will lead to e-Commerce sales – Belief that your e-Commerce efforts will result in

achieving your personal goals – Belief that you can make it happen

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• Free flowing discussions to identify desired rewards (financial, social and psychological)

• Recognize neighbors who produce and sell products on a small scale for “extra cash”

– Entrepreneurial small farmers who engage in truck farming activities

– People who participate in local farmers markets– Persons who are known to make special products such as

jams, jellies, toys, quilts or other craft products

– Write in other people and products

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Activities to Address Challenges

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What Kinds of People Sell on the Internet? Success Stories from Rural Communities

• Rural life skills have value

• Key success stories– Oyster Creek Mushroom Company – Indian Village– Others

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Oyster Creek Mushroom CompanyStrategy in Action

Oyster Creek Mushroom Company of Damariscotta, Maine shows how e-Commerce can serve specialty food niche markets. The web site explains that the company grows “the very best” Shiitake Mushrooms, as well as a variety of fresh wild mushrooms, and offers dried mushrooms, mushroom powders, flavored mushroom oils, and gift boxes. The site also tells the owners’ personal story, educates customers about wild mushrooms, offers recipes, and allows customers to purchase online.

www.oystercreekmushroom.com

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www.oystercreekmushroom.com

Reproduced with permission from Dan Heydon, Oyster Creek Mushroom Company

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Indian VillageStrategy in Action

One of the most interesting rural e-Commerce Web sites is www.IndianVillage.com, an online shopping mall with many links to Indian related web sites such as Durango Silver Company that offers turquoise jewelry and cabochons through its eBay store. Other IndianVillage.com Web site links displays American Indian artisans offering pottery, basketry, textiles, beadwork and Indian jewelry.

www.indianvillage.com

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www.indianvillage.comReproduced with permission from John Hartman, Durango Silver Company

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Group discussions to identify success stories from your area!• Does anyone know anyone who has sold products on the Internet

– Family members, neighbors, work colleagues, friends? How did they do it? What auction site(s) do they know about? Did they make money?

Review Web pages cited in the presentation• Print or display web pages• Think of products you might sell• Discuss costs involved

– Time– Supplies

• Compare prices of similar products being sold on the Internet to show the profit potential

Activities to Build on Success Stories

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Your Rural Life Skills and Products Have E-Commerce Market Value

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Common Rural Life Skills

• A variety of job skills can produce marketable products appropriate for profitable e-Commerce sales:– Food processing– Fabric crafts– Carpentry and wood working– Visual arts – Music– Book publishing

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• Jams, jellies, candies, relishes• “Home grown” or “gourmet” foods

Food Processing

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• Sewing• Knitting• Crocheting• Quilting• Leather goods• Embroidery• Fabric toys

Fabric Crafts

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• Furniture• Toys• Art objects• Yard décor• Dollhouses• Mailboxes

Carpentry and Wood Working

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• Painting• Photography• Sculpture

– Clay– Metal– Ceramic– Wood

• Pottery– Decorative– Functional

Visual Arts

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• Independent artists• Musical groups• Church choirs

Music

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• Rural authors• Cultural or historical

organizations• Club fund raisers• Genealogical materials

Book Publishing

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• What things do you make for family and friends?

– Products made as presents or for home use

– Explore market potentials through online store searches

– Search in group for similar products on Internet auction sites

– Observe how Internet auction sites work

Activities for Discovering E-Commerce Opportunities

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Simple E-Commerce Approaches for Getting Started

Online auction and shopping websites are where people and businesses buy and sell goods and services worldwide

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Things You Need to Know About Selling Online • Obtain Internet access and an e-mail address

• Register as a seller on an Internet auction site

• Establishing a payment system to receive your money

• Create a listing to offer your product

• Actively sell your product during the offering time

• Arrange payment and shipping

• Buyer and seller feedback to the Internet auction site

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Obtaining Internet Access and an E-mail Address

• Free Internet access is often available in the community

• Free e-mail accounts are available through several reputable internet sites

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Register as a Seller• Basic Steps:

– Enter basic information--is it secure?

– Choose your User ID and password

– Click on the register link at the top of most internet auction pages

– Get a confirmation e-mail

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Establish a Payment System• Requirements for efficient, secure

sales:

– Local bank account to receive payments

– Secure payment method for customers PayPal

(https://www.paypal.com/)

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Create a Listing• Decide what to sell• Complete online listing form• Auction format

– Fixed price format– Classified ad format– “Store” format

• Select a category• Specify a title• Write a description• Take digital photographs• Beginning and ending times for the auction• Other listing information

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Selling the Product• Monitor the process regularly

– Check e-mail and the auction

• Communicate with interested buyers– Reply to information requests quickly

• Promptly close the sale– Notify winning bidder – Confirm purchase

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Payment and Shipping• Monitor payment method

• Ship product when payment is received

• Pack product properly

• Insure the product

• Get a tracking number

• Use a reputable carrier– USPS– UPS– FedEx– DHL

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Buyer and Seller Feedback• Use the auction site process for

buyer and seller feedback

• Feedback is important to create a trustworthy online auction community

• Trust will build sales

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E-CommerceCheck-sheet,Sales Listing

Worksheet, and Sales Log

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Activities for Getting Started!• In group discussions, identify free local

computer and e-mail access resources– Churches, public libraries, schools– Ask friends and relatives for assistance– Observe how to use e-mail and the Internet

• Explore online Internet auctions with group members

• Perform searches for products you might make– Monitor auction activity– Determine shipping options and costs– Calculate realistic prices for products to be

sold

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Keeping Track – Recordkeeping and Internet Transactions

• Basic financial skills needed– Basic recordkeeping– Sales tax– Income tax– How to get paid?

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Simple accounting approaches of keeping records

• Use IRS Schedule C as template

• Organize a simple ledger

Recordkeeping

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Schedule C

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Simple Ledgers

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Sales Taxes• The state tax authority determines current policies

– Sales tax may be state, county, or city specific– Most states do not require the Internet seller to pay

sales tax on out-of-state sales

• Local extension workers may be able to help with setting up a sales tax account if necessary

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Personal Income Taxes

• Profits from e-Commerce sales are subject to taxes– Federal, State, and Local income taxes– Self-employment taxes

• Portion of e-Commerce revenues should be set aside in a bank account

• Forms to become familiar with– IRS Form 1040 Schedule C– IRS Schedule SE– State income tax form (state-dependent)

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How to Get Paid: The Need for a Local Bank Account and Third Party Payment System

• You must develop trust in credit and banking systems

• Bank checking account is critical for e-Commerce selling

• PayPal third party payment account is strongly advised– Provides a safe and secure method to

purchase goods– Speeds up the seller’s receipt of funds from a

sale

• Bank and PayPal fees should be taken into consideration when setting product prices

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Activities to Develop Basic Financial Skills• Financial Literacy Discussions

– Discuss feelings about banks and payment systems– Discuss current methods of handling personal finances– Discuss how to use credit properly and the cost of interest– The group should take the Rutgers Financial Fitness Quiz at

http://njaes.rutgers.edu/money/ffquiz

• Discuss the need for basic recordkeeping– Work in groups to review the IRS Schedule C (1040 form)– Discuss why good record are important to the success of any

business, even small home-based businesses

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Get Started• Examples have been provided

• Your rural life skills can become marketable products

• Opportunities have been identified

• Procedures to follow have been stated

• Financial management issues have been addressed

• Now it’s up to you to take control of the process and bring a product to the e-Commerce marketplace

• What is your next step?

• How can we help?

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E-Commerce Checklist

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EvaluationEvery educational program can be improved. We want your judgment of how much this program has helped you understand how you can create products to be marketed through the Internet and how you can place them for sale on the Internet. Please take a few moments to fill out the questionnaire that will be provided by your extension educator. Your opinions will help us toward our goal of continual improvement so that we can serve you better.