e-commerce and the entrepreneur. copyright 2008 prentice hall publishing 2chapter 9: e-commerce the...

E-Commerce and the EntrepreneurE-Commerce and the Entrepreneur

2Chapter 9: E-Commerce Copyright 2008 Prentice Hall Publishing

The Internet: Changing The Internet: Changing the Face of Business the Face of Business

The most successful companies embrace The most successful companies embrace the Internet as a mechanism for the Internet as a mechanism for transforming their companies and for transforming their companies and for changing changing everythingeverything about the way they about the way they do business.do business.

Business basics still apply online just as Business basics still apply online just as much as they do in brick-and-mortar much as they do in brick-and-mortar businesses. businesses.

In the world of e-commerce, size matters In the world of e-commerce, size matters less than speed and flexibility.less than speed and flexibility.


The Internet: Changing The Internet: Changing the Face of Business the Face of Business

Nearly 10 percent of the world’s population – Nearly 10 percent of the world’s population – 627 million people – has shopped online at 627 million people – has shopped online at least once. least once.

Items purchased most often online: books, Items purchased most often online: books, music, DVDs, travel services, clothing, tickets music, DVDs, travel services, clothing, tickets for entertainment events, electronics, and for entertainment events, electronics, and toys. toys.

In the U.S., 12 percent of total retail sales will In the U.S., 12 percent of total retail sales will occur online in 2010. occur online in 2010.

Study: by 2010, the Internet will influence one-Study: by 2010, the Internet will influence one-half of all retail sales. half of all retail sales.

14%

16%

46%

56%

56%

62%

67%

0% 10% 20% 30% 40% 50% 60% 70%

Percent of Small Businesses

Increased sales outside the U.S.

Reduced unit costs

Increased profits

Increased total sales

New types of customers

Improved competitive condition

Brought new customers

Benefits to Small Businesses of a Web Site

Source: National Federation of Independent Businesses.


Benefits of Selling on the Benefits of Selling on the WebWeb

Opportunity to increase revenues and Opportunity to increase revenues and profitsprofits Study: 72 percent of small online companies Study: 72 percent of small online companies

report increased sales, and 65 percent report increased sales, and 65 percent report higher profits. report higher profits.

Ability to expand into global marketsAbility to expand into global markets Ability to remain open 24 hours a day, Ability to remain open 24 hours a day,

seven days a weekseven days a week Capacity to use the Web’s interactive Capacity to use the Web’s interactive

nature to enhance customer servicenature to enhance customer service Power to educate and informPower to educate and inform


Benefits of Selling on the Benefits of Selling on the WebWeb

Ability to lower the cost of doing Ability to lower the cost of doing businessbusiness Study: 73 percent of online small Study: 73 percent of online small

companies experienced savings because of companies experienced savings because of lower administrative costs. lower administrative costs.

Ability to spot new business Ability to spot new business opportunities and capitalize on themopportunities and capitalize on them

Ability to grow fasterAbility to grow faster Power to track sales resultsPower to track sales results

Conversion rate – the percentage of Conversion rate – the percentage of customers to a Web site who actually make customers to a Web site who actually make a purchase. a purchase.


E-CommerceE-Commerce

70 percent of small businesses in the 70 percent of small businesses in the U.S. have a Web presence. U.S. have a Web presence.

Of those small business owners who Of those small business owners who do not have Web sites:do not have Web sites: 77 percent say their products and 77 percent say their products and

services are not suitable for selling services are not suitable for selling online.online.

37 percent say they do not see any 37 percent say they do not see any benefits of selling online.benefits of selling online.

Barriers:Barriers: Not knowing how or where to startNot knowing how or where to start Cost and time concernsCost and time concerns


Factors to Consider Factors to Consider Before Launching into E-Before Launching into E-

CommerceCommerce How a company exploits the Web’s How a company exploits the Web’s

interconnectivity and the interconnectivity and the opportunities it creates to transform opportunities it creates to transform relationships with suppliers, relationships with suppliers, customers, and others is crucial to its customers, and others is crucial to its success.success.

Web success requires a company to Web success requires a company to develop a plan for integrating the develop a plan for integrating the Web into its overall strategy.Web into its overall strategy.


Factors to Consider Factors to Consider Before Launching into E-Before Launching into E-

CommerceCommerce Developing a deep, lasting relationship Developing a deep, lasting relationship

with customers takes on even greater with customers takes on even greater importance on the Web.importance on the Web.

Creating a meaningful presence on the Creating a meaningful presence on the Web requires an ongoing investment of Web requires an ongoing investment of resources – time, money, energy, and resources – time, money, energy, and talent.talent.

Measuring the success of a Web-based Measuring the success of a Web-based sales effort is essential to remaining sales effort is essential to remaining relevant to customers whose tastes, needs, relevant to customers whose tastes, needs, and preferences constantly change. and preferences constantly change.


Assessing Your Assessing Your Company’s Online Company’s Online

PotentialPotential1.1. Does your product have broad appeal to Does your product have broad appeal to

customers everywhere?customers everywhere?2.2. Do you want to sell your product to Do you want to sell your product to

customers outside of your immediate customers outside of your immediate geographic area?geographic area?

3.3. Can the product you sell be delivered Can the product you sell be delivered conveniently and economically?conveniently and economically?

4.4. Can your company realize significant cost Can your company realize significant cost advantages by going online?advantages by going online?

5.5. Can you draw customers to your company’s Can you draw customers to your company’s Web site with a reasonable investment?Web site with a reasonable investment?


12 Myths of E-Commerce12 Myths of E-Commerce

Myth 1: Setting up a business on Myth 1: Setting up a business on the Web is easy and inexpensive.the Web is easy and inexpensive.


Follow-up InvestmentsFollow-up Investments

Setting up a Web site is only the first Setting up a Web site is only the first investment:investment:

Redesign Web siteRedesign Web site Buy more computer hardwareBuy more computer hardware Automate or expand warehouse to meet Automate or expand warehouse to meet

customer demandcustomer demand Integrate Web site into inventory control Integrate Web site into inventory control

systemsystem Increase customer call-center capacityIncrease customer call-center capacityLessonLesson: Focus on your company’s core : Focus on your company’s core

competencies and outsource all other competencies and outsource all other aspects of doing business online. aspects of doing business online.




Myth 2: If I launch a site, Myth 2: If I launch a site, customers will flock to it.customers will flock to it.


Promotion Is the Key!Promotion Is the Key!

Print URL on everything related Print URL on everything related to your businessto your business

Web-based newslettersWeb-based newsletters Write articles that link to your Write articles that link to your

company’s Web sitecompany’s Web site Host a customer chat roomHost a customer chat room Sponsor online contestsSponsor online contests Establish a blogEstablish a blog




Myth 2: If I launch a site, Myth 2: If I launch a site, customers will flock to it.customers will flock to it.

Myth 3: Making money on the Myth 3: Making money on the Web is easy.Web is easy.Study: Web retailers invest 65 percent of Study: Web retailers invest 65 percent of revenue in marketing and advertising, revenue in marketing and advertising, compared to just 4 percent for their off-compared to just 4 percent for their off-line counterparts.line counterparts.

Myth 4: Privacy is not an Myth 4: Privacy is not an important issue on the Web. important issue on the Web.


Privacy OnlinePrivacy Online

Study: 80 percent of Internet users Study: 80 percent of Internet users say that privacy of their personal say that privacy of their personal information is either important or information is either important or very important. very important.

Estimate: If online companies were Estimate: If online companies were able to alleviate customers’ online able to alleviate customers’ online privacy and security issues, online privacy and security issues, online retail sales would be 24 percent retail sales would be 24 percent higher! higher!



Myth 5: The most important part Myth 5: The most important part of any e-commerce effort is of any e-commerce effort is technology. technology. Myth 6: Strategy? I don’t need a Myth 6: Strategy? I don’t need a strategy to sell on the Web! Just strategy to sell on the Web! Just give me a Web site and the rest give me a Web site and the rest will take care of itself. will take care of itself. Myth 7: On the Web, customer Myth 7: On the Web, customer service is not as important as it service is not as important as it is in a traditional retail store. is in a traditional retail store.


The Importance of The Importance of ServiceService

on the Webon the Web Study: 57 percent of Web shoppers who fill Study: 57 percent of Web shoppers who fill

their online shopping carts become their online shopping carts become frustrated and leave the site before checking frustrated and leave the site before checking out.out.

Result: For every $1 they spend online, Result: For every $1 they spend online, customers leave behind $4.51 in abandoned customers leave behind $4.51 in abandoned shopping carts. shopping carts.

Reasons:Reasons: Shipping and handling charges too highShipping and handling charges too high Delivery times too longDelivery times too long Checkout process too lengthyCheckout process too lengthy Insufficient product information availableInsufficient product information available



Myth 8: Flash makes a Web site better.Myth 8: Flash makes a Web site better.Lesson: Simplicity rules!Lesson: Simplicity rules!

Myth 9: It’s what’s up front that counts. Myth 9: It’s what’s up front that counts.

Myth 10: E-commerce will cause brick-Myth 10: E-commerce will cause brick-and-mortar retail stores to disappear. and-mortar retail stores to disappear.

Myth 11: The greatest opportunity for e-Myth 11: The greatest opportunity for e-commerce lies in the retail sector. commerce lies in the retail sector.

Myth 12: It’s too late to get on the Web. Myth 12: It’s too late to get on the Web.


Strategies for E-SuccessStrategies for E-Success

Focus on a market niche.Focus on a market niche. Develop a community.Develop a community. Attract visitors by giving away Attract visitors by giving away

“freebies.” “freebies.” Make creative use of e-mail, but Make creative use of e-mail, but

avoid becoming a “spammer.” avoid becoming a “spammer.”

14.7%

3.5%

14.3%

2.7%

20.8%

3.7%

19.5%

3.6%

20.0%

3.7%

21.0%

4.0%

13.0%

2.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Rat

e

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Day

E-Mail Read and Click-Through Rates by Day of the Week

% Opened

% Read

For businesses,Friday is the best day to send e-mails.


Strategies for E-SuccessStrategies for E-Success

Make sure your Web site says Make sure your Web site says “credibility.”“credibility.”

Consider forming strategic alliances.Consider forming strategic alliances. Make the most of the Web’s global Make the most of the Web’s global

reach.reach. Promote your site online and offline. Promote your site online and offline. Develop an effective search engine Develop an effective search engine

optimization strategy.optimization strategy.


Search Engine StrategiesSearch Engine Strategies Natural (organic) listingsNatural (organic) listings – arise as – arise as

a result of “spiders,” powerful a result of “spiders,” powerful programs search engines use to programs search engines use to crawl around the Web.crawl around the Web.

Paid (sponsored) listingsPaid (sponsored) listings – short – short text ads with links to the sponsoring text ads with links to the sponsoring company’s Web site. company’s Web site.

Paid inclusionPaid inclusion – when a company – when a company pays a search engine for the right to pays a search engine for the right to submit either selected pages or its submit either selected pages or its entire Web site content for listing. entire Web site content for listing.


Designing a Killer Web Designing a Killer Web SiteSite

Understand your target customer. Understand your target customer. Give customers what they want. Give customers what they want. Select a domain name that is Select a domain name that is

consistent with the image you want consistent with the image you want to create for your company and to create for your company and register it.register it. ShortShort MemorableMemorable Indicative of a company’s businessIndicative of a company’s business Easy to spellEasy to spell



Make your Web site easy to Make your Web site easy to navigate.navigate.

Create a gift idea center.Create a gift idea center. Build loyalty by giving Build loyalty by giving

online customers a reason online customers a reason to return to your Web site.to return to your Web site.

Establish hyperlinks with Establish hyperlinks with other businesses, other businesses, preferably those selling preferably those selling complementary products.complementary products.



Include an e-mail option an Include an e-mail option an a telephone number in a telephone number in your site.your site.

Give shoppers the ability to Give shoppers the ability to track their orders online.track their orders online.

Offer Web shoppers a Offer Web shoppers a special all their own.special all their own.

Follow a simple design.Follow a simple design. Create a fast, simple Create a fast, simple

checkout process. checkout process.



Assure customers that their Assure customers that their online transactions are online transactions are secure. secure.

Post shipping and handling Post shipping and handling charges up front.charges up front.

Confirm transactions. Confirm transactions. Keep your site updated.Keep your site updated. Test your site often.Test your site often. Consider hiring a professional Consider hiring a professional

to design your site. to design your site.


Tracking Web ResultsTracking Web Results

Web analytics – tools that measure Web analytics – tools that measure a Web site’s ability to attract a Web site’s ability to attract customers, generate sales, and customers, generate sales, and keep customers coming back.keep customers coming back.

Only 40 percent of e-businesses Only 40 percent of e-businesses use Web analytics strategically to use Web analytics strategically to refashion their Web sites. refashion their Web sites. Commerce metricsCommerce metrics Visitor segmentation measurementsVisitor segmentation measurements Content reportsContent reports Process measurementsProcess measurements


Tracking Web ResultsTracking Web Results

CounterCounter Log-analysis Log-analysis

softwaresoftware Click-stream Click-stream

analysisanalysis

ClusteringClustering Collaborative Collaborative

filteringfiltering Profiling Profiling

systemssystems Artificial Artificial

intelligenceintelligence

Performance Indicators:Performance Indicators:


Measuring Online Measuring Online PerformancePerformance

RecencyRecency – the length of time between – the length of time between customers’ visits to a Web site.customers’ visits to a Web site.

Click-through rateClick-through rate (CTR)(CTR) – the proportion – the proportion of people who see a company’s ad online of people who see a company’s ad online and actually click on it. and actually click on it.

Cost per acquisition (CPA)Cost per acquisition (CPA) – the amount it – the amount it costs to generate a purchase (or a costs to generate a purchase (or a customer registration). customer registration).

Conversion (browse-to-buy) ratioConversion (browse-to-buy) ratio – the – the proportion of visitors to a site who actually proportion of visitors to a site who actually make a purchase.make a purchase.


Ensuring Web PrivacyEnsuring Web Privacy

Take an inventory of the Take an inventory of the customer data collected.customer data collected.

Develop a company policy for the Develop a company policy for the information you collect.information you collect.

Post your company’s privacy Post your company’s privacy policy prominently on your Web policy prominently on your Web site and follow it. site and follow it.


Ensuring Web SecurityEnsuring Web Security

Virus detection softwareVirus detection software Intrusion detection softwareIntrusion detection software FirewallFirewall

e-commerce and the entrepreneur. copyright 2008 prentice hall publishing 2chapter 9: e-commerce the...

Documents

business ability

business study

week ability

faster ability

web ability

percent of total retail

face of business

business basics