CHAPTER

E-Commerce and the Entrepreneur

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2011 Pearson Education

The Internet: Changing the Face of Business

Successful companies embrace the Internet as a mechanism for transforming their companies and for changing everything about the way they do business.

Business basics still apply online.

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

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The Internet: Changing the Face of Business

Study: By 2011, the Internet will influence more that $1 billion in offline sales. Neilsen study: 86% of the worlds online population has used the Internet to make a purchase. Items purchased most often online include computer hardware and software, tickets, books, music, movies, gift cards, toys and video games, and baby products.
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FIGURE 9.1 Online Retail Sales in the U.S.

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Benefits of Selling on the Web

In addition to the text

Opportunity to increase revenues and profits Ability to expand into global markets Ability to remain open 24 hours a day, seven days a week Capacity to use the Webs interactive nature to enhance customer service Power to educate and inform

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Benefits of Selling on the Web

(continued)

In addition to the text

Ability to lower the cost of doing business Ability to spot new business opportunities and capitalize on them Ability to grow faster Power to track sales results

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

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Ch. 9: E-Commerce and the Entrepreneur

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E-Commerce

The Small Business Research Board reports:

57.3% of small business owners in the U.S. have a Web site 56.1% of those sites engage in online sales.

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

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Factors to Consider Before Launching into E-Commerce

How a company exploits the Webs interconnectivity and the opportunities it creates to transform relationships with suppliers, customers, and others is crucial to its success.
Web success requires a company to develop a plan for integrating the Web into its overall strategy.
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Ch. 9: E-Commerce and the Entrepreneur

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Factors to Consider Before Launching into E-Commerce

(continued)

Developing deep, lasting relationships with customers takes on even greater importance. Creating a meaningful presence on the Web requires an ongoing investment of resources time, money, energy, and talent. Measuring the success of a Web-based sales effort is essential to remaining relevant to customers whose tastes, needs, and preferences constantly change.
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Assessing You Companys Online Potential

1. Does your product have broad appeal to customers everywhere? 2. Do you want to sell your product to customers outside of your immediate geographic area? 3. Can the product you sell be delivered conveniently and economically? 4. Can your company realize significant cost advantages by going online? 5. Can you draw customers to your companys Web site with a reasonable investment?
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10 Myths of E-Commerce
Myth 1: Myth 2: Myth 3: Myth 4: Myth 5: Myth 6: Myth 7: Myth 8: Myth 9: Myth 10: Online customers are easy to please. If I launch a site, customers will flock to it. Making money on the Web is easy. Privacy is not an important issue. The most important part of an e-commerce effort is technology. I dont need a strategy to sell online. Customer service is not important. Flashy Web sites are better than simple ones. Its whats up front that counts. Its too late to get on the Web.
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10 Myths of E-Commerce
Myth 1: Online customers are easy to please. Experienced online shoppers tend to be unforgiving and quick click to another site if their shopping experience is subpar or they cannot find the products and information they want.

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to please. Myth 2: If I launch a site, customers will flock to it.

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Promotion Is the Key!

Include your URL on everything related to your business Provide phone and e-mail contact information Create Web-based newsletters Write articles that link to your companys Web site Sponsor online contests Establish a blog

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to please. Myth 2: If I launch a site, customers will flock to it. Myth 3: Making money on the Web is easy.

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to please. Myth 2: If I launch a site, customers will flock to it. Myth 3: Making money on the Web is easy. Myth 4: Privacy is not an important issue.

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Myth 4: Privacy Online

(continued)

Pew Internet Report:

If online companies were able to alleviate customers online privacy and security issues, the percentage of online buyers would increase from 66% to 73%.

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10 Myths of E-Commerce
(continued)

Myth 5: The most important part of an e-commerce effort is technology.

Understand the underlying business...

then use technology to develop an online business model that provides customer value in a profitable way.

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10 Myths of E-Commerce
(continued)

Myth 6: I dont need a strategy.

An online strategy is critical to success Define the target audience Understand customers needs and wants Create a strategy to set your site apart from others

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Myth 7: The Importance of Customer Service on the Web

Myth 7: Customer service is not important.

Study: 22% of online shoppers expect higher levels of customer service than they do offline. Concern:

Nearly 90% of online shopper reported they have had problems completing an online transaction. 84% of these shoppers said they would share their negative online shopping experience with others!

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Myth 7: The Importance of Customer Service on the Web

Study: 58% of Web shoppers who fill their online shopping cars abandon them without checking out. Reasons:

Shipping and handling charges too high Total purchase higher than expected Desire to compare final price before buying Inability to contact customer service representative Forgot use name or password for Web site
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FIGURE 9.3

Reasons for Abandoning Online Shopping Carts

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10 Myths of E-Commerce
(continued)

Myth 8: Flashy Web site are better than simple sites.

Fast download times increase sales potential Order systems and support are critical Web opportunities still exist
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Myth 9: Its whats up front that counts.

Myth 10: Its too late to get on the Web.

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Strategies for E-Success

Focus on a market niche. Develop a community. Attract visitors by giving away freebies. Make creative use of e-mail, but avoid becoming a spammer. Make sure your Web site says credibility.

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Strategies for E-Success

(continued)

Make the most of the Webs global reach. Use Web 2.0 tools to attract and retain customers. Promote your site online and offline. Develop an effective search engine optimization (SEO) strategy.

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Search Engine Strategies

Natural (organic) Listings

Arise as a result of spiders, powerful programs search engines use to crawl around the Web. Paid (sponsored) Listings Short text ads with links to the sponsoring companys Web site. Paid Inclusion When a company pays a search engine for the right to submit either selected pages or its entire Web site content for listing.
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Designing a Killer Web Site

Understand your target customer. Give customers what they want. Select an intuitive domain name that is consistent with the image you want to create for your company and register it.
Short Memorable Indicative of a companys business Easy to spell

Make your Web site easy to navigate.

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Designing a Killer Web Site

(continued)

Add wish list capability. Use online videos. Create a gift idea center. Build loyalty by giving online customers a reason to return to your Web site. Establish hyperlinks with other businesses, preferably those selling complementary products.

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Designing a Killer Web Site

(continued)

Include an e-mail option an a telephone number on your site. Give shoppers the ability to track their orders online. Offer Web shoppers a special all their own. Follow a simple design. Create a fast, simple checkout process.
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Designing a Killer Web Site

(continued)

Assure customers that online transactions are secure. Establish reasonable shipping and handling charges and post them up front. Confirm transactions. Keep your site updated. Test your site often. Consider hiring a professional to design your site
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Tracking Web Results

Web Analytics tools that measure a Web

sites ability to attract customers, generate sales, and keep customers coming back.

Only about 40% of e-businesses use Web analytics strategically to refashion their Web sites.
Commerce metrics Visitor segmentation measurements Content reports Process measurements

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Measuring Online Performance

Recency The length of time between customers visits to a Web site. Click-through Rate (CTR) The proportion of people who see a companys ad online and actually click on it.

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FIGURE 9.3

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

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Measuring Online Performance

(continued)

Cost per Acquisition (CPA) The amount it costs to generate a purchase (or a customer registration). Conversion (browse-to-buy) ratio The proportion of visitors to a site who actually make a purchase.

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Ensuring Web Privacy

Take an inventory of the customer data collected. Develop a company policy for the information you collect. Post your companys privacy policy prominently on your Web site and follow it.

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Ensuring Web Security

Virus detection software

Intrusion detection software

Firewall

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Conclusion

Know what you need to know before launching into e-commerce Assess the basic strategies to follow

Know what works on Web sites

Track results and listen to customers

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