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E-Commerce and

Entrepreneurship
The Internet: Changing
the Face of Business
 The most successful companies embrace
the Internet as a mechanism for
transforming their companies and for
changing everything about the way they do
business.
 E-commerce has launched a revolution, a
new industrial order.

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The Internet: Changing
the Face of Business
 In the world of e-commerce, speed and
flexibility matter much more than size .
 High-volume, low-margin, commodity
products are best suited for selling on the
Web.
 Example: FreshDirect, Inc.

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The Internet: Changing
the Face of Business
 Most commonly cited reasons among
owners of small and medium-sized
businesses for taking their companies to the
Web:
 Reach new customers
 Sell goods and services
 Disseminate information more quickly
 Keep up with competitors
 Reach global markets

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Internet Users Worldwide

Latin Ame ric a Afric a


6.0% 1.3%

As ia/ P ac ific Rim


Canada/ Unite d S tate s
35.8%
28.8%

Euro pe
28 .1%

Source: United Nations Conference on Trade and Development: E-Commerce and Development Report, 2003
Chapter 13 E-Commerce
Benefits of Selling
on the Web
78% of small business owners whose
companies have Web sites report that their
businesses benefit by having a site.
 Opportunity to increase revenues
 Ability to expand into global markets
 Ability to remain open 24 hours a day,
seven days a week
 Capacity to use the Web’s interactive nature
to enhance customer service

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Benefits of Selling
on the Web
 Power to educate and inform
 Ability to lower the cost of doing
business
 Capacity to improve efficiency in the
purchasing process
 Ability to spot new business
opportunities and capitalize on them
 Power to track sales results

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E-Commerce
 Survey: Just 43% of U.S. companies with
fewer than 100 employees have Web
sites...
 Only 40% of those actually sell
merchandise online.
 Small companies account for more than
50% of all retail sales in the U.S., but they
generate only 6% of online retail sales.
 Why?

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Factors to Consider Before
Launching into E-Commerce
 How a company exploits the Web’s
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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Factors to Consider Before
Launching into E-Commerce
 Developing a deep, lasting relationship with
customers takes on even greater importance
on the Web.
 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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12 Myths of E-Commerce

Myth 1: Setting up a business on the


Web is easy and inexpensive.

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Time Required to Develop an E-Commerce Site

35%

30%

25%

20%

15%

10%

5%

0%
4 to 8 9 to 12 13 to 24 25 to 52 More than 52

Number of Weeks

Chapter 13 E-Commerce
12 Myths of E-Commerce

Myth 1: Setting up a business on the


Web is easy and inexpensive.
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 on the Web.
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Privacy and the Web

 Privacy on the Web does matter!


 Jupiter Communications survey: 64%
of Web customers distrust Web sites.
 Post a privacy policy and stick to it.
 Safeguard information your company
collects from customers.

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12 Myths of E-Commerce

Myth 5: The most important part of any


e-commerce effort is technology.
Myth 6: Strategy? I don’t need a
strategy to sell on the Web! Just give
me a Web site and the rest will take
care of itself.

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12 Myths of E-Commerce

Myth 7: On the Web, customer service


is not as important as it is in a
traditional retail store.

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The Importance of Service
on the Web
 Jupiter Research Study: 72% of online
buyers cite service as a critical factor
in their online shopping satisfaction.
 Unfortunately…
 Only 41% said they were satisfied with
the service they receive from online
merchants.

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The Importance of Service
on the Web
 Research by Jakob Nielsen: 56% of
the time an online shopper is unable
to complete an e-commerce
transaction.
 Cost: Billions of dollars in lost sales
due to poor customer service.

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The Importance of Service
on the Web
 Study: 75% of Web shoppers who fill their
on-line shopping carts become frustrated
and leave the site before checking out.
 Reasons:
 Shipping charges too high
 Delivery times too long
 Checkout process required
too much information
 Insufficient product information
available
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Tips for Reducing Shopping
Cart Abandonment Rate
 Streamline the steps in the checkout
process
 Include a progress indicator on each
checkout page
 Provide a link back to the items in
the shopping cart
 Allow customers to see if an item is
in stock

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Tips for Reducing Shopping
Cart Abandonment Rate
 Include product photos in the shopping cart
 Make it easy for customers to change the
contents of their carts
 Give customers the option of calling to
resolve problems they encounter during
checkout
 Make it easy for customers to pay for their
online purchases.

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12 Myths of E-Commerce

Myth 8: Flash makes a Web site


better.
Myth 9: It’s what’s up front that
counts.
Myth 10: E-commerce will cause brick-
and-mortar retail stores to disappear.

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12 Myths of E-Commerce

Myth 11: The greatest opportunity for


e-commerce lies in the retail sector.

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B2B E-Commerce Sales

$9,000 $8,530

$8,000
$7,000
$5,950
$6,000
Millions of $

$5,000
$3,632
$4,000
$3,000
$1,929
$2,000
$919
$1,000 $150
$433
$50
$-
1998 1999 2000 2001 2002 2003 2004 2005

Chapter 13 E-Commerce
12 Myths of E-Commerce

Myth 11: The greatest opportunity for


e-commerce lies in the retail sector.
Myth 12: It’s 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”

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Strategies for E-Success

 Make sure your Web site says


“credibility”
 Consider forming strategic alliances
 Make the most of the Web’s global
reach
 Promote your site online and offline

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Strategies for E-Success
 Develop an effective search marketing
strategy
 JupiterMedia Metrix study: 77% of
Internet shoppers go straight to a search
engine to find the products and services
they want.
 Bad news: Business owners invest less
than 1% of their marketing budgets on
search engine marketing.

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A Search Marketing
Strategy
 Natural listings - the result of “spiders,”
powerful programs that crawl the Web, looking
at key words, links, and other data.
 Paid (sponsored) listings – short text ads with
links to the sponsoring company’s Web site that
appear on the results page of a search engine.
 Paid inclusion – when a company pays a search
engine for the right to submit either selected
pages or the contents of its entire Web site

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Designing a Killer Web
Site
 Start with your target customer.
 Select a domain name that is
consistent with the image you want to
create for your company and register
it.
 Short
 Memorable
 Indicativeof a company’s business
 Easy to spell

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Designing a Killer Web
Site
 Be easy to find.
 Give customers what they want.

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Features that Make U.S. Shoppers More
Likely to Buy from a Web Site

90%
Free shipping

81%
Discounts to frequent customers

Ability to track shipping of 77%


purchases
Feature

62%
A published privacy policy

Ability to save personal 53%


information for fast checkout
High rating from an independent 51%
source

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%


Proportion of Shoppers

Chapter 13 E-Commerce
Designing a Killer Web
Site
 Be easy to find.
 Give customers what they want.

 Establish hyperlinks with other


businesses, preferably those
selling complementary products.
 Include an e-mail option, an
address, and a telephone number
in your site.
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Designing a Killer Web
Site
 Give shoppers the ability to
track their orders online.
 Offer Web shoppers a special
all their own.
 Follow a simple design.

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Web Site Design Tips

 Avoid clutter
 Avoid huge graphics
 Include a menu bar at top of page
 Include navigation buttons
 Incorporate meaningful content
into the site

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Web Site Design Tips

 Include an “FAQ” section


 Include privacy and return policies
 Avoid fancy typefaces and small
fonts
 Watch for “typos” and misspelled
words

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Web Site Design Tips

 Avoid small fonts on “busy”


backgrounds
 Use contrasting colors for text and
graphics
 Be careful with frames
 Test the site on different browsers
and different size monitors

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Web Site Design Tips
 Collect information from visitors, but
don’t put them through a tedious
registration process
 Include a search function and company
contact information
 Avoid automated music
 Make sure the page looks appealing
 Remember: Simpler is better

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Designing a Killer Web
Site
 Assure customers that their online
transactions are secure.
 Follow up every online transaction
with an order-confirmation e-mail.
 Keep your site updated.
 Consider hiring a professional to
design your site.

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Tracking Web Results

 Counter
 Log-analysis software
 Click-stream analysis
 Clustering
 Collaborative filtering
 Profiling systems
 Artificial intelligence

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Return on Investment
(ROI)
Common measures of ROI:
 Cost per action (CPA) - the cost of
producing a particular customer action, such
as registering for a newsletter, requesting
information, etc.
 Cost per order (CPO) – the cost of
generating a customer order. Can be
calculated across all product lines or for a
single product.

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

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Ensuring Web Security

 Virus detection software


 Intrusion detection software
 Firewall
 Secure sockets layer (SSL)
technology

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Web Sites

 All-Outdoors Whitewater Rafting


http://www.aorafting.com
 Earth Treks Inc.
http://www.earthtreksclimbing.com
 REI, Inc.
http://www.rei.com

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