Effective Online Business: Hosting, Marketing, and Management StrategiesWorkshop #I - Introduction

Presenters:

Kelly Burke – University of Hawaii at HiloSteven Parente – Aina Hawaiian Tropical Products

Supported by a USDA Cooperative State Research, Education and Extension Service Grant through the University of Hawaii at Hilo and College of Business and Economics Dean Dr. Marcia Sakai

Ecommerce and the Internet: Introduction to Online Retail Overview

The business case for e-commerce What is e-commerce? Benefits Some issues and options

The Internet – how it works Website hosting basics

Alternatives, costs, services provided Website development and design basics

Using a web host’s tools and resources Website management basics

Assessing site performance Payment processing Order processing and fulfillment

THE BUSINESS CASE FOR HAVING A WEB SITE

E-Commerce Defined

E-Commerce “Buying, selling, or exchanging products, services,

and information via computer networks.” (Turban, King, Lee and Viehland – 2004)

But that’s ‘narrow’ Internet offers more – E-Business includes

Servicing customers Collaborating with business partners Supporting electronic transactions within the firm

We mean the ‘broader’ definition here

5

E-Commerce Business Models

There are 2 that are most prominent Business to Business (B2B)

Selling products and services to customers who are primarily other businesses

Business to Consumer (B2C) Sells products and services to individuals

B2B is where most of the money is About 97%

B2C is the most well-known Amazon, eBay, etc.

* Dataquest, 2000

Forces Driving Online B2C Shopping

Convenience – 75% Cost – 38% Context

Opportunity to buy at right time and right place For example: from my desk when I am thinking about –

or reminded about – that book.

The Typical Online Customer

Activity conducted online by % of Internet users Research a product before buying – 78% Buy a product – 67% Use a search engine – 84%

Source: Pew/Internet.org - 2005

The Typical Online Customer

Percent of each group that browse online Age:

18-29 – 64% 30-49 – 56% 50-64 – 36% 65+ – 12%

Gender: Male – 69% Female – 67%

Income Less than $30,000/yr – 49% $30,000-$50,000 – 73% $50,000-$75,000 – 87% More than $75,000 – 93%

Source: Pew/Internet.org - 2005

The Typical Online Customer

Completed online transactions: 10 Online sessions per week: 6 Unique sites visited per week: 6 Average surfing session: 31 minutes Time per site per week: 32 minutes Time online per week: 3 hours, 8 minutes

Source: Harris Interactive, Nielson Netratings

Why Have a Web Site:Benefits of E-Commerce

Increase sales Distributed market exposure Target narrow segments Create virtual communities which become targets

Reduce costs Sales inquiries Price quotes Product availability

Enhance product value Benefits work both ways – selling or buying

But are these reason enough for YOU to own a web site?

Why Have a Web Site:Benefits of E-Commerce

Well – of course – a not insignificant reason to own a web site may be that:

Your competitors are doing it

In our survey of Big Island Flower Growers (mostly small mom-and-pop businesses), 40% of those responding (29 out of 74) say they already have a web site

Also – it’s just not that hard or costly to do

HOW THE INTERNET WORKS

How the Web Works: Uniform Resource Locators

Browsers differ in the way they are programmed So if WWW is to be useful to many – we need

standard way to identify a resource Example:

http://www.hawaii.edu:2074/~kburke/course_info.html

URLs specify: communication method (protocol) – ex: http host name – ex: www.hawaii.edu connection ‘port’ on host – ex: 2074 path on web server to resource / page – ex:

course_info.html

How the Web Works: The Internet Protocol (IP)

TCP / IP protocol for communicating IP addressing – every device on the Internet has

a different IP address Network Information Center allocates address

blocks Class Address Network part Host part

A 18.155.32.5 18 155.32.5

B 128.171.12.237 128.171 12.237

C 1 92.66.12.56 192.66.12 56

How the Web Works:IP Addresses and Domain Names

IP addresses are unfriendly Assign a human readable name to IP addresses Placed in a distributed, hierarchical, lookup system In network of thousands of domain name severs (DNS) Which map domain names to IP addresses For example: 128.171.xxx.xxx = uhh.hawaii.edu

Domain

Organization Name

uhh.hawaii

Top Level Domain

Organization Type

.edu

How the Web Works:Protocols and Infrastructure

Messages versus Packets i.e., connection vs. connectionless

HTTP

TCP

IP

HTTP

TCP

IPPacket Packet Packet

Packet 3 Packet 2 Packet 1

Message (example: Page)

Web Server This Machine

Client(Browser)

Web Server

Commerce Server(Storefront)

ProductDatabase

Shopping Cart

Secure Transaction

Server

Dynamic

Static

PagesPagesPages

Pages

WEB SITE HOSTING

Getting Started: Hosting Issues

Hosting Understanding what “hosting” means and your

alternatives?

“Do-it-yourself” website services http://www.1and1.com http://www.bigstep.com/ http://store.yahoo.com/

Getting Started: Hosting Issues

Bandwidth Capabilities and specifications

Examine the features and functions provided by different hosts

Example: Comparison of features at 1and1.com

Firewall system Wireless delivery Buy, rent, or lease Maintenance, upgrade, and service of the

equipment

Identify what you have resources and time to do

Identify what will be done “outside” the firm Identify which external parties will be involved

e.g., designer, ISP, web host? commerce provider?

Identify how you will assess their performance Decision metrics – e.g., are they reliable? On-going performance metrics – e.g., is their

“uptime” what they claim?

Getting Started: Web Hosting

Web site considerations The services wanted How much your company can

contribute to the site, from manpower to electronic content

Time to design your site Time to create and program

your site Extra fees for software

development Fees for off-the-shelf

applications tools The size of the site

Training requirements Installation and server

maintenance Programming On corporate site hosting

vs. off-site Secure Server for financial

transactions Your bandwidth needs Your server capacity needs Location of your server at

the Web company or ISP company location

What is Involved in Establishing a Web Site?

WEB SITE DEVELOPMENT

Ecommerce and the Internet:Basic Site Building

First – your ‘Domain Name’ Maybe I’d like to use “flowersbykelly.com” Check at Register.com to see if it’s available

10 Steps at Yahoo! to developing your site http://smallbusiness.yahoo.com/webhosting/gstart.php

Demonstration in basic site construction Using Yahoo! SiteWizards

WEB SITE MANAGEMENT

Ecommerce and the Internet:Basic Site Management Functions

Example: Yahoo! Merchant Solutions Plans and features Business Control Panel - Site manager

Store editor Catalog manager Order / request processing Site statistics Order settings Promoting the site

On-line Transaction Completion

18%

82%

Complete transaction

Do not complete transaction

Source: A.T. Kearney, 2001

Reasons for Abandoning On-line Purchases

46

42

40

24

16

16

52

0 20 40 60

Too much information required

Did not want to enter credit card details

Web site malfunction

Could not find product

Could not specify product

Had to make phone call

Did not like returns policy

Percent

Source: A.T. Kearney, 2001

Website Management Issues: The Shopping Experience

Industry research shows that up to 80 percent of shoppers abandon shopping cart before completing checkout

Techniques for minimizing shopping cart abandonment rates:

If the billing information is the same as the shipping information, include a “Same as billing information” check box to automatically fill in.

Show stock availability on the product page, so shoppers do not have to wait until checkout to determine if a product is out of stock.

Include a link back to product page from shopping cart, so shoppers can easily go back to make sure they have selected the right item.

Make it easy to change quantities or delete items from shopping cart.

Make it easy to select or change product values in the shopping cart (e.g., color, size).

Include a "Progress Indicator" (e.g., "Step 2 of 5") on each checkout page (e.g., tabbed pages), so shoppers always know where they are in the checkout process.

Adapted from Overture.com - 2005

Website Management Issues:The Shopping Experience Techniques for minimizing shopping cart

abandonment rates (continued): Provide shipping costs early in the process, so shoppers are not

surprised during final checkout. Include a prominent "Next Step" or "Continue with Checkout"

button on each checkout page, so shoppers do not get lost. Keep all information on one screen on each checkout page, so

shoppers do not have to frequently scroll down. If information is missing or filled out incorrectly during checkout,

give meaningful error message that clearly describes what needs to be corrected.

If you intend to add your customers to a list for future e-mail marketing (either from you or a third party), make sure your customers know this and can easily opt out.

Make recommendations of additional items to buy based on what is already in the shopping cart.

Adapted from Overture.com - 2005

Web Site Management:Payment Processing

Web Site Management:Payment Processing

Steps in Online Payment Processing

1. Merchant submits credit card transaction to the Payment Gateway on behalf of a customer via secure connection from a Web site.

2. Payment Gateway receives the secure transaction information and passes it via a secure connection to the Merchant Bank’s Processor.

3. The Merchant Bank’s Processor submits the transaction to the Credit Card Interchange (a network of financial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).

4. Credit Card Interchange routes transaction to customer’s Credit Card Issuer.

5. Credit Card Issuer approves / declines the transaction based on customer’s available funds and passes transaction results, and if approved, the appropriate funds, back through the Credit Card Interchange.

6. Credit Card Interchange relays transaction results to Merchant Bank’s Processor.

7. Merchant Bank’s Processor relays transaction results to Payment Gateway.

8. Payment Gateway stores transaction results and sends them to customer and/or merchant.

9. Credit Card Interchange passes appropriate funds for the transaction to Merchant’s Bank, which then deposits funds into the merchant’s bank account.

Web Site Management:Payment Processing

Some things to keep in mind: The merchant needs a special Internet Merchant

Account The merchant needs to arrange for service through an

Internet entity called a Payment Gateway The merchant needs to submit charges for settlement

– daily or weekly

Merchant’s sign-up process at VeriSign.com

Web Site Management:Order Processing and Fulfillment

Web Site Management:Steps in Order Processing and Fulfillment

Order validated Settlement of order payment Customer notified Items picked Inventory updated Items packed (with packing slip) Shipping labels prepared Shipper pickup arranged Shipper picks up Send shipping confirmation (with tracking

number) to customer

Web Site Management:Order Processing and Fulfillment

Merchant has to be notified or become aware that an order has been placed

One reliable person should be made responsible for checking / processing orders

It should become part of their ‘job description’ What mode of informing?

Email? Manual check of the site?

How frequently / often will the person check / process?

Web Site Management:Order Processing and Fulfillment

Customer has to be notified of order confirmation

Method – email, phone? Confirmation of stage in process

Order placed Charge assessed to card Order shipped

Web Site Management:Order Processing and Fulfillment Packaging

Effective AND attractive

Fulfillment Track inventory accurately Make sure you have enough product Indicate availability on web site – database inventory

Shipping Vendor(s) and methods Rates – how much and how assessed

included in price, flat rate, by weight, by number of items Shipment tracking Shipment status updates Remember - foreign shipping may require additional paperwork

Product guarantees and returns Post a visible policy with explicit instructions Handle returns quickly

WEB SITE PLANNING / OPERATING

CHECKLISTS AND

OTHER RESOURCES

Website Planning / Operating Checklist Have you carefully analyzed your market and competition? Do you know who your target audience is, and is your website speaking to

them? Do your prices include a realistic margin for profit when all expenses are

subtracted including shipping, customer service and advertising Are your prices competitive with similar online businesses? Are your site’s objectives and purpose clear? Are your products or services clearly identified? Are the competitive advantages of your products or services clearly stated? Do you have a business plan?  Have you planned 1, 3 and 5 years out?  Will your website ever make money? Does your staff clearly understand their organizational duties and who is in

charge? How is your company’s hierarchy and decision process handled?  Is there a clear path from R&D to sales? How quickly can your company

initiate innovative ideas and products and have them online? Is your website’s architecture well designed and easy to navigate? Is your shopping cart easy to use? Is it secure? Is your electronic infrastructure set up efficiently?  Do your website, product database, shipping, inventory, accounting, e-mail

and customer database integrate well with each other?  Is your database the hub? Do you have good statistical analysis software in place to track visitor and

customer information?

Website Planning / Operating Checklist Does your website have a professional appearance when compared to your

competition?  Is your text well written, concise and free of errors? Do you change your website frequently to make it ‘fresh’? Are your photos high quality and well lit? Are your graphics and photos optimized for the web? Do they represent your products well? Do you have click-to-enlarge photos of your products? Does your website load quickly? Is your software working well between inventory, fulfillment, shipping, customer

service and accounting? Do you have a merchant credit card processing account? Have you decided on transaction policies, types of transactions, privacy policies,

secure data storage for customer data? Does your staff know what to do in every situation? Are you able to fulfill orders quickly? Do you respond quickly to customer e-mail questions and service issues? Do you have a toll-free telephone number and can customers easily find someone

to talk to? Do you or the person responsible for your website and marketing have intimate

knowledge of the internet? How many hours per day is spent online?  Do you purchase, conduct business and research online yourself? Are you watching for online trends and emerging technologies?  Do you know if streaming media or other interactive technologies are beneficial for

your website?

Other Online Resources

A lot of small business related information - AllBusiness.com

Universal online payment processing – PayPal.com

Online payment processing and transaction security – VeriSign.com

Ecommerce and the Internet: Conclusion

We Talked About: What is e-commerce and why do it? The Internet Website hosting basics Website development and design basics Website management basics

Now You Should: Go Out and Explore Some Web Site Options Maybe Even Start a Web Site

In The Next Workshop We’ll Talk About: How To Effectively Market Your Site Online Exchanges and Co-operatives

Effective Online Business: Hosting, Marketing, and Management StrategiesWorkshop #2

Presenters:

Kelly Burke – University of Hawaii at HiloSteven Parente – Aina Hawaiian Tropical Products

Supported by a USDA Cooperative State Research, Education and Extension Service Grant through the University of Hawaii at Hilo and Dr. Marcia Sakai

Effective Online Business Marketing and Management Strategies

Marketing your Internet business

Monitoring your site’s performance

Extending business opportunities - online exchanges / cooperatives

Website Marketing

Excellent customer service Word of mouth is the best form of advertising

Plan a realistic monthly marketing and advertising budget Search engines Directories Traditional off-line media

Domain name should suggest your service or products Ex: FlowersByKelly.com or flowers-by-kelly.com

not kelly.com

The text in your website is critical to marketing Descriptive, accurate, concise Include keywords – more than once – but not too

often

Website Marketing

Website Marketing: Three Objectives

Increase Presence Optimize

Drive Traffic Publicize

Convert Visitors Monetize

Website Marketing

Find out if your site is indexed Pages in cache

At Google cache:http://your-domain.com Ex: cache:http://primal-elements.com - nothing? Ex: cache:http://www.primalelements.com

Number of pages indexed in domain At Google or Yahoo! site:your-domain.com At Google site:www.uhhiloagstore.com At Yahoo! site:www.uhhiloagstore.com

Search Engine Marketing

Search Engine Marketing

Combination of: Your site’s pages (content)

+ Bid for placement advertising

Sponsored results at search engine sites Ex: search Google for “bath soap”

Most search engines use weighted point systems to display results in a ranked order

Ranking is result of page “grade”

Grade = title + description + keywords + H1 tags + links-into + ‘alt’ descriptions + number of images + page size

Use a tool at Summit Media to analyze your site http://tools.summitmedia.co.uk/spider

Search Engine Marketing: Basic Design

Search Engine Marketing: Basic Design

It’s all about ‘descriptive content’

Limit use of multimedia

Limit use of graphics

Use long descriptive ‘link’ text

Ex: Here you will find a listing of all of the courses

Dr. Burke teaches.

Spell check and edit

Make it easy to move around the site

Avoid frames

Search Engine Marketing: Optimization

Use a descriptive ‘Title’ No more than 40 characters including spaces Include keyword in title Ex: Flowers-by-Kelly Home Page – Orchids for all

occasions

Use meta-tags Description meta-tag – should

Be no more than 190 characters long Include keywords Be factual and accurate Include general product information Include information about target audience Not include slang, exaggeration, or hyperbole

Keywords meta-tag Header ‘H1’ tags

Title Tag <title>Sore Okole Mountain Bikes - Home Page</title>

Description Tag <META NAME = “description” CONTENT = “Sore Okole Mountain

Bikes is the place for all of your biking needs, including frames, components, accessories, gear and popular brands like Cannondale, Trek and Specialized”>

Keywords Tag <META NAME = “keywords” CONTENT = “mountain, bike, bikes,

Cannondale, Trek, Specialized, components, gear, frames”>

Header Tag <h1> Sore Okole Mountain Bicycles </h1>

Example of HTML source at Sore Okole Bicylcles

Search Engine Marketing: Optimization Using Meta Tags

Search Engine Marketing: Bid for Placement and Keywords

Register with PPC system (search engine)

Load account

Create an advertisement Title, body text, link to ‘landing’ page

Choose keywords to associate with the ad

For each keyword you associate - bid amount you are willing to pay for each click for the ad

Search Engine Marketing:Bid for Placement - PPC Advertising

Search Engine Marketing: Keywords How they work Keyword analysis

Keyword rank = meta tag placement + capitalization + font size + word position in document relative to other words

Identify competitors’ keywords Look up synonyms

Bicycle and bike Consider plurals and spelling mistakes

Bicycles and bicycels Research the use of the keyword

Yahoo! Advertiser Center Tools Term Suggestion Type in search term

Search Engine Marketing: Keywords

Keywords should attract visitors in all three stages of the buying cycle

Researching General keywords mountain bikes

Shopping (comparing) More focused cross country mountain bikes

Purchasing Specific choices Specialized Rockhopper (a

brand of cross-country mountain bike)

Many sites will have to manage dozens and even hundreds of keywords

Every keyword should ‘land’ the visitor at the most relevant page for that keyword Example: ‘Trek’ should land visitor on a page with

Trek bikes - not on the site’s homepage

Keywords may have to change to reflect ‘seasonality’

Search Engine Marketing: Keywords

Search Engine Marketing: Keywords

Matching Broad

Mountain bikes – whenever search contains these words

Phrase “Mountain bikes” – only when search contains this

phrase Could be in a search for “used mountain bikes”

Exact [downhill mountain bikes] – only when search specifies

this exact order of words Would not show for search of “mountain bikes

downhill” Negative

-Used – does not show when this word or phrase is used by someone looking for used bikes

Search Engine Marketing: Keyword Tools

www.Adwords.Google.com www.Wordtracker.com

Searches data at large web-crawlers like www.Dogpile.com

Stores two months of searches – 300 million searches Number of times searched for in last 60 days Estimates number of searches per day Similar terms & common misspellings Comparison of number of times term is searched for

and number of pages returned for the term Look for term with many searches and few pages

returned

Search Engine Marketing: Valuing PPC Search Terms Determine how much gross profit (after costs) you make per

sale Is there a ‘lifetime’ value per customer or Do you value a customer as ‘one time’ only?

Calculate ‘conversion’ rate Shop.org estimates retail industry average at 2.4% When possible use your own site statistics

Calculate PPC value – also called Conversion Cost If your gross profit is $10 per sale And your conversion rate is 4% (4 sales per 100 click-throughs) Then your PPC value is $10 X .04 = $0.40 - that you would be willing

to pay per visitor (PPC) In other words, you can pay $0.40 per click through and after 25 of

them you would have paid 25 X $0.40 = $10.00 but you’d expect 1 of the 25 visitors (4%) to buy something - giving you that $10.00 gross profit, covering your PPC costs

Search Engine Marketing: Cross-linking and Other Issues

Page Rank is increased by More links into your site Links into your site from more relevant sites

Cross-linking is also a form of ‘Branding’ Use linking strategies that enhance your website's position –

not detract from potential sales For instance, link from complementary products sites rather than

from similar products sites Cross-linking sources:

Trade associations Companies you do business with Press releases and promotions Have content people value (ex: history of lei making) Contact relevant sites

The power of cross-linking Check link popularity - for ex: at AltaVista.com -

link:flowersbykelly.com

Search Engine Marketing:Cross-linking

Search Engine Marketing: What Search Engines Don’t Like Don’t search or find it difficult to search when they see:

Frames, images, multimedia (ex: flash, animation), image maps

Avoid frames, images, animation unless necessary Move images and image maps to bottom of page

Scripts, excessive formatting code Call external scripts – don’t embed in source Use external CSS files for formatting

Dynamic pages – too many parameters, too many possible pages

Use static pages when possible Use one or two parameters at most

Will not search sites that demand cookies for site access

Search Engine Marketing: Submit to the Major Engines

AltaVista – www.altavista.com AOL.COM Search – search.aol.com Ask Jeeves – www.askjeeves.com Google – www.google.com Overture – www.overture.com Excite – www.excite.com Fast – www.alltheweb.com HotBot – www.hotbot.com Lycos – www.lycos.com MSN Search – search.msn.com

Don’t forget Froogle – www.froogle.com

Search Directory Marketing

Search Directory Marketing

Directories are different than engines

Index by categories rather than keywords So – there are far fewer categories

Why submit to directories? Another channel of exposure Each one is one more ‘link into’ your site – remember

cross-linking

Major directories are Google Directory – fed by Open Directory Project

Yahoo! Directory Fourteen categories – thousands of subcategories So may be difficult choosing a category to be listed in Submitting costs $$$

Open Directory Project – www.dmoz.com

LookSmart – www.looksmart.com

Search Directory Marketing

Search Engine Marketing: Webmaster SEO Resources

Google’s webmaster pages http://www.Google.com/webmasters/guidelines.html http://www.Google.com/webmasters/faq.html

Yahoo help http://help.Yahoo.com/help/us/ysearch/index.html

Search Engine Watch http://www.SearchEngineWatch.com

Pandia Search Central http://www.Pandia.com

Open Directory Project http://www.dmoz.org/Computers/Internet/Searching

Non-Search Engine Marketing:

Non-Search Engine Marketing Advertising banners

Typical ad = 468 x 60 pixels (about 1” x 5”) Are they effective?

Click through rates of 1 – 3 per thousand impressions Buying them

Costs dropping – ~$20 for 1,000,000 impressions (banner.com) Link ‘exchanges’ – ex: flower sellers could partner with gift sellers or

gift-card sellers Remember - having link partners also looks good to search engines

Are they right for your products or services?

Banner strategies Banner should load quickly and have a ‘call to action’ – ex: “click

here for…” Have inventory of 5-6 banners Have them rotated every 5,000-10,000 impressions Use multiple banner exchanges for different networks of targets Look / negotiate for more ‘targeted’ exposures (they target using

‘keywords’ that you bid on) Monitor click-throughs for each banner and from each exchange

Opt-in e-mail databases Promotions, e-mail marketing, direct mail marketing Build lists from store front, web site, catalogs Buy lists from list sellers Response rates higher than with banner ads – as

much as 5%-10% They are targeted

Effectiveness of banner ads and email programs may be considered as “Brand Building”

Non-Search Engine Marketing

Non-Search Engine Marketing

Affiliate programs and promotional partnerships Pay to have leads sent to you (pay per-click or per-

sale) Ex: www.myaffiliateprogram.com

Bonus point strategies can develop repeat business

The importance of traditional advertising Print – can cost $2 - $3 per sale Radio, television – can cost $10 - $40 per sale

Website Marketing: Follow-up Management Issues

Website Marketing: Follow-up Management

Collecting / analyzing visitor and customer data Discovering your customers’ patterns, wants and

desires Using software to analyze the data

Ex: uhhiloagstore at Yahoo! Store What to analyze How often

ROI (Return On Investment) from advertising and marketing Measuring advertising effectiveness What is your “Cost Per Conversion”?

For example Google has a “Conversion Tracker” tool

Website Marketing Checklist Does your domain name make sense with your service or products? Is the text in your website descriptive, concise and accurate? Do you understand how search engines work and that most use a weighted point system to

display results? Do you understand what bid-for-placement marketing is? Do you understand what sponsored results are in the search engines? Do you understand what cross-linking is? Do you know linking strategies that enhance your website's position and do not detract from

potential sales? Do you know that some past internet marketing techniques can actually get your website

penalized with the search engines? Have you planned for a realistic monthly marketing and advertising budget? Is online marketing such as advertising banners good for your products or services? Would traditional advertising work with your online presence, such as print, radio and

television? Have you considered creating an opt-in e-mail database for promotions, e-mail marketing and

direct mail marketing? Are there promotional partnerships available for your products or services? Do you have bonus point strategies in place to develop repeat customer traffic? Do you have the software in place to collect and analyze visitor and customer data?  Do you analyze it regularly and learn your customer patterns, wants and desires? Do you have a good ROI (Return On  Investment) from your advertising and marketing? Do you

know how to tell?