chap13 e-commerce and entrepreneurship

Chapter 13: E-Commerce 1Copyright 2003 Prentice Hall Publishing Company

E-Commerce andEntrepreneurship

E-Commerce andEntrepreneurship


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

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

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

High-volume, low-margin, commodity products High-volume, low-margin, commodity products are best suited for selling on the Web. are best suited for selling on the Web.

Internet Users by World Region

Africa0.8%

Asia/Pacific Rim28.0%

Europe30.1%

Middle East0.9%

Canada/United States35.2%

Latin America4.9%


Benefits of Selling on the WebBenefits of Selling on the Web

Opportunity to increase revenuesOpportunity to increase revenues 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


Benefits of Selling on the WebBenefits of Selling on the Web

Power to educate and informPower to educate and inform Ability to lower the cost of doing businessAbility to lower the cost of doing business Ability to spot new business opportunities Ability to spot new business opportunities

and capitalize on themand capitalize on them Power to track sales resultsPower to track sales results


E-CommerceE-Commerce

Survey: Only 27% of U.S. companies Survey: Only 27% of U.S. companies with fewer than 50 employees have Web with fewer than 50 employees have Web sites.sites.

Small companies account for more than Small companies account for more than 50% of all retail sales in the U.S., but 50% of all retail sales in the U.S., but they generate only 6% of online retail they generate only 6% of online retail sales. sales.

Why?Why?


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

How a company exploits the Web’s How a company exploits the Web’s interconnectivity and the opportunities it interconnectivity and the opportunities it creates to transform relationships with creates to transform relationships with suppliers, customers, and others is crucial to its suppliers, customers, and others is crucial to its success.success.

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


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

Developing a deep, lasting relationship with Developing a deep, lasting relationship with customers takes on even greater importance on customers takes on even greater importance on the Web.the Web.

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

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


12 Myths of E-Commerce12 Myths of E-Commerce

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

0%

5%

10%

15%

20%

25%

30%

35%

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

Number of Weeks

Time Required to Develop an E-Commerce Site



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

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

Myth 3: Making money on the Web is easy.Myth 3: Making money on the Web is easy.

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


Privacy and the WebPrivacy and the Web

Privacy on the Web Privacy on the Web doesdoes matter! matter! Jupiter Communications survey: 64% of Jupiter Communications survey: 64% of

Web customers distrust Web sites.Web customers distrust Web sites. Post a privacy policy and stick to it.Post a privacy policy and stick to it. Safeguard information your company Safeguard information your company

collects from customers. collects from customers.



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


The Importance of ServiceThe Importance of Serviceon the Webon the Web

Jupiter Research Study: 72% of online Jupiter Research Study: 72% of online buyers cite service as a critical factor in buyers cite service as a critical factor in their online shopping satisfaction.their online shopping satisfaction.

Unfortunately…Unfortunately… Only 41% said they were satisfied with Only 41% said they were satisfied with

the service they receive from online the service they receive from online merchants. merchants.


The Importance of ServiceThe Importance of Serviceon the Webon the Web

Study: 75% of Web shoppers who fill their on-Study: 75% of Web shoppers who fill their on-line shopping carts become frustrated and leave line shopping carts become frustrated and leave the site before checking out.the site before checking out.

Reasons:Reasons: Could not find items they wantedCould not find items they wanted Shopping cart too hard to findShopping cart too hard to find Checkout took too longCheckout took too long Site did not look trustworthySite did not look trustworthy Shipping charges too highShipping charges too high



Myth 8: Flash makes a Web site better.Myth 8: Flash makes a Web site better.

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.

$50 $150$433

$919

$1,929

$3,632

$5,950

$8,530

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Mill

ion

s o

f $

1998 1999 2000 2001 2002 2003 2004 2005

B2B E-Commerce Sales



Myth 8: Flash makes a Web site better.Myth 8: Flash makes a Web site better.

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.


Approaches to E-CommerceApproaches to E-Commerce

On-line shopping mallsOn-line shopping malls Storefront building servicesStorefront building services Internet service providers (ISPs)Internet service providers (ISPs) Hiring professionals to design a custom Hiring professionals to design a custom

sitesite Building a site in-houseBuilding a site in-house


Online Shopping MallsOnline Shopping Malls

Advantages:Advantages: SimplicitySimplicity Low costLow cost

Disadvantages:Disadvantages: Lack of prominenceLack of prominence Lack of control over siteLack of control over site


Storefront-Building ServicesStorefront-Building Services

Advantages:Advantages: SimplicitySimplicity Low cost – as little as $100 to $500 per Low cost – as little as $100 to $500 per

monthmonth DisadvantagesDisadvantages

Cookie-cutter approachCookie-cutter approach Handle only a limited number of productsHandle only a limited number of products


Internet Service ProvidersInternet Service Providers

Provide many of the same features as store-Provide many of the same features as store-front design services but offer more flexibility front design services but offer more flexibility and customized designs. and customized designs.

Can grow with a company as its online sales Can grow with a company as its online sales volume grows. volume grows.

What to consider when choosing:What to consider when choosing: CostCost DowntimeDowntime Quality of backup systemsQuality of backup systems Capacity for hosting sitesCapacity for hosting sites


Hiring ProfessionalsHiring Professionals

Key advantage: Ability to customize a Key advantage: Ability to customize a site, making it anything an entrepreneur site, making it anything an entrepreneur wants. wants.

Major disadvantage: CostMajor disadvantage: Cost A custom-designed site can cost between A custom-designed site can cost between

$10,000 and $30,000$10,000 and $30,000 A site with complete front-office and back-A site with complete front-office and back-

office integration can cost more than office integration can cost more than $500,000!$500,000!


Building a Site in-HouseBuilding a Site in-House

Key advantage: Complete control over Key advantage: Complete control over the site and its design, operation, and the site and its design, operation, and maintenance.maintenance.

Major disadvantage: Cost of hiring staff.Major disadvantage: Cost of hiring staff. Cost can reach $250,000 to $500,000Cost can reach $250,000 to $500,000


Strategies for E-SuccessStrategies for E-Success

Focus on a market nicheFocus on a market niche Develop a communityDevelop a community Attract visitors by giving away “freebies” Attract visitors by giving away “freebies” Make creative use of e-mail, but avoid Make creative use of e-mail, but avoid

becoming a “spammer” becoming a “spammer”


Strategies for E-SuccessStrategies for E-Success

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

Consider forming strategic alliancesConsider forming strategic alliances Make the most of the Web’s global reachMake the most of the Web’s global reach Promote your site online and offline Promote your site online and offline


Designing a Killer Web SiteDesigning a Killer Web Site

Start with your target customer.Start with your target customer. Select a domain name that is consistent Select a domain name that is consistent

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



Be easy to find.Be easy to find. Give customers what they want.Give customers what they want. Establish hyperlinks with other Establish hyperlinks with other

businesses, preferably those businesses, preferably those selling complementary products.selling complementary products.

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



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

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

Follow a simple design.Follow a simple design.


Web Site Design TipsWeb Site Design Tips

Avoid clutterAvoid clutter Avoid huge graphicsAvoid huge graphics Include a menu bar at top of pageInclude a menu bar at top of page Include navigation buttonsInclude navigation buttons Incorporate meaningful content into Incorporate meaningful content into

the sitethe site Include a “FAQ” sectionInclude a “FAQ” section



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

wordswords Avoid small fonts on “busy” Avoid small fonts on “busy”

backgroundsbackgrounds Use contrasting colors for text and Use contrasting colors for text and

graphicsgraphics



Be careful with framesBe careful with frames Test the site on different browsers Test the site on different browsers

and different size monitorsand different size monitors Collect information from visitors, but Collect information from visitors, but

don’t put them through a tedious don’t put them through a tedious registration processregistration process

Make sure the page looks appealingMake sure the page looks appealing Remember: Simpler is betterRemember: Simpler is better



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

Keep your site updated.Keep your site updated. Consider hiring a professional to Consider hiring a professional to

design your site. design your site.


Tracking Web ResultsTracking Web Results

CounterCounter Log-analysis softwareLog-analysis software ClusteringClustering Collaborative filteringCollaborative filtering Profiling systemsProfiling systems Artificial intelligenceArtificial intelligence


Ensuring Web PrivacyEnsuring Web Privacy

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

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

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


Ensuring Web SecurityEnsuring Web Security

Virus detection softwareVirus detection software Intrusion detection softwareIntrusion detection software FirewallFirewall


Web SitesWeb Sites

All-Outdoors Whitewater RaftingAll-Outdoors Whitewater Raftinghttp://www.aorafting.comhttp://www.aorafting.com

Earth Treks Inc.Earth Treks Inc.http://www.earthtreksclimbing.comhttp://www.earthtreksclimbing.com

Just BallsJust Ballshttp://www.justballs.comhttp://www.justballs.com

chap13 e-commerce and entrepreneurship

Documents

ecommerce copyright

ecommerce site

world of ecommerce

ecommerce survey

web customers

ecommerce effort

web privacy

web success