Effective Online Business: Hosting, Marketing, and Management Strategies Workshop #I - Introduction Presenters: Kelly Burke – University of Hawaii at Hilo Steven Parente – Aina Hawaiian Tropical Products Supported by a USDA Cooperative State Research,
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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
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
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
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).
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.
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
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
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,
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:
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