Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall E-Commerce E-Commerce and the Entrepreneur and the Entrepreneur CHAPTER CHAPTER 9 9
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
E-Commerce E-Commerce and the Entrepreneurand the Entrepreneur
E-Commerce E-Commerce and the Entrepreneurand the Entrepreneur
CHAPTER CHAPTER 99
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 2Ch. 9: E-Commerce and the Entrepreneur
The Internet: Changing the The Internet: Changing the Face of Business Face of Business
Successful companies embrace the Internet Successful companies embrace the Internet as a mechanism for transforming their as a mechanism for transforming their companies and for changing companies and for changing everythingeverything about the way they do business.about the way they do business.
Business basics still apply online. Business basics still apply online. In the world of e-commerce, In the world of e-commerce,
company size matters less company size matters less than speed and flexibility.than speed and flexibility.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 3Ch. 9: E-Commerce and the Entrepreneur
The Internet: Changing the The Internet: Changing the Face of Business Face of Business
Study: By 2011, the Internet will influence Study: By 2011, the Internet will influence more that $1 billion in offline sales.more that $1 billion in offline sales.
Neilsen study: 86% of the world’s online Neilsen study: 86% of the world’s online population has used the Internet to make a population has used the Internet to make a purchase. purchase.
Items purchased most often online include Items purchased most often online include computer hardware and software, tickets, computer hardware and software, tickets, books, music, movies, gift cards, toys and books, music, movies, gift cards, toys and video games, and baby products. video games, and baby products.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
FIGURE 9.1 Online Retail Sales in the U.S.
9 - 4
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 5Ch. 9: E-Commerce and the Entrepreneur
Benefits of Selling on the WebBenefits of Selling on the Web
Opportunity to increase revenues and Opportunity to increase revenues and profitsprofits
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 Power to educate and informPower to educate and inform
In addition to the text
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
Benefits of Selling on the WebBenefits of Selling on the Web
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 Ability to grow fasterAbility to grow faster Power to track sales resultsPower to track sales results
Conversion rate – Conversion rate – the percentage of customers the percentage of customers to a Web site who actually make a purchase. to a Web site who actually make a purchase.
9 - 6
In addition to the text(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur 9 - 7
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 8Ch. 9: E-Commerce and the Entrepreneur
E-CommerceE-Commerce
The Small Business Research Board The Small Business Research Board reports: reports: 57.3% of small business owners in the 57.3% of small business owners in the
U.S. have a Web siteU.S. have a Web site 56.1% of those sites engage in online 56.1% of those sites engage in online
sales. sales. Barriers:Barriers:
Not knowing how or where to startNot knowing how or where to start Cost and time concerns Cost and time concerns
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
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 suppliers, customers, and others is crucial to its success.crucial to its success.
Web success requires a company to Web success requires a company to develop a plan for integrating develop a plan for integrating the Web into its overall strategythe Web into its overall strategy..
9 - 9
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 10Ch. 9: E-Commerce and the Entrepreneur
Factors to Consider Before Factors to Consider Before Launching into E-CommerceLaunching into E-Commerce
Developing deep, lasting relationships with Developing deep, lasting relationships with customers takes on even greater importance.customers takes on even greater importance.
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 customers whose tastes, needs, and preferences constantly change. preferences constantly change.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 11Ch. 9: E-Commerce and the Entrepreneur
Assessing You Company’s Assessing You Company’s Online PotentialOnline Potential
1.1. Does your product have broad appeal to Does your product have broad appeal to customers everywhere?customers everywhere?
2.2. Do you want to sell your product to Do you want to sell your product to customers outside of your immediate customers outside of your immediate geographic area?geographic area?
3.3. Can the product you sell be delivered Can the product you sell be delivered conveniently and economically?conveniently and economically?
4.4. Can your company realize significant cost Can your company realize significant cost advantages by going online?advantages by going online?
5.5. Can you draw customers to your company’s Can you draw customers to your company’s Web site with a reasonable investment?Web site with a reasonable investment?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 12Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-CommerceMyth 1: Myth 1: Online customers are easy to please.Online customers are easy to please.Myth 2: Myth 2: If I launch a site, customers will flock to it.If I launch a site, customers will flock to it.Myth 3: Myth 3: Making money on the Web is easy.Making money on the Web is easy.Myth 4: Myth 4: Privacy is not an important issue.Privacy is not an important issue.Myth 5: Myth 5: The most important part of an e-commerce The most important part of an e-commerce
effort is technology.effort is technology.Myth 6: Myth 6: I don’t need a strategy to sell online.I don’t need a strategy to sell online.Myth 7:Myth 7: Customer service is not important.Customer service is not important.Myth 8: Myth 8: Flashy Web sites are better than simple Flashy Web sites are better than simple
ones.ones.Myth 9: Myth 9: It’s what’s up front that counts.It’s what’s up front that counts.Myth 10:Myth 10: Its too late to get on the Web.Its too late to get on the Web.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 13Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 1: Online customers are easy to please.Myth 1: Online customers are easy to please.
Experienced online shoppers tend to be Experienced online shoppers tend to be unforgiving and quick click to another site unforgiving and quick click to another site if their shopping experience is subpar or if their shopping experience is subpar or they cannot find the products and they cannot find the products and information they want. information they want.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 14Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.
Myth 2: If I launch a site, customers will Myth 2: If I launch a site, customers will flock to it.flock to it.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 15Ch. 9: E-Commerce and the Entrepreneur
Promotion Is the Key!Promotion Is the Key! Include your URL on everything related to Include your URL on everything related to
your businessyour business Provide phone and e-mail contact Provide phone and e-mail contact
information information Create Web-based newslettersCreate Web-based newsletters Write articles that link to your company’s Write articles that link to your company’s
Web siteWeb site Sponsor online contestsSponsor online contests Establish a blogEstablish a blog
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 16Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.
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.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 17Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.
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.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 18Ch. 9: E-Commerce and the Entrepreneur
Myth 4: Privacy OnlineMyth 4: Privacy Online
Pew Internet Report: Pew Internet Report:
If online companies were able to If online companies were able to alleviate customers’ online alleviate customers’ online privacy and security issues, the privacy and security issues, the percentage of online buyers percentage of online buyers would increase from 66% to 73%.would increase from 66% to 73%.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 5: The most important part of an Myth 5: The most important part of an e-commerce effort is technology.e-commerce effort is technology. Understand the underlying business...Understand the underlying business... ……then use technology to develop an then use technology to develop an
online business model that provides online business model that provides customer value in a profitable way. customer value in a profitable way.
(continued)
9 - 19
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 6: I don’t need a strategy.Myth 6: I don’t need a strategy. An online strategy is critical to successAn online strategy is critical to success Define the target audienceDefine the target audience Understand customers’ needs and Understand customers’ needs and
wantswants Create a strategy to set Create a strategy to set
your site apart from othersyour site apart from others
(continued)
9 - 20
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 21Ch. 9: E-Commerce and the Entrepreneur
Myth 7: The Importance of Myth 7: The Importance of Customer Service on the WebCustomer Service on the Web
Myth 7: Customer service is not important.Myth 7: Customer service is not important. Study: 22% of online shoppers expect higher Study: 22% of online shoppers expect higher
levels of customer service than they do offline. levels of customer service than they do offline. Concern: Concern:
Nearly 90% of online shopper reported they have Nearly 90% of online shopper reported they have had problems completing an online transaction. had problems completing an online transaction.
84% of these shoppers said they would share their 84% of these shoppers said they would share their negative online shopping experience with others!negative online shopping experience with others!
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 22Ch. 9: E-Commerce and the Entrepreneur
Myth 7: The Importance of Myth 7: The Importance of Customer Service on the WebCustomer Service on the Web
Study: 58% of Web shoppers who fill their Study: 58% of Web shoppers who fill their online shopping cars abandon them without online shopping cars abandon them without checking out. checking out.
Reasons:Reasons: Shipping and handling charges too highShipping and handling charges too high Total purchase higher than expectedTotal purchase higher than expected Desire to compare final price before buyingDesire to compare final price before buying Inability to contact customer service Inability to contact customer service
representativerepresentative Forgot use name or password for Web siteForgot use name or password for Web site
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
FIGURE 9.3 Reasons for Abandoning Online Shopping Carts
9 - 23
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 24Ch. 9: E-Commerce and the Entrepreneur
10 Myths of E-Commerce10 Myths of E-Commerce
Myth 8: Flashy Web site are better than Myth 8: Flashy Web site are better than simple sites. simple sites.
Fast download times increase sales Fast download times increase sales potentialpotential
Myth 9: It’s what’s up front that counts.Myth 9: It’s what’s up front that counts. Order systems and support are criticalOrder systems and support are critical
Myth 10: Its too late to get on the Web.Myth 10: Its too late to get on the Web. Web opportunities still existWeb opportunities still exist
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 25Ch. 9: E-Commerce and the Entrepreneur
Strategies for E-SuccessStrategies for E-Success
Focus on a market niche.Focus on a market niche. Develop a community.Develop a community. Attract visitors by giving away Attract visitors by giving away
“freebies.” “freebies.” Make creative use of e-mail, but avoid Make creative use of e-mail, but avoid
becoming a “spammer.” becoming a “spammer.” Make sure your Web site Make sure your Web site
says “credibility.” says “credibility.”
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 26Ch. 9: E-Commerce and the Entrepreneur
Strategies for E-SuccessStrategies for E-Success
Make the most of the Web’s global Make the most of the Web’s global reach.reach.
Use Web 2.0 tools to attract and retain Use Web 2.0 tools to attract and retain customers.customers.
Promote your site online and offline. Promote your site online and offline. Develop an effective search Develop an effective search
engine optimization (SEO) engine optimization (SEO) strategy.strategy.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 27Ch. 9: E-Commerce and the Entrepreneur
Search Engine StrategiesSearch Engine Strategies Natural (organic) Listings Natural (organic) Listings – –
Arise as a result of “spiders,” powerful Arise as a result of “spiders,” powerful programs search engines use to crawl programs search engines use to crawl around the Web.around the Web.
Paid (sponsored) Listings Paid (sponsored) Listings – – Short text ads with links to the sponsoring Short text ads with links to the sponsoring company’s Web site. company’s Web site.
Paid Inclusion Paid Inclusion – – When a company pays a search engine for When a company pays a search engine for the right to submit either selected pages the right to submit either selected pages or its entire Web site content for listing. or its entire Web site content for listing.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
Designing a Killer Web SiteDesigning a Killer Web Site Understand your target customer. Understand your target customer. Give customers what they want. Give customers what they want. Select an intuitive domain name that is Select an intuitive domain name that is
consistent with the image you want to consistent with the image you want to create for your company and register it.create for your company and register it. ShortShort MemorableMemorable Indicative of a company’s businessIndicative of a company’s business Easy to spellEasy to spell
Make your Web site easy to navigate.Make your Web site easy to navigate.
9 - 28
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 29Ch. 9: E-Commerce and the Entrepreneur
Designing a Killer Web SiteDesigning a Killer Web Site
Add wish list capability.Add wish list capability. Use online videos.Use online videos. Create a gift idea center.Create a gift idea center. Build loyalty by giving online customers Build loyalty by giving online customers
a reason to return to your Web site.a reason to return to your Web site. Establish hyperlinks with other Establish hyperlinks with other
businesses, preferably those businesses, preferably those selling complementary products.selling complementary products.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 30Ch. 9: E-Commerce and the Entrepreneur
Designing a Killer Web SiteDesigning a Killer Web Site
Include an e-mail option an a telephone Include an e-mail option an a telephone number on your site.number on your site.
Give shoppers the ability to track their Give shoppers the ability to track their orders online.orders online.
Offer Web shoppers a special all their Offer Web shoppers a special all their own.own.
Follow a simple design.Follow a simple design. Create a fast, simple Create a fast, simple
checkout process. checkout process.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 31Ch. 9: E-Commerce and the Entrepreneur
Designing a Killer Web SiteDesigning a Killer Web Site
Assure customers that online transactions Assure customers that online transactions are secure. are secure.
Establish reasonable shipping and Establish reasonable shipping and handling charges and post them up front. handling charges and post them up front.
Confirm transactions. Confirm transactions. Keep your site updated.Keep your site updated. Test your site often.Test your site often. Consider hiring a professional Consider hiring a professional
to design your siteto design your site
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 32Ch. 9: E-Commerce and the Entrepreneur
Tracking Web ResultsTracking Web Results
Web AnalyticsWeb Analytics – tools that measure a Web – tools that measure a Web site’s ability to attract customers, generate site’s ability to attract customers, generate sales, and keep customers coming back.sales, and keep customers coming back.
Only about 40% of e-businesses use Only about 40% of e-businesses use Web analytics strategically to refashion Web analytics strategically to refashion their Web sites.their Web sites. Commerce metricsCommerce metrics Visitor segmentation measurementsVisitor segmentation measurements Content reportsContent reports Process measurementsProcess measurements
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 33Ch. 9: E-Commerce and the Entrepreneur
Measuring Online PerformanceMeasuring Online Performance
Recency – Recency – The length of time between The length of time between customers’ visits to a Web site.customers’ visits to a Web site.
Click-through Rate (CTR) – Click-through Rate (CTR) – The proportion of people who The proportion of people who see a company’s ad online and see a company’s ad online and actually click on it. actually click on it.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 9: E-Commerce and the Entrepreneur
FIGURE 9.3 E-Mail Open and Click-Through Rates by the Day of the Week
9 - 34
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 35Ch. 9: E-Commerce and the Entrepreneur
Measuring Online PerformanceMeasuring Online Performance
Cost per Acquisition (CPA) – Cost per Acquisition (CPA) – The amount it costs to generate a The amount it costs to generate a purchase (or a customer registration). purchase (or a customer registration).
Conversion (browse-to-buy) ratio – Conversion (browse-to-buy) ratio – The proportion of visitors to a site The proportion of visitors to a site who actually make a purchase.who actually make a purchase.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 36Ch. 9: E-Commerce and the Entrepreneur
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 prominently on your Web site and follow it. Web site and follow it.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 37Ch. 9: E-Commerce and the Entrepreneur
Ensuring Web SecurityEnsuring Web Security
Virus detection softwareVirus detection software
Intrusion detection softwareIntrusion detection software
Firewall Firewall
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 38Ch. 9: E-Commerce and the Entrepreneur
ConclusionConclusion
Know what you need to know before Know what you need to know before launching into e-commercelaunching into e-commerce
Assess the basic strategies to followAssess the basic strategies to follow
Know what works on Web sitesKnow what works on Web sites
Track results and Track results and listen to customerslisten to customers
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9 - 39Ch. 9: E-Commerce and the Entrepreneur
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of
the publisher. Printed in the United States of America.