E-Commerce and Entrepreneurship

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Nov 18, 2013 (3 years and 4 months ago)

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Chapter 13: E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

1

E
-
Commerce and

Entrepreneurship

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

2

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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

3

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.

18.8
19.4
33.4
102.3
231.0
319.1
409.4
-
50
100
150
200
250
300
350
400
450
Millions of Internet Users
Oceania/Australia
Middle East
Africa
Latin America/Caribbean
North America
Europe
Asia
Region
Number of Internet Users (in Millions)
Source: Data from Internet Usage Statistics: The Big Picture, Internet World Stats, 2007, http://www.internetworldstats.com/s
tat
s.htm.

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

5

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


Chance to attract new customers


Ability of brick
-
and
-
mortar retailers to drive online
customers to their stores and increase sales there


Ability to expand into global markets


Ability to remain open 24 hours a day, seven days a
week


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

6

Benefits of Selling

on the Web


Capacity to use the Web’s interactive nature to
enhance customer service


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


Opportunity to build credibility and brand identity
among customers

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

7

E
-
Commerce


National Small Business Association
Survey: 60% of small companies have
Web sites, but...


Only 40% of small companies actually
sell merchandise online


Why?

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

8

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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

9

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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

10

12 Myths of E
-
Commerce

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


Setting up a site and taking it live are just
the beginning


Updating


Advertising and promoting


SEO strategy


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

11

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


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

12

Privacy and the Web


Privacy on the Web
does

matter!


Gartner survey: 46% of online adults say
that security and privacy concerns have
affected their Internet purchasing behavior


Tips:


Post a privacy policy and stick to it


Safeguard information your company collects
from customers

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

13

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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

14

12 Myths of E
-
Commerce


Myth 7: On the Web, customer service
is not as important as it is in a
traditional retail store

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

15

The Importance of Service

on the Web


Study: 82% of shoppers who had
experienced a frustrating online
shopping experience reported that
they were not likely to return to the
online store, and…


28% said that they were less likely to
shop at the retailer’s physical store


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

16

The Importance of Service

on the Web


Average conversion rate for e
-
commerce sites is 2.4%, down from
3.1% in 2001


Cost: Billions of dollars in lost sales,
much of it because of poor customer
service


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

17

The Importance of Service

on the Web


Study: 48% of Web shoppers who fill their
on
-
line shopping carts become frustrated
and abandon them before checking out


Reasons:


Customer was comparison shopping


Shipping charges too high


Checkout process required

too much time and information


Product out of stock


Customer uncomfortable with

the site’s buying process


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

18

Tips for Reducing Shopping
Cart Abandonment Rate


Offer multiple shipping methods and
provide free shipping if a customer’s
purchase exceeds a minimum amount


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 whether an item is
in stock

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

19

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


Include a short survey of customers who
abandon their carts

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

20

12 Myths of E
-
Commerce


Myth 8: Flash makes a Web site better


Myth 9: It’s what’s up front that
counts



Virtual order fulfillment


Myth 10: E
-
commerce will cause brick
-
and
-
mortar retail stores to disappear

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

21

12 Myths of E
-
Commerce


Myth 11: The greatest opportunity for
e
-
commerce lies in the retail (B2C)
sector


B2B sales account for more than 90% of
all e
-
commerce transactions



Myth 12: It’s too late to get on the
Web







E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

22

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”

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

23

Strategies for E
-
Success


Make sure your Web site says
“credibility”


Consider forming strategic alliances


Affiliate marketing programs


Make the most of the Web’s global
reach


Promote your site online and offline

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

24

Strategies for E
-
Success


Develop an effective search marketing
strategy


Forrester study: 67% of Internet
shoppers go straight to a search engine
to find the products and services they
want


Search engine marketing


fastest
growing segment of advertising spending

2%
5%
7%
10%
11%
29%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percent of Companies
Other
E-mails to prospect lists
Comparison shopping engines
Affiliate programs
Catalogs
Organic listings
Search engine marketing
Source
Sources of New Online Customers
Source: State of Retailing Online 2006, Forrester Research, 2007.

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

26

A Search Marketing
Strategy


Natural (organic) listings

-

the result of
“spiders,” powerful programs that crawl the
Web, looking at key words, links, and other
data


Success requires a search engine optimization (SEO)
strategy

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

27

Search Engine
Optimization (SEO)


Goal: Get your site listed at or near
the top of search results listing


62% of search engine users click
on a link to a site that appears on
the first page of the search results

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

28

A Search Marketing
Strategy


Natural (organic) 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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

29

Paid Listings


Use paid listings to accomplish what
natural listings cannot


Five search engines


Google, Yahoo!,
MS Live Search, Ask.com, and AOL


account for 97% of all searches in the
U.S.


Average cost of a keyword has risen
from 39
¢

in 2004 to 58
¢

today


Beware of click fraud!


Estimate: Pay
-
per
-
click fraud rate =14%

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

30

A Search Marketing
Strategy


Natural (organic) 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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

31

Designing a Killer Web
Site


Start with your target customer


Give customers what they want

60%
64%
64%
68%
71%
86%
89%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Proportion of Shoppers
Customer reviews
Product comparisons
Zoom and rotate views of
products
Store locator feature
Ability to conduct keyword
search on site
Promotional discounts
Free shipping
Feature
Features that Make U.S. Shoppers More
Likely to Buy from a Web Site
Source: eBrain Market Research/Consumer Electronics Association, 2003.

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

33

Designing a Killer Web
Site


Select a domain name that is
consistent with the image you
want to create for your company
and register it


Short


Memorable


Indicative of a company’s business


Easy to spell

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

34

Designing a Killer Web
Site


Make your Web site easy to navigate


Create a gift idea center


Build loyalty by giving online
customers a reason to return


Establish hyperlinks with other
businesses, especially those selling
products that complement yours

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

35

Designing a Killer Web
Site


Include an e
-
mail option and a
telephone # on your site


Offer shoppers online tracking


Offer Web specials


Look for the opportunity to
cross
-
sell


Use customer testimonials


Follow a simple design

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

36

Web Site Design Tips


Avoid clutter


Avoid huge graphics


Include a menu bar at the top of the
page


Include navigation buttons


Minimize the number of clicks required
to a page


Incorporate meaningful content into
the site

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

37

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


Avoid small fonts on “busy”
backgrounds

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

38

Web Site Design Tips


Use contrasting colors for text and
graphics


Be careful with frames


Test the site on different browsers
and different size monitors


Collect information from visitors,
but don’t put them through a
tedious registration process


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

39

Web Site Design Tips


Include a search function and
company contact information


Avoid automated music


Make sure the page looks
appealing


Remember: Simpler is better

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

40

Designing a Killer Web
Site


Assure customers that their online
transactions are secure


Post S&H charges up front


Create a fast, simple checkout
process


Confirm transactions with e
-
mail

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

41

Designing a Killer Web
Site


Keep your site updated


Test your site often


Consider hiring a professional to
design your site

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

42

Tracking Web Results


Web analytics


tools that measure a
Web site’s ability to attract customers,
generate sales, and keep customers
coming back


Commerce metrics


Visitor segmentation measurements


Content reports


Process measurements


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

43

Measures of Web Site
Performance


Click
-
through rate (CTR)

-

the
proportion of people who see a
company’s online ad and actually click
on it to reach the company’s Web site


CTR = # of clicks
÷

# of impressions

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

44

Measures of Web Site
Performance


Cost per acquisition (CPA)



the cost a
company incurs to generate each
purchase (or customer registration)


CPA = Total cost of acquiring a new
customer
÷

number of new customers

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

45

Return on Investment
(ROI)


Conversion (browse
-
to
-
buy) rate

-

the
proportion of visitors to a site who
actually make a purchase


Conversion rate = number of customers
who make a purchase
÷

number of
visitors to a site

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

46

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

E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

47

Ensuring Web Security

Study: 70% of Web sites have
vulnerabilities that are rated from
medium
-

to high
-
risk


Virus detection software


Intrusion detection software


Firewall


Secure sockets layer (SSL)
technology


E
-
Commerce

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

48


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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.


Copyright ©2009 Pearson Education,
Inc.

Publishing as Prentice Hall