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E-Commerce

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					E-Commerce
Provided by My Own Business, Content Partner for the SME Toolkit
          E-Commerce Overview
                o What is E-Commerce?
                o Is an E-Commerce website right for your business?
          Setting Up a Website
                o Registering your domain name
                o Finding a host
                o Setting up and maintaining your own server
                o Hosting services
                o Building your website
                o Hiring a professional website developer
                o Designing your own website
          Tips For Developing a Successful Site
                o Make your site easy to use
                o Provide useful content
                o Encourage customer feedback
                o Develop a mailing list
          Online Marketing and Promotion
                o Advertising online
                o Search engines
                o Use key words - meta tags
                o Submit your site
                o Check your positioning regularly
                o E-Bay
          SESSION 9 Business Plan
          SESSION 9 Quiz




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E-Commerce Overview

What is E-Commerce?
E-commerce is the sale of products and services over the Internet. It is the fastest growing segment of our
economy. It allows even the smallest business to reach a global audience with its product or message with
minimal cost. Currently, there are more than 250 million people using the Internet internationally.

Sixty-nine percent of the online population has made at least one purchase in the last 90 days. Analysts
project online sales of $3.2 trillion by the year 2004. The Internet user average household income is $59,000,
making this a very attractive demographic for your business to target.

Is an E-Commerce Website Right For Your Business?

Probably. Much depends on the nature of your business. If you own a
small independent bookstore, is there a good chance that you can get rich           Testimonial
selling your books online? Probably not. Amazon.com and Barnes &                                 Brian Kerns
Noble have established their hold over this market, and their sheer size,                        Computer
name recognition and the relationship of trust they have with their                              Programmer, Web
customers allows them to dominate this market with good pricing (due to                          Developer/Designer
economies of scale) and remarkable customer loyalty.
                                                                                    "A project must be able to carry talent
However, if you own a local bookstore, there are several ways to reach      and time at least for the cost of the time."
new customers, get them to know you better and have them keep coming                               Transcription - html
back for more. You might want to offer notices of special promotions or
readings by authors. Trust will become the cornerstone of building your e-business. As Warren Buffett has
said, "If you don't know jewelry, know your jeweler."

A website doesn't need to exist solely to sell your product online. It can serve a number of roles. It could
supplement the sales of your already established retail store. If you sell a unique product, such as wheat grass
or gourmet chocolates, you might find success reaching others around the country (or the world, for that
matter) who do not have access to these products in their own towns.

Using the Internet for conducting e-commerce will not assure you of being able to compete favorably with
large established competitors. They already have the inventory, delivery and marketing systems in place and
they can deliver the groceries as cheap (or more cheaply) than you can. Yet, the beauty of the Internet is that
it provides a global audience of potential customers and it never closes.

Your customers will have access to information about your business 24 hours a day. How many times have
you wanted information about a store, looked them up in the Yellow Pages, given them a call on Sunday
morning and found that they were closed? Sure, most companies have a recorded message that will say that
they are closed and will give you their hours of operation.

But it is much better to not only have information about your store hours available to your potential customers
24 hours a day, 7 days a week, but also about your entire product line. You can add pictures and maybe even
video. And your customer will even be able to buy from you 24 hours a day. So, your website address should
be promoted everywhere including your stationery, sales forms and advertisements.

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Setting Up a Website

Registering Your Domain Name

Each website has its own unique name, such as Amazon.com or Pets.com. This is your "Domain Name." It is
a unique name that identifies you to all of the other computers on the Internet. You must register your
website's name through something called the Internic so that the other computers on the Internet will know
you exist. Once you've registered, people who type www.yourcompanyname.com into their browsers will be
taken directly to your website.

There are now a number of companies that will assist you with registering your website's name, including
Network Solutions, Register.com, worldwidedomains.com, domainit.com and many others. But remember,
because most of the common and obvious names have already been taken (over 20 million names have been
registered), you'll want to use a utility called "Whois" to find out whether the name you have in mind has
already been snapped up. Register.com has a "Whois" look-up box on their site just for this purpose.

While there are other extensions beyond ".com," it is the easiest to remember. Some extensions such as ".org"
are meant for non-profit institutions, and "edu" and ".gov" for education and government institutions
respectively. Other less widely known extensions include ".ro," ".gs," ".cc," and ".vg." These are often
international extensions. While it might be possible to register mufflershop.cc (mufflershop.com was
registered in August of 1999), people will have a harder time remembering your website's address. If they just
type mufflershop into their browser, they'll probably be taken to your competitor's ".com" site instead of
yours.

Try first to find an easy-to-remember ".com" name for your site. Once you've successfully registered your
domain name, it's yours to keep. It currently costs about $35 per year to have your name registered, usually
with a two year minimum.

Keep in mind that your company name, trademarks, logos and artwork used on your site will require
appropriate trademark and copyright protection under intellectual property laws. Your lawyer should be
consulted on this issue in order to avoid unpleasant surprises (for example, the possibility of being advised
that your company slogan belongs to someone else.)

Finding a Host
During an earlier My Own Business session you learned about location and leasing space for your business.
Similarly, your online business will need to reside somewhere as well. Your choice will depend on a number
of factors. You may choose to buy (by having your own network server) or lease (by having your site hosted
by a web-hosting service).

Setting Up and Maintaining Your Own Server

Setting up your own server is analogous to owning your own store. You set up and maintain the computer
(server) that people on the Internet connect to when they visit your site. Having your own server is almost a
necessity if you will be using large databases for your inventory and customer tracking, as well as for more
advanced programming features. This approach requires a significant amount of technical knowledge and
expertise. Buying and setting up your own server will also be more costly in the short run. The server needs to
be up and running and connected to the Internet 24 hours a day. If it goes down, your website is no longer
accessible to the web surfing public.

You will also want to have a high-speed connection to the Internet, which can cost several hundred dollars or
more per month, to assure fast access to your site when the traffic is heaviest. You may remember when
Victoria's Secret had a fashion show during the Superbowl. Tens of thousands of earnest football-loving
lingerie shoppers flooded the site, bringing it to a near stand-still.

More recently, weddingchannel.com promoted a tie-in with the soap opera All My Children. Viewers were
encouraged to log into the site and vote for which dress one of the lead characters should wear for her
wedding. The response was so great that the site crashed due to too many users trying to access the site
simultaneously. The size and speed of your servers must be adequate to meet the demands of your most
successful days, or your potential shoppers will be turned away.

Hosting Services

A simpler solution for businesses that do not want to get into the technical burdens of hosting their own site is
to have the website hosted by a web hosting service. Using a web hosting service is analogous to leasing real
estate for your store. For a monthly fee ranging from $10-$200 per month for small to moderate sized
businesses, the web host handles the technical details of server maintenance, and you are free to spend your
time developing content for your website.

Hosting services can also provide "user statistics," which track the number of visitors to your site. Depending
on the size and complexity of your site, using a hosting service is often a more cost effective solution for most
small businesses. Resources such as "thelist.com" and "Cnet.com" offers a list of hosting services you can
compare and contrast.

Building Your Website

Your company will need to decide whether to hire a professional web developer to create your website or to
produce your own site "in-house." Both choices come with costs and benefits.

Hiring a professional website developer:

Before hiring a web developer, it's important to do your homework. What is the purpose of your site? Is it to
serve as an online brochure of your products, or do you plan to actually sell your product or services over the
Internet? What is your budget? Who will be responsible for ongoing maintenance of the site? Who will
provide the art and content for the site? Who will own the copyrights for these materials? Will the developer
be responsible for both design and marketing of your website?

Once you are able to answer these questions, begin interviewing site developers. Be sure to look at other
websites they've created and ask for references from other clients with whom they've worked. Ask those
references about their experience with your potential developer. Did they deliver the product in a timely
manner at the quoted price? Did they listen effectively and present a product that matched the company's
vision?
Once you've identified your developer, get a written contract that specifies the responsibilities of that
developer, the timelines for project completion and a complete budget for the total project. This should
include arrangements for ongoing maintenance of the site.

Contracting out your website offers several advantages. A professional developer has the technical knowledge
to create a site that works with all browsers and should be fluent with the current technologies -- whether it's
Flash animation, Javascript enabled tools, streaming audio and video -- and online commerce solutions.
Investing in a professional developer will allow you to spend more time on creating a successful business and
less time learning the new trade of being your own website developer.

Designing your own website

Despite the advantages of using an outside contractor, many businesses choose to create their own websites. If
you or one of your employees has a strong interest in computers and website design, this can be a more
affordable solution. Your web design should not incorporate unusual or unique fonts. It is better to stay with
standard and widely used fonts that can easily be printed or saved to a file.

Tools such as Microsoft Frontpage and Macromedia's Dreamweaver allow you to create websites without any
(or much) prior knowledge of HTML. These "what you see is what you get" editors are similar to programs
such as Microsoft Word in that you insert text and graphics onto your page and specify the appropriate links.
The program then generates the HTML code for you. Pre-defined templates give a consistent look and feel to
your entire site and built-in tools allow you to globally change navigational links throughout your site.

While these programs have improved significantly in recent years, they still are not a perfect substitute for the
hand-coded sites created by a professional web developer. Advanced features, such as interactive forms and
e-commerce capabilities, are difficult to implement. And every hour spent trouble-shooting problems with
your website is time spent away from running your business.

If your business's budget does not allow you to hire a professional and you have a real desire to learn how to
create your own site, spend some time with some of the many online tutorials on creating your own site. Just
remember: your customers will be turned off by a site that appears amateur. Your credibility is at stake, and if
your site is difficult to navigate, has broken links or images or out-of-date content, you will not engender trust
with your customers.

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Tips For Developing a Successful Site

Make your site easy to use. While it might be tempting to have a cutting edge website with all of the bells
and whistles - don't forget the basics. You will fail if a visitor can't navigate successfully through your site.
Provide clear, easy to understand navigational tools on each page of your site. Don't rely on graphical buttons
for your links. Not all web surfers have graphic capable browsers, and some surfers intentionally turn their
graphics off to speed download times. Provide text links.

Provide Useful Content. Don't Just Sell! These days, it's not enough to have a website that lists your
products and provides a shopping cart for purchases. If you want your visitors to return, you'll want to provide
meaningful content. If you sell ski equipment, your site could post local ski conditions, articles about the
latest ski fashion trends, resort reviews or any other information that would give visitors a reason to want to
return for more. A CPA's site could publish tax tips and offer links to IRS forms. A catering service could
offer articles on how to host a successful party.

Encourage customer feedback via online forms and email. Ask your customers what they want. Did they
find what they were looking for? How could your site be more useful or easier to use? Listen to your
customers' frustrations and gripes. They'll tell you what you're doing right and what you're doing wrong.

Develop a Mailing List. Most consumers hate getting junk email, also called "spam." A far more appealing
strategy is to develop a mailing list. Invite your customers to "opt in" to receive a newsletter or notices of
specials running at your business. Make this information relevant and useful for your customer. Provide a
"coupon" that will give them a discount on their next purchase. And, always give the recipient an easy means
to "opt out" of receiving future emails.

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Online Marketing and Promotion

Advertising Online

If you build it will they come? Not necessarily. Once you have established an online presence, your next task
will be drawing traffic to your site. Remember, you are a needle in a haystack competing against millions of
other websites. How will your customers find you? There are a number of strategies for getting potential
buyers to visit your site.

Search Engines

You are probably familiar with Yahoo. It is not really a search engine. It is a directory, which is a vast
collection of websites listed on the Internet. Each submitted site is viewed and approved by one of Yahoo's
editors. Listing your site on Yahoo is free, but not guaranteed. Your site must meet a level of professional
standards, not have broken links or images and offer something unique for Yahoo's visitors.

Not all websites who request a listing on Yahoo are successful. Read their submission guidelines carefully
before attempting to list your site.

Yahoo is just one of many search tools on the Internet. Your site should be registered with all of the major
search engines and directories. These sites include, but are not limited to:


                      AOL Search
                                                                   LookSmart
                      AltaVista
                                                                   Lycos
                      Ask Jeeves
                                                                   MSN Search
                      Direct Hit
                                                                   Netscape Search
                      Excite
                                                                   Northern Light
                      FAST Search
                                                                   Snap
                      Go / Infoseek
                                                                   WebCrawler
                      Google
                                                                   Yahoo
                      HotBot




Registering your site is usually free, although it is now possible to receive better placement on many search
engines by paying a substantial fee. Unless you have a large marketing budget, this is not feasible for most
new online businesses. Instead, simply go to the search engine and look for the link that says "Submit a URL"
or "Submit a site."

There are services available on the Internet that charge a fee to register your site with hundreds of search
engines. This is generally not necessary because site registration, while time consuming, is not particularly
difficult.

By scouring the Internet 24 hours a day, the search engines catalogue the vast number of pages on the Web,
creating indexes based on the content of your site. However, there are things you must do to make your
website "search engine friendly."

Before submitting your site to the search engines, you'll want to add meta tags within the tags of your html
documents. Meta-tags are a list of keywords that users will be most likely to type into a search engine when
searching for your product or service. Many search engines will index your site based on these keywords, as
well as the content of the text within your site.

A sample meta-tag for a designer clothing store might be:

<meta http-equiv="keywords" content="fashion, clothes, clothing, shopping, designer, pasadena, Valentino,
Moschino, Calvin Klein, Jil Sander, Lagerfeld, Giorgio Armani, Prada, St. John, Ralph Lauren, Anne Klein
II, DKNY, Escada, Emmanuel Ungaro, Celine, Gianni Versace, France, Catherine Leroy, garments, informal,
formal, shopping, retail, retailer, retailers, retailing, specialized, couture, pret-a-porter, ready to wear, haute,
haute couture, information, season, spring, winter, summer, autumn, fall, in style, professional, style,">

The meta Description tag should provide a single sentence that accurately describes your online business or
service. This description is often displayed by the search engine below your URL when your site is listed in
the search results.

For example, a Description meta-tag for a discount designer clothing store might be:

<meta http-equiv="description" content="The finest in Designer Clothing by your favorite designers,
including Gucci, Prada, and Versace, at a fraction of the retail cost.">

Be sure to check your search engine positioning regularly by typing in your targeted keywords into all of the
search engines. Examine the statistic logs of your website to find which search engines are driving traffic to
your site and which keywords are most frequently used to find your site.

Targeted Email

Email allows you to communicate directly to your customers. It is also one of the most abused forms of online
advertising on the Internet. Nobody enjoys receiving unsolicited email touting a business or service. While it
is possible to purchase huge mailing lists of email addresses that can be used for marketing your product, you
are likely to turn off large numbers of potential customers by engaging in this practice.

Instead, opt-in mailing lists are now the preferred method of establishing email lists of customers who are
genuinely interested in your product or service. Give customers the option of signing up for the opportunity to
receive periodic emailing of future promotions and information.

Consider creating an online newsletter - something that does more than just tout your products. Make it
informative, useful and worth reading. For example, if your online store sells tropical fish, write a short article
detailing useful aquarium maintenance tips. Include relevant links to your site within the email itself,
encouraging readers to find more information by clicking on the appropriate links.

Consider providing time-limited online "coupons" that can be redeemed at your site. Barnes and Noble has
effectively used this strategy to reward frequent buyers at their online store.

Finally, remember that each email should also contain instructions for how the recipient can be removed from
the email list.

eBay

The largest of the online auction houses, eBay can provide a means of both selling your product and driving
additional traffic to your online store. Selling products on eBay is a terrific way to find customers who have a
genuine interest in your product. Within the product description of each item you list for auction, be sure to
provide links to your website, informing auction visitors that more products are available at your website.

Banner Ads

Banner ads are by far the most common form of online advertising on the Internet. These are the flashy
rectangular advertisements you see at the top and sides of most commercial and many amateur websites.
DoubleClick and LinkExchange are the largest distributors of online banner advertising. Banner ads provide a
means of reaching thousands of potential customers with your marketing campaigns.

The effectiveness of these campaigns is often measured by calculating the "click-throughs" rate. This rate is
the percentage of times an ad is clicked on, based on the number of times it's viewed. If a banner ad is seen by
200 site visitors and 10 of them actually click on the ad, the banner ad has a click-though rate of 5%. The
click-through rate, however, does not tell the whole story.

To accurately determine the effectiveness of your ads, you'll need to know which click-through resulted in
actual purchases from your site. This is now possible with the marketing tools provided by the major online
marketing distributors mentioned above. By analyzing this data, you will be able to better tailor your
marketing campaigns to effectively reach your best potential customers.

To use your marketing dollars most effectively, be sure that your advertisements are aimed at sites catering to
your targeted demographic. If you sell fine china, you will probably be disappointed with an ad campaign
displayed on a youth-oriented website. Consider exchanging banner ads with other sites that complement your
product or service. The online seller of aquarium equipment would find substantially higher click-through
rates by advertising on websites related to tropical fish.

Placing banner advertisements on your website can provide a means of generating additional revenue for your
site. The sponsor will pay you for each visitor who clicks on the ad, although this is usually just pennies per
click. If traffic to your site is high, these pennies can begin to add up.

There are also disadvantages to placing advertisements on your site. Banner ads tend to be large and result in
longer download time for your pages. Customers who would rather see the content on your site are forced to
wait longer for pages to load. This increases the likelihood that they will shop elsewhere. The ads also are not
usually aesthetically pleasing and can distract from the content on your site.

And finally, remember that each time your visitor does click on an ad placed on your site, he will be taken
away from your site. Unless you have a contract with the sponsor that states otherwise, you should set the ad
to spawn a new browser window when the ad is clicked. That way, when the user closes the new browser
window, he/she will be back at your site when the new window is closed.

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Business Plan for Session 9: E-Commerce

We heartily recommend that you download the individual business plan template for this session Business
Plan Template Document 9 and complete it now.

                Section 9: E-Commerce
                                                      MS Word


Instructions on filling in the business plan template:

                Section 1-12: All
                                                      MS Word


     1.   Each box has a permanent title in CAPITAL LETTERS
     2.   Below each title is a sentence starting with an "Insert here..." sentence. This will suggest
          information to insert. The boxes will enlarge as you take up more room so use all the space you
          need.
     3.   After completing each box, delete the "Insert here" sentence, which will leave only the permanent
          title of the box and the information you have filled in.
                         We suggest that you fill in each section of the business plan
                                    as you proceed through the course.

The template for all sessions 1-12 can also be downloaded into your computer as a single document.

Include sufficient research findings and background materials. Make it interesting up by the use of
background data, your biography, charts, demographics and research data. When your business plan is
completed, print off and assemble the 12 sections.

Many other business plan formats are available in libraries, bookstores and software.

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SESSION 9 Quiz: E-Commerce

          1.    The single most important ingredient for success utilizing e-commerce is:

                    A.          Getting people to visit my site.

                    B.          Designing a website that is easy to navigate and use.

                    C.          Trust of my customers and assuring them that I will be honest and
                          ethical.

                    D.          Creating a web address that is easy to remember and enter.

                    E.         Having adequate infrastructure including warehousing and delivery
                          systems in place.


          2.    The information I present on my website is automatically protected by intellectual
                property laws and cannot be used by others.

                    A.          True

                    B.          False


          3.    It's not a good idea to disclose my website address on my business cards, stationery
                and advertising.

                    A.          True

                    B.          False


          4.    In registering my domain name, I should keep in mind that the most easily
                remembered websites end in:

                    A.          .bus

                    B.          .net

                    C.          .com

                    D.          .org


          5.    My website design should incorporate:
         A.        Artistically designed and unusual or unique fonts.

         B.        Standard and widely used fonts.


6.   Knowledge of search engine placement is important to my website because:

         A.        Search engines have an impact on my credit rating.

         B.        Good search engine placement will bring more customers to my site.

         C.        Good search engine management will reduce the risks of viruses.


7.   E-commerce websites exist solely to sell products on-line.

         A.        True

         B.        False


8.   It will be possible for me to keep track of how many people are visiting my website.

         A.        True

         B.        False


9.   The use of the Internet for conducting e-business will assure me of competing
     favorably with large established competitors paying rent on a store.

         A.        True

         B.        False


10. Setting up my own server is like:

         A.        Renting my own store

         B.        Owning my own store

         C.        Creating my own website

				
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