CHAPTER

E-Commerce
E-Commerce
and
and the
the Entrepreneur
Entrepreneur

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Internet: Changing the

Face of Business

Successful companies embrace the Internet

as a mechanism for transforming their
companies and for changing everything
about the way they do business.

Business basics still apply online.

In the world of e-commerce,

company size matters less
than speed and flexibility.

Ch. 9: E-Commerce and the Entrepreneur

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The Internet: Changing the

Face of Business

Study: By 2011, the Internet will influence

more that $1 billion in offline sales.
Neilsen study: 86% of the worlds online
population has used the Internet to make a
purchase.
Items purchased most often online include
computer hardware and software, tickets,
books, music, movies, gift cards, toys and
video games, and baby products.

Ch. 9: E-Commerce and the Entrepreneur

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FIGURE 9.1 Online Retail Sales in the U.S.

Ch. 9: E-Commerce and the Entrepreneur

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Benefits of Selling on the Web

In addition to the text

Opportunity to increase revenues and

profits
Ability to expand into global markets
Ability to remain open 24 hours a day,
seven days a week
Capacity to use the Webs interactive
nature to enhance customer service
Power to educate and inform

Ch. 9: E-Commerce and the Entrepreneur

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Benefits of Selling on the Web

(continued)

In addition to the text

Ability to lower the cost of doing business

Ability to spot new business opportunities

and capitalize on them

Ability to grow faster

Power to track sales results

Conversion rate
the percentage of customers
to a Web site who actually make a purchase.

Ch. 9: E-Commerce and the Entrepreneur

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Ch. 9: E-Commerce and the Entrepreneur

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E-Commerce

The Small Business Research Board

reports:
57.3% of small business owners in the
U.S. have a Web site
56.1% of those sites engage in online
sales.

Barriers:
Not knowing how or where to start
Cost and time concerns

Ch. 9: E-Commerce and the Entrepreneur

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Factors to Consider Before

Launching into E-Commerce

How a company exploits the Webs

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.

Ch. 9: E-Commerce and the Entrepreneur

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Factors to Consider Before

Launching into E-Commerce
(continued)

Developing deep, lasting relationships with

customers takes on even greater importance.
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.

Ch. 9: E-Commerce and the Entrepreneur

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9 - 10

Assessing You Companys

Online Potential
1. Does your product have broad appeal to
customers everywhere?
2. Do you want to sell your product to
customers outside of your immediate
geographic area?
3. Can the product you sell be delivered
conveniently and economically?
4. Can your company realize significant cost
advantages by going online?
5. Can you draw customers to your companys
Web site with a reasonable investment?
Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
Myth 1:
Online customers are easy to please.
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.
Myth 5:
The most important part of an e-commerce
effort is technology.
Myth 6:
I dont need a strategy to sell online.
Myth 7:
Customer service is not important.
Myth 8:
Flashy Web sites are better than simple
ones.
Myth 9:
Its whats up front that counts.
Myth 10: Its too late to get on the Web.
Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
Myth 1: Online customers are easy to please.
Experienced online shoppers tend to be
unforgiving and quick click to another site
if their shopping experience is subpar or
they cannot find the products and
information they want.

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to

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

Ch. 9: E-Commerce and the Entrepreneur

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Promotion Is the Key!

Include your URL on everything related to

your business
Provide phone and e-mail contact
information
Create Web-based newsletters
Write articles that link to your companys
Web site
Sponsor online contests
Establish a blog

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to

please.
Myth 2: If I launch a site, customers will
flock to it.
Myth 3: Making money on the Web is easy.

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 1: Online customers are easy to

please.
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.

Ch. 9: E-Commerce and the Entrepreneur

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Myth 4: Privacy Online

(continued)

Pew Internet Report:

If online companies were able to
alleviate customers online
privacy and security issues, the
percentage of online buyers
would increase from 66% to 73%.

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 5: The most important part of an

e-commerce effort is technology.

Understand the underlying business...

then use technology to develop an

online business model that provides
customer value in a profitable way.

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 6: I dont need a strategy.

An online strategy is critical to success

Define the target audience

Understand customers needs and

wants

Create a strategy to set

your site apart from others

Ch. 9: E-Commerce and the Entrepreneur

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Myth 7: The Importance of

Customer Service on the Web
Myth 7: Customer service is not important.

Study: 22% of online shoppers expect higher

levels of customer service than they do offline.
Concern:

Nearly 90% of online shopper reported they have

had problems completing an online transaction.
84% of these shoppers said they would share their
negative online shopping experience with others!

Ch. 9: E-Commerce and the Entrepreneur

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Myth 7: The Importance of

Customer Service on the Web

Study: 58% of Web shoppers who fill their

online shopping cars abandon them without
checking out.
Reasons:

Shipping and handling charges too high

Total purchase higher than expected
Desire to compare final price before buying
Inability to contact customer service
representative
Forgot use name or password for Web site

Ch. 9: E-Commerce and the Entrepreneur

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FIGURE 9.3

Reasons for Abandoning Online Shopping Carts

Ch. 9: E-Commerce and the Entrepreneur

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10 Myths of E-Commerce
(continued)

Myth 8: Flashy Web site are better than

simple sites.

Fast download times increase sales

potential

Myth 9: Its whats up front that counts.

Order systems and support are critical

Myth 10: Its too late to get on the Web.

Web opportunities still exist

Ch. 9: E-Commerce and the Entrepreneur

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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.
Make sure your Web site
says credibility.

Ch. 9: E-Commerce and the Entrepreneur

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Strategies for E-Success

(continued)

Make the most of the Webs global

reach.
Use Web 2.0 tools to attract and retain
customers.
Promote your site online and offline.
Develop an effective search
engine optimization (SEO)
strategy.

Ch. 9: E-Commerce and the Entrepreneur

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Search Engine Strategies

Natural (organic) Listings

Arise as a result of spiders, powerful

programs search engines use to crawl
around the Web.
Paid (sponsored) Listings
Short text ads with links to the sponsoring
companys Web site.
Paid Inclusion
When a company pays a search engine for
the right to submit either selected pages
or its entire Web site content for listing.

Ch. 9: E-Commerce and the Entrepreneur

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Designing a Killer Web Site

Understand your target customer.

Give customers what they want.
Select an intuitive domain name that is
consistent with the image you want to
create for your company and register it.
Short
Memorable
Indicative of a companys business
Easy to spell

Make your Web site easy to navigate.

Ch. 9: E-Commerce and the Entrepreneur

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Designing a Killer Web Site

(continued)

Add wish list capability.

Use online videos.
Create a gift idea center.
Build loyalty by giving online customers
a reason to return to your Web site.
Establish hyperlinks with other
businesses, preferably those
selling complementary products.

Ch. 9: E-Commerce and the Entrepreneur

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Designing a Killer Web Site

(continued)

Include an e-mail option an a telephone

number on your site.
Give shoppers the ability to track their
orders online.
Offer Web shoppers a special all their
own.
Follow a simple design.
Create a fast, simple
checkout process.

Ch. 9: E-Commerce and the Entrepreneur

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Designing a Killer Web Site

(continued)

Assure customers that online transactions

are secure.
Establish reasonable shipping and
handling charges and post them up front.
Confirm transactions.
Keep your site updated.
Test your site often.
Consider hiring a professional
to design your site

Ch. 9: E-Commerce and the Entrepreneur

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Tracking Web Results

Web Analytics tools that measure a Web

sites ability to attract customers, generate
sales, and keep customers coming back.

Only about 40% of e-businesses use

Web analytics strategically to refashion
their Web sites.
Commerce metrics
Visitor segmentation measurements
Content reports
Process measurements

Ch. 9: E-Commerce and the Entrepreneur

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Measuring Online Performance

Recency
The length of time between
customers visits to a Web site.

Click-through Rate (CTR)

The proportion of people who
see a companys ad online and
actually click on it.

Ch. 9: E-Commerce and the Entrepreneur

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FIGURE 9.3

E-Mail Open and Click-Through Rates by the Day of the Week

Ch. 9: E-Commerce and the Entrepreneur

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Measuring Online Performance

(continued)

Cost per Acquisition (CPA)

The amount it costs to generate a
purchase (or a customer registration).

Conversion (browse-to-buy) ratio

The proportion of visitors to a site
who actually make a purchase.

Ch. 9: E-Commerce and the Entrepreneur

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

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Ensuring Web Privacy

Take an inventory of the customer data

collected.

Develop a company policy for the

information you collect.

Post your companys privacy policy

prominently on your
Web site and follow it.

Ch. 9: E-Commerce and the Entrepreneur

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Ensuring Web Security

Virus detection software

Intrusion detection software

Firewall

Ch. 9: E-Commerce and the Entrepreneur

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Conclusion

Know what you need to know before

launching into e-commerce

Assess the basic strategies to follow

Know what works on Web sites

Track results and

listen to customers

Ch. 9: E-Commerce and the Entrepreneur

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recording, or otherwise, without the prior written permission of
the publisher. Printed in the United States of America.

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