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E-Commerce

Provided by My Own Business, Content Partner for the SME Toolkit

OBJECTIVE: If you are not fully engaged in using your website to market your product or service, e-commerce can present a momentous opportunity to expand your business on a world-wide scale. This section serves as a primer for your business to leverage opportunities in e-commerce.

E-Commerce Overview

Dr. Stephen Morgan President University of La Verne Dr. Stephen Morgan
President University of La Verne
Play Video
What training should a person have before starting a business?

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. The sale of products or services on your Web site can generate sales that will make the difference between success and failure. Even Walmart, the largest retailer in the world with one billion dollars sales per day, could not anticipate the increasing wave of Internet business.

  • In 2005 there were approximately 1.08 billion people worldwide who used the internet at least once a month. This grew to 2.4 billion in 2012.
  • Analysts project online sales of $1.25 trillion by the year 2013. 
Is an e-commerce Web site right for your business?
Probably. Much depends on the nature of your business. Web site such as Amazon.com and Barnes & Noble have established their hold over the book market, and their sheer size, name recognition and the relationship of trust they have with their customers allows them to dominate this market with good pricing (due to economies of scale) and remarkable customer loyalty.

However, if you own a local bookstore, there are several ways to reach new customers, get them to know you better and have them keep coming 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 Web site doesn't need to exist solely to sell your product online. 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 365 days a year. You can add pictures, audio, video, news, and so much more. Your customer will even be able to buy from you 24 hours a day. So, your Web site address should be promoted everywhere including your stationery, sales forms and advertisements.

A website can transform a local business into one engaged in global commerce. But you will need to be aware of the advantages and disadvantages of international trade outlined in Global Expansion session. 

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Money Transactions

There are many ways to complete money transactions online. If you already have an established Web site that your clients know you will probably want to keep it and add an e-commerce solution into it. If you do not have an e-commerce Web site you may consider e-commerce solutions offered by major online sites such as Yahoo, Amazon, and Google with little to no Web design experience needed. (Enter "commerce solutions" in the search box.) Online auction sites such as eBay, Yahoo, Google and MSN might also offer additional avenues for your business. Consider hiring and or consulting with an experienced Web designer or firm to set this up for you. Their experience can often save you time, money, and unnecessary aggravation.

Setting up e-commerce

Setting it all up
E-Commerce software often requires setting up a merchant account as well as establishing a payment gateway provider. A merchant account is a specialized bank account set up by a bank that allows you to accept credit cards. A payment gateway charges your customers' credit cards via the Internet and sends the funds to your merchant account. The payment gateway acts as the bridge between the merchant's Web site and the financial institutions that process transactions. Payment data is collected online from the shopper and submitted to the gateway for real-time authorization.

Several companies such as 2CheckOut.comAuthorize.NetCybersource.com, and Verisign.com offer various credit card transaction packages. A great start would be to try your local bank. Many banks now partner with e-commerce payment gateway solutions and can help you in most cases.

E-Commerce Considerations
  • Per Cyber Source Corporation, online fraudsters took $3 billion out of e-commerce in 2006. Most companies provide at least basic forms of fraud protection.
  • Be sure to take into account all your costs such as monthly e-commerce fees, packaging costs, shipping costs, time, etc.
Alternative methods of online payments:
  • Cash payments are less advanced but easier to set up.  Funds are transferred from the buyer's bank account or credit card to the seller's account. This is similar to writing someone a check but much more secure and easier to track. 
  • Below is a list of some of the more popular and well-known forms of "payment processor" systems.
PayPal - Owned by Ebay

Money transactions summary

Consider issues such as taxes, security, cost, and reliability. If your site becomes very popular, your e-commerce system will need to be scalable to that growth. Many more electronic payment companies can be found on the popular search engine Google.

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Setting Up a Website

Before you get started you need to answer the following questions:
 
  • How will these customers interact with your Web site, and how can you make your Web site promote that interaction?
  • How many sales do you expect to make each month? What additions would you like to add once you get going?
  • Do the monthly profits justify the monthly costs?

Setting up a professional Web presence can be a big project and setting up an e-commerce system on top of that can be yet another big project. Be sure to consult with professionals in this field who have experience in e-commerce not just Web design.

Registering Your Domain Name
Each Web site has its own unique name, such as Amazon.com or eBay.com. This is your "domain name." It is a unique name that identifies you to all of the other computers on the Internet. There are a number of companies, known as "registrars," that will assist you in registering your Web site's name, including Network Solutions and Dotster.

Find an easy-to-remember ".com" name for your site. Once you've successfully registered your domain name, it will remain in your name and control for as long as you pay to keep it. People who type www.yourcompanyname.com into their browsers will be taken directly to your Web site. To completely secure a name, it's not a bad idea to also buy the .net and .org extensions for it.

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.)

Hosting you Web site

 Your online business will need a place to reside. You may choose to buy (by having your own network server) or lease (by having your site hosted by a Web-hosting service). In most cases, people find it much easier to lease hosting space. For example at My Own Business, we lease our hosting. For a monthly fee the Web host handles the technical details, and you are free to spend your time developing content for your Web site.

Hosting services can also provide "user statistics," which track the number of visitors to your site.

Building your Web site

You will need to decide whether to hire a professional Web developer to create your Web site or to produce your own site "in-house." Both choices come with costs and benefits. If you decide to create your Web site, it is advisable to have an employee who is skilled and experienced with Web design.

If you have a real desire to learn how to create your own site, spend some time with online tutorials on creating your own site. 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.

Tools such as Adobe Dreamweaver® and Adobe Photoshop® allow you to create Web site without any (or much) prior knowledge of Web design. 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. 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.

These programs have improved significantly in recent years, but are not a perfect substitute for a professional Web developer. Advanced features are difficult to implement.

Hiring a professional Web site developer
Before hiring a Web developer, it's important to determine

  • The purpose and budget of your Web site, as well as the ongoing maintenance needs.
  • Who will provide the content and who will own the copyrights for these materials.
  • Whether the developer will be responsible for both design and marketing of your Web site.

Look at other Web sites the developer has created and ask for references. Did the developer deliver the product in a timely manner at the quoted price? Did the developer 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 the developer, the timelines for project completion and a complete budget for the total project. This should include arrangements for ongoing maintenance of the site. Keep in mind the developer you choose is someone you will most likely have a long-term relationship with as you add and improve the Web site.

Contracting out your Web site 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. 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 Web site developer.

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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 Web site - 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. Make it easy for a visitor to find your contact information on every page.

Provide useful content: Don't just sell! These days, it's not enough to have a Web site 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. 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 e-mail: Pay attention to the valuable information your customers can give you. Consider using online surveys such as www.zoomerang.com. 

Develop a mailing list: Most consumers resent junk e-mail, 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. Consider providing 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 e-mails.

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Online Marketing and Promotion

Thomas Mix Internet Entrepreneur Thomas Mix
Internet Entrepreneur
Play Video
How should a business market their website on the internet?

There are thousands of well-designed Web sites, but very few are visible on the search engines. Almost 90 percent of Internet users today use search engines to find the information they need. Yet, many businesses are not registered with search engines. Search engines have a great capacity to drive traffic to your site, yet few new entrepreneurs have the know-how to tap into this resource. Top search engines such as Google and Yahoo! now provide local search. Local search makes it even more important that you market your Web site effectively.

Search engines: your primary marketing tool
In the past, the methods that search engines used to rank pages were primitive and easily deciphered for savvy Webmasters to manipulate.

Times have changed and gaining a high rank on the top search engines has become extremely competitive. Today, submitting your Web site to a large number of free search engines will only result in your e-mail address being added to a large number of spam lists. Search engines are now looking to provide quality listings for their users, but also to turn a profit: hence "paid listings."

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.

How does your Web site rank?
It is important to monitor your search engine rankings so that you can track changes, monitor the ones that you need to improve and identify engines with whom you are not listed. If your customers did a search for specific keywords on a search engine, would they find your site? Are you in the first 10 results or the first 30? The average visitor scrolls through 1.8 page results during a typical search. If your business does not appear in those first 1.8 results, that could translate to lost business.

What are people searching for?
"Search volume" is the number of times a specific keyword is searched over a period of time. Having knowledge of search volumes will give you a sense for what is being searched for and what keywords you may want to focus on. A good place to look up search volumes is through Wordtracker.com and its search suggestion tool. The goal is to find keywords or keyword phrases that you feel would drive qualified traffic to your site. Keep in mind the amount of competition for each keyword and be creative in finding different keyword combinations that others may not have tried yet.

Targeted Audience

 

How to manage search engine placement
It takes hard work, market research, educated decisions, and even trial and error. There are ways to improve your rankings - and actions to avoid that will hurt your rankings. While you have the option of hiring a search engine consultant to manage this important responsibility, you can also do this yourself. Here are the factors that go into search engine placement and how to better optimize your pages for search engines.

How to manage search engine placement

It takes hard work, market research, educated decisions, and even trial and error. There are ways to improve your rankings - and actions to avoid that will hurt your rankings. While you have the option of hiring a search engine consultant to manage this important responsibility, you can also do this yourself. Here are the factors that go into search engine placement and how to better optimize your pages for search engines.

 

Local Search
With the advent of "Local Search" the playing field has just gotten a whole lot more competitive. Now it is almost essential that you have an internet presence or you will lose out to your nearest local competitor that does. Do a search on any of the major search engines and look for a "Local" tab to see how this works. Expect "Local Search" to greatly expand and improve over the years ahead. 

Key components to successful search engine marketing for a Web site

  • Start with a descriptive domain name: The domain name you choose is important. It is so very important because the name itself can help your Web site be more relevant to search engines. Pick a domain name that is easy for your clients to remember.
  • Submit to the top engines: Submit your Web site for review and indexing only to the top search engines where people are actually doing their searches such as Google, Yahoo, MSN, etc. Be careful to read the submission guidelines for each search engine before submitting. For example, have a look at Google's search engine guidelines.
Search Engine Resources

Outsourcing search engine optimization
If you would like to out source search engine optimization, ask your professional consultant for the names of previous clients or "case studies". Speak with these clients to determine what, if any, improvements they experienced. Make sure that unethical or questionable practices are not used that will be harmful in the long run.

Targeted E-mail

E-mail allows you to communicate directly with your customers. It is also one of the most abused forms of online advertising. Nobody enjoys receiving unsolicited e-mail touting a business or service. While it is possible to purchase huge mailing lists of e-mail 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 e-mail lists of customers who are genuinely interested in your product or service. Consider creating an online newsletter. Make it informative, useful and worth reading.

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

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eBay

Whether you are starting your own business, promoting your product online, or just cleaning out your attic, eBay is definitely something you should consider. For more information, visit www.ebay.com.

How to get started
To sell on eBay, you will need to register and then verify your identity. Registration is a quick and easy process. Verification will be a little more involved, but is a necessary process to ensure that eBay remains a safe marketplace. Once you have completed these two steps, you will have a "Seller's Account" and will be able to start listing your items for sale.

Listing basics
  • Decide which selling format best meets your needs. You may wish to add a Buy It Now price or Reserve price .
  • Choose the optional listing upgrades you feel will help your item stand out from the rest.
  • Write a good title and description. This is essential.
  • Specify what payment methods you will accept, and your return policy.

Fees
When you list your item on eBay, you will pay an Insertion Fee. This fee is based on your starting price (or your reserve price if you set one). When your auction has ended, if your item sells, you will be charged a Final Value Fee based on the ending price.

Don'ts of eBay
Before you start using eBay, you need to read through their policies. Violations can cause your listings to be canceled and your account to be suspended. There are also many items that cannot be sold on eBay. Examples are firearms, drugs, fireworks, recalled items and surveillance equipment.

Get the most from your eBay experience
Supplement your commerce by providing information about your business, your products, and your policies, but most importantly a link to your Web site. This will let potential customers know where they can go to find more.

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Top Ten Do's and Don'ts

Do's

  1. Create a Web site to compliment your business.
  2. Hire a professional to create your Web site.
  3. Use a .com Web site domain name that is descriptive of your business and easy to remember.
  4. Register your domain name. Keep your account information in a safe place.
  5. Develop a mailing list to better connect with your visitors.
  6. Provide updated useful content on your Web site in order to encourage visitors to return.
  7. Encourage customer feedback via online forms and e-mail.
  8. Learn how to, and continually implement, ways to improve your placements on top search engines.
  9. Keep your eye on your competition's rankings and get pointers from its sites.
  10. Consider eBay as a means of selling your product and gaining traffic to your online store.

Don'ts

  1. Assume a Web site will assure you of competing favorably with large, established competitors.
  2. Turn your customers off with an unprofessional Web site.
  3. Incorporate unusual or unique Web design styles that are difficult to print or save.
  4. Make it difficult to navigate your site.
  5. Permit out-of-date content to remain on your site.
  6. Rely on graphical buttons.
  7. Try to create a Web site on your own unless you are a Web designer.
  8. Make it difficult for people to find your contact information.
  9. Turn off your customers with unsolicited e-mail advertising.
  10. Weigh your pages down with too much graphics and media.

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Business Plan for Session "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  "E-Commerce"
Microsoft Word File MS Word

Instructions on filling in the business plan template:

Section 1-15: All
Microsoft Word File 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 1-15 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 15 sections.

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

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Session Feedback and Quiz

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