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Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Session B2 Cashing in on ECommerce: New Opportunities and Issues John McKown, President Delaware.Net,

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Presentation on theme: "Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Session B2 Cashing in on ECommerce: New Opportunities and Issues John McKown, President Delaware.Net,"— Presentation transcript:

1 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Session B2 Cashing in on ECommerce: New Opportunities and Issues John McKown, President Delaware.Net, Inc. john@delaware.net 888-432-7965

2 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Ecommerce Topics Market Forces PCI Compliance Pricing Your Ecommerce Hosting Where’s The Money in Ecommerce Common Hassles and Risks

3 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Ecommerce Market Forces June 8, 1998 – Yahoo! Buys Viaweb for $49M and renames it Yahoo! Store (1000 stores) 2000 – Entry cost for Delaware.Net to build a store was $2500 and it took a week or more for setup (average store cost: $3000 - $6000) September 2003 - 1and1 (owned by United Online in Germany) enters US Market, also offers Ecommerce September 2003 - FindWhat (PPC company) purchases Miva for $8M May 2005 - EBay Launches ProStores Ecommerce Hosting 2005 – Entry cost for Delaware.Net to build a store becomes $500, store setup takes two days December 2005 - Network Solutions buys MonsterCommerce, getting them into ecommerce, PPC, SEO, and site-building January 2006 – Delaware.Net creates a store in under an hour for $200, store setup takes 15 minutes (largest store - $50,000+) March 1, 2006 - Register.com partners with EBay's "Prostores" to offer ECommerce to its customers

4 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com PCI Compliance (Payment Card Industry)

5 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com PCI - What is it and Why do I care? Choicepoint Debacle February 2005 ChoicePoint Inc., a national provider of identification and credential verification services, says it will send an additional 110,000 statements to people informing them of possible identity theft after a group of well-organized criminals was able to obtain personal information on almost 140,000 consumers through the company. From the Amex web site:

6 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com PCI Merchant Classes Level 1 - All VisaNet processors (member and Nonmember) and all payment gateways Level 2 - Any service provider that is not in Level 1 and stores, processes, or transmits more than 1,000,000 Visa accounts/transactions annually. Level 3 - Any service provider that is not in Level 1 and stores, processes, or transmits fewer than 1,000,000 Visa accounts/transactions annually Providers processing or hosting over 20,000 transactions annually or providers with public-accessible IP addresses must submit to a network scan from a qualified provider

7 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Store-Logic.com administration interface showing revenue per store on a server ONE Store can cause you to need compliance verification

8 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Level 1 PCI Compliance Validation Level 1 Compliance (for Payment Gateways, not you guys) Validation Action: Annual On-Site PCI Data Security Assessment Quarterly Network Scan Validated By: Qualified Data Security Company Qualified Independent Scan Vendor

9 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Level 2 PCI Compliance Validation If you are large, this one is for you… (over $1M transactions annually) Validation Action: Annual On-Site PCI Data Security Assessment Quarterly Network Scan Validated By: Qualified Data Security Company Qualified Independent Scan Vendor

10 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Level 3 PCI Compliance Validation Oops, this one is for all of you… Validation Action: Annual PCI Self-Assessment Questionaire Quarterly Network Scan Validated By: Service Provider Quarterly Network Scan

11 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com PCI Validation Providers http://www.cybersource.com Qualys.com Annual Subscription for Perimeter Scanning — Pricing is based on the number of IP addresses (up to 128) and starts at $1,495 for external (perimeter only) testing. Annual Subscription for Internal & Perimeter Scanning — Pricing for internal and external scanning is based on the number of IP addresses (up to 2,048) and starts at $2,995. http://www.securitymetrics.com http://www.vigilar.comhttp://www.scanalert.com

12 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Pricing Your Ecommerce Hosting

13 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Yahoo! Stores Fees Starting Prices and Ease of Setup are great, but…

14 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Yahoo! Stores Fees Assuming merchant has $60,000 / month in GROSS sales Starter Plan: $900 in transaction fees $39.95 in hosting fees Total fees = $939.95 per month Standard Plan: $600 $99.95 Total Fees = $699.95 per month Pro Plan: $450 $299.95 Total Fees = $749.95 per month

15 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Types of Ecommerce Hosting Charges Most services have a myriad of fees, so keep your fee structure simple Option 1: Flat Fee, with a cut of sales Option 2: Flat fee only - requires higher fees that you tack on extra fees or become a merchant provider Option 3: Charge a flat fee based on bandwidth usage and/or disk space Option 4: Charge a structured fee based on the number of products Upsell additional add-ons: Offer premium options like better traffic reports, PPC, shipping, etc.

16 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Where is the Money in Ecommerce?

17 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Design and Programming Profit Centers Custom Site Design (if you already offer design services) Template Integration (i.e. Monster Templates or customer’s design) Product Entry/Import Service (supplements tech support employees) Photo retouching / knockouts Custom Page Design (categories and product pages) Custom Programming (countless integration requests, manage them) Multiple sites to support additional product lines (grows hosting) Backoffice Integration (billing, inventory, CRM, web site)

18 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Additional Recurring Revenue Merchant Services Commissions 0.005% Payment Gateway Commissions $79-$150 Training – Basic is free, additional costs Expanded Traffic Reports ($10-$55) Search Engine Optimization (SEO) – Good commerce engines have it built-in. Advanced SEO should be outsourced. Pay-Per-Click (PPC) Management – Huge Site Maintenance Agreements Advanced Analytics (look at HBX)

19 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Planning Your Offering

20 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Vertical Markets and Syndication Use commerce engine for building static catalogs for content management (good low-risk entry point for some businesses) Don’t just help customers sell products, also sell services Ecommerce engines can make good Booking Engines Syndicated Catalogs (many clients from one catalog) Syndicated Stores (many hosting fees from one store)

21 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Ecommerce Checklist Create a sufficient barrier to entry Build or Outsource Ecommerce Software – Depends on your resources, takes years to build a good Ecommerce system Centralize and Version the Code (avoid cut & paste) Offer Developer APIs (must talk to billing/inventory) Offer Designer APIs (CSS is magical here) Offer Reseller Training (Ecommerce training zaps profits) Create turn-key offerings for verticals (sporting goods, parts suppliers, clothing, gifts) Integrate Marketing (SEO, PPC, Newsletters) Focus on Setup Automation Implement Web 2.0 appropriately (without killing analytics)

22 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Important Ecommerce APIs Google Sitemap API Google Conversion Snippet Google Checkout Ebay API: http://developer.ebay.com/common/apihttp://developer.ebay.com/common/api Paypal SDK https://www.paypal.com/IntegrationCenter/ic_sdk- resource.html https://www.paypal.com/IntegrationCenter/ic_sdk- resource.html Yahoo Shopping API http://searchmarketing.yahoo.com/shopsb/index.php ?SS=3027042 http://searchmarketing.yahoo.com/shopsb/index.php ?SS=3027042 Mail Order Manager (MOM) http://www.dydacomp.com http://www.dydacomp.com

23 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Common Hassles and Risks

24 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Common Hassles and Risks More Hosting Risk – You must update your legal agreements to make sure that you are not liable for lost revenue. Educating customers about Payment Gateways and how Ecommerce works –Setting up payment gateways for customers with multiple merchant accounts –Poorly trained merchant services salespeople mislead your clients Moving stores from one cart to another Supporting all available payment gateways and APIs Managing Custom Programming Requests Avoiding Problem Merchants –Customer hands Ecommerce responsibilities to overworked employee –Customers that fall into the “prohibited merchant” status with merchant services companies –Brick and mortars hide online transactions to protect their rates –Customers violating copyright laws (metadata tracking is a growing trend) Volume of credit card transactions (PCI)

25 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Reference Links: Companies offering Compliance Services http://www.brainlink.com/information_security/pci_cisp_small_business_appearances_are_not_always_what_ they_seem.htmlhttp://www.brainlink.com/information_security/pci_cisp_small_business_appearances_are_not_always_what_ they_seem.html http://www.cybersource.com/products_and_services/verification_and_compliance_services/ http://www.qualys.com/compliance/emerchants/ PCI Programs: http://www.securitymetrics.com/sitecertinfo.adp http://usa.visa.com/business/accepting_visa/ops_risk_management/cisp_service_providers.html?it=l2|%2Fb usiness%2Faccepting_visa%2Fops_risk_management%2Fcisp%2Ehtml|Service%20Providershttp://usa.visa.com/business/accepting_visa/ops_risk_management/cisp_service_providers.html?it=l2|%2Fb usiness%2Faccepting_visa%2Fops_risk_management%2Fcisp%2Ehtml|Service%20Providers Choicepoint Debacle http://news.softpedia.com/news/CardSystems-Solutions-hands-over-40M-credit-cards-to-hackers-3367.shtml http://money.cnn.com/2005/02/17/technology/personaltech/choicepoint/index.htm http://www.epic.org/privacy/choicepoint/ Yahoo! Pricing Plans: http://smallbusiness.yahoo.com/merchant/http://smallbusiness.yahoo.com/merchant/ Yahoo! Stores Marketing Challenges: http://www.marketingexperiments.com/online-marketplace/yahoo-stores.htmlhttp://www.marketingexperiments.com/online-marketplace/yahoo-stores.html Wikipedia Definition of Ecommerce: http://en.wikipedia.org/wiki/Electronic_commercehttp://en.wikipedia.org/wiki/Electronic_commerce What are JCB Cards? http://www.jcbusa.com/jcb_cards.htmlhttp://www.jcbusa.com/jcb_cards.html MasterCard Annual Report: http://www.mastercardintl.com/corporate/yir/2004/letter.htmlhttp://www.mastercardintl.com/corporate/yir/2004/letter.html DiscoverCard Compliance: http://www.discoverbiz.com/merchant/resources/data/security_features.htmlhttp://www.discoverbiz.com/merchant/resources/data/security_features.html Copyright November 2006 – This presentation is not to be copied or reproduced without written permission from John McKown

26 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Thank you for attending Please Fill Out Your Review Card My Contact Information: John McKown President & CEO Delaware.Net, Inc. john@delaware.net ICQ: 1812513

27 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Ecommerce Still Growing In Canada, Ecommerce sales have grown on average of 38% over the last four years. A Visa report claims Ecommerce sales grew in volume by 24% on 2005 VS 2004 Peak Shopping Day overall for Visa: Friday, December 30, 2005 ($4,450,805,725) Debit Cards will surpass credit cards online by 2007 (Jupiter Research)

28 Copyright 2006, John McKown 1-888-432-7965 www.JohnMcKown.com Traits of a Successful Ecommerce Customer Is a brick and mortar company, not home-based Is not a drop-shipper (all virtual) Answers the phone, no cell phones SSL is at their own domain Well designed interface is “outside-in”, not “inside-out” Understands conversion and studies traffic patterns Traffic reporting that supports dynamic links Good product image quality Good at Search Engine Optimization (SEO) Has multiple Pay-Per-Click (PPC) campaigns and manages them Uses search engine APIs (Google sitemap & Conversion Snippet).HTML site map Has knowledge base or forum Search Engine Safe (SES) URLs Skilled PPC manager in- house Really uses Live Support and/or is responsive to their emails Solid billing integration and backend automation Uses shipping APIs (UPS/FedEx/USPS) RSS Feed HTML newsletters Offers promotions Good offline site promotion Niche or specialty products


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