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David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute.

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Presentation on theme: "David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute."— Presentation transcript:

1 David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute for Economic and Community Development EDA University Center for Economic Development Deb Markley Co-Director

2  E-Commerce an actively growing small business strategy for many rural-based firms  Significant e-commerce strategy adoption lags expected in rural areas  Case studies provide in-depth examples for other rural small businesses to emulate  No national database of case studies exists, mainly scattered and diverse efforts

3  Review of Existing E-Commerce Case Study Projects  Identification of Good Examples and Development of New Case Studies  Distillation of E-Commerce Best Practices for Rural SMEs  Development of Curriculum Guidebook for Extension Professionals Working with Rural SMEs

4 I. Goals Identify Businesses in a variety of Economic Sectors Agriculture/Food Products Manufacturing Arts Tourism/Recreation Retail/Wholesale Trade Services Identify Businesses of Different Sizes and Organizations Lone Eagles Family Businesses Cooperatives Corporations Small and Large Employers Selecting Case Studies

5 *Identify Businesses from Different Parts of the County * Identify Businesses where the Adoption of E-commerce Significantly Impacted Sales or Costs *Identify Businesses with Varied E- Commerce Structures B2B B2C Internet only Bricks and Mortar and Internet KansasColorado IowaMaine North CarolinaNew Mexico South CarolinaMinnesota West VirginiaMontana IdahoColorado Oregon?????????????

6 Methodology for Selection of Businesses to Interview Literature Review and Internet Search of E-commerce Programs and Businesses RUPRI Center for Rural Entrepreneurship Newsletter Request for Information Leads

7  We conducted extensive reviews of websites, news stories, and other available published information, and solicited examples on entrepreneurship network listserve  Initial Telephone Interview  Face-to-Face Interview (2-3 hours)  Draft Case Studies Reviewed and Approved by Businesses  Several examples follow…

8  Provide outfitting services, trip planning, lodging for people traveling in the Boundary Waters Canoe Area  Full e-commerce site so that people can do all their trip planning and booking online if desired  Have launched a non-profit endeavor, with link on their website, for Pink Paddles, selling pink canoe paddles to raise funds for breast cancer research – full e- commerce site as well  Prepare daily blog on life in the BWCA which allows them to make and keep a personal connection with clients (and future clients); includes a live chat feature

9  Start-up enterprise offering Mushing 101 weekends (dog sledding)  This start-up site is used primarily now as an advertising vehicle for their newly created Mushing 101 weekend trips  Also includes blog (not daily) to help connect clients (and future clients) with their newly developing product lines  Currently a part-time venture in support of their competitive sled racing activities

10  Brick and mortar art gallery, with website, that features local artists as well as one of the largest collections of Inuit art  Full e-commerce website created to help expand their seasonal sales (tourism related)  Use the website to alert customers to new one-of-a-kind pieces of artwork, particularly Inuit art – provides a direct marketing opportunity and they don’t have to wait for customers to return to the store; extends their geographic reach  No opportunity to physically expand the gallery so e-commerce site allows them to expand virtually

11  Non-profit ISP created to provide high- speed Internet service to Grand Marais and some surrounding areas; also provides technical support, e.g., website development  The development of this ISP was instrumental in the other three businesses being able to expand their e-commerce capabilities  High-speed access was essential for the gallery (given volume of pictures used)  Technical assistance provided was essential since there are no other service providers in the local area

12  Sell glass and supplies to stained glass hobbyists; do fabrication and repair  Within last year, developed a full e- commerce site focused on selling glass and supplies  Taken a slow, incremental approach to establishing e-commerce capability because they have so many products  Shopping online for supplies is more difficult than doing it in person – can make substitutions of colors more easily in person than online; online orders can require more customer service

13  Sells nautical antiques (mostly imported) online  Has a “retail” store only to legitimize his online business, i.e., give him a physical address, but 96% of business is online  Seen 20% growth each year (for about 10 years) until last year – increased competition  Taken courses to develop his e- commerce skills but is at a point where he needs to upgrade significantly to keep growing

14  Sells herbs and vegetables as part of community supported agriculture (CSA) initiative  Website serves two purposes – information about farm and CSA; weekly information and ordering for herbs and vegetables  Not full e-commerce site since people buy memberships of some type and just order online  Innovation on traditional CSA approach since there’s choice – something ordering online allows farm to do

15  Manufacture rural mailboxes that swing away, making them snowplow and vandal resistant  To expand sales of a product developed by father and grandfather, had to use e- commerce – now accounts for about 50% of sales  Full e-commerce site allows them to tap a national market  Developed own e-commerce skills through CEI classes

16  Sells fiber and fiber-related products (raw and processed) derived from her llamas and sheep  Lifestyle entrepreneur who uses website for (1) informational purposes and (2) product sales  Has experimented with different e- commerce approaches – started with PayPal but had too many problems; now uses an E-Bay store with a link on her website  Sales online cover the costs of e- commerce

17  Wholesale (5%) and retail pottery (95%) through retail store and online  Developed website to expand off-season (outside tourist season) and out of region market  E-commerce sales are allowing her to grow the business while reducing and eventually eliminating the retail store (too much for her as she gets older)  E-commerce allowing her to achieve her long term goals for the business – have her do less business management and more art

18  Provider of e-commerce training both in the classroom, online, and web-based (self paced)  Most of the Maine e-commerce businesses took advantage of these classes to build their skill sets – not great private sector resources to provide these services in rural Maine  Moved more recently to online classes as a way of reaching more rural entrepreneurs, with good reviews so far

19  Manufacture natural skin care products under their own brand, Würx, and do private label manufacturing  60% of business is private label manufacturing and more than half of their private label sales have come through their website, including major client in Japan  Full e-commerce site to sell their own products; website serves as informational for private label clients  Only 10% of their business is retail; e- commerce generates about 30% and is growing

20  15 week program (3 hours per session) designed to help businesses deliver a “perfect pitch” about their business (5 minute pitch with products  Pre-requisite for participation in – developed the website because they were working with rural artisans and realized that none had their own website  Has served 55 artists since 2000 – now have about 20 artists on the site and about 25% have developed their own website  Just getting started on a search engine optimization grant project – based on other case studies, this is a very important service that is missing in most rural areas; key challenge for e-commerce

21  Copper bathroom sinks and copper lighting  Established web presence through because he didn’t have the staff or own capacity to develop his own website  Was very successful in selling products when actively buying Google ad words – sink sales went from 1 per month to 1 per week; as soon as they stopped, sales dropped  Website sales continue but he uses site for informational purposes with homeowners (“look at site and then talk to me”)  Not making the investment of time or money to really optimize the site

22  High end, handmade silver jewelry; primarily retail and custom sales (although some is wholesale through Sundance catalog)  Saw participation in as a good value from a marketing standpoint – needed a web presence since very few of her sales are local (in spite of tourism in the region)www.wesstartisans.com  Full e-commerce site but also uses website for informational purposes – galleries find her via the website and then purchase to sell in gallery  Just now developing her own website and building her skills to manage it  25% of her sales come directly through the website – this is the base of her business; gallery and custom sales are more variable

23  Bricks and clicks specialty food store focused on high-end market  Resisting VC’s encouragement to work with WalMart  Web hosting at distant site, placing site on high-speed network  E-commerce sales more profitable than regular marketing channels --- plans more e-commerce in future  Bundling own products with others’ products to increase traffic, both in- store and at website

24  Whitewater and related (outsourced) outdoor adventures  Bought into legacy specialized on-line reservations system with several other similar outfitters  Calls customers to verify complicated reservations --- necessary nice touch!  Web presence key to attracting customers familiar with whitewater rafting, but not familiar with Songer (highly competitive market)

25  Sells Makita power tools, not at rock- bottom prices, but couples with on- site sales and service --- serving regional market and avoiding direct competition with large-volume big box stores  Offers full line of tools (1,500) and parts (15,000), unlike competition, allowing them to reach construction, rental, and other business customers  Invested in specialized legacy system that might not be serving their needs well presently. But, find it difficult to make a large new capital investment once staff are trained and owner is personally vested.

26 Markets commercial and public properties (e.g. empty schools) on eBay, LoopNet, and Cityfeet for real estate firms in the Midwest Focus on quality by providing an abundance of high quality photos and solid local information Refers leads to lead real estate agents in contracted firms They’ve found a niche but realize it might not last forever given low barriers to entry in a competitive market

27  Inventor/Entrepreneur relocated to rural community (and state) for combination of cost-savings and lifestyle reasons (live on lake and near family)  95% of business is on-line and there is little interest in more bricks and mortar retail due to associated expenses  Sells non-owned product lines to help drive traffic to site

28  High-end custom household furnishings sold through 15 designer showrooms – B2B  Designed in Plainville, produced in California, materials from Europe --- heavy reliance on Internet --- sophisticated operation!  Large presence in Plainville ◦ Plainville chosen based on family ties ◦ Nearly 200 employees, 2 full-time IT staff, $50k hardware/$100k software annually ◦ Renovating downtown existing buildings

29  Full-service marketing and media services company --- nearly all client interaction is now handled over Internet  Internet reduced “cycle time” to 2 weeks from 4 months; nearly tripling project completions (past 10 years)  Greatly reduced costs; travel, phone, fax, shipping (e.g. UPS 30-40/day to 2-3/day (past 6 years)  Time savings allowing new venture development --- secured marketing websites allowing dealer networks to produce customized yet consistent materials  $2.4M investment in e-commerce!

30 Mountain One – Leland, IA Doll-making supplies Grown Locally - northeast IA Locally-grown farm products Farmchem - Floyd, IA Equipment and service provider for crop input dealers

31  There is no apparent singular or “right” way to deploy e-commerce strategy. “Jazz” is an appropriate metaphor.  Though problematic, lack of local Broadband Access is not an insurmountable barrier.  Shortage of technical skills can be overcome by savvy outsourcing of services ◦ Web design ◦ Hosting ◦ Maintenance ◦ Content Development and Management  E-Commerce requires continual investment of time and dollars --- it is an evolutionary process that integrates well with continuous business strategic thinking and planning  E-Commerce Training Initiatives Are On Target! We Have Work To Do!

32  Conduct Additional Case Studies (Two in Montana identified)  Categorize Information Several Ways ◦ Business Type ◦ Entrepreneur Type ◦ Products and Services Offered via Web ◦ Other?  Distillation of Best Practices and Lessons Learned into Practical Wisdom  Development of Curriculum Guidebook ◦ Integration into E-Commerce Programs ◦ Integration into Entrepreneurship Training Programs (e.g. FastTrac)

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34 David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute for Economic and Community Development EDA University Center for Economic Development Deb Markley Co-Director


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