Copyright © 2016 Pearson Education, Inc.

Section 3: Launching the Business 9 E-Commerce and the Entrepreneur Copyright © 2016 Pearson Education, Inc. 9-2

Copyright © 2016 Pearson Education, Inc. Learning Objectives Understand the factors an entrepreneur should consider before launching into e-commerce. Explain the 10 myths of e-commerce and how to avoid falling victim to them. Explain the basic strategies entrepreneurs should follow to achieve success in their e-commerce efforts. Learn the techniques of designing a killer Web site. Explain how companies track the results from their Web sites. Describe how e-businesses ensure the privacy and security of the information they collect and store from the Web. Copyright © 2016 Pearson Education, Inc.

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. There are more than 2.4 billion Internet users worldwide. Copyright © 2016 Pearson Education, Inc.

The Internet: Changing the Face of Business (continued) By 2017, online sales and Internet activity will account for or influence 60% of total retail sales in the United States. Research shows: 80% of global shoppers research products online. 84% of the world’s online population has used the Internet to make a purchase. 79% of consumers trust online reviews as much as personal recommendations. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. U.S. E-Commerce Sales Copyright © 2016 Pearson Education, Inc.

Internet Penetration Rate Copyright © 2016 Pearson Education, Inc.

Factors to Consider Before Launching into E-Commerce 82% of small business owners in the United States have a Web site, but 28% do not engage in ecommerce because their Web sites cannot accept payments. Reasons for not having a Web site: It is not necessary (27%). It is too difficult to create and maintain (19%). It is too costly to operate (12%). Copyright © 2016 Pearson Education, Inc.

Factors to Consider Before Launching into E-Commerce (continued) How a company exploits the Web’s 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. Copyright © 2016 Pearson Education, Inc.

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. Copyright © 2016 Pearson Education, Inc.

Factors Essential to E-Commerce Success Acquiring customers Optimizing conversions Maximizing Web site performance Ensuring a positive user experience Retaining customers Using Web analytics as part of a cycle of continuous improvement Copyright © 2016 Pearson Education, Inc.

Ten Myths of E-Commerce Myth 1: If I launch a site, customers will flock to it. Myth 2: Online customers are easy to please. Myth 3: Making money on the Web is easy. Myth 4: Privacy is not an important issue. Myth 5: I don’t need a strategy to sell online. Myth 6: The most important part of an e-commerce effort is technology. Myth 7: Customer service is not important. Myth 8: Flashy Web sites are better than simple ones. Myth 9: It’s what’s up front that counts. Myth 10: My business doesn’t need a Web site. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Promotion Is the Key! Include your URL on everything related to your business Use social media such as Facebook and YouTube to drive traffic to your site Network – build relationships with other companies, customers, trade associations, online directories, and other Web sites to interact with customers Make your site compatible with mobile devices Use QR codes Copyright © 2016 Pearson Education, Inc.

Satisfaction Is Important 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. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. The Basics Still Apply Success online requires a sound business strategy that is aimed at the appropriate target audience and that is implemented effectively and efficiently. The same elements are required for success offline! Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Privacy Matters! TRUSTe Privacy Index study: 89% of U.S. adults worry about privacy online and avoid doing business with companies they believe do not protect their privacy online. 17% of online shoppers have abandoned their shopping carts because of security concerns. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Strategy Is Critical 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 Copyright © 2016 Pearson Education, Inc.

Business First, Technology Second Understand the underlying business…then use technology to develop an online business model that provides customer value in a profitable way. Copyright © 2016 Pearson Education, Inc.

Customer Service Counts The average conversion rate for e-commerce sites is just 2.55%! 67% of Web shoppers abandon their shopping carts without checking out. The cart abandonment rate for shoppers using mobile devices is 97%! 57% of customers say that live help is one of the most important features a Web site can offer. Copyright © 2016 Pearson Education, Inc.

Reasons for Shopping Cart Abandonment Copyright © 2016 Pearson Education, Inc.

More Is Not Always Better Simple design, easy navigation, clear calls to action on every page, and consistent color schemes show that a company is putting customers first. The time to download a Web site is one of the most important determinants of sales effectiveness. Copyright © 2016 Pearson Education, Inc.

Page Abandonment Rate vs. Page Load Time Copyright © 2016 Pearson Education, Inc.

Emphasize Order F:ulfillment Order systems and support are critical. Virtual order fulfillment: A fulfillment strategy in which a company forwards customers’ orders to a wholesaler or distributor who then ships the product to the customer with the online merchant’s label on it. Aka drop shipping Copyright © 2016 Pearson Education, Inc.

Use Multichannel Selling A multichannel approach to selling is important. Meet customers wherever they want to do business with a personalized shopping experience similar to a that of a brick-and- mortar store experience. Copyright © 2016 Pearson Education, Inc.

Strategies for E-Success Focus on a market niche. Develop a community. Listen to your customers and act on what you hear. Attract visitors by giving away “freebies.” Sell the “experience.” Make creative use of e-mail, but avoid becoming a “spammer.” Make sure your Web site says “credibility.” Copyright © 2016 Pearson Education, Inc.

Building Web Site Credibility Allow visitors to verify easily the accuracy of the information on your site. Show that there are real people behind your site. Emphasize the skills, experience, and knowledge of the people in your company. Show that honest, trustworthy people stand behind your site. Make it easy for customers to contact you. Make sure your site has a professional look. Copyright © 2016 Pearson Education, Inc.

Building Web Site Credibility (continued) Make sure your site is easy to use – and useful. Update your site regularly. Prominently display your company’s privacy policy. Be vigilant for errors of all types. Post the seals of approval your company has won. Make sure customers know their online transactions are secure. Copyright © 2016 Pearson Education, Inc.

Strategies for E-Success (continued from 9-35) Go mobile. Responsive web sites Social-local –mobile (SoLoMo) strategies Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Mobile Commerce Sales Copyright © 2016 Pearson Education, Inc.

Strategies for E-Success (continued from 9-40) Go mobile. Promote your Web site online and offline. Use social media tools to attract and retain customers. Develop an effective search engine optimization (SEO) strategy. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Use Social Components Add social components to e-commerce strategies: Mashups Really simple syndication Social networking Wikis Widgets Apps Copyright © 2016 Pearson Education, Inc.

Search Engine Strategies Natural (organic) listings Search engine optimization (SEO) Paid (sponsored) listings Product listing ads (PLAs) Click fraud Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Google Search Results Copyright © 2016 Pearson Education, Inc.

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 company’s business Easy to spell Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Make your Web site easy to navigate. Locating products. Getting product information. Offer suggestions for related products. Add wish list capability. Use online videos. Create a gift idea center. Provide customer ratings and reviews. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Establish the appropriate call to action on each page. Build loyalty by giving online customers a reason to return to your Web site. Establish hyperlinks with other businesses, preferably those selling complementary products. Include an e-mail option and a telephone number on your site. Give shoppers the ability to track their orders online. Offer Web shoppers a special all their own. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Use the power of social media. Follow a simple design. Avoid clutter. Use less text on your homepage. Avoid huge graphic headers that must download first. Include a menu bar at the top of the page. Include navigation buttons at the bottom of the page. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Minimize the number of clicks to get to pages. Incorporate meaningful content that is consistent with your company’s message. Connect the Web site to social media pages so that posts on social media sites appear on the Web site. Include a FAQ section. Post prominently privacy and return policies. If your site is heavy on content, include a search tool. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Avoid fancy type faces and small fonts. Be vigilant for errors. Avoid small fonts on busy backgrounds. Use contrasting colors of texts and graphics. Be careful with frames. Test the site on different browsers. Use your web site to collect information, but don’t tie up visitors with a tedious registration process. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Avoid automated music that plays continuously and can’t be shut off. Make sure the overall look of the page is appealing. Remember that simpler is almost always better. Create a fast, simple checkout process. Provide customers multiple payment options. Assure customers that their transactions are secure. Copyright © 2016 Pearson Education, Inc.

Designing a Killer Web Site (continued) Establish reasonable shipping and handling charges and post them upfront. Confirm transactions. Keep your site updated. Test your site often. Rely on analytics to improve your site. Consider hiring a professional to design your site. Copyright © 2016 Pearson Education, Inc.

The Purchase Funnel and Ways to Improve the Shopping Experience Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Tracking Web Results Web analytics: Tools that measure a Web site’s ability to attract customers, generate sales, and keep customers coming back. Only about 25% of small businesses use Web analytics strategically to refashion their Web sites. Commerce metrics Visitor segmentation measurements Content reports Process measurements Copyright © 2016 Pearson Education, Inc.

Measuring Online Performance Cost per Acquisition (CPA): The amount it costs to generate a purchase (or a customer registration). Average number of page views per visit: Measures how much time visitors spend on a site. Bounce Rate: The percentage of visitors to a site who view a single page and leave without viewing other pages. Copyright © 2016 Pearson Education, Inc.

Measuring Online Performance (continued) Conversion (browse-to-buy) ratio: The proportion of visitors to a site who actually make a purchase. Cart Abandonment Rate (CTR): The percentage of shoppers who place at least one item in a shopping cart but never complete the transaction. Search engine ranking: Shows where a company’s Web site ranks in search engines’ results pages. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Ensuring Web Privacy Take an inventory of the customer data collected. Develop a company policy for the information you collect. Privacy policy Post your company’s privacy policy prominently on your Web site and follow it. Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Ensuring Web Security Virus detection software Intrusion detection software Firewall Secure Sockets Layer (SSL) Technology Charge backs Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc. Losses to Online Fraud Copyright © 2016 Pearson Education, Inc.