ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

1

Copyright © 2016 Pearson Education, Inc.1

Copyright © 2016 Pearson Education Inc

Copyright © 2016 Pearson Education, Inc.

E-Commerce and the Entrepreneur

9

9-2

Section 3: Launching the Business

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.

9- 3Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

2

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.

9- 4Copyright © 2016 Pearson Education, Inc.

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.

9- 5Copyright © 2016 Pearson Education, Inc.

(continued)

9- 6Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

3

9- 7Copyright © 2016 Pearson Education, Inc.

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%).

9- 8Copyright © 2016 Pearson Education, Inc.

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.

9- 9Copyright © 2016 Pearson Education, Inc.

(continued)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

4

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.

9- 10Copyright © 2016 Pearson Education, Inc.

(continued)

Acquiring customersOptimizing conversionsMaximizing Web site performanceEnsuring a positive user experienceRetaining customersUsing Web analytics as part of a cycle of

continuous improvement

9- 11Copyright © 2016 Pearson Education, Inc.

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.

9- 12Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

5

Myth 1: If I launch a site, customers will flock to it.

9- 13Copyright © 2016 Pearson Education, Inc.

(continued)

Include your URL on everything related to your businessUse social media such as Facebook and YouTube

to drive traffic to your siteNetwork – build relationships with other

companies, customers, trade associations, online directories, and other Web sites to interact with customersMake your site compatible with mobile devices Use QR codes

9- 14Copyright © 2016 Pearson Education, Inc.

Myth 1: If I launch a site, customers will flock to it.Myth 2: Online customers are easy to please.

9- 15Copyright © 2016 Pearson Education, Inc.

(continued from 9-13)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

6

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.

9- 16Copyright © 2016 Pearson Education, Inc.

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.

9- 17Copyright © 2016 Pearson Education, Inc.

(continued from 9-15)

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!

9- 18Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

7

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.

9- 19Copyright © 2016 Pearson Education, Inc.

(continued from 9-17)

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.

9- 20Copyright © 2016 Pearson Education, Inc.

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.

9- 21Copyright © 2016 Pearson Education, Inc.

(continued from 9-19)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

8

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

9- 22Copyright © 2016 Pearson Education, Inc.

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.

9- 23Copyright © 2016 Pearson Education, Inc.

(continued from 9-21)

Understand the underlying business…then use technology to develop an online business model that provides customer value in a profitable way.

9- 24Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

9

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.

9- 25Copyright © 2016 Pearson Education, Inc.

(continued from 9-23)

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.

9- 26Copyright © 2016 Pearson Education, Inc.

9- 27Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

10

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 sites.

9- 28Copyright © 2016 Pearson Education, Inc.

(continued from 9-25)

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.

9- 29Copyright © 2016 Pearson Education, Inc.

9- 30Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

11

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 sites.Myth 9: It’s what’s up front that counts.

9- 31Copyright © 2016 Pearson Education, Inc.

(continued from 9-28)

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

9- 32Copyright © 2016 Pearson Education, Inc.

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 sites.Myth 9: It’s what’s up front that counts.Myth 10: My business doesn’t need a Web site.

9- 33Copyright © 2016 Pearson Education, Inc.

(continued from 9-31)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

12

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.

9- 34Copyright © 2016 Pearson Education, Inc.

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.”

9- 35Copyright © 2016 Pearson Education, Inc.

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.

9- 36Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

13

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.

9- 37Copyright © 2016 Pearson Education, Inc.

(continued)

Go mobile.Responsive web sitesSocial-local –mobile (SoLoMo) strategies

9- 38Copyright © 2016 Pearson Education, Inc.

(continued from 9-35)

9- 39Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

14

Go mobile.Promote your Web site online and offline.Use social media tools to attract and retain

customers.

9- 40Copyright © 2016 Pearson Education, Inc.

(continued from 9-38)

Add social components to e-commerce strategies: MashupsReally simple syndicationSocial networkingWikisWidgetsApps

9- 41Copyright © 2016 Pearson Education, Inc.

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.

9- 42Copyright © 2016 Pearson Education, Inc.

(continued from 9-40)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

15

Natural (organic) listings Search engine optimization (SEO)Paid (sponsored) listings Product listing ads (PLAs)Click fraud

9- 43Copyright © 2016 Pearson Education, Inc.

9- 44Copyright © 2016 Pearson Education, Inc.

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.ShortMemorableIndicative of a company’s businessEasy to spell

9- 45Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

16

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.

9- 46Copyright © 2016 Pearson Education, Inc.

(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.

9- 47Copyright © 2016 Pearson Education, Inc.

(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.

9- 48Copyright © 2016 Pearson Education, Inc.

(continued)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

17

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.

9- 49Copyright © 2016 Pearson Education, Inc.

(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.

9- 50Copyright © 2016 Pearson Education, Inc.

(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.

9- 51Copyright © 2016 Pearson Education, Inc.

(continued)

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

18

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.

9- 52Copyright © 2016 Pearson Education, Inc.

(continued)

9- 53Copyright © 2016 Pearson Education, Inc.

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 metricsVisitor segmentation measurementsContent reportsProcess measurements

9- 54Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

19

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.

9- 55Copyright © 2016 Pearson Education, Inc.

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.

9- 56Copyright © 2016 Pearson Education, Inc.

(continued)

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.

9- 57Copyright © 2016 Pearson Education, Inc.

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTChapter 9: E-Commerce and the Entrepreneur

20

Virus detection software

Intrusion detection software

Firewall

Secure Sockets Layer (SSL) Technology

Charge backs

9- 58Copyright © 2016 Pearson Education, Inc.

9- 59Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc.9 - 60