III. SECTION BUILDING THE BUSINESS PLAN: MARKETING AND FINANCIAL CONSIDERATIONS
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E-Commerce and the Entrepreneur
Chapter Outline At a glance Introduction I. II. Benefits of Selling on the Web Factors to Consider before Launching into E-Commerce
III. Twelve Myths of E-Commerce IV. Strategies for E-Success V. Designing a Killer Web Site VI. Tracking Web Results VII. Ensuring Web Privacy and Security
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Introduction We are fortunate to be witness to the early stages of e-business. It is important for us to incorporate e-business in order to remain current in the marketplace. E-commerce has removed the obstacle of size for many small business entrepreneurs, replacing that with speed, and the Internet has changed the face of business. II. Benefits of Selling on the Web The Internet has brought new customers and offered an improved competitive position for many businesses that have an online presence. Some of the primary benefits of having a market presence on the Internet include: The opportunity to increase revenues The ability to expand their reach into global markets The ability to remain open 24/7 The capacity to use the Web's interactive nature The power to educate and inform The ability to lower the cost of doing business The ability to spot and capitalize on new business opportunities The ability to grow faster The power to track sales results Today, a majority of small businesses--70 percent and growing--have a presence on the Internet. II. Factors to Consider before Launching into E-Commerce As with any proposed change or new venture, business owners must consider the variables and challenges facing them: Is the product or service conducive to e-business? Can the business afford not to add e-business to its mix? Will customers use the Web to buy? How and where to best start a Web site? What are the specific goals and objectives of the Web site? What effects would a Web site have on customer relations, channels of distribution, financial condition of the business, and so on?
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III. Twelve Myths of E-Commerce E-commerce already has many stories of success and failure. Make sure that you do not fall victim to one of the following e-commerce myths: Myth 1: Setting up a business on the Web is easy and inexpensive. A Web site can result in additional costs for site redesign, hardware requirements, and other implication to the infrastructure of the business. Myth 2: If I launch a site, customers will flock to it. Promoting the site is important and needs to become an integral part of the overall promotional strategy. Myth 3: Making money on the Web is easy. Web retailers invest 65 percent of revenue in marketing and advertising, compared to just 4 percent for their off-line counterparts. Myth 4: Privacy is not an important issue on the Web. Internet users value their privacy and this concern has a negative impact on online sales. Myth 5: The most important part of any e-commerce effort is technology. Other factors influence online buyer behavior more than technology alone. Myth 6: Strategy? I don't need a strategy to sell on the Web! Just give me a Web site, and the rest will take care of itself. Having a plan for the role your site will play in your business is critical to ensure it is a solid investment and that it complements and supports all other aspects of your business. Myth 7: On the Web, customer service is not as important as it is in a traditional retail store. The customer service experience on the Web is vitally important and directly impacts buyer behavior.
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Myth 8: Flash makes a Web site better. A simple, easy to navigate and intuitive Web site wins every time! Myth 9: It's what's up front that counts. The site must offer value throughout. Myth 10: E-commerce will cause brick-and-mortar retail stores to disappear. A well-designed Web site can provide synergy to the physical retail store. Myth 11: The greatest opportunities for e-commerce lie in the retail sector. Internet technology offers tremendous value to many areas of business. The business-to-business environment is just one other example where the has Internet had a tremendous influence. Myth 12: It's too late to get on the Web. It is never too late and, as the Internet continues to evolve, additional features and technologies will make it even more attractive. Approaches to e-commerce need to consider the short- and long-term goals of a company along with its target markets, and budgetary constraints help to define the best approach to an e-business venture. Entrepreneurs have five basic choices: 1. Online shopping malls 2. Storefront-building services 3. Internet service providers and application service providers 4. Hiring a professional to design a custom site 5. Building a Web site in-house IV. Strategies for E-Success
A well-designed plan for your online presence may benefit from these tactics: Consider focusing on a niche in the market. Develop a community and potentially leverage Web 2.0 strategies. Attract visitors by giving away freebies.
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Make creative use of e-mail, but avoid becoming a spammer. Tracking e-mail read and click-through rates is one method to assess activity on a day and weekly basis. In addition, you can increase your online effectiveness when you: Make sure your Web site says credibility. Consider forming strategic alliances. Make the most of the Web's global reach. Promote your Web site online and off-line. Search engine strategies enable your site to be found as visitors use a variety of search techniques through: Natural listings -- organic Paid listings -- sponsored Paid inclusions V. Designing a Killer Web Site Web users demand fast and reliable sites, have little patience, and currently buy from a relatively low number of the e-businesses that they visit. While there are no guarantees, the following suggestions may increase the chances for online success. Understand your target customer. Select a domain name that is consistent with the image you want to create for your company and register it. Selecting a domain name that is short, memorable, intuitive with the company name, and easy to spell will help visitors find it. Design your Web site with ease of navigation in mind. Give customers what they want. Build loyalty by giving online customers a reason to return to your Web site. Establish hyperlinks with other businesses, preferably those selling products or services that complement yours. Include an e-mail option and a telephone number in your site. Give shoppers the ability to track their orders online. Offer Web shoppers a special all their own. Assure customers that their online transactions are secure. Post shipping and handling charges up front.
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Keep your site updated. Consider hiring a professional to design your site. VI. Tracking Web Results Firms using Web sites must closely track the benefits of increased sales against increased costs. Web analytics are software tools that measure a site's ability to attract customers, generate sales, and keep customers coming back. Other tracking methods include: clustering, collaborative filtering, profiling systems, and artificial intelligence. The art and science of quantifying the return on investment from e-commerce activities continues to develop. Recency length of time between customers' visits Click-through rate (CTR) proportion of people who click on a company's online ad Cost per acquisition CPA the amount it costs to generate a customer purchase Conversion (browse-to-buy) ratio the proportion of visitors to a site who make a purchase VII. Ensuring Web Privacy and Security The Web's ability to track the behavior of its customers raises concerns and issues over the privacy of that information. Companies are encouraged to take the following steps to ensure that the information they collect is being used in a legal and ethical manner: Take an inventory of the customer data collected. Develop a company privacy policy for the information you collect. Post your company's privacy policy prominently on your site and follow it! Security is another unresolved and developing Web site issue. Hackers, viruses, credit card fraud, and unauthorized users continue to adversely affect companies, customers, and the growth of e-commerce. Virus and intrusion detection software and firewalls may help to ward off attacks from hackers.
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