Effective Online Business: Hosting, Marketing, and Management StrategiesWorkshop #I - Introduction Presenters: Kelly Burke – University of Hawaii at Hilo Steven Parente – Aina Hawaiian Tropical Products Supported by a USDA Cooperative State Research, Education and Extension Service Grant through the University of Hawaii at Hilo and College of Business and Economics Dean Dr. Marcia Sakai
Ecommerce and the Internet: Introduction to Online Retail Overview • The business case for e-commerce • What is e-commerce? • Benefits • Some issues and options • The Internet – how it works • Website hosting basics • Alternatives, costs, services provided • Website development and design basics • Using a web host’s tools and resources • Website management basics • Assessing site performance • Payment processing • Order processing and fulfillment
E-Commerce Defined • E-Commerce • “Buying, selling, or exchanging products, services, and information via computer networks.” (Turban, King, Lee and Viehland – 2004) • But that’s ‘narrow’ • Internet offers more – E-Business includes • Servicing customers • Collaborating with business partners • Supporting electronic transactions within the firm • We mean the ‘broader’ definition here
E-Commerce Business Models • There are 2 that are most prominent • Business to Business (B2B) • Selling products and services to customers who are primarily other businesses • Business to Consumer (B2C) • Sells products and services to individuals • B2B is where most of the money is • About 97% • B2C is the most well-known • Amazon, eBay, etc.
Forces Driving Online B2C Shopping • Convenience – 75% • Cost – 38% • Context • Opportunity to buy at right time and right place • For example: from my desk when I am thinking about – or reminded about – that book. * Dataquest, 2000
The Typical Online Customer • Activity conducted online by % of Internet users • Research a product before buying – 78% • Buy a product – 67% • Use a search engine – 84% Source: Pew/Internet.org - 2005
The Typical Online Customer • Percent of each group that browse online • Age: • 18-29 – 64% • 30-49 – 56% • 50-64 – 36% • 65+ – 12% Gender: • Male – 69% • Female – 67% • Income • Less than $30,000/yr – 49% • $30,000-$50,000 – 73% • $50,000-$75,000 – 87% • More than $75,000 – 93% Source: Pew/Internet.org - 2005
The Typical Online Customer • Completed online transactions:10 • Online sessions per week: 6 • Unique sites visited per week: 6 • Average surfing session: 31 minutes • Time per site per week: 32 minutes • Time online per week: 3 hours, 8 minutes Source: Harris Interactive, Nielson Netratings
Why Have a Web Site:Benefits of E-Commerce • Increase sales • Distributed market exposure • Target narrow segments • Create virtual communities which become targets • Reduce costs • Sales inquiries • Price quotes • Product availability • Enhance product value • Benefits work both ways – selling or buying • But are these reason enough for YOU to own a web site?
Why Have a Web Site:Benefits of E-Commerce • Well – of course – a not insignificant reason to own a web site may be that: • Your competitors are doing it • In our survey of Big Island Flower Growers (mostly small mom-and-pop businesses), 40% of those responding (29 out of 74) say they already have a web site • Also – it’s just not that hard or costly to do
How the Web Works: Uniform Resource Locators • Browsers differ in the way they are programmed • So if WWW is to be useful to many – we need standard way to identify a resource • Example: • http://www.hawaii.edu:2074/~kburke/course_info.html • URLs specify: • communication method (protocol) – ex: http • host name – ex: www.hawaii.edu • connection ‘port’ on host – ex: 2074 • path on web server to resource / page – ex: course_info.html
How the Web Works: The Internet Protocol (IP) • TCP / IP protocol for communicating • IP addressing – every device on the Internet has a different IP address • Network Information Center allocates address blocks • Class Address Network part Host part A 126.96.36.199 18 155.32.5 B 188.8.131.52 128.171 12.237 C 1 184.108.40.206 192.66.12 56
How the Web Works:IP Addresses and Domain Names • IP addresses are unfriendly • Assign a human readable name to IP addresses • Placed in a distributed, hierarchical, lookup system • In network of thousands of domain name severs (DNS) • Which map domain names to IP addresses • For example: 128.171.xxx.xxx = uhh.hawaii.edu Domain Organization Name uhh.hawaii Top Level Domain Organization Type .edu
HTTP TCP IP HTTP TCP IP Message (example: Page) Packet 3 Packet 2 Packet 1 Packet Packet Packet How the Web Works:Protocols and Infrastructure • Messages versus Packets • i.e., connection vs. connectionless Web Server This Machine
Client (Browser) Web Server Static Pages Pages Commerce Server (Storefront) Pages Pages Dynamic Product Database Shopping Cart Secure Transaction Server
Getting Started: Hosting Issues • Hosting • Understanding what “hosting” means and your alternatives? • “Do-it-yourself” website services • http://www.1and1.com • http://www.bigstep.com/ • http://store.yahoo.com/
Getting Started: Hosting Issues • Bandwidth • Capabilities and specifications • Examine the features and functions provided by different hosts • Example: Comparison of features at 1and1.com • Firewall system • Wireless delivery • Buy, rent, or lease • Maintenance, upgrade, and service of the equipment
Getting Started: Web Hosting • Identify what you have resources and time to do • Identify what will be done “outside” the firm • Identify which external parties will be involved • e.g., designer, ISP, web host? commerce provider? • Identify how you will assess their performance • Decision metrics – e.g., are they reliable? • On-going performance metrics – e.g., is their “uptime” what they claim?
What is Involved in Establishing a Web Site? • Web site considerations • The services wanted • How much your company can contribute to the site, from manpower to electronic content • Time to design your site • Time to create and program your site • Extra fees for software development • Fees for off-the-shelf applications tools • The size of the site • Training requirements • Installation and server maintenance • Programming • On corporate site hosting vs. off-site • Secure Server for financial transactions • Your bandwidth needs • Your server capacity needs • Location of your server at the Web company or ISP company location
Ecommerce and the Internet:Basic Site Building • First – your ‘Domain Name’ • Maybe I’d like to use “flowersbykelly.com” • Check at Register.com to see if it’s available • 10 Steps at Yahoo! to developing your site • http://smallbusiness.yahoo.com/webhosting/gstart.php • Demonstration in basic site construction • Using Yahoo! SiteWizards
Ecommerce and the Internet:Basic Site Management Functions • Example: Yahoo! Merchant Solutions • Plans and features • Business Control Panel - Site manager • Store editor • Catalog manager • Order / request processing • Site statistics • Order settings • Promoting the site
On-line Transaction Completion Source: A.T. Kearney, 2001
Reasons for Abandoning On-line Purchases Source: A.T. Kearney, 2001
Website Management Issues: The Shopping Experience • Industry research shows that up to 80 percent of shoppers abandon shopping cart before completing checkout • Techniques for minimizing shopping cart abandonment rates: • If the billing information is the same as the shipping information, include a “Same as billing information” check box to automatically fill in. • Show stock availability on the product page, so shoppers do not have to wait until checkout to determine if a product is out of stock. • Include a link back to product page from shopping cart, so shoppers can easily go back to make sure they have selected the right item. • Make iteasy to change quantities or delete items from shopping cart. • Make iteasy to select or change product values in the shopping cart (e.g., color, size). • Include a "Progress Indicator" (e.g., "Step 2 of 5") on each checkout page (e.g., tabbed pages), so shoppers always know where they are in the checkout process. Adapted from Overture.com - 2005
Website Management Issues:The Shopping Experience • Techniques for minimizing shopping cart abandonment rates (continued): • Provide shipping costs early in the process, so shoppers are not surprised during final checkout. • Include a prominent "Next Step" or "Continue with Checkout" button on each checkout page, so shoppers do not get lost. • Keep all information on one screen on each checkout page, so shoppers do not have to frequently scroll down. • If information is missing or filled out incorrectly during checkout, give meaningful error message that clearly describes what needs to be corrected. • If you intend to add your customers to a list for future e-mail marketing (either from you or a third party), make sure your customers know this and can easily opt out. • Make recommendations of additional items to buy based on what is already in the shopping cart. Adapted from Overture.com - 2005
Steps in Online Payment Processing • Merchant submits credit card transaction to the Payment Gateway on behalf of a customer via secure connection from a Web site. • Payment Gateway receives the secure transaction information and passes it via a secure connection to the Merchant Bank’s Processor. • The Merchant Bank’s Processor submits the transaction to the Credit Card Interchange (a network of financial entities that communicate to manage the processing, clearing, and settlement of credit card transactions). • Credit Card Interchange routes transaction to customer’s Credit Card Issuer. • Credit Card Issuer approves / declines the transaction based on customer’s available funds and passes transaction results, and if approved, the appropriate funds, back through the Credit Card Interchange. • Credit Card Interchange relays transaction results to Merchant Bank’s Processor. • Merchant Bank’s Processor relays transaction results to Payment Gateway. • Payment Gateway stores transaction results and sends them to customer and/or merchant. • Credit Card Interchange passes appropriate funds for the transaction to Merchant’s Bank, which then deposits funds into the merchant’s bank account.
Web Site Management:Payment Processing • Some things to keep in mind: • The merchant needs a special Internet Merchant Account • The merchant needs to arrange for service through an Internet entity called a Payment Gateway • The merchant needs to submit charges for settlement – daily or weekly • Merchant’s sign-up process at VeriSign.com
Web Site Management:Steps in Order Processing and Fulfillment • Order validated • Settlement of order payment • Customer notified • Items picked • Inventory updated • Items packed (with packing slip) • Shipping labels prepared • Shipper pickup arranged • Shipper picks up • Send shipping confirmation (with tracking number) to customer
Web Site Management:Order Processing and Fulfillment • Merchant has to be notified or become aware that an order has been placed • One reliable person should be made responsible for checking / processing orders • It should become part of their ‘job description’ • What mode of informing? • Email? • Manual check of the site? • How frequently / often will the person check / process?
Web Site Management:Order Processing and Fulfillment • Customer has to be notified of order confirmation • Method – email, phone? • Confirmation of stage in process • Order placed • Charge assessed to card • Order shipped
Web Site Management:Order Processing and Fulfillment • Packaging • Effective AND attractive • Fulfillment • Track inventory accurately • Make sure you have enough product • Indicate availability on web site – database inventory • Shipping • Vendor(s) and methods • Rates – how much and how assessed • included in price, flat rate, by weight, by number of items • Shipment tracking • Shipment status updates • Remember - foreign shipping may require additional paperwork • Product guarantees and returns • Post a visible policy with explicit instructions • Handle returns quickly
Website Planning / Operating Checklist • Have you carefully analyzed your market and competition? • Do you know who your target audience is, and is your website speaking to them? • Do your prices include a realistic margin for profit when all expenses are subtracted including shipping, customer service and advertising • Are your prices competitive with similar online businesses? • Are your site’s objectives and purpose clear? • Are your products or services clearly identified? • Are the competitive advantages of your products or services clearly stated? • Do you have a business plan? Have you planned 1, 3 and 5 years out? • Will your website ever make money? • Does your staff clearly understand their organizational duties and who is in charge? • How is your company’s hierarchy and decision process handled? • Is there a clear path from R&D to sales? How quickly can your company initiate innovative ideas and products and have them online? • Is your website’s architecture well designed and easy to navigate? • Is your shopping cart easy to use? Is it secure? • Is your electronic infrastructure set up efficiently? • Do your website, product database, shipping, inventory, accounting, e-mail and customer database integrate well with each other? • Is your database the hub? • Do you have good statistical analysis software in place to track visitor and customer information?
Website Planning / Operating Checklist • Does your website have a professional appearance when compared to your competition? • Is your text well written, concise and free of errors? • Do you change your website frequently to make it ‘fresh’? • Are your photos high quality and well lit? • Are your graphics and photos optimized for the web? • Do they represent your products well? • Do you have click-to-enlarge photos of your products? • Does your website load quickly? • Is your software working well between inventory, fulfillment, shipping, customer service and accounting? • Do you have a merchant credit card processing account? • Have you decided on transaction policies, types of transactions, privacy policies, secure data storage for customer data? • Does your staff know what to do in every situation? • Are you able to fulfill orders quickly? • Do you respond quickly to customer e-mail questions and service issues? • Do you have a toll-free telephone number and can customers easily find someone to talk to? • Do you or the person responsible for your website and marketing have intimate knowledge of the internet? • How many hours per day is spent online? • Do you purchase, conduct business and research online yourself? • Are you watching for online trends and emerging technologies? • Do you know if streaming media or other interactive technologies are beneficial for your website?
Other Online Resources • A lot of small business related information - AllBusiness.com • Universal online payment processing – PayPal.com • Online payment processing and transaction security – VeriSign.com
Ecommerce and the Internet: Conclusion We Talked About: • What is e-commerce and why do it? • The Internet • Website hosting basics • Website development and design basics • Website management basics Now You Should: • Go Out and Explore Some Web Site Options • Maybe Even Start a Web Site In The Next Workshop We’ll Talk About: • How To Effectively Market Your Site • Online Exchanges and Co-operatives
Effective Online Business: Hosting, Marketing, and Management StrategiesWorkshop #2 Presenters: Kelly Burke – University of Hawaii at Hilo Steven Parente – Aina Hawaiian Tropical Products Supported by a USDA Cooperative State Research, Education and Extension Service Grant through the University of Hawaii at Hilo and Dr. Marcia Sakai
Effective Online Business Marketing and Management Strategies • Marketing your Internet business • Monitoring your site’s performance • Extending business opportunities - online exchanges / cooperatives
Website Marketing • Excellent customer service • Word of mouth is the best form of advertising • Plan a realistic monthly marketing and advertising budget • Search engines • Directories • Traditional off-line media
Website Marketing • Domain name should suggest your service or products • Ex: FlowersByKelly.com or flowers-by-kelly.com • not kelly.com • The text in your website is critical to marketing • Descriptive, accurate, concise • Include keywords – more than once – but not too often
Website Marketing: Three Objectives • Increase Presence Optimize • Drive Traffic Publicize • Convert Visitors Monetize
Website Marketing • Find out if your site is indexed • Pages in cache • At Google cache:http://your-domain.com • Ex: cache:http://primal-elements.com - nothing? • Ex: cache:http://www.primalelements.com • Number of pages indexed in domain • At Google or Yahoo! site:your-domain.com • At Google site:www.uhhiloagstore.com • At Yahoo! site:www.uhhiloagstore.com