Entrepreneurship and the Internet

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1 Entrepreneurship and the Internet Thomas Poulios Technological Education Institute of Larissa Larissa, Greece 1

2 E-Commerce Revenue as % of Total Revenue 0,4 in the USA 0,1 in the Western European Countries 0,024 in Greece 2

3 Estimated number of active e-markets by region Active in World North America Europe 4/ / Source: 3

4 Myths of e-commerce Setting up a business on the web is easy and inexpensive! Time Required to Develop an E-Commerce Site 35% 30% 25% 20% 15% 10% 5% 0% 4 to 8 9 to to to 52 More than 52 Number of Weeks 4

5 Myths of e-commerce If I launch a site, customers will flock to it. Making money on the Web is easy. Privacy is not an important issue on the Web. The most important part of any e-commerce effort is technology. 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. On the Web, customer service is not as important as it is in a traditional retail store. 5

6 Myths of e-commerce The Importance of Service on the web Study: 75% of Web shoppers who fill their online shopping carts become frustrated and leave the site before checking out. Reasons: Site too slow Site looks unprofessional Site does not take credit cards Checkout area too hard to find No return policy posted 6

7 Myths of e-commerce Flash makes a Web site better. It s what s up front that counts. E-commerce will cause brick-andmortar retail stores to disappear. The greatest opportunity for e- commerce lies in the retail sector. It s too late to get on the Web. 7

8 Disciplines Concerned with E-Commerce 8

9 The Internet is Changing the Way Companies do Business Small businesses that have a web presence report higher annual revenues than traditional brick-and-mortar companies $3,79 million annual revenues in 1998 for online companies as compared to $2,72 million for all small enterprises. Companies in the best position to capitalize on e-commerce are traditional brick-and-mortar companies. 9

10 The Internet is Changing the Way Companies do Business Three-fourths of the most successful e-tailers are online channels of existing brickand-mortar companies. Some businesses are better suited for the Internet than others. 10

11 Status of B2C E-commerce Business-to-consumer (B2C) e-commerce: Online traffic doubles every 100 days In 2002, e-tailing reached a level of $40 billion projections for online sales range from $25 billion to over $300 billion depending on the source Asian e-commerce doubles annually 11

12 Status of B2B E-commerce Business-to-business (B2B) e-commerce: Currently exceeds B2C e-commerce by five times Is projected to account for 40% of all B2B revenue by 2004 Going online may be a necessity for a firm engaging in business with other companies! 12

13 Understanding E-commerce Developing a Web site does not necessarily mean that a business will engage in selling products or services over the Internet Only 61% of businesses use the Internet for product sales Approximately 93% of businesses use the Internet to disseminate company information The Internet is just a component of the traditional business model that allows many companies to further existing goals Establishing a Web presence can benefit a brick-andmortar company in numerous ways 13

14 Online Feasibility Analysis Why put a business online? Disseminate company information Build company image Reach new customers Sell goods and services Disseminate product information Keep up with competitors Reach global markets Increase revenues Interact with customers Enhance customer service Engage in B2B e-commerce Build a virtual community 14

15 Online Feasibility Analysis (Continued) Is the Web site affordable? Who will develop the Web site and how will the site be maintained--in house or outsourced? Who is the audience or customer base, and what is their technological profile? What are the online objectives--short-term and longterm? How does e-commerce fit into the firm s traditional business model? What are the firm s e-commerce vision and strategies? How will the Web site be promoted? What results are expected from e-commerce efforts? 15

16 Is the Web site affordable? Average initial investment is (for a site involving security of credit card electronic payments and/or electronic funds transfer); for a site with no security issues Approximately 20% of launching funds to maintain the site annually 16

17 Is the Web site affordable?(continued) Cost of registration of domain name Register.com $35,00 1 st year and $20,00 a year thereafter; business owner should register instead of allowing Web master to register Options--.com,.net,.org,.biz,.info,.ws,.tv Hosting site costs Can range from $20 per month to $2,000+ per month Understand search engines included for cost as well as other benefits Hourly rate for Web masters Miminum hourly rate is approximately $75 per hour 17

18 Who will develop the Web site and how will the site be maintained--in house or outsourced? Doing it yourself Technical skills from start to finish site often lacks professional design, navigation ease, and understanding of technology Commercial templates not unique, don t reflect the individual business image Time required takes too much time away from running the business 18

19 Who will develop the Web site and how will the site be maintained--in house or outsourced? (Continued) Professional Web designer or Web master Understand the cost Get references Review Web sites they have designed 19

20 Who is the audience or customer base, and what is their technological profile? Any person is the EU with an interest in _?_ Immediate geographic market in Middle Tennessee with a total population of _?_ A 50-mile geographic area interested in our services Demographic customer profile Age, income levels, etc. Technological profile Computer use and knowledge Type of hardware customers use Type of browsers customers use 20

21 Market Research Sites

22 What are the online objectives-- short-term and long-term? Should be measurable. Should include time frame to reach each objective. Increase revenues through Web-based sales by 2,000 per month with a 5% growth rate thereafter Meet needs of customers outside the local area through Web access Reduce phone calls by 20% 1 st year Enhance communication with established customers Expand customer base by 10% per year Drive traffic from Web site to brick-and-mortar store Provide online appointment booking Attract 50 new customers first year Bring in 2 million page views per month first year 22

23 How does e-commerce fit into the firm s traditional business model? Does e-commerce compliment existing business initiatives? If so, how? Is e-commerce a major component of the traditional marketing plan? If so, how? Online shopping center Special online sales promotions Online newsletter 23

24 What are the firm s e-commerce vision and strategies? According to Fortune magazine, less than 10% of e-business strategies are effectively executed. Strategies specifically outlined in the Web site plan: Purpose and objectives of Web site Web site strategy Marketing plan Financial plan Product delivery Product inventory 24

25 How will the Web site be promoted Search engines Word-of-mouth Internet alliance links Traditional approach--include Web address on: Letterhead Business cards Brochures Signs Ad banners Print ads 25

26 How will the Web site be promoted? Offline (examples) Put your URL on letterhead, business cards and in signatures wherever potential visitors are likely to see it. If your employees wear uniforms, put your URL on them so every one of your customers sees a walking advertisement of your Web site. Include your URL on all promotional items you give away coffee mugs, T-shirts, keychains and so on. A daily reminder is a good way to get people to visit your site. Be sure to include your Web address in all press releases you send out to members of the media. By having it at their fingertips, they may be more likely to include it in articles they write about your company. Don't forget to put your Web address in your Yellow Pages ad. That's one place people see it every day. Do you own any company vehicles? Be sure to put your URL on the side of any car or truck that's out there delivering your products. In addition to listing your toll-free number, put your Web address on the bottom of every page of your catalogue so customers have easy access to your online store. 26

27 How will the Web site be promoted? Online (examples) Hone your search engine submission process so you can get the best exposure possible. For more exposure, explore search engine marketing, wherein you pay to have a text ad appear when visitors search for certain keywords. Launch a sweepstakes that offers anyone who registers on your site or subscribes to e-newsletters within a certain time frame the chance to win a free gift. Send out a weekly newsletter to registered site members that offers tips and news related to your company or industry with links back to your site. Offer free content to other sites. It's a win-win situation: The other site gets free articles to beef up their offerings and you get a link back to your site and the cachet of being an expert. Send a well-planned, customer-focused promotion to a targeted list of potential visitors and offer a credit toward the purchase of anything from your site. Spend time on your 's look and content: You want to offer value to customers and not have it appear to be Spam. 27

28 How will the Web site be promoted? Online (examples) Create your own link exchange by asking sites complementary to yours (but that don't compete) to put your link on their pages and you'll do likewise. Hook up with web affiliates hundreds of sites that all link their traffic to yours and get visitors from sites with related content. Get active in online discussion groups and chats and always include your URL in your signature. (Don't do any hard selling, though. Most groups frown on such behaviour and will think you're spamming the group.) Any time someone orders a product from your site, include a catalogue with their order to get them coming back for more. Inspire your visitors to spread the word for you with viral marketing techniques, from the aforementioned newsgroup participation to including an " this link" on every page of your site. Not sure what your customers want? Try creating an online survey to get their crucial opinions on how well your site is selling to them. When creating your own ads, make sure you understand who you're targeting, the goal of your campaign, and how to creatively use the ad confines to get viewers to click on your ad, not away from it. Use other selling venues like online classified advertising or online auction sites to increase exposure to your site and products. 28

29 Webanalizing Sites and Programs Webalizer, Web Trends Log Analyzer, Microsoft Site Server Click tracks 29

30 What results are expected from e-commerce efforts? Increase profits Increase sales Enhance customer satisfaction Build a community of customers Improve image 30

31 Web Site Design Features It only takes a click of a mouse for a customer to leave a Web site! Design Basics Design a site that reflects the firm s image and appeals to the company s customers Design a site that is well organized and easy to read Use graphics that download quickly and avoid clutter Include a menu bar and navigation buttons so customers can navigate the site with ease Keep in mind that the best designs are simple Include how to contact us 31

32 Web Site Design Features (Continued) Important features Design a site that encourages purchasing Pay careful attention to privacy and security issues and electronic payment Make it clear how to return merchandise if selling a product over the Internet Spell out product guarantees Provide enough information for customers to make decisions Create a sticky Web site (customers want to stay and come back) 32

33 Web Site Design Features (Continued) Technical issues Register the Web site on appropriate search engines (key words selection) Test the site on different Web browsers Update the user interface periodically Make sure hyperlinks connect Update site content regularly to keep the site fresh 33

34 Web Site Design Features (Continued) Customer interaction Incorporate a means of interacting with customers ( , chat rooms, etc.) Collect customer information 75% of Web users are aware that sites they visit collect personal information 90% of online customers want to control their personal information on the Web Consider installing tracing software to determine the most popular areas of customer interest (refer to pages 7-10 of this handout) Evaluate privacy and ethical issues surrounding collection of customer information and tracing software 34

35 Web Site Plan (Include as part of the traditional business plan.) Executive Summary Industry Analysis Industry Description Industry History Future Projections for Industry Internet Presence Dot-com Companies Click-and-Mortar Companies Brick-and-Mortar Presence Web Site Purpose Objectives 35

36 Web Site Plan (Continued) Marketing Plan Market Analysis Market Trends Online Buying Patterns Market Growth Potential Web Site Demographics Market Segmentation Competition Web Site Promotion Marketing Strategy Advertising Strategy 36

37 Web Site Plan (Continued) Web Site Strategy Site Development Features Search Engines Site Promotion Competitive Strategy Traffic Forecasts Traffic Tracing Internet Alliances 37

38 Web Site Plan (Continued) Financial Plan Cash Flow Analysis Monthly Projections for Three-Five Years Break-even Analysis Sales Projections Monthly Projections for Three-Five Years Expense Budget Monthly Projections for Three-Five Years 38

39 Web Site Plan (Continued) Critical Risks Potential Threats Potential Problems Contingency Plans 39

40 40

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