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Effective Online Business: Hosting, Marketing, and Management Strategies Workshop #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      The Internet – how it works Website hosting basics   Alternatives, costs, services provided Website development and design basics   What is e-commerce? Benefits Some issues and options Using a web host’s tools and resources Website management basics    Assessing site performance Payment processing Order processing and fulfillment THE BUSINESS CASE FOR HAVING A WEB SITE E-Commerce Defined  E-Commerce    But that’s ‘narrow’ Internet offers more – E-Business includes     “Buying, selling, or exchanging products, services, and information via computer networks.” (Turban, King, Lee and Viehland – 2004) 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)   Business to Consumer (B2C)   Sells products and services to individuals B2B is where most of the money is   Selling products and services to customers who are primarily other businesses About 97% B2C is the most well-known  Amazon, eBay, etc. 5 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     Reduce costs       Distributed market exposure Target narrow segments Create virtual communities which become targets 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 INTERNET WORKS 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 A 18.155.32.5 18 B 128.171.12.237 128.171 C 1 92.66.12.56 192.66.12 Host part 155.32.5 12.237 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 Top Level Domain Organization Name Organization Type uhh.hawaii .edu How the Web Works: Protocols and Infrastructure  Messages versus Packets  i.e., connection vs. connectionless Web Server HTTP This Machine Message (example: Page) HTTP TCP Packet 3 Packet 2 Packet 1 TCP IP Packet Packet Packet IP Client (Browser) Web Server Static Commerce Server (Storefront) Dynamic Pages Pages Pages Pages Product Database Shopping Cart Secure Transaction Server WEB SITE HOSTING 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 WEB SITE DEVELOPMENT 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 WEB SITE MANAGEMENT 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 18% Complete transaction Do not complete transaction 82% Source: A.T. Kearney, 2001 Reasons for Abandoning On-line Purchases Did not like returns policy 16 Had to make phone call 16 24 Could not specify product Could not find product 40 Web site malfunction 42 Did not want to enter credit card details 46 Too much information required 52 0 20 40 Percent Source: A.T. Kearney, 2001 60 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 it easy to change quantities or delete items from shopping cart. Make it easy 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 Web Site Management: Payment Processing Web Site Management: Payment Processing Steps in Online Payment Processing 1. Merchant submits credit card transaction to the Payment Gateway on behalf of a customer via secure connection from a Web site. 2. Payment Gateway receives the secure transaction information and passes it via a secure connection to the Merchant Bank’s Processor. 3. 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). 4. Credit Card Interchange routes transaction to customer’s Credit Card Issuer. 5. 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. 6. Credit Card Interchange relays transaction results to Merchant Bank’s Processor. 7. Merchant Bank’s Processor relays transaction results to Payment Gateway. 8. Payment Gateway stores transaction results and sends them to customer and/or merchant. 9. 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: Order Processing and Fulfillment 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   Fulfillment     Effective AND attractive 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 WEB SITE PLANNING / OPERATING CHECKLISTS AND OTHER RESOURCES 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 Strategies Workshop #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 Search Engine Marketing Search Engine Marketing  Combination of:  Your site’s pages (content) +   Bid for placement advertising Sponsored results at search engine sites  Ex: search Google for “bath soap” Search Engine Marketing: Basic Design  Most search engines use weighted point systems to display results in a ranked order  Ranking is result of page “grade”   Grade = title + description + keywords + H1 tags + links-into + ‘alt’ descriptions + number of images + page size Use a tool at Summit Media to analyze your site  http://tools.summitmedia.co.uk/spider Search Engine Marketing: Basic Design  It’s all about ‘descriptive content’  Limit use of multimedia  Limit use of graphics  Use long descriptive ‘link’ text  Ex: Here you will find a listing of all of the courses Dr. Burke teaches.  Spell check and edit  Make it easy to move around the site  Avoid frames Search Engine Marketing: Optimization  Use a descriptive ‘Title’     No more than 40 characters including spaces Include keyword in title Ex: Flowers-by-Kelly Home Page – Orchids for all occasions Use meta-tags  Description meta-tag – should         Be no more than 190 characters long Include keywords Be factual and accurate Include general product information Include information about target audience Not include slang, exaggeration, or hyperbole Keywords meta-tag Header ‘H1’ tags Search Engine Marketing: Optimization Using Meta Tags  Title Tag   Description Tag   <META NAME = “keywords” CONTENT = “mountain, bike, bikes, Cannondale, Trek, Specialized, components, gear, frames”> Header Tag   <META NAME = “description” CONTENT = “Sore Okole Mountain Bikes is the place for all of your biking needs, including frames, components, accessories, gear and popular brands like Cannondale, Trek and Specialized”> Keywords Tag   <title>Sore Okole Mountain Bikes - Home Page</title> <h1> Sore Okole Mountain Bicycles </h1> Example of HTML source at Sore Okole Bicylcles Search Engine Marketing: Bid for Placement and Keywords Search Engine Marketing: Bid for Placement - PPC Advertising  Register with PPC system (search engine)  Load account  Create an advertisement  Title, body text, link to ‘landing’ page  Choose keywords to associate with the ad  For each keyword you associate - bid amount you are willing to pay for each click for the ad Search Engine Marketing: Keywords   How they work Keyword analysis      Keyword rank = meta tag placement + capitalization + font size + word position in document relative to other words Identify competitors’ keywords Look up synonyms  Bicycle and bike Consider plurals and spelling mistakes  Bicycles and bicycels Research the use of the keyword  Yahoo! Advertiser Center  Tools  Term Suggestion  Type in search term Search Engine Marketing: Keywords  Keywords should attract visitors in all three stages of the buying cycle  Researching   Shopping (comparing)   General keywords  mountain bikes More focused  cross country mountain bikes Purchasing  Specific choices  Specialized Rockhopper (a brand of cross-country mountain bike) Search Engine Marketing: Keywords  Many sites will have to manage dozens and even hundreds of keywords  Every keyword should ‘land’ the visitor at the most relevant page for that keyword  Example: ‘Trek’ should land visitor on a page with Trek bikes - not on the site’s homepage  Keywords may have to change to reflect ‘seasonality’ Search Engine Marketing: Keywords  Matching  Broad   Phrase    “Mountain bikes” – only when search contains this phrase Could be in a search for “used mountain bikes” Exact    Mountain bikes – whenever search contains these words [downhill mountain bikes] – only when search specifies this exact order of words Would not show for search of “mountain bikes downhill” Negative  -Used – does not show when this word or phrase is used by someone looking for used bikes Search Engine Marketing: Keyword Tools   www.Adwords.Google.com www.Wordtracker.com  Searches data at large web-crawlers like www.Dogpile.com  Stores two months of searches – 300 million searches  Number of times searched for in last 60 days  Estimates number of searches per day  Similar terms & common misspellings  Comparison of number of times term is searched for and number of pages returned for the term  Look for term with many searches and few pages returned Search Engine Marketing: Valuing PPC Search Terms  Determine how much gross profit (after costs) you make per sale    Calculate ‘conversion’ rate    Is there a ‘lifetime’ value per customer or Do you value a customer as ‘one time’ only? Shop.org estimates retail industry average at 2.4% When possible use your own site statistics Calculate PPC value – also called Conversion Cost     If your gross profit is $10 per sale And your conversion rate is 4% (4 sales per 100 click-throughs) Then your PPC value is $10 X .04 = $0.40 - that you would be willing to pay per visitor (PPC) In other words, you can pay $0.40 per click through and after 25 of them you would have paid 25 X $0.40 = $10.00 but you’d expect 1 of the 25 visitors (4%) to buy something - giving you that $10.00 gross profit, covering your PPC costs Search Engine Marketing: Cross-linking and Other Issues Search Engine Marketing: Cross-linking  Page Rank is increased by     Cross-linking is also a form of ‘Branding’ Use linking strategies that enhance your website's position – not detract from potential sales   For instance, link from complementary products sites rather than from similar products sites Cross-linking sources:       More links into your site Links into your site from more relevant sites Trade associations Companies you do business with Press releases and promotions Have content people value (ex: history of lei making) Contact relevant sites The power of cross-linking  Check link popularity - for ex: at AltaVista.com link:flowersbykelly.com Search Engine Marketing: What Search Engines Don’t Like  Don’t search or find it difficult to search when they see:  Frames, images, multimedia (ex: flash, animation), image maps    Scripts, excessive formatting code    Call external scripts – don’t embed in source Use external CSS files for formatting Dynamic pages – too many parameters, too many possible pages    Avoid frames, images, animation unless necessary Move images and image maps to bottom of page Use static pages when possible Use one or two parameters at most Will not search sites that demand cookies for site access Search Engine Marketing: Submit to the Major Engines  AltaVista – www.altavista.com AOL.COM Search – search.aol.com Ask Jeeves – www.askjeeves.com Google – www.google.com Overture – www.overture.com Excite – www.excite.com Fast – www.alltheweb.com HotBot – www.hotbot.com Lycos – www.lycos.com MSN Search – search.msn.com  Don’t forget Froogle – www.froogle.com          Search Directory Marketing Search Directory Marketing  Directories are different than engines  Index by categories rather than keywords  So – there are far fewer categories  Why submit to directories?  Another channel of exposure  Each one is one more ‘link into’ your site – remember cross-linking Search Directory Marketing  Major directories are  Google Directory – fed by Open Directory Project  Yahoo! Directory    Fourteen categories – thousands of subcategories So may be difficult choosing a category to be listed in Submitting costs $$$  Open Directory Project – www.dmoz.com  LookSmart – www.looksmart.com Search Engine Marketing: Webmaster SEO Resources      Google’s webmaster pages  http://www.Google.com/webmasters/guidelines.html  http://www.Google.com/webmasters/faq.html Yahoo help  http://help.Yahoo.com/help/us/ysearch/index.html Search Engine Watch  http://www.SearchEngineWatch.com Pandia Search Central  http://www.Pandia.com Open Directory Project  http://www.dmoz.org/Computers/Internet/Searching Non-Search Engine Marketing: Non-Search Engine Marketing  Advertising banners  Typical ad = 468 x 60 pixels (about 1” x 5”)  Are they effective?  Click through rates of 1 – 3 per thousand impressions  Buying them  Costs dropping – ~$20 for 1,000,000 impressions (banner.com)  Link ‘exchanges’ – ex: flower sellers could partner with gift sellers or gift-card sellers    Remember - having link partners also looks good to search engines Are they right for your products or services? Banner strategies       Banner should load quickly and have a ‘call to action’ – ex: “click here for…” Have inventory of 5-6 banners Have them rotated every 5,000-10,000 impressions Use multiple banner exchanges for different networks of targets Look / negotiate for more ‘targeted’ exposures (they target using ‘keywords’ that you bid on) Monitor click-throughs for each banner and from each exchange Non-Search Engine Marketing  Opt-in e-mail databases  Promotions, e-mail marketing, direct mail marketing  Build lists from store front, web site, catalogs  Buy lists from list sellers  Response rates higher than with banner ads – as much as 5%-10%  They are targeted  Effectiveness of banner ads and email programs may be considered as “Brand Building” Non-Search Engine Marketing  Affiliate programs and promotional partnerships  Pay to have leads sent to you (pay per-click or persale)  Ex: www.myaffiliateprogram.com  Bonus point strategies can develop repeat business  The importance of traditional advertising  Print – can cost $2 - $3 per sale  Radio, television – can cost $10 - $40 per sale Website Marketing: Follow-up Management Issues Website Marketing: Follow-up Management  Collecting / analyzing visitor and customer data  Discovering your customers’ patterns, wants and desires  Using software to analyze the data     Ex: uhhiloagstore at Yahoo! Store What to analyze How often ROI (Return On Investment) from advertising and marketing  Measuring advertising effectiveness  What is your “Cost Per Conversion”?  For example Google has a “Conversion Tracker” tool Website Marketing Checklist                  Does your domain name make sense with your service or products? Is the text in your website descriptive, concise and accurate? Do you understand how search engines work and that most use a weighted point system to display results? Do you understand what bid-for-placement marketing is? Do you understand what sponsored results are in the search engines? Do you understand what cross-linking is? Do you know linking strategies that enhance your website's position and do not detract from potential sales? Do you know that some past internet marketing techniques can actually get your website penalized with the search engines? Have you planned for a realistic monthly marketing and advertising budget? Is online marketing such as advertising banners good for your products or services? Would traditional advertising work with your online presence, such as print, radio and television? Have you considered creating an opt-in e-mail database for promotions, e-mail marketing and direct mail marketing? Are there promotional partnerships available for your products or services? Do you have bonus point strategies in place to develop repeat customer traffic? Do you have the software in place to collect and analyze visitor and customer data? Do you analyze it regularly and learn your customer patterns, wants and desires? Do you have a good ROI (Return On Investment) from your advertising and marketing? Do you know how to tell?