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CHAPTER
E-Commerce
and the Entrepreneur
Copyright
© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9
The Internet: Changing the
Face of Business
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Successful companies embrace the Internet
as a mechanism for transforming their
companies and for changing everything
about the way they do business.
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Business basics still apply online.
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In the world of e-commerce,
company size matters less
than speed and flexibility.
Ch. 9: E-Commerce and the Entrepreneur
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9-2
The Internet: Changing the
Face of Business
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Study: By 2011, the Internet will influence
more that $1 billion in offline sales.
Neilsen study: 86% of the world’s online
population has used the Internet to make a
purchase.
Items purchased most often online include
computer hardware and software, tickets,
books, music, movies, gift cards, toys and
video games, and baby products.
Ch. 9: E-Commerce and the Entrepreneur
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9-3
FIGURE 9.1 Online Retail Sales in the U.S.
Ch. 9: E-Commerce and the Entrepreneur
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Benefits of Selling on the Web
In addition to the text
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Opportunity to increase revenues and
profits
Ability to expand into global markets
Ability to remain open 24 hours a day,
seven days a week
Capacity to use the Web’s interactive
nature to enhance customer service
Power to educate and inform
Ch. 9: E-Commerce and the Entrepreneur
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Benefits of Selling on the Web
(continued)
In addition to the text
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Ability to lower the cost of doing business
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Ability to spot new business opportunities
and capitalize on them
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Ability to grow faster
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Power to track sales results
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Conversion rate –
the percentage of customers
to a Web site who actually make a purchase.
Ch. 9: E-Commerce and the Entrepreneur
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9-6
Ch. 9: E-Commerce and the Entrepreneur
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9-7
E-Commerce

The Small Business Research Board
reports:
57.3% of small business owners in the
U.S. have a Web site
 56.1% of those sites engage in online
sales.
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Barriers:
Not knowing how or where to start
 Cost and time concerns
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Ch. 9: E-Commerce and the Entrepreneur
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Factors to Consider Before
Launching into E-Commerce
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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.
Ch. 9: E-Commerce and the Entrepreneur
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9-9
Factors to Consider Before
Launching into E-Commerce
(continued)
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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.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 10
Assessing You Company’s
Online Potential
1. Does your product have broad appeal to
customers everywhere?
2. Do you want to sell your product to
customers outside of your immediate
geographic area?
3. Can the product you sell be delivered
conveniently and economically?
4. Can your company realize significant cost
advantages by going online?
5. Can you draw customers to your company’s
Web site with a reasonable investment?
Ch. 9: E-Commerce and the Entrepreneur
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9 - 11
10 Myths of E-Commerce
Myth 1:
Myth 2:
Myth 3:
Myth 4:
Myth 5:
Myth 6:
Myth 7:
Myth 8:
Myth 9:
Myth 10:
Online customers are easy to please.
If I launch a site, customers will flock to it.
Making money on the Web is easy.
Privacy is not an important issue.
The most important part of an e-commerce
effort is technology.
I don’t need a strategy to sell online.
Customer service is not important.
Flashy Web sites are better than simple
ones.
It’s what’s up front that counts.
Its too late to get on the Web.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 12
10 Myths of E-Commerce
Myth 1: Online customers are easy to please.
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.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 13
10 Myths of E-Commerce
(continued)
Myth 1: Online customers are easy to
please.
Myth 2: If I launch a site, customers will
flock to it.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 14
Promotion Is the Key!
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Include your URL on everything related to
your business
Provide phone and e-mail contact
information
Create Web-based newsletters
Write articles that link to your company’s
Web site
Sponsor online contests
Establish a blog
Ch. 9: E-Commerce and the Entrepreneur
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9 - 15
10 Myths of E-Commerce
(continued)
Myth 1: Online customers are easy to
please.
Myth 2: If I launch a site, customers will
flock to it.
Myth 3: Making money on the Web is easy.
Ch. 9: E-Commerce and the Entrepreneur
Copyright
© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 16
10 Myths of E-Commerce
(continued)
Myth 1: Online customers are easy to
please.
Myth 2: If I launch a site, customers will
flock to it.
Myth 3: Making money on the Web is easy.
Myth 4: Privacy is not an important issue.
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 17
Myth 4: Privacy Online
(continued)
Pew Internet Report:
If online companies were able to
alleviate customers’ online
privacy and security issues, the
percentage of online buyers
would increase from 66% to 73%.
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 18
10 Myths of E-Commerce
(continued)
Myth 5: The most important part of an
e-commerce effort is technology.

Understand the underlying business...
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…then use technology to develop an
online business model that provides
customer value in a profitable way.
Ch. 9: E-Commerce and the Entrepreneur
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10 Myths of E-Commerce
(continued)
Myth 6: I don’t need a strategy.
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An online strategy is critical to success
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Define the target audience
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Understand customers’ needs and
wants
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Create a strategy to set
your site apart from others
Ch. 9: E-Commerce and the Entrepreneur
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9 - 20
Myth 7: The Importance of
Customer Service on the Web
Myth 7: Customer service is not important.
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Study: 22% of online shoppers expect higher
levels of customer service than they do
offline.
Concern:
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Nearly 90% of online shopper reported they have
had problems completing an online transaction.
84% of these shoppers said they would share their
negative online shopping experience with others!
Ch. 9: E-Commerce and the Entrepreneur
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9 - 21
Myth 7: The Importance of
Customer Service on the Web
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Study: 58% of Web shoppers who fill their
online shopping cars abandon them without
checking out.
Reasons:
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Shipping and handling charges too high
Total purchase higher than expected
Desire to compare final price before buying
Inability to contact customer service
representative
Forgot use name or password for Web site
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 22
FIGURE 9.3
Reasons for Abandoning Online Shopping Carts
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 23
10 Myths of E-Commerce
(continued)
Myth 8: Flashy Web site are better than
simple sites.

Fast download times increase sales
potential
Myth 9: It’s what’s up front that counts.
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Order systems and support are critical
Myth 10: Its too late to get on the Web.
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Web opportunities still exist
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 24
Strategies for E-Success
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Focus on a market niche.
Develop a community.
Attract visitors by giving away
“freebies.”
Make creative use of e-mail, but avoid
becoming a “spammer.”
Make sure your Web site
says “credibility.”
Ch. 9: E-Commerce and the Entrepreneur
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9 - 25
Strategies for E-Success
(continued)
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Make the most of the Web’s global
reach.
Use Web 2.0 tools to attract and retain
customers.
Promote your site online and offline.
Develop an effective search
engine optimization (SEO)
strategy.
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 26
Search Engine Strategies
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Natural (organic) Listings –
Arise as a result of “spiders,” powerful
programs search engines use to crawl
around the Web.
Paid (sponsored) Listings –
Short text ads with links to the sponsoring
company’s Web site.
Paid Inclusion –
When a company pays a search engine for
the right to submit either selected pages
or its entire Web site content for listing.
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 27
Designing a Killer Web Site
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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.
Short
 Memorable
 Indicative of a company’s business
 Easy to spell
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Make your Web site easy to navigate.
Ch. 9: E-Commerce and the Entrepreneur
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Designing a Killer Web Site
(continued)
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Add wish list capability.
Use online videos.
Create a gift idea center.
Build loyalty by giving online customers
a reason to return to your Web site.
Establish hyperlinks with other
businesses, preferably those
selling complementary products.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 29
Designing a Killer Web Site
(continued)
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Include an e-mail option an a telephone
number on your site.
Give shoppers the ability to track their
orders online.
Offer Web shoppers a special all their
own.
Follow a simple design.
Create a fast, simple
checkout process.
Ch. 9: E-Commerce and the Entrepreneur
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Designing a Killer Web Site
(continued)
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Assure customers that online transactions
are secure.
Establish reasonable shipping and
handling charges and post them up front.
Confirm transactions.
Keep your site updated.
Test your site often.
Consider hiring a professional
to design your site
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 31
Tracking Web Results
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Web Analytics – tools that measure a Web
site’s ability to attract customers, generate
sales, and keep customers coming back.
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Only about 40% of e-businesses use
Web analytics strategically to refashion
their Web sites.
Commerce metrics
 Visitor segmentation measurements
 Content reports
 Process measurements
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Ch. 9: E-Commerce and the Entrepreneur
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Measuring Online Performance
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Recency –
The length of time between
customers’ visits to a Web site.
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Click-through Rate (CTR) –
The proportion of people who
see a company’s ad online and
actually click on it.
Ch. 9: E-Commerce and the Entrepreneur
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© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 33
FIGURE 9.3
E-Mail Open and Click-Through Rates by the Day of the Week
Ch. 9: E-Commerce and the Entrepreneur
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9 - 34
Measuring Online Performance
(continued)
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Cost per Acquisition (CPA) –
The amount it costs to generate a
purchase (or a customer registration).
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Conversion (browse-to-buy) ratio –
The proportion of visitors to a site
who actually make a purchase.
Ch. 9: E-Commerce and the Entrepreneur
Copyright
© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 35
Ensuring Web Privacy
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Take an inventory of the customer data
collected.
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Develop a company policy for the
information you collect.
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Post your company’s privacy policy
prominently on your
Web site and follow it.
Ch. 9: E-Commerce and the Entrepreneur
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9 - 36
Ensuring Web Security
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Virus detection software
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Intrusion detection software
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Firewall
Ch. 9: E-Commerce and the Entrepreneur
Copyright
© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 37
Conclusion
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Know what you need to know before
launching into e-commerce
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Assess the basic strategies to follow
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Know what works on Web sites
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Track results and
listen to customers
Ch. 9: E-Commerce and the Entrepreneur
Copyright
© 2011 Pearson Education, Inc. Publishing as Prentice Hall
9 - 38
All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in any
form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of
the publisher. Printed in the United States of America.
Ch. 9: E-Commerce and the Entrepreneur
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