Effective Online Business: Hosting, Marketing, and Management Strategies Workshop #I - Introduction

1. 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

2. 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

3. THE BUSINESS CASE FOR HAVING A WEB SITE

4. 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

5. 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.

6. 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

7. 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

8. 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

9. 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

10. 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?

11. 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

12. HOW THE INTERNET WORKS

13. 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

14. 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 18.155.32.5 18 155.32.5 B 128.171.12.237 128.171 12.237 C 1 92.66.12.56 192.66.12 56

15. 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

16. 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

17. Client (Browser) Web Server Static Pages Pages Commerce Server (Storefront) Pages Pages Dynamic Product Database Shopping Cart Secure Transaction Server

18. WEB SITE HOSTING

19. 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/

20. 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

21. 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?

22. 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

23. WEB SITE DEVELOPMENT

24. 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

25. WEB SITE MANAGEMENT

26. 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

27. On-line Transaction Completion Source: A.T. Kearney, 2001

28. Reasons for Abandoning On-line Purchases Source: A.T. Kearney, 2001

29. 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

30. 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

31. Web Site Management:Payment Processing

32. Web Site Management:Payment Processing

33. 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.

34. 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

35. Web Site Management:Order Processing and Fulfillment

36. 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

37. 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?

38. 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

39. 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

40. WEB SITE PLANNING / OPERATING CHECKLISTS AND OTHER RESOURCES

41. 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?

42. 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?

43. 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

44. 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

45. 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

46. Effective Online Business Marketing and Management Strategies • Marketing your Internet business • Monitoring your site’s performance • Extending business opportunities - online exchanges / cooperatives

47. 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

48. 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

49. Website Marketing: Three Objectives • Increase Presence  Optimize • Drive Traffic  Publicize • Convert Visitors  Monetize

50. 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