Starting an E-business

1. Starting an E-business Dr. John P. Abraham Professor UTPA

2. Pre-requisite • start a business in Texas. I have a lecture with forms for this. • Complete all necessary requirements to start a business in texas.

3. Determine what model of ecommerce • Most common is Business to consumer • If you are a manufacturer, business to business is the way to go. • If you are a manufacturer, selling directly to the customers might impede your growth.

4. Selling directly to consumers • It appears starting a business with either eBay or Amazon (or both) initially would be easier. • Consumers are now used to going to one or both of these websites for purchases. • You have a built in customer base.

5. Before launching your business • Get registered with a name • Network solutions, or another registrar • Try to get a .com. Hard to get. .co would be your second choice. • Choose a name that is short and easy to remember.

6. Agencies that controls • ICAAN (internet corporation for assigned names and numbers) oversees the domain registration. • W3C (weld wide web consortium) sets standards for HTML and web • IETF (internet engineering task force) sets standards for Internet architecture.

7. Get a broadband service • ISDN – integrated services digital network 128 Kbps • DSL digital subscriber line 144 Kbps to 8 Mbps. It is asynchronous. • T1 – 1.5 Mbps up and down • T2 is a combined foru t1 lines to give over 6Mbps • T3 is comnbination of 28 t1 lines– up to 44.736 Mbps

8. Build a website • Start with Static (passive) web presence • Just showing your presence • Advertise on the web to generate traffic. This is what you gain from being on eBay or Amazon. • When advertising know how many people will be exposed to your ad, and how long. Checkout google, ebay, microsoft, aol, ask, etc. for advertising • Register with search engines • Titles and metatags are important for each page.

9. Create a Web Service • Other web services can integrate with yours.

10. Determine how to collect payments • Bank accounts • Wire transfer • Setup credit card services • Paypal • Google payment

11. Accounting • Integrated with online sales • Payroll • Automatic completion of reporting forms (sales tax, w-2, 941s and so on) • Inventory control, ordering (PO), receiving, RMAs • Must collect tax if sold in Texas.

12. Shipping • Determine how you want to ship • Trucking • UPS, FedEx, USPS • Create volume shipping rates

13. Web programming • Move up to interactive dynamic web pages • This is what we have been covering so far • AJAX, PHP, Ruby on Rails, ASP, etc.

14. Alliances • If you are a BtB, register with an alliance such as the airline alliances, hospitality, hotels, etc. • Become a business at social networks, such as Facebook, Twitter, etc.

15. Marketing Issues • E-Mail marketing (more later) • Cheap • Must know target (reach) • Use customer names where possible • Different languages (www.logos.it - does translations to 20 languages) • Consider outsourcing – Boldfish.com, messagemedia.com, digitalimpact.com, ilux.com, etc.

16. Marketing Issues (2) • Promotions • Netcentives.com • Frequent miles • Directcoupons.com, coolsavings.com, etc. • Advertising • TV, movies, newspapers, magazines • Online advertising • Linking your site, banner ads, search engine ads, etc.

17. Marketing Issues (3) • Buying and selling ads on the web • Put your ad on other popular sites that sells similar products • Sell banner ads on your site. • Cost is based on hits, pay-per-lead, pay-per-click, pay-per-lead,etc. • www.valueclick.com • Webcasts (Victoria Secret).

18. Public Relations • Chat sessions • Crisis management (within company) • Press releases www.prweb.com • CRM customer relationship management – www.datadistilleries.com, egain.com • Datamining • Record customers’ behavior

19. Online Monetary Transactions • Credit-card • Merchant account with a bank • www.cybercash.comwww.icat.com will set up accounts so that you can accept credit cards online. • COD • Debit Cards and debit-it.com (just give bank account info). • Digital currencty – ecash.com – internetcash.com • Paypal.com • Smart cards

20. Monetary transactions (2) • Micropayments – save on credit card fees • Combining many small charges into one charge, like a telephone bill. • Check free • Electronic Fund transfer (for large amounts) • Bank credit line

21. Legal Issues • Privacy – a major concern in web practices. • Tracking devices • Cookies – advantages of cookies come at the price of security. • Keystroke cops (employer/employee tension) • Defamation • Child pornography • Intellectual property – napster • Spam • Internet taxation

22. Traditional Advertising • Print, TV, Radio, Direct Mail, Yellow Pages • National Advertising • Dominated by large holding companies like Omnicom or WPP • Local Advertising • Small businesses • Pricing vary based on quantity.

23. Online Advertisinge-advertising • email marketing • search engine marketing (SEM) • social media marketing • many types of display advertising (including web banner advertising), • mobile advertising.

24. Email • comprising an entire email or a portion of an email message  • Email marketing may be unsolicited, in which case the sender may give the recipient an option to opt out of future emails, or it may be sent with the recipient's prior consent (opt-in).

25. Search Engine Marketing •  SEM, is designed to increase a website's visibility in search engine results pages (SERPs). • Search engines provide sponsored results and organic (non-sponsored) results based on a web searcher's query.  • Search engines often employ visual cues to differentiate sponsored results from organic results.

26. Social media marketing • commercial promotion conducted through social media websites. • Many companies promote their products by posting frequent updates and providing special offers through their social media profiles • Facebook captures your search activities posts product sensitive ads immediately to your page. 2.68 billion revenue in 2014

27. Mobile advertising • Ads delivered through wireless mobile devices such as smartphones, feature phones, or tablet computers. • There are more mobile devices in the field, connectivity speeds have • Proximity based advertising

28. Display Advertising • Banner Ads • Some relevance to content viewed, may be directed to locality. • Search Linked Ads • Related search terms • Context linked Ads • Related Content on the page • Up to Google, or Yahoo’s capability to determine content

29. Advertising money (year 2018) • 43 billion in 2013 – worldwide • 300 billion in 2016 with 1-2% growth per year • 628 billion in 2018 • In 2018 283 billion spent for internet advertising with rapid growth. • (Google’ revenue is ~116 billion in 2018)

30. Search share In 2013 Google 46% Yahoo 23% MSN 11% AOL 7% In 2018 Google 93% Bing 2.55, Yahoo 1.6

31. Search Engine Marketing • Per click cost per keyword • Example laptop $2.00 per click • Bid on this, based on bid an ad may go first place to second place, etc. • Bid is the determinant of ad position • Bidding on the word takes place continuously

32. Auction for keyword • Internet user enters a search term • Gets a page with results • Also shows ads to the side • If a user click on ad – pay for click • Top ads are clicked most • Advertisers submit bids stating maximum pay for click • Ad with highest bid is displayed on top • Advertisers can change their bid frequently

33. Auction Models • First Price Auction • Sealed Bid • Open Bid • Dutch • Second Price Auction • VCG (Vickrey-Clarke-Groves (VCG) • GSP (Generalized Second Price Auction)

34. VCG •  type of sealed-bid auction of multiple items •  it charges each individual the harm they cause to other bidders •  It also gives bidders an incentive to bid their true valuations • https://www.youtube.com/watch?v=c6BBTBhCk4k&t=2594s • Used by Facebook, linkedIn

35. Generalized Second Price Auction (GSP) • Google uses. It is a non-truthful auction • Advertiser submit bids stating their maximum willingness to pay for a click for a key word. • If a user click an advertiser that is not on top, the advertiser pays an amount equal to the next highest bid (bid for advertiser i+1) • http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1015&context=berkeley_econ221