E-CommerceE-Commerceand and

EntrepreneurEntrepreneur

ABDM4233 ENTREPRENEURSHIPABDM4233 ENTREPRENEURSHIP

byStephen OngStephen Ong

Principal Lecturer (Specialist)Principal Lecturer (Specialist)Visiting Professor, Shenzhen UniversityVisiting Professor, Shenzhen University

FINANCIAL FINANCIAL

MILESTONEMILESTONESS

BUSINESBUSINESS MODELS MODEL

The 360° CUBE PitchThe 360° CUBE Pitch

Six Posters in a 6 minute Investor Pitch

SOCIAL SOCIAL PROBLEMPROBLEMVISION & VISION & MISSIONMISSION

MARKETINMARKETING & SALESG & SALES

OPERATIONS OPERATIONS TEAM & KEY TEAM & KEY PARTNERSPARTNERS

360° Business CUBE360° Business CUBE1.1. The Problem : How BIG is the problem?The Problem : How BIG is the problem?2.2. The Solution : Our Social Enterprise’s Vision The Solution : Our Social Enterprise’s Vision

& Mission & Mission 3.3. The Business Model : Getting the JOB done for The Business Model : Getting the JOB done for

the Customer Segmentsthe Customer Segments4.4. Marketing & Sales (and Fundraising)Marketing & Sales (and Fundraising)5.5. The Team & Key PartnersThe Team & Key Partners

6.6. The Financial Plan : Goals The Financial Plan : Goals and objectives, with a and objectives, with a timeline (Milestones)timeline (Milestones)

The Internet: Changing the The Internet: Changing the Face of Business Face of Business

Successful companies embrace the Internet Successful companies embrace the Internet as a mechanism for transforming their as a mechanism for transforming their companies and for changing companies and for changing everythingeverything about the way they do business.about the way they do business.

Business basics still apply online. Business basics still apply online. In the world of e-commerce, In the world of e-commerce,

company size matters less company size matters less than speed and flexibility.than speed and flexibility.

The Internet: Changing the The Internet: Changing the Face of Business Face of Business

Study: By 2011, the Internet will influence Study: By 2011, the Internet will influence more that $1 billion in offline sales.more that $1 billion in offline sales.

Neilsen study: 86% of the world’s online Neilsen study: 86% of the world’s online population has used the Internet to make a population has used the Internet to make a purchase. purchase.

Items purchased most often online include Items purchased most often online include computer hardware and software, tickets, computer hardware and software, tickets, books, music, movies, gift cards, toys and books, music, movies, gift cards, toys and video games, and baby products. video games, and baby products.

FIGURE 9.1 Online Retail Sales in the U.S.

Benefits of Selling on the WebBenefits of Selling on the Web Opportunity to increase revenues and Opportunity to increase revenues and

profitsprofits Ability to expand into global marketsAbility to expand into global markets Ability to remain open 24 hours a day, Ability to remain open 24 hours a day,

seven days a weekseven days a week Capacity to use the Web’s interactive Capacity to use the Web’s interactive

nature to enhance customer servicenature to enhance customer service Power to educate and informPower to educate and inform

Benefits of Selling on the WebBenefits of Selling on the Web

Ability to lower the cost of doing businessAbility to lower the cost of doing business Ability to spot new business opportunities Ability to spot new business opportunities

and capitalize on themand capitalize on them Ability to grow fasterAbility to grow faster Power to track sales resultsPower to track sales results

Conversion rate Conversion rate – – the percentage of customers the percentage of customers to a Web site who actually make a purchase. to a Web site who actually make a purchase.

(continued)

Online Business ModelsOnline Business Models Affliate programsAffliate programs Pay-per-click programsPay-per-click programs Direct AdsDirect Ads E-commerceE-commerce Subcription servicesSubcription services Freemium modelsFreemium models

Online Business ModelsOnline Business Models

E-CommerceE-Commerce The Small Business Research Board The Small Business Research Board

reports: reports: 57.3% of small business owners in the 57.3% of small business owners in the

U.S. have a Web siteU.S. have a Web site 56.1% of those sites engage in online 56.1% of those sites engage in online

sales. sales. Barriers:Barriers:

Not knowing how or where to startNot knowing how or where to start Cost and time concerns Cost and time concerns

Factors to Consider Before Factors to Consider Before Launching into E-CommerceLaunching into E-Commerce

How a company exploits the Web’s How a company exploits the Web’s interconnectivity and the opportunities it interconnectivity and the opportunities it creates to transform relationships with creates to transform relationships with suppliers, customers, and others is suppliers, customers, and others is crucial to its success.crucial to its success.

Web success requires a company to Web success requires a company to develop a plan for integrating develop a plan for integrating the Web into its overall strategythe Web into its overall strategy..

Factors to Consider Before Factors to Consider Before Launching into E-CommerceLaunching into E-Commerce

Developing deep, lasting relationships with Developing deep, lasting relationships with customers takes on even greater importance.customers takes on even greater importance.

Creating a meaningful presence on the Web Creating a meaningful presence on the Web requires an ongoing investment of resources requires an ongoing investment of resources – time, money, energy, and talent.– time, money, energy, and talent.

Measuring the success of a Web-based sales Measuring the success of a Web-based sales effort is essential to remaining relevant to effort is essential to remaining relevant to customers whose tastes, needs, and customers whose tastes, needs, and preferences constantly change. preferences constantly change.

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Assessing You Company’s Assessing You Company’s Online PotentialOnline Potential

1.1. Does your product have broad appeal to Does your product have broad appeal to customers everywhere?customers everywhere?

2.2. Do you want to sell your product to Do you want to sell your product to customers outside of your immediate customers outside of your immediate geographic area?geographic area?

3.3. Can the product you sell be delivered Can the product you sell be delivered conveniently and economically?conveniently and economically?

4.4. Can your company realize significant cost Can your company realize significant cost advantages by going online?advantages by going online?

5.5. Can you draw customers to your company’s Can you draw customers to your company’s Web site with a reasonable investment?Web site with a reasonable investment?

Case : Sevenly – E-commerce Case : Sevenly – E-commerce by Weekly Campaignby Weekly Campaign

FaceBook Users (2012)FaceBook Users (2012) Worldwide : Worldwide :

835m835m USA : 173mUSA : 173m Asia : 195mAsia : 195m Malaysia : 12mMalaysia : 12m

T-shirts Sold OnlineT-shirts Sold Online Highest : $51,016 (7,288 Highest : $51,016 (7,288

T-shirts) (0.004% USA T-shirts) (0.004% USA FB)FB)

Lowest : $1,900 (271 T-Lowest : $1,900 (271 T-shirts) (0.0001% USA shirts) (0.0001% USA FB)FB)

10 Myths of E-Commerce10 Myths of E-CommerceMyth 1: Myth 1: Online customers are easy to please.Online customers are easy to please.Myth 2: Myth 2: If I launch a site, customers will flock to it.If I launch a site, customers will flock to it.Myth 3: Myth 3: Making money on the Web is easy.Making money on the Web is easy.Myth 4: Myth 4: Privacy is not an important issue.Privacy is not an important issue.Myth 5: Myth 5: The most important part of an e-commerce The most important part of an e-commerce

effort is technology.effort is technology.Myth 6: Myth 6: I don’t need a strategy to sell online.I don’t need a strategy to sell online.Myth 7:Myth 7: Customer service is not important.Customer service is not important.Myth 8: Myth 8: Flashy Web sites are better than simple Flashy Web sites are better than simple

ones.ones.Myth 9: Myth 9: It’s what’s up front that counts.It’s what’s up front that counts.Myth 10:Myth 10: Its too late to get on the Web.Its too late to get on the Web.

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 1: Online customers are easy to please.Myth 1: Online customers are easy to please.

Experienced online shoppers tend to be Experienced online shoppers tend to be unforgiving and quick click to another site unforgiving and quick click to another site if their shopping experience is subpar or if their shopping experience is subpar or they cannot find the products and they cannot find the products and information they want. information they want.

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.

Myth 2: If I launch a site, customers will Myth 2: If I launch a site, customers will flock to it.flock to it.

(continued)

Promotion Is the Key!Promotion Is the Key! Include your URL on everything related to Include your URL on everything related to

your businessyour business Provide phone and e-mail contact Provide phone and e-mail contact

information information Create Web-based newslettersCreate Web-based newsletters Write articles that link to your company’s Write articles that link to your company’s

Web siteWeb site Sponsor online contestsSponsor online contests Establish a blogEstablish a blog

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.

Myth 2: If I launch a site, customers will Myth 2: If I launch a site, customers will flock to it.flock to it.

Myth 3: Making money on the Web is easy.Myth 3: Making money on the Web is easy.

(continued)

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 1: Online customers are easy to Myth 1: Online customers are easy to please.please.

Myth 2: If I launch a site, customers will Myth 2: If I launch a site, customers will flock to it.flock to it.

Myth 3: Making money on the Web is easy.Myth 3: Making money on the Web is easy.Myth 4: Privacy is not an important issue.Myth 4: Privacy is not an important issue.

(continued)

Myth 4: Privacy OnlineMyth 4: Privacy Online

Pew Internet Report: Pew Internet Report: If online companies were able to If online companies were able to alleviate customers’ online alleviate customers’ online privacy and security issues, the privacy and security issues, the percentage of online buyers percentage of online buyers would increase from 66% to 73%.would increase from 66% to 73%.

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10 Myths of E-Commerce10 Myths of E-Commerce

Myth 5: The most important part of an Myth 5: The most important part of an e-commerce effort is technology.e-commerce effort is technology. Understand the underlying business...Understand the underlying business... ……then use technology to develop an then use technology to develop an

online business model that provides online business model that provides customer value in a profitable way. customer value in a profitable way.

(continued)

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 6: I don’t need a strategy.Myth 6: I don’t need a strategy. An online strategy is critical to successAn online strategy is critical to success Define the target audienceDefine the target audience Understand customers’ needs and Understand customers’ needs and

wantswants Create a strategy to set Create a strategy to set

your site apart from othersyour site apart from others

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Myth 7: The Importance of Myth 7: The Importance of Customer Service on the WebCustomer Service on the WebMyth 7: Customer service is not important.Myth 7: Customer service is not important. Study: 22% of online shoppers expect higher Study: 22% of online shoppers expect higher

levels of customer service than they do offline. levels of customer service than they do offline. Concern: Concern:

Nearly 90% of online shopper reported they have Nearly 90% of online shopper reported they have had problems completing an online transaction. had problems completing an online transaction.

84% of these shoppers said they would share their 84% of these shoppers said they would share their negative online shopping experience with others!negative online shopping experience with others!

Myth 7: The Importance of Myth 7: The Importance of Customer Service on the WebCustomer Service on the Web Study: 58% of Web shoppers who fill their Study: 58% of Web shoppers who fill their

online shopping cars abandon them without online shopping cars abandon them without checking out. checking out.

Reasons:Reasons: Shipping and handling charges too highShipping and handling charges too high Total purchase higher than expectedTotal purchase higher than expected Desire to compare final price before buyingDesire to compare final price before buying Inability to contact customer service Inability to contact customer service

representativerepresentative Forgot use name or password for Web siteForgot use name or password for Web site

FIGURE 9.3 Reasons for Abandoning Online Shopping Carts

10 Myths of E-Commerce10 Myths of E-Commerce

Myth 8: Flashy Web site are better than Myth 8: Flashy Web site are better than simple sites. simple sites.

Fast download times increase sales Fast download times increase sales potentialpotential

Myth 9: It’s what’s up front that counts.Myth 9: It’s what’s up front that counts. Order systems and support are criticalOrder systems and support are critical

Myth 10: Its too late to get on the Web.Myth 10: Its too late to get on the Web. Web opportunities still existWeb opportunities still exist

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Strategies for E-SuccessStrategies for E-Success Focus on a market niche.Focus on a market niche. Develop a community.Develop a community. Attract visitors by giving away Attract visitors by giving away

“freebies.” “freebies.” Make creative use of e-mail, but avoid Make creative use of e-mail, but avoid

becoming a “spammer.” becoming a “spammer.” Make sure your Web site Make sure your Web site

says “credibility.” says “credibility.”

Strategies for E-SuccessStrategies for E-Success

Make the most of the Web’s global Make the most of the Web’s global reach.reach.

Use Web 2.0 tools to attract and retain Use Web 2.0 tools to attract and retain customers.customers.

Promote your site online and offline. Promote your site online and offline. Develop an effective search Develop an effective search

engine optimization (SEO) engine optimization (SEO) strategy.strategy.

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Search Engine StrategiesSearch Engine Strategies Natural (organic) Listings Natural (organic) Listings – –

Arise as a result of “spiders,” powerful Arise as a result of “spiders,” powerful programs search engines use to crawl programs search engines use to crawl around the Web.around the Web.

Paid (sponsored) Listings Paid (sponsored) Listings – – Short text ads with links to the sponsoring Short text ads with links to the sponsoring company’s Web site. company’s Web site.

Paid Inclusion Paid Inclusion – – When a company pays a search engine for When a company pays a search engine for the right to submit either selected pages the right to submit either selected pages or its entire Web site content for listing. or its entire Web site content for listing.

Designing a Killer Web SiteDesigning a Killer Web Site Understand your target customer. Understand your target customer. Give customers what they want. Give customers what they want. Select an intuitive domain name that is Select an intuitive domain name that is

consistent with the image you want to consistent with the image you want to create for your company and register it.create for your company and register it. ShortShort MemorableMemorable Indicative of a company’s businessIndicative of a company’s business Easy to spellEasy to spell

Make your Web site easy to navigate.Make your Web site easy to navigate.

Designing a Killer Web SiteDesigning a Killer Web Site Add wish list capability.Add wish list capability. Use online videos.Use online videos. Create a gift idea center.Create a gift idea center. Build loyalty by giving online customers Build loyalty by giving online customers

a reason to return to your Web site.a reason to return to your Web site. Establish hyperlinks with other Establish hyperlinks with other

businesses, preferably those businesses, preferably those selling complementary products.selling complementary products.

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Designing a Killer Web SiteDesigning a Killer Web Site Include an e-mail option an a telephone Include an e-mail option an a telephone

number on your site.number on your site. Give shoppers the ability to track their Give shoppers the ability to track their

orders online.orders online. Offer Web shoppers a special all their Offer Web shoppers a special all their

own.own. Follow a simple design.Follow a simple design. Create a fast, simple Create a fast, simple

checkout process. checkout process.

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Designing a Killer Web SiteDesigning a Killer Web Site Assure customers that online transactions Assure customers that online transactions

are secure. are secure. Establish reasonable shipping and Establish reasonable shipping and

handling charges and post them up front. handling charges and post them up front. Confirm transactions. Confirm transactions. Keep your site updated.Keep your site updated. Test your site often.Test your site often. Consider hiring a professional Consider hiring a professional

to design your siteto design your site

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Tracking Web ResultsTracking Web Results Web AnalyticsWeb Analytics – tools that measure a Web – tools that measure a Web

site’s ability to attract customers, generate site’s ability to attract customers, generate sales, and keep customers coming back.sales, and keep customers coming back.

Only about 40% of e-businesses use Only about 40% of e-businesses use Web analytics strategically to refashion Web analytics strategically to refashion their Web sites.their Web sites. Commerce metricsCommerce metrics Visitor segmentation measurementsVisitor segmentation measurements Content reportsContent reports Process measurementsProcess measurements

Measuring Online PerformanceMeasuring Online Performance

Recency – Recency – The length of time between The length of time between customers’ visits to a Web site.customers’ visits to a Web site.

Click-through Rate (CTR) – Click-through Rate (CTR) – The proportion of people who The proportion of people who see a company’s ad online and see a company’s ad online and actually click on it. actually click on it.

FIGURE 9.3 E-Mail Open and Click-Through Rates by the Day of the Week

Measuring Online PerformanceMeasuring Online Performance

Cost per Acquisition (CPA) – Cost per Acquisition (CPA) – The amount it costs to generate a The amount it costs to generate a purchase (or a customer registration). purchase (or a customer registration).

Conversion (browse-to-buy) ratio – Conversion (browse-to-buy) ratio – The proportion of visitors to a site The proportion of visitors to a site who actually make a purchase.who actually make a purchase.

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Ensuring Web PrivacyEnsuring Web Privacy Take an inventory of the customer data Take an inventory of the customer data

collected.collected. Develop a company policy for the Develop a company policy for the

information you collect.information you collect. Post your company’s privacy policy Post your company’s privacy policy

prominently on your prominently on your Web site and follow it. Web site and follow it.

Ensuring Web SecurityEnsuring Web Security

Virus detection softwareVirus detection software Intrusion detection softwareIntrusion detection software Firewall Firewall

ConclusionConclusion Know what you need to know before Know what you need to know before

launching into e-commercelaunching into e-commerce Assess the basic strategies to followAssess the basic strategies to follow Know what works on Web sitesKnow what works on Web sites Track results and Track results and

listen to customerslisten to customers

Further ReadingFurther Reading Scarborough, Norman, M. 2011. Scarborough, Norman, M. 2011. Essentials of Essentials of

Entrepreneurship and Small Business Management.Entrepreneurship and Small Business Management. 66thth edition. Pearson. edition. Pearson.

Brooks, Arthur C. (2006) Social Entrepreneurship : A Brooks, Arthur C. (2006) Social Entrepreneurship : A Modern Approach to Social Value Creation. Pearson Modern Approach to Social Value Creation. Pearson

Barringer, Bruce R. & Ireland, R. Duane, 2011 Barringer, Bruce R. & Ireland, R. Duane, 2011 Entrepreneurship – Successfully launching new Entrepreneurship – Successfully launching new ventures ventures 44thth edition, Pearson. edition, Pearson.

Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Entrepreneurship and Small Business.Entrepreneurship and Small Business. 3 3rdrd Asia Asia Pacific edition. John Wiley.Pacific edition. John Wiley.