Chapter 15: E-Commerce and the
Entrepreneur
Objectives |
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Upon completion of this chapter, you will be able to:
- Describe the benefits of selling on the World Wide Web.
- Understand the factors an entrepreneur should consider before launching into
e-commerce.
- Explain the twelve myths of e-commerce and how to avoid falling victim to
them.
- Discuss the five basic approaches available to entrepreneurs wanting to
launch an e-commerce effort.
- Explain the basic strategies entrepreneurs should follow to achieve success
in their e-commerce efforts.
- Learn the techniques of designing a killer Web site.
- Explain how companies track the results from their Web sites.
- Describe how e-businesses ensure the privacy and security of the information
they collect and store from the Web.
- Learn how to evaluate the effectiveness of a company’s Web site.
Chapter 15: E-Commerce and the
Entrepreneur
Chapter Overview
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E-commerce is creating a new economy, one that is connecting producers,
sellers, and customers via technology in ways that have never been possible
before. In this fast-paced world of e-commerce, size no longer matters as much
as speed and flexibility do. The Internet is creating a new industrial order,
and companies that fail to adapt to it will soon become extinct.
- Describe the benefits of selling on the World Wide Web.
Although a Web-based sales strategy does not guarantee success, the companies
that have pioneered Web-based selling have realized many benefits, including the
following:
- The opportunity to increase revenues.
- The ability to expand their reach into global markets.
- The ability to remain open 24 hours a day, seven days a week.
- The capacity to use the Web’s interactive nature to enhance customer
service.
- The power to educate and to inform
- The ability to lower the cost of doing business.
- The ability to spot new business opportunities and to capitalize on them.
- The power to track sales results.
- Understand the factors an entrepreneur should consider before
launching into e-commerce.
Before launching an e-commerce effort, business owners should consider the
following important issues:
- How a company exploits the Web’s interconnectivity and the opportunities it
creates to transform relationships with its suppliers and vendors, its
customers, and other external stakeholders is crucial to its success.
- Web success requires a company to develop a plan for integrating the Web
into its overall strategy. The plan should address issues such as site design
and maintenance, creating and managing a brand name, marketing and promotional
strategies, sales, and customer service.
- Developing deep, lasting relationships with customers takes on even greater
importance on the Web. Attracting customers on the Web costs money, and
companies must be able to retain their online customers to make their Web sites
profitable.
- Creating a meaningful presence on the Web requires an ongoing investment of
resources—time, money, energy, and talent. Establishing an attractive Web site
brimming with catchy photographs of products is only the beginning.
- Measuring the success of its Web-based sales effort is essential to
remaining relevant to customers whose tastes, needs, and preferences are always
changing.
- Explain the twelve myths of e-commerce and how to avoid falling
victim to them.
The twelve myths of e-commerce are:
Myth 1. Setting up a business on the Web is easy and inexpensive.
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 on the Web.
Myth 5. The most important part of any e-commerce effort is technology.
Myth 6. "Strategy? I don’t need a strategy to sell on the Web! Just give me a
Web site, and the rest will take care of itself."
Myth 7. On the Web, customer service is not as important as it is in a
traditional retail store.
Myth 8. Flash makes a Web site better.
Myth 9. It’s what’s up front that counts.
Myth 10. E-commerce will cause brick-and-mortar retail stores to disappear.
Myth 11. The greatest opportunities for e-commerce lie in the retail sector.
Myth 12. It’s too late to get on the Web.
- Discuss the five basic approaches available to entrepreneurs wanting
to launch an e-commerce effort.
- Entrepreneurs looking to launch an e-commerce effort have five basic
choices: (1) on-line shopping malls, (2) storefront-building services, (3)
Internet service providers (ISPs), (4) hiring professionals to design a custom
site, and (5) building a site in-house.
- Explain the basic strategies entrepreneurs should follow to achieve
success in their e-commerce efforts.
Following are some guidelines for building a successful Web strategy for a small
e-company:
- Consider focusing on a niche in the market.
- Develop a community of on-line customers.
- Attract visitors by giving away "freebies."
- Make creative use of e-mail, but avoid becoming a "spammer."
- Make sure your Web site says "credibility."
- Consider forming strategic alliances with larger, more established
companies.
- Make the most of the Web’s global reach.
- Promote your Web site on-line and off-line.
- Learn the techniques of designing a killer Web site.
There is no sure-fire formula for stopping surfers in their tracks, but the
following suggestions will help:
- Select a domain name that is consistent with the image you want to create
for your company and register it.
- Be easy to find.
- Give customers want they want.
- Establish hyperlinks with other businesses, preferably those selling
products or services that complement yours.
- Include an e-mail option and a telephone number in your site.
- Give shoppers the ability to track their orders on-line.
- Offer Web shoppers a special all their own.
- Follow a simple design for your Web page.
- Assure customers that their on-line transactions are secure.
- Keep your site updated.
- Consider hiring a professional to design your site.
- Explain how companies track the results from their Web sites.
The simplest technique for tracking the results of a Web site is a counter,
which records the number of "hits" a Web site receives. Another option for
tracking Web activity is through log-analysis software. Server logs record every
page, graphic, audio clip, or photograph that visitors to a site access, and
log-analysis software analyzes these logs and generates reports describing how
visitors behave when they get to a site.
- Describe how e-businesses ensure the privacy and security of the
information they collect and store from the Web.
To make sure they are using the information they collect from visitors to their
Web sites legally and ethically, companies should take the following steps:
- Take an inventory of the customer data collected.
- Develop a company privacy policy for the information you collect.
- Post your company’s privacy policy prominently on your Web site and follow
it.
To ensure the security of the information they collect and store from Web
transactions, companies should rely on virus and intrusion detection software
and firewalls to wad off attacks from hackers.
- Learn how to evaluate the effectiveness of a company’s Web site.
- Because the techniques used to evaluate traditional companies do not always
fit e-commerce businesses, on-line entrepreneurs are developing new models to
evaluate the performances of their companies that include measures of customer
behavior and retention, financial returns, and site performance.
Chapter 15: The Foundations of
Entrepreneurship
Small Business
Assignments |
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Answer all of the following questions:
1. How has the internet and e-commerce changed the way companies with
your industry are doing business?
2. Discuss the factors entrepreneurs should consider before launching
an e-commerce site
3. What are the 12 myths of e-commerce? What can you to do avoid
them
4. Explain 5 basic approaches available to entrepreneurs for launching
an e-commerce effort. What are the advantages, the disadvantages, and the
costs associated with each one?
5. What design characteristics make for a successful web page?
6. Explain the characteristics of an ideal domain name
7. Why does evaluating the effectiveness of a website pose a problem
for online entrepreneurs?
Chapter 15: E-Commerce and the
Entrepreneur
Small Business Links
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