Fort Hays State University > About FHSU > Academic Divisions > College of Business and Entrepreneurship > Kansas Small Business Development Center > Business3
Electronic Commerce (e-commerce) is the buying and selling of goods and services over computer networks (predominantly over the Internet). It's changing the fundamental dynamics of how consumers and businesses shop, and by all accounts, e-commerce is a very big market. In fact, the U.S. Commerce Department predicts that goods and services sold over the Internet will soar to $300 billion by 2002 from about $10 billion in 1997.
That growth is fueled in part by a tidal wave of new users, ushered into the electronic market by faster and faster Internet access service. In addition, the increasing sophistication of online payment systems, and the advent of digital cash, secure transactions and authentication (methods for confirming that a user is who he says he is), are all contributing to the growth of e-commerce.
E-commerce PlanFor small businesses, the technical savvy and resources required for online promotion, order-taking and fulfillment can be significant. Just like a plan for your business off the Web, an e-commerce business plan is necessary to grow your business and will help you determine when and how your company should begin conducting sales over the Internet. The e-plan should include objectives, start-up costs, a market analysis and market strategies. Questions to be answered include:
-How will customers be handled? (i.e. who will be responsible for online promotion and maintenance of the site, order taking, and fulfillment? Will these duties be handled in-house or will you outsource them?)-Which services/products will you sell on the net?-Who are your customers and how will your site benefit them?-How will prospects learn about your site?-Do you need to hire more employees? Can you?-What will be the return on your investment-increased sales, prospects, and/or customers? Greater customer satisfaction through better service, thus yielding more repeat sales? A competitive advantage?
E-commerce MethodsThere are generally two types of e-commerce Web sites:
Passive: A basic Web site is created simply to let online users know what products are available. This is more like an advertising medium. A customer still has to contact the store by phone, e-mail or in person to place an order. This type of site can be relatively easy to launch; however, the potential for increased revenue is limited since the customer must still contact the retailer personally to transact a sale.
The type of site you choose will depend on your industry, the needs of your customers and your company resources. One way to determine how far and fast your company needs to implement e-commerce is to test the waters. Get a sense from your customers about what they want by taking one or more of the following steps:
Once some of these features are up and running, analyze the feedback you're getting. Are prospects sending in questions about your products or services? Do customers enter orders based on the e-mail alerts? Do they ask for direct online ordering from the Web site? Why or why not?
E-commerce OutsourcingIf, after all your planning and research, you decide to sell items directly from your Web site, you will need to determine whether 1) to build an in-house system for online ordering, or 2) to outsource with an e-commerce service provider. For many online retailers, especially small companies and start up entrepreneurs, outsourcing can be a much more cost-effective, lower risk alternative. Outsource providers can supply everything you need to sell and distribute your products via the net, covering any or all of the following areas:
Search the Web to find e-commerce out sourcers. Prices and services vary widely so shop around and check references of various service providers.
Online Credit Card TransactionsPayment by credit cards for online orders can be handled manually or may be automated. Manual credit card processing is a good option only if you already have credit card capabilities for your business and are simply testing the e-commerce waters. For manual processing, e-commerce sites are set to send e-mail at the time orders are placed that contain credit card information. That information is then processed manually through your existing credit card system. Sales volume must be rather low for this type of payment system, however, or you'll find yourself spending more time processing credit card orders than managing your business. A significant drawback of manual payment processing from the perspective of the consumer is that e-mail based credit transactions are not encrypted. Therefore, it is up to the merchant to reassure customers that they are operating in a secure environment.
Automated online credit card transactions make payment of online orders easy for both the merchant and the customer. In addition, online credit card information is encrypted- in each step of the process, making it very safe for consumers. However, it is a more expensive option than manual processing. Your Web site must be designed to conduct automated transactions which may require special software, and you must work with various services providers (merchant banks, credit card gateways, ISP's, etc.) to enable secure and timely automatic processing of credit card transactions.
CybermallsLike regular malls, cybermalls are collections of online stores where mall merchants benefit from the promotional and support services of the mall owner. Usually cybermall Web sites host Web pages of online stores that have something in common-the type of product or service, geographic location, etc. thereby creating a one-stop shopping experience for the consumer. For merchants, there are various advantages and disadvantages of locating their Web site in a cybermall.
There are literally thousands of cybermalls, many of which draw little or no traffic. Before getting a Web site (or link for an existing site) in any cybermall, verify the following:
Portions excerpted from, Small Business Computing and Communications, August 1999 and Home Business Magazine
Copyright © 2009-2012 Fort Hays State University • 600 Park Street, Hays, Kansas 67601–4099 • 785–628–FHSU (3478) Contact Webmaster with any questions or comments concerning this Web site.