e-Commerce

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Contents •  Buying safely online (practicalities)

•  History, the dot-com boom and bust •  Modern e-Commerce

–  Companies, facts and figures

•  Making your own e-business –  Web site building and promotion –  Accepting payment –  Spam –  Customer Relationship Management (CRM)

Buying Safely Online •  Check the web site address

– should be https:// … –  should be trusted, e.g. not a link from an e-mail !!

•  HTTPS is a secure protocol that –  authenticates the web site and the server –  encrypts data that is sent –  always be there if you are making a payment –  Note the padlock icon

More Safety •  If Paypal is used, check that payer protection is included

•  Credit cards often offer more protection than debit cards

•  Look for online reviews of the shop if you haven’t used it before –  Ensure it has a physical address too

•  Look out for hidden extras –  Sometimes included as options that are already checked, such

as warranties, insurance, costly delivery options etc.

…and selling safely online •  The same issues apply!

–  Ensure your customers are safe •  https:// site •  Reviews?

–  Probably use the facilities on a hosting site •  Much easier than setting it up on your own systems.

History •  During the 90s there was a period known as the

�dot com boom� •  Programmers, companies and investors raced to start

.com companies •  Many of them failed, losing many people a lot of money •  This was the dot com bust •  They were interesting times

Last Minute.com •  One good example was lastminute.com

•  Launched in 1998 by Martha Lane Fox and Brent Hoberman, selling late holiday deals

•  Raised $31m in investment before flotation •  Floated for £571m and peaked at £768m

•  Shares dropped from around 500p to 80p in March 2001 •  By 2005, it was yet to make a net profit, and it was

bought out by Sabre Holdings

Lastminute Share Price

Amazon •  Founded in 1994 by Jeff Bezos

•  Initial business plan aimed for slow growth – no profit for 5 years

•  This was something most dot-coms ended up with, but was rarely planned!

•  When the dot com bust came, Amazon suffered less than many and went on to show great growth

Mainstream •  Now e-commerce is common place •  Most �bricks and mortar� businesses also have an

online presence

•  Top online stores in UK in 2010: 1.  Amazon UK 2.  Argos 3.  Play.com 4.  Apple Computer 5.  Amazon.com 6.  Tesco.com 7.  Marks & Spencer 8.  John Lewis 9.  Next 10.  easyJet

Source: www.netimperative.com

And in 2013 March 2012

•  8.3% of economic activity in UK is online –  18% in 2012

•  Internet economy worth £121bn in 2010 –  £492bn in 2012

•  13.5% of all purchases were made online in 2010

http://www.bbc.co.uk/news/business-17405016

Internet purchases by age group. (ONS)

http://ec.europa.eu/eurostat/statistics-explained/index.php/E-commerce_statistics_for_individuals

Internet users who bought or ordered goods or services for private use over the internet in the previous 12 months, EU-28, 2016 (% of internet users) - Source: Eurostat

Frequency of internet purchasing by age group.

Your Own Dot Com

•  The technical practicalities of starting a dot com are “relatively simple”

–  Decide whether you want a dedicated site or not –  Pick a name and register the domain –  Set up the site –  Arrange payment methods –  Go!

Income Models •  Selling things you have made or bought

“Britain is a nation of shopkeepers” Ascribed to Napoleon Bonaparte

•  Revenue from advertisements

•  Revenue from referrals

Dedicated Site?

•  You can sell things buy building a dedicated site with its own domain, e.g.

www.myshop.com

•  You can use one of a number of agent sites

Agent Sites

•  They handle product listing, search, etc.

•  Branding is their own, not yours

•  Their advertising and promotion will reach customers that you cannot

•  You share the site with many other retailers, possibly competitors

•  Customers know and trust the site

•  Site takes a commission or charges a fee

eBay Shops •  Rather than selling items in isolation on eBay, you can open

an eBay shop

•  Hosted on the eBay site, but with some customisation by you

•  List all your products in one place

•  Allow customers to buy multiple products in one go

•  Offers tools or promoting, tracking and managing your shop

http://pages.ebay.co.uk/storefronts/anatomy.html

Payment •  Many eBay sellers insist on Paypal payment and many

buyers use it

•  Getting the money into your paypal account is easier than it is with your own site (more on that later)

Amazon •  Similar to eBay, but no auction

•  You can have your own Amazon store, but only selling the type of thing that Amazon sells

–  Which is quite a lot… –  Registration now include name, address etc…

Cafe Press •  www.cafepress.com

•  Puts your designs on mugs, shirts, bags, etc.

•  Sells them via their website

•  They take payment and send you a royalty (currently 8%)

•  A Cafe Press shop allows you to put your brand / design on many different products and sell them from one place

•  You upload the images, they do the rest

Cafe Press

•  There is a market place where items are sold individually and a shop based around your own brand

•  In the market place, Cafe Press sets the prices, in your shop, you can add a premium to the base price

•  No initial outlay on products, they make them for you

Building Your Own Site •  If you have a small number of products, you could build

your own online shop from scratch

•  No database is needed if products are fixed and customers infrequent

•  Adding a database allows you to store customer details for easy repeat purchases and keep a larger inventory of products

USBDux Build Your Own

•  HTML, CSS, JavaScript web pages

•  PHP server scripts •  MySQL database for customers, products, etc.

•  Cheap – all the software is free, service provision is cheap

•  Design is exactly how you want it, but more work is required to make the site

Off the Shelf Shops •  Many service providers offer e-Commerce packages

with online stores pre-built –  Shopping baskets –  Catalogues with search facilities –  Credit card and other payment processing

•  Shopify https://www.shopify.co.uk/ –  Design your store online –  Upload inventory, photos, etc. –  They host, organise payment, etc. –  Cost is monthly fixed fee (£19 - £115) plus transaction fee

Tax

•  If you sell more than £81,000 worth of goods you MUST register for VAT and add VAT to your prices

•  You collect the VAT and pass it on to HMRC

•  You can claim back any VAT on raw materials or products that you re-sell

•  This means it can be worthwhile registering even with a lower turnover

Payment •  PayPal is easy to use, trusted and secure

•  They charge a commission on each transaction

•  The Paypal site will communicate with your site to verify a payment has been made

•  Other services exist to help you accept credit cards, e.g. WorldPay

Promoting Your Site

•  Adverts

•  Search Engines

•  Social Media

•  Spam

Adverts •  Buying advertising space on other people’s web pages

can be expensive

•  Google Adwords offer a semi-targeted advertisement service, placing small text adverts on the Google search page and on sites with related keywords

Adwords

Search Engine Optimisation •  The search engine ranking of a site is determined by

how high up the list of search results it appears given certain search terms

•  Search Engine Optimisation is the process of manipulating aspects of the site in the hope of moving its ranking towards the top (or at least onto the first page)

SEO Arms Race •  Search engines want to be reliable, so they don�t want

web pages fooling them into putting inappropriate sites at the top of the list

•  Web site owners want their sites to feature in search results – sometimes even if the search term has nothing to do with their site

•  This produces a conflict and an escalating arms race between search engines and web site owners

Black / White Hat SEO

•  A distinction is made between good and bad practice in SEO

•  White hat SEO involves trying to move a site up listing in a legitimate way

•  Black hat SEO involves manipulating content, links, etc. to get coverage for a site that it does not deserve

[But, what does a site deserves?? ]

How Search Engines Work •  When they started, they compared the term you search

for with the content of web pages and showed pages that contained those words

•  This was easy to fool by hiding unrelated words in a web page

•  This made the search engines look bad

PageRank •  In 1998 Larry Page and Sergey Brin developed an

algorithm that rated pages based on the quantity and strength of inbound links

•  This is the PageRank algorithm and it formed the basis for a new company, Google

•  Pages that were linked to from other sites were ranked more highly

Link Spam •  There are many ways of gaining links to your site

•  Link farms are communities who share reciprocal link to each other – this is mostly white hat

•  Making many web sites with the sole purpose of linking to the site you want to promote – black hat

•  Forum spam – putting links to your site into every forum, bulletin board and comments page you can find. This can be automated with a spambot

Personalised Search

•  In 2005, Google started to store your search history and use it to produce personalised search

•  This meant that regular users were less likely to suffer from SEO as Google showed them pages that somehow matched their search profile

Copied Content

•  If you assume that the content of today�s BBC news page is likely to be of interest to a lot of people, you could copy that content into your own site to make it match lots of unrelated searches

•  In 2011 Google added penalties to copied content, moving it down the rankings

Google Penguin •  �Penguin� is the code name for Google�s 2012

algorithm update

•  It specifically penalises web sites that use black hat SEO techniques

•  It also has an algorithm, called Panda, which ranks a page�s quality

Legitimate SEO •  Legitimate SEO is essentially marketing and PR

•  Press releases can make it onto news sites

•  Social media –  Being liked on FB –  Being tweeted about

http://en.wikipedia.org/wiki/Search_engine_optimization is a good place to start learning

For more information: Look at http://static.googleusercontent.com/media/ www.google.co.uk/en/uk/webmasters/docs/search-engine-optimization-starter-guide.pdf [Remunerative job, if properly done – cfr again the top-page issue!]

Spam •  Spam generally means unwanted email

•  It is also applied to other examples of unwanted messages

•  Named after a Monty Python sketch

•  Illegal in the UK and many other countries, though not all

•  Difficult to police as it is often sent from virus infected computers

Other Spam •  Instant messaging •  Newsgroups and Fora •  Mobile text messages •  Social network sites •  Spamdexing •  Blogs, wikis, guest books, reviews •  Video and other media sharing spam

Spam and Not Spam

•  Legitimate businesses do not tend to use spam

•  It is not a good way to promote a site

•  If you get customers, you can offer them the chance to receive communications from you in future and bulk mail the list of people who agreed – that is not spam

•  Slightly less acceptable is an opt-out option on mailing lists

Good CRM •  CRM is Customer Relationship Management

•  Keep a customer database, and try to keep it up to date

•  Communicate with sensible frequency, try to make �news� (offers, new products, competitions etc.)

•  Ask customers to mention you in social media

•  Do the occasional good deed (replacement out of warranty, free extra something, …)

International Sales

•  Selling Internationally is very easy

•  Paypal, credit cards and bank transfers are easy to accept from abroad

•  Shipping by Royal Mail is generally very good

•  No customs forms needed inside the EU*

•  Simple customs arrangements outside

Other Online Business Models

•  Other methods of making money online do not require the provision of goods

•  Referral income

•  Advertising income

Advertising Income

•  If you provide media that people want to see, you can place adverts on your site (youtube)

•  You can invite advertisers to contact you with an �advertise here��link

•  You can actively seek advertisers

•  An easy way to get adverts is using Google AdSense

From http://www.google.co.uk/adsense/start/how-it-works.html

Adsense •  Sign up to AdSense and verify your identity •  Choose the type of advert layout you want

•  Copy and paste some code that Google provide:

<script type="text/javascript" src=“http://pagead2.googlesyndication.com/pagead/show_ads.js">

</script>

•  After a review by Google, adverts start to appear

How AdSense Ads are Chosen •  Contextual Targeting

–  Automatic based on the content of your web page

•  Placement Targeting –  Placement specifically chosen by advertisers

•  Interest Base Targeting –  Advertisers can specify the interests of target groups – Sport,

Cars, etc. –  Users (people who browse the web) can set their own interests,

and Google guesses them from your web searches

http://www.google.co.uk/adsense/start/how-it-works.html

Revenue

•  You get paid a small amount whenever somebody who visits your site clicks on an advert

•  Google has automated algorithms for detecting illegal clicks (so don’t sit there all day clicking your own site)

•  �Click bombing� is the automated process of sending many clicks to an advert, either to gain revenue or use up a competitor�s budget

Content •  The web is full of content on a great many topics

•  You may have a niche interest which you could base a site around

•  You might �meet� other like minded people who visit your site

•  Adsense revenue might just be a bonus, or enough to pay for hosting

MFO •  MFO sites (Made For AdSense) are designed with target

adverts in mind •  Here are the top ten search terms in Google (source:

Word Stream, 2011)

http://www.wordstream.com/articles/most-expensive-keywords

Blogs •  Blogs are a popular way to generate AdSense income

•  Some bloggers even publish their Adsense earnings on the blog

•  A blog takes work – update regularly, write about something people want to read about, do your research well

•  Blogs are easy to set up, but hard to promote

Amazon Associates •  Rather than paying when an advert is clicked, Amazon

pay when a click leads to a purchase

https://affiliate-program.amazon.co.uk/

Reviews and Guides

•  A popular way to make money from AdSense or Amazon (and other schemes) is to write a product review / guide site

•  This is a good way to make it likely that visitors are looking to buy the products you carry adverts for

Summary •  eCommerce had a bumpy start, but is now mainstream

•  Buying online is safe with a few precautions

•  You can “easily” build your own eCommerce business selling, advertising or referring

•  Adwords is an easy way to advertise on Google and many other sites