A Beginners Guide to e-Commerce: Tools for Profit

Extension Worker Training

Kimball P.Marshall, Ph.D., Alcorn State University kimball.p.marshall@netzero.net

Ilya Smolyaninov, Alcorn State UniversityIgor Georgievskii, Alcorn State University

Leigh Junkin, Alcorn State UniversityMarch 15, 2008

Chapter 1: Introduction – Objective, Premises, and Content of this Training

Manual Objective Provide guidance to Extension workers to encourage

rural people to begin small-scale Internet-based e-Commerce activities

Premises Rural populations must have confidence in their ability to

use e-Commerce for personal goals. Extension workers must encourage this confidence and

provide support as skills are developed. Expectancy and Locus of Control theories provide

theoretical frameworks for building confidence in rural populations who are just beginning internet businesses

Existing e-Commerce private sector sites provide opportunities for all skill levels to enter e-Commerce

Chapter 1: Slide 1

Content of Remaining Chapters

Chapter 1: Slide 2

Chapter 2 Explains how expectancy theory and locus of control theory can be applied to rural populations that might have limited internet skills.

Chapter 3 Provides success stories of using e-Commerce to sell rural life skills products

Chapter 4 Provides guidance identifying rural life skills products appropriate for e-Commerce

Chapter 5 Introduces simple approaches to e-Commerce such as selling products on Internet auction sites

Chapter 6 Provides guidance in basic personal finance management skills for entering e-Commerce

Chapter 7 Reviews what has been learned and encourages actions, evaluations, and feedback

Chapter 2: Building Confidence – Expectancy and Locus of Control Theories of Motivation

Rural populations may face many e-Commerce barriers Lack of information and experience Lack of knowledge about similar people Lack of role models

Two key theories of managerial psychology can help clients achieve goals Expectancy Theory Locus of Control Theory

Chapter 2: Slide 1

Expectancy Theory involves establishing three basic beliefs: The individual must believe that he or she can perform the

required tasks. The individual must believe that performing the tasks

specified will lead to the intended results of the task. The individual must believe that, as a result of successfully

achieving the desired outcomes, the individual will achieve the reward that the individual desires.

Chapter 2: Slide 2

Expectancy Theory

Locus of Control refers to whether an individual perceives himself or herself as having the ability to achieve personal goals or whether the individual perceives their fate as controlled by external conditions

Internal locus of control

You believe you can set and achieve your own

goals

External locus of control

You believe you must depend on others to set

and fulfill goals

Chapter 2: Slide 3

Locus of Control Theory

Locus of Control Theory Expectancy T

heory

Self Reliance

Chapter 2: Slide 4

Persons with an internal locus of control

Have confidence in their ability to perform desired tasks Recognize that this ability allows them to achieve personal

goals

Persons with an external locus of control

Might not believe that they can accomplish the desired tasks

Lack confidence in their ability to achieve personal goals

The Extension worker’s challenge is to build clients’ confidence

In their goals In their ability to achieve their goals In their ability to perform the necessary e-Commerce tasks

Chapter 2: Slide 5

Challenges Facing Rural e-Commerce Beginners

Chapter 2: Slide 6

Explore clients’ desires for financial, social and psychological rewards from self-owned business ventures

Free flowing discussions with groups of clients and extension workers can help clients identify desired rewards (financial, social and psychological)

All members of the group should be encouraged to share their ideas with one another

Explore clients’ awareness of neighbors who produce and sell products on a small scale for “extra cash”

Entrepreneurial small farmers who engage in truck farming activities

People who participate in local farmers markets Persons who are known to make special products such as

jams, jellies, toys, quilts or other craft products

Discussion Topics and Exercises

Chapter 3. Microenterprise Success Stories from Rural Communities

Success stories will Build confidence Motivate Stimulate vision Provide reference groups for beginning clients

Key success story illustrations include Oyster Creek Mushroom Company Indian Village

Chapter 3: Slide 1

Chapter 3: Slide 2

Examples of rural, microenterprise e-Commerce help people understand that

rural life skills have value and that their products can be sold

through e-Commerce

Oyster Creek Mushroom CompanyStrategy in Action

Oyster Creek Mushroom Company of Damariscotta, Maine shows how e-Commerce can serve specialty food niche markets. The Web site explains that the company grows “the very best” Shiitake Mushrooms, as well as a variety of fresh wild mushrooms, and offers dried mushrooms, mushroom powders, flavored mushroom oils, and gift boxes. The site also tells the owners’ personal story, educates customers about wild mushrooms, offers recipes, and allows customers to purchase online.

Chapter 3: Slide 3

www.oystercreekmushroom.com

Chapter 3: Slide 4

www.oystercreekmushroom.com

Reproduced with permission from Dan Heydon, Oyster Creek Mushroom Company

Indian VillageStrategy in Action

One of the most interesting rural e-Commerce Web sites is www.IndianVillage.com, an online shopping mall with many links to Indian related web sites such as Durango Silver Company that offers turquoise jewelry and cabochons through its eBay store. Other IndianVillage.com Web site links displays American Indian artisans offering pottery, basketry, textiles, beadwork and Indian jewelry.

Chapter 3: Slide 5

www.indianvillage.com

Chapter 3: Slide 6

www.indianvillage.com

Reproduced with permission from John Hartman, Durango Silver Company

Seek local area success stories from clients Identify family members, neighbors, work colleagues, and

friends who have sold products on the Internet Ask questions such as

• How did they do it?• What auction site(s) do they know about?• Did they make money?

Review Web pages success stories Print or display Web pages Ask clients to think of products they might sell Discuss costs involved

• Time• Supplies

Compare prices of similar products being sold on the Internet• With client, search Internet stores and online auctions

Chapter 3: Slide 7

Discussion Topics and Exercises

Chapter 4. Valuing Rural Life Skills and Products

Chapter 4: Slide 1

Rural clients need to recognize the market value of his or her skills and the products they can produce

Common Rural Life Skills

A variety of job skills can produce marketable products appropriate for high-margin e-Commerce sales: Food processing Fabric crafts Carpentry and wood working Visual arts Music Book publishing

Chapter 4: Slide 2

Jams, jellies, candies, relishes “Home grown” or “gourmet” foods

Chapter 4: Slide 3

Food Processing

Extension workers can help with health regulations and licenses

Sewing Knitting Crocheting Quilting Leather goods Embroidery Fabric toys

Chapter 4: Slide 4

Fabric Crafts

Furniture Toys Art objects Yard décor Dollhouses Mailboxes

Chapter 4: Slide 5

Carpentry and Woodworking

Painting Photography Sculpture

Clay Metal Ceramic Wood

Pottery Decorative Functional

Chapter 4: Slide 6

Visual Arts

Independent artists Musical groups Church choirs

Chapter 4: Slide 7

Music

Rural authors Cultural or historical organizations Club fund raisers Genealogical materials

Chapter 4: Slide 8

Book Publishing

Discover the clients’ skills and products Products that were made as presents or to use at home

Explore market potentials for client-made products Seek similar products on Internet auction sites Note final prices and bid patterns Observe intensity of bid activity in the final hour of the

auction Note number of different sellers offering similar products

Chapter 4: Slide 9

Discussion Topics and Exercises

Chapter 5: Slide 1

Chapter 5: Simple E-Commerce

Approaches for Getting Started

Online auction and shopping Websites are where people and businesses buy and sell goods and services worldwide

Things Clients Need to Know About Selling Online Obtain Internet access and an e-mail address Register as a seller on an Internet auction site Establish a payment system to receive your money Create a listing to offer your product Actively sell your product during the offering time Arrange payment and shipping Buyer and seller feedback through the Internet auction site

Chapter 5: Slide 2

Obtain Internet Access and an E-mail Address

Free Internet access is often available in the community Free e-mail accounts are available through several reputable

internet sites

Chapter 5: Slide 3

Register as a Seller

Basic Steps:

Enter basic information

Choose your User ID and password

Click on the register link at the top of most Internet auction pages

Get a confirmation e-mail

Chapter 5: Slide 4

Establish a Payment System

Requirements for efficient, secure sales:

Local bank account to receive payments

Secure payment method for customers

– PayPal (https://www.paypal.com/)

Chapter 5: Slide 5

Create a Listing

Decide what to sell Complete online listing form Auction format

Fixed price format Classified ad format “Store” format

Select a category Specify a title Write a description Take digital photographs Beginning and ending times for the auction Other listing information

Chapter 5: Slide 6

Sell the Product

Monitor the process regularly Check e-mail and the auction

Communicate with interested buyers Reply to information requests quickly

Promptly close the sale Notify winning bidder Confirm purchase

Chapter 5: Slide 7

Payment and Shipping Monitor payment method

Ship product when payment is received

Pack product properly

Insure the product

Get a tracking number

Use a reputable carrier USPS UPS FedEx DHL

Chapter 5: Slide 8

Buyer and Seller Feedback

Use the auction site process for buyer and seller feedback

Feedback is important to create a trustworthy online auction community

Trust builds sales

Chapter 5: Slide 9

Chapter 5: Slide 10

E-CommerceCheck-sheet,

Sales Listing Worksheet, and

Sales Log

Chapter 5: Slide 11

Discussion Topics and Exercises

Work with clients to identify free computer and e-mail access resources

Churches, public libraries, schools Ask friends and relatives for assistance Demonstrate how to use e-mail and the Internet

Demonstrate Internet auctions with clients who are beginners.

Perform searches Monitor auction activity Determine shipping options and costs Calculate realistic prices for products to be sold

Chapter 5: Slide 12

Chapter 6: Financial Literacy, Records, Taxes and Internet Transactions

Chapter 6: Slide 1

The Extension worker should help the client develop basic financial literacy skills needed for e-Commerce

Basic recordkeeping

Sales tax

Income tax

How to get paid?

Simple accounting approaches of keeping records Use IRS Schedule C as template Help client organize simple ledger

Chapter 6: Slide 2

Recordkeeping

Schedule C

Chapter 6: Slide 3

Chapter 6: Slide 4

Simple Ledgers

Sales Taxes

Consult with state tax authority to determine current policies

Sales tax may be state, county, or city specific Most states do not require the Internet seller to pay sales

tax on out-of-state sales

Local Extension worker assistance will be important

Assist with setting up a sales tax account if necessary

Chapter 6: Slide 5

Personal Income Taxes Profits from e-Commerce sales are subject to taxes

Federal, state, and local income taxes Self-employment taxes

Portion of e-Commerce revenues should be set aside in a bank account

Forms to become familiar with

IRS Form 1040 Schedule C IRS Schedule SE State income tax form (state-dependent)

Again, local Extension worker assistance will be important

Chapter 6: Slide 6

How to Get Paid: The Need for a Basic Bank Checking Account and Third Party Payment System

Important challenge is to encourage clients to develop trust in credit and banking systems

Bank checking account is critical for e-Commerce selling

PayPal third party payment account is strongly advised

Provides a safe and secure method to purchase goods

Speeds up the seller’s receipt of funds from a sale

Bank, PayPal, and shipping fees should be taken into consideration when setting product prices

Chapter 6: Slide 7

Chapter 6: Slide 8

Discussion Topics and Exercises Financial literacy discussions

Discuss how client feels about banks and payment systems Discuss client’s current method of handling personal

finances Include information about credit and interest rates See the Financial Fitness Quiz at

http://njaes.rutgers.edu/money/ffquiz

The need for basic recordkeeping

Clients should work in groups to review the IRS Schedule C (1040 form)

Keeping good records is critical to the success of any business

Chapter 7: Now Let’s Get Started

We have addressed these key issues…

Expectancy and Locus of Control Theories e-Commerce success stories Common rural life skills can become marketable products Steps to begin e-Commerce activity Financial management issues

Let’s bring these opportunities to our Clients!

Chapter 7: Slide 1

Chapter 7: Slide 2

A Trainer’s Checklist for Introducing E-Commerce to Clients

Evaluation

Evaluation is important to ensure that the training program is effective and to provide for continuous improvement. Evaluation forms are included in the manual. Thank you for taking the time to see that they are completed.

Chapter 7: Slide 3