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E-Commerce 101
This document provides an overview of e-commerce fundamentals. It begins with an agenda that covers introduction, things to learn, fundamentals of selling, how real stores work, how e-stores emulate real stores, what makes e-stores work, e-commerce teams, suitability of e-commerce, getting started, lessons from the field, and Q&A. It then discusses key topics like traffic, conversion rates, e-commerce structure, sourcing, logistics, marketing, analytics, and infrastructure requirements. The goal is to educate about all aspects of running a successful e-commerce business.
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E-Commerce 101
- 2. E-COMMERCE 101 The thingsyou always wanted to know about E-commerce but where afraid to ask. Paul Lepa, CEO, RedStores.com
- 3. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 4. Founders Background • ElectricalEngineer with Computer Minor from Canada – Postgraduate work in Digital Filter Theory • Valmet Automation – Started as a Programmer/Analyst in automation arena – Shortly moved into Sales/Marketing Support Role – Support Sales Department at tradeshows, technical solution coordination • Founded Just For Fun Compatibility at age 24 – sold 2000 copies of the software – Direct Mail campaigns to 20,000 schools in US and Canada • Moved to Koch Oil – Project Manager – Executed large pipeline software automation project - $3MM budget – Executed number of pipeline expansion projects - $3-5$MM
- 5. Founders Background • Recruitedby Valmet Automation to enter the sales team – Became Senior Account executive in charge of large pursuits – Assembled pursuit teams from cross-company – Solution focused selling to Fortune 500 companies (BP, Chevron) – Over 4 years, sold over $40MM of automation projects – Worked with top level Fortune 500 companies – C level • Recruited by ABB to headed up a Global Pipeline Solution Unit – Responsible for solutions for the pipeline automation worldwide – Multi-country team – Relocated to Mannheim, Germany in 2002 – Relocated to Beijing, China in 2003
- 6. Founders Background • 2003– Recognized opportunity for trade out of China to the western countries • 2004 - Resigned from ABB • 2004 – 2006 – PearlsOnly grows from $40K to $3MM USD in sales • 2007 - Begin process to convert PearlsOnly into scalable system – Focus away from Pearls into scalability – Invest in R&D and high level of automation – Invest in high level of Business Processes – Goal of scalability – Invested over $500K in systems and scalability processes • 2009 – RedStores.com transformation completed – Ready to run
- 7. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 8. Things that youWILL learn • Learn a ‘big’ picture of eCommerce • Make you aware of all the areas of eCommerce • Give you ideas where to look for more specific information – will show you books that had influenced me • Give you some ideas for your own venture • Open up your imagination • Make eCommerce „accessible‟ through knowledge • Inspire 1 or 2 of you, to go and DO IT!
- 9. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 10. Fundamental Concepts We areborn with inherent ability to sell.
- 11. Lemonade Stand We areborn with inherent ability to sell.
- 12. Customers Location Draw the costumer Product to sell Store Design Staff Cash Register Fundamentals of Selling Anything
- 13. Commerce: Success is about2 things • Traffic – Getting enough customers • Conversion Rate – Getting those customers to buy
- 14. What is traffic? •Traffic is people visiting your store • Traffic is the simple relatively easy to get
- 15. What is ConversionRate? Numbers of Sale (CR%) = Numbers of Visitors
- 16. Key Focus Numbers of Sale (CR%) = Numbers of Visitors This is our focus – getting this person to buy. Everything we do from now on is focused on him and her.
- 17. Interesting Fact ???? • Conversion Rate in Retail world is 20% • Conversion Rate in ecommerce is 2% ????
- 18. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 19. Welcome to theE world We must think different
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- 21. Customers Location Draw the costumer Product to sell Store Design Staff Cash Register Fundamentals of Selling Anything
- 22. Customers Location Draw the costumer Product to sell Store Design Staff Cash Register Fundamentals of Selling Anything
- 23. Suitability of Ecommerce Whendoes eCommerce make sense for your business?
- 24. Causality • Success inphysical space <> success in ecommerce • Success in ecommerce <> success in physical space
- 25. Ecommerce and Retail Retail eCommerce Very different types of business
- 26. Ecommerce vs Webpresence • eCommerce is: – Transacting – taking orders – working with customers • Web Presence – a web site with company info – Office directions – store hours – product catalog • eCommerce <> Web Presence • Some businesses need only Web Presence as extension of their marketing – not ecommerce
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- 28. Brick-and-Mortar eCommerce Customers Traffic (page views) Location Server (hosting), cart Draw the costumer Marketing – PPC and SEO Product to sell Photos, Description Store Design Site Design (Skin) Staff Customer Care Cash Register Payment Gateway
- 29. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 30. We have unlimitedtraffic • In Retail traffic – we only get traffic within a certain radius and volume the venue draws • In eCommerce we can bring millions of people – there is no limit on people • BUT can we can convert them economically.
- 31. Differences • Corporate siteis to provide information • eCommerce website is designed to „convert‟ a customer right there and right now – Every element on a page ha a purpose to help with conversion – If an element is on a site – it MUST have a purpose.
- 32. Structure of aSite • Core Commerce Structure (only 5 pages) – Home Page – Landing Page – Catalog Page – Product Detail Page – Checkout • Optional Trust Building Pages
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- 38. Trust Building Pages • About Us • Education / Information • Customer Care • Policies • References
- 39. Elements of Design Differencebetween ecommerce site and a corporate site
- 40. Purpose of SiteElements What is the purpose of this Element? Why tell them how many hours? People want it FAST – we Being VERY specific build want to let them know trust this right away
- 41. Purpose of SiteElements What is the purpose of this Element? Why tell them savings? If others have done it, I must People go to internet be ok to do it too. Sheep for savings. Specific # effect. help trust.
- 42. Trial and Error •There is no hard and fast RULES for an ecommerce design • Must UNDERSTAND your customer to design a site for THEM • Psychology of consumer key
- 43. Moral of Trials •EVERY element has to be analyzed – Testing with A/B trials – Assumptions are good – but must be tested – Gut hunches are often counter intuitive • Ecommerce site HAS to be designed for Conversion. • EVERY little element makes a difference. • EVERY little element makes a difference.
- 44. Factors influence CR% •Testimonials from • Phone Number for Customers Customer Care on site • Reviews • Chat function • Site Colors • High Quality Descriptions • Trust Factor • Speed of Site • Free shipping • Ease of use of cart • Site navigation • Price of product • Education Pages • Photo Quality and Quantity
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- 47. Sourcing – CustomerView • Needs Quality Product • Wants to know if the item is in stock • Wants it YESTERDAY, but will settle for TOMMOROW. • Needs to find what she needs – and it should be in stock – NOW!
- 48. Logistics – customerview • He wants to know that what he ordered will reach him. • He want to know where it is • When will I get it. • How fast will it ship • What if it gets lost. • I WANT it NOW!
- 49. Traffic – customerview • Take me right to what I want to look at. • Guide me, step by step – don‟t make think too much • Show up on Google, so I feel more safe • Let me see your site in at least 7 difference places – I will trust you then
- 50. Traffic – customerview • Show up in the place where I am looking • Show up at the time I‟m looking to get something • Remind me what your site name is again – I can only remember last 10 minutes
- 51. Customer Care –customer view • To buy things, she wants an answer NOW! with no hassle. Knowledgebase. • If there is a question that is NOT answered on the site – customer experience already reduced – because now we added complexity. • BUT, if there is a CHAT she may ask a question right there or maybe CALL. • She may EMAIL – and be ok to wait for an answer – but now our chances of sale are down by 60%. • Attention span of 15 seconds.
- 52. Web Servers –customer view • My attention span is 5 sec – your site better show up FAST or I will go somewhere else. • If your site is down, I will just buy somewhere else. • I don’t want to see anything that would worry me – like a warning message about security, or a broken link.
- 53. Payment – customerview • I want to pay by a way that is easy for me. • Don‟t you steel from me • I want to fill out as little as possible on a form. • Is my card going to be safe?
- 54. Marketing – customerview • Does the site look nice • Do you make it easy for me to find things • Do you help me make a decision • Am I comfortable at this site • Do I trust it • Are the descriptions inspiring • Can I get help if I need it?
- 55. IT Infrastructure –Customer View • She would like to see tons and tons of photos of HER product. • Tell me ALL the little details about the product – so I don‟t have to ask you. • She needs to READ a LOT to help her buy the item. • All this info on the site better be 100% correct – or Customer Care costs go up.
- 56. Bridging the Gap– CR% SALE Do you have Site makes Will I get it Will they what I want me FAST? deliver comfortable Can I find it I like the Why should I easily Do I have all pictures buy now? info I need to Is it in stock buy now This site sure Can I pay loads fast easily Price?
- 59. IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Marketing Customer Care
- 60. IT Infrastructure Sourcing Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Marketing Customer Care
- 61. Sourcing for eCommerce •Has to be repeatable and consistent - because of photos • Has to be managed – ideally in real time avoid out of stock situation – otherwise high Customer Care Costs • Available for FAST shipment • Need to have minimum quantities – otherwise to expensive to photograph
- 62. IT Infrastructure Sourcing Payment Gateways Logistics Logistics Ecommerce is: Website Infrastructure Traffic Marketing Customer Care
- 63. Logistics • Label Printing •Tracking numbers – needs to integrate with website • Backorder Management • Invoice generation • Shipping Documents • Personalization – certificates, letters, VIP • Communicate back to the customer
- 64. IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Traffic Marketing Customer Care
- 65. Traffic Sources • Google • Yahoo • SEO • Blogs • Social Media • Repeat Business
- 66. Traffic • Use Googleand Yahoo and others – create landing pages to take customers right where they want to buy – its cheaper to advertise • Show up consistently, build trust through predictability • Natural Search Engine results give credibility • BUT PPC and SEO buyers are different segmented • SEO success does not mean PPC can be stopped
- 67. Return Traffic • Firsttime to acquire customer can be from $20 to $100. • 2nd time – its $2-$3. • Methods to keep them coming back: – Loyalty programs – Newsletters – Social Marketing – Product rotation
- 68. IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Marketing Customer Care Customer Care
- 69. Customer Care • Requiresstrong set of Policies and Procedures • Phone support good for high ticket (VIP) customers – otherwise expensive • Email is very good – requires a strong Customer Care Ticket Management System • Knowledge Base – focus to reduce Customer Care costs by constant improvement on site and FAQ • Return Handling – easy, traceable and care free
- 70. Customer Care • OnlineChat is good – requires higher Customer Care People • Outsourcing to India – yes – but need to be a big size – and have VERY strong SOP‟s
- 71. Example of SupportSuite
- 72. IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Marketing Marketing Customer Care
- 73. Marketing • OnSite Marketing- images • Traffic – getting people to visit • Pricing – compelling prices • Product Selection – sufficient not to loose traffic • Return per customer (loyalty) • Analytics - looking at the numbers to understand behavior
- 74. Marketing • Everything todo with user experience • Colors, photos, descriptions, spe cs, ease of use, etc. • Loyalty programs and CR% focus
- 75. Reporting Tools • Poorperforming product identification • Total Sales • Sales by Category • ROAS (Return on Advertising Spent) • Cost per order • Profit Per Order • Historical performance – with tuning
- 76. Analytics • Core purpose:to allow you to ‘see’ your site. • No true equivalent in “real world‟ • Your eyes and ears on a site • Primary tool for „tuning‟ a website • Person ‘tuning’ a site begins the site ‘through’ numbers
- 77. IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Website Infrastructure Traffic Marketing Customer Care
- 78. Web Site (Cart) •Server – owned, hosted or cloud – Backup of server – Redundancy – Security Patches – Performance very important • Shopping Cart Software – 1000’s to choose from – Choosing one depends on features, cost, ease of maintenance
- 79. Payment • Need tobe able to accept payment – Paypal – Google Checkout – Amazon Checkout – Many others • Require integration with Cart • Each payment method means higher Customer Care costs
- 80. Payment • Chargebacks – fraudulent charges • Fraud Detection – you are responsible • Banking to accept payment – especially challenging in China
- 81. IT Infrastructure IT Infrastructure Sourcing Payment Gateways Logistics Ecommerce is: Website Infrastructure Traffic Marketing Customer Care
- 82. In-house IT Infrastructure • Product Management • Order Fulfillment • Inventory Management • Reporting
- 83. Product Management • ProductManagement – Pricing tools – Image Management – Integration with Web Servers – Description management – Specification Management
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- 85. Sourcing IT Infrastructure Logisticst Payment Gateways Website Infrastructure Traffic Customer Care Customer Care Marketing
- 86. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 87. A Look ateCommerce Team
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- 89. Ecommerce Team • Instartup stages its possible to find a person that can handle multiple functions • However in general, most people tend to be SPECIALIST • Some positions only require 10-20% of a person – hence the challenge of large overheads and under utilization of resources.
- 90. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 91. Suitability of Ecommerce forYOU Do YOU have the rights skills If not, can you hire the right skills:
- 92. Online business ideas •Retail Goods –if you are saturating local physical market, or not able to expand physical territory. • Services – booking a driver, cleaning, translation, etc. – can replace office with online office. • Restaurants – enable delivery and market reach since restaurant ‘radius’ is small. Requires AMAZING execution – 100% reliability. • Consulting – moving services traditionally delivered in real space into virtual space.
- 93. Skills Sets Physical Space eCommerce Sourcing YES YES Store Design Designer Graphic Designer Store Construction Building Contractor A whole team Product Visual cues – Depend on analytics Merchandising use your eyes and numbers Inventory Out of Stock Not there – cannot sell it Need to have good inventory management system Photography Not required MUST – and must be good Descriptions Not required MUST – and must be good Specifications Not required MUST – and must be good
- 94. Skills Sets Physical Space eCommerce Staff Yes – need training Yes – need training – must be computer able Store Security Yes – physical Yes – virtual – hackers Payment Yes – if cash low risk, credit Yes – higher risk card also lower risk Advertising Just being there If you don’t promote gets traffic. no chance for anyone to show up
- 95. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 96. Getting Started Boot StrappingScenario
- 97. Options to getstarted • Entry Level – Amazon Market Place, Ebay, PayPal, Amazon Shops, other low cost carts. No identity • Mid-level – better carts – more features. Identity hard to establish • High level – Miva, open source carts, etc. • Expert-level – grown your own (Amazon level)
- 98. One Time Costs Entry Level Mid-Level High-level Cart Software $0 $500 $200 Help Desk Software $0 – email $0 - email $400 Order Tracking and Fulfillment $0 – part of offering $0 – spreadsheet, list, etc. $5000 Site Design $0 – minimal branding $1000 $20,000 Product Management Software $0 – web based $0 – web based $5000 Customer Care Policies $0 – wing it on a case by case $0 – wing it on a case by case $5000 Photography $0 – do it with your own camera $5/photo – $2500K $7500 Descriptions $0 – get creative $5/photo – $2500K $7500 Product Specifications $0 – bring out the ruler and scale $0 – do it yourself $5000 Traffic – setup Google, Yahoo Learn the basic in two weeks Outsource to India - $500 $5000 Stock Product dependent - but need Product Product samples Dependent – but need samples Dependent – but need samples Project Management $0 -Its only you $0 – Its still only you $80K Development Engineers $0 – no need $2000 – likely need some help $100K Total $0 $8500 $325K Expected Results Don‟t count on too much – price $100K to $200K/year in sales $1MM-$3MM/year based marketing - $50K/year possible possible What you can handle 5 – 10 orders a day 10-20 orders 400 order/day
- 99. Operating Costs Entry Level Mid-Level High-level WebMaster $0 – no need $500 $5000 Customer Care Staff $0 – its you $1000 $3000 Fulfillment Staff $0 – its you $1000 $4000 Site Changes (Designer) $0 – not really $500 $1000 possible Product Changes (DB Manager) $0 – its you $0 – its you $1000 Reporting and Analysis $0 – its you $0 – its you $1000 Photography $0 – do it with your $5/photo – $200 $500 own camera Operations Manager $0 – its you $0 – its you $3000 Marketing Spend Learn the basic in two Outsource – 15% of spend $4500 weeks - $500 COG Product dependent Product dependent Product dependent Shipping Product dependent Product dependent Product dependent Payment Processing 3% = $100 $3% – $500 $1500 Total $100 $4200 $25,000 Expected Results 80-100 hour week $100K to $200K/year in $1MM-$3MM/year sales possible possible What you can handle 5 – 10 orders a day 10-20 orders 400 order/day
- 100. Low COST site=JOB • The $100-$500K in sales is a good job. • You have to work at the site every day and do all the work BUT • You can probably manage 50% Gross Margin ie. $50K to $250K. • Low investment – 1 or 2 staff. • Not really a 4-hour week – still have to work JOB. • Need some skills BUT not necessary to be expert
- 101. One Page LongCopy • I’m a secret fan of one page long copy sites. • One product • One Person • Outsourced everything • $5K to get started • Could generate $500K to $1MM in sales • Example: www.easywebvideo.com
- 102. Easy Web VideoExample
- 103. Mid-tier Sites Challenges •Cannot do it yourself anymore • HR / people / management/ reporting / etc. – all the business stuff comes into play • Now you are not only a site operator but also need to be a manager. • High failure rate – 9 out of 10 fail. • Choose to grow! – don’t let growth happen on its own • Know the risks – understand your own skills
- 104. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 105. Lesson from thefield • Its about two things – traffic and CR • Ecommerce is 100% different than retail • The work is never done – ie. This is not a one time project.
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- 113. Lesson from thefield • Ecommerce is efficient at small scale - $500K-$1M in sales – but it’s a job. • The $1-$5M in sales – is awkward time – teenage years – infrastructure costs are high – volume not so high. • $5M+ - infrastructure costs become small compared to volume. • Staying small in ecommerce space is not a bad thing – its profitable
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- 124. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 125. Agenda • Introduction • Things that you will learn • Fundamentals of selling • Real stores – how they work • E-stores – how they emulate real stores • What makes E-stores works • Ecommerce Team • Suitability of ecommerce for your business • Getting Started • Lessons from the field • Questions and Answers
- 126. Questions And Answers! (hopefully)
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- 131. Example • Baby’s supposedto increase conversion rate on a site • Picture of owner supposed to be 2nd best • 3rd best is a picture of a smiling person • Tried the PICTURE of OWNER strategy
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- 133. Example of trialand Error • We tried the owner ‘angle’ – of featuring me on the site
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- 135. Conversion Rate dipped bya LOT Suspected Reasons: - No smile - Angle head on to aggressive - Too sexy for women – got distracted Trial one Learning
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- 137. Conversion Rate dipped byeven LOWER Suspected Reasons: - Angle of face “pushing” people away from the page - The Pearls not flowing down - Pearl Strand too long Trial two Learning
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- 139. Conversion HITS BOTTOM Suspected Reasons: -Smile looks little angry - Angle to direct - Not playful enough Trial three Learning
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Editor's Notes
- #3 I am using here this images. The other one is cropped which doesn’t looks so good. I left it anyway so you can choose which one you like. I would almost use no images at all the give the title more value
- #4 The Agenda needs a bit more work. I have the feeling some titles are not displayed in the duration of the presentation. You might have to have a closer look…
- #5 I exchanged the red fonts with grey once as we have to much red, which appears a bit aggressive. I highlighted some parts bold red, those you made capital and important things. Like that they stand out and it is helps the spectator to orientate. You might (if you like it) highlight some other parts I guess you know much better then I which parts are most important.
- #20 I was not so sure what you idea was here. So I basically left it.
- #22 Graphic needs to be changed
- #23 The Agenda needs a bit more work. I have the feeling some titles are not displayed in the duration of the presentation. You might have to have a closer look…
- #25 As I said I am not so sure where a new chapter starts so that you might need to over look one more time. I got the feeling there are some chapter titles (the reappearing agenda) missing.
- #36 The Agenda needs a bit more work. I have the feeling some titles are not displayed in the duration of the presentation. You might have to have a closer look…
- #48 Katrina: This page needs a tuneup
- #49 Katrina: This page needs a tuneup
- #61 Katrina: Can we add the lady to this slide – This will be the ‘customer’ point of view icon for us – to show people that this is what we are thinking when we talk customer.
- #65 Katrina: Could we get a bit more visual here. Was thinking for some kind of animation of a person walking across the beam – and that the items below are supporting them. If something is missing the arrow breaks and the sale doesn’t go through.Between the time a customer arrives on your site – and the time they buy – you (or your site) has a lot of work to do – and has to do it VERY fast.
- #67 I was not sure what kind of images you wanted. Whether a table or pic. Let me know and I will send you something tomorrow
- #69 I am not sure whether the is right here. I have the feeling something is missing. I am sometimes a bit confused because it is quite a bunch of information and I am not familiar with it. And as time is pressing I am not able to oversee that.
- #79 Katrina:Can we put this inside the ‘laptop’ as well – I really like how you did that.!
- #82 Without strong Policies and Procedures customer care will not be consitent
- #83 Without strong Policies and Procedures customer care will not be consitent
- #85 Without strong Policies and Procedures customer care will not be consitent
- #101 Can we put this inside the ‘laptop’ as well – I really like how you did that.!
- #103 Can we put this inside the ‘laptop’ as well – I really like how you did that.!
- #104 In conculsion – the factors in Ecommerce are several – if exectuted well yield to profit
- #107 Katrina:Could we bulid this – so that at first – we show the main groups of Ecommerce team – then we fly in the various ‘jobs’ they doPaul:Time is running out so I did something a bit different in indesign – u wont be able to change it. Let me know if there are chances needed
- #109 Katrina: Could we color in each box (the red one) that shows some kind of 10-20% of utilization of each department. The CEO would be full time, but the other boxes, I would like to show lower utilization.Let me know whether that fits for you.
- #157 Katrina: This page needs a tuneup