New e Commerce Trends and Technologies David Strom

New e. Commerce Trends and Technologies David Strom david@strom. com +1 (516) 944 3407 Centra Presentation 2/9/2000 Centra presentation (c) David Strom Inc. 2000 1

Agenda • Build or buy your web storefront? • What becomes success? • Future trends Centra presentation (c) David Strom Inc. 2000 2

Topic 1: Build or Buy Your Web Storefront • Rent: outsource to a CSP • Buy suite of software • Build it yourself Centra presentation (c) David Strom Inc. 2000 3

Evaluating CSPs • • Do they offer storefront design? Have in-house programmers? Hosting of your own web server machine? How many payment systems do they support? • What kinds of accounting reports do they offer? Centra presentation (c) David Strom Inc. 2000 4

Some CSP Examples • www. psi. net/web/ecommerce. shtml • www. Best. com/bizcomm. html • www. Brainlink. com/html/saleslink. htm • www. Earthlink. net • IBM: mypage. ihost. com • www. Netcom. com • business. Mindspring. com/prodsvc/smbiz/ • www. outer. net/ONCommerce (Outer. Net) Strom Inc. 2000 Centra presentation (c) David 5

Earthlink pricing explained Program Monthly fee Setup fee Starter Site 20 25 Total Access Acct. 20 (waived) SSL cert. 10 20 Domain fee 75 Ecommerce 40 175 TOTAL 100 210 Centra presentation (c) David Strom Inc. 2000 6

CSP Approaches • • • Geo. Shop/Yahoo Via. Web/Yahoo i. Cat/Intel Encanto i. Tool Others entering a very crowded field Centra presentation (c) David Strom Inc. 2000 7

Geo. Shop/Yahoo • Builds on Geo. Cities “communities” but for merchants (www. geocities. com/join/geoshops) • $25/month for just commercial listings • $180/month (or more!) for actual transactions – working with Internet Commerce Services Corp. who uses Open Market Transact servers (www. icoms. com/pp. htm) Centra presentation (c) David Strom Inc. 2000 8

Via. Web/Yahoo • $100/month (<50 items) or $300/month options • Cyber. Cash processing $500 setup • Solid reporting and admin options Centra presentation (c) David Strom Inc. 2000 9

i. Cat/Intel Commerce Online Hosting Solution • Free for <10 items, $99/mo. for 100 items • No per-transaction fees • Email and browser-based notifications of purchase completion • Advanced items like upsell, featured products, cybercash gateways Centra presentation (c) David Strom Inc. 2000 10

i. Tool Demo • www. itool. com/admin/controlpanel. cfm • $25 -$100/mo. Centra presentation (c) David Strom Inc. 2000 11

Sitematic • Flat rate for $40/mo • Staging/production site concept • More templates and controls Centra presentation (c) David Strom Inc. 2000 12

Encanto • Turnkey server/software for free! • Payment gateway included ($50 initial, $70/month) • Web storefront, shopping cart, catalog system • Also need secure cert, merchant bank account • All managed via browser, steps are clearly documented Centra presentation (c) David Strom Inc. 2000 13

The Suite Approach • Leading contenders • What is part of the suite and what isn’t • Prices and platforms Centra presentation (c) David Strom Inc. 2000 14

Popular e. Commerce Suites Centra presentation (c) David Strom Inc. 2000 15

Popular e. Commerce Suites (con’t) Centra presentation (c) David Strom Inc. 2000 16

Four Typical Elements • • Catalog Storefront designer Ordering/inventory system Shopping cart/check out system Centra presentation (c) David Strom Inc. 2000 17

The Cold Hard Reality of Suites • Suites are nothing more than collection of products • Lack integration among various elements • Difficult to setup, customize, and use • Require you to live “inside” their structure • Limited payment options • Sounds like early MS Office Centra presentation (c) David Strom Inc. 2000 18

Payment Systems Included in Each Suite • • Microsoft: Verifone, Buy Now IBM (Net. Commerce): Verifone, SET/e. Till Open. Market: Verifone Web. Site Pro: IC Verify, PC Authorize, Cyber. Cash, others • Intershop: Cyber. Cash, ICVerify, others Centra presentation (c) David Strom Inc. 2000 19

Sample Stores Included in Each Suite • Microsoft: 4 stores • IBM: e. Mall, simple and advanced sample stores • Open. Market: none • Web. Site Pro: 1 bookstore • Intershop: 3 stores Centra presentation (c) David Strom Inc. 2000 20

Database Support Centra presentation (c) David Strom Inc. 2000 21

Dealing With ODBC • Have to understand how to set up data sources • Intimate knowledge of your data structure • Re-install ODBC drivers at least once! • Best to start with built-in database Centra presentation (c) David Strom Inc. 2000 22

Store Wizards Included in Each Suite • • Net. Commerce (the best) Web. Site Pro (but doesn’t do much) Intershop (various wizards) MS Commerce (although you’ll really need to know COM!) Centra presentation (c) David Strom Inc. 2000 23

Tips u Don’t install anything before making sure you have everything! u Downloads for free, but they expire u Can you export existing files to these systems? Centra presentation (c) David Strom Inc. 2000 24

Prices of DIY Products Centra presentation (c) David Strom Inc. 2000 25

Putting Together Your Own Solution • • • SQL Server database Cyber. Cash payment system Web. Catalog 3. 0 (supports CCash) IIS web server Total price:

Topic 2: What Becomes Success? • • • Overview of e. Commerce market Review physical storefront success factors Propose some definitions Define success for the web Draw up e. Commerce principles Centra presentation (c) David Strom Inc. 2000 27

Sad State of Today’s e. Commerce Marketplace • • • Poor quality tools Hard-to-find stores Limited payment methods Credit card snooping perceptions Older browser versions can’t view latest sites Centra presentation (c) David Strom Inc. 2000 28

Case in Point: Buying a Bike Rack • • Item not carried: outdated catalog Telesales not familiar with web No cross-sell or substitutions online Needed three phone calls to complete purchase Centra presentation (c) David Strom Inc. 2000 29

Another Case: Buying Theater Tickets • Web site doesn’t carry event information in real time • Orders are fulfilled weeks later • No indication on web site of sold-out or nearly so events Centra presentation (c) David Strom Inc. 2000 30

Let’s Learn From the “Real World” • Compare what works for physical stores • Try to extend to the web Centra presentation (c) David Strom Inc. 2000 31

Critical Success Factors for Physical Storefronts • • • Location Branding Good service Good product selection Proper pricing and margins Traffic Centra presentation (c) David Strom Inc. 2000 32

First Problem: • None of these translate on the ‘net! Centra presentation (c) David Strom Inc. 2000 33

Now Try to Agree on Definitions for Web Stores • What determines a good location? – Position on a search page – Nearness to popular destination – Ad on a popular server • What determines branding? – Memorable domain name – Popular search category destination Centra presentation (c) David Strom Inc. 2000 34

An Example of bad location: Montana Meats • Link • Can’t they afford their own domain name? • www. company. com/~anything is BAD NEWS! Centra presentation (c) David Strom Inc. 2000 35

Determining Traffic • Hard to do -- is it hits, page views, registered users? • [HITS = How Idiots Track Success] • Hard to measure -- do you count gifs? Use log files? • No general agreement on any metrics! Centra presentation (c) David Strom Inc. 2000 36

One Working Definition of Success: • SURVIVAL! • If a site is still running after 12 months, and getting more traffic, it is a success. Centra presentation (c) David Strom Inc. 2000 37

Does a site actually have to sell something? • Many actual e. Commerce sites don’t do the complete transaction • Require faxes or telephone calls! • Some merely have catalogs • Examples: Singapore Power Authority • Cisco Connection Online Centra presentation (c) David Strom Inc. 2000 38

Principles of Good e. Commerce • • Easy to find merchandize Good service Individual customization is key Simple navigation Make payments easy Make buyer feel transaction is secure Communicate effectively and frequently Centra presentation (c) David Strom Inc. 2000 39

AMP Connect • Have customers in 100 countries • Speak many languages • Produce 400 catalogs covering 135, 000 items • Mailings cost US$7 MM/yr • Fax back cost US$800, 000/yr • But you can’t buy anything directly! Centra presentation (c) David Strom Inc. 2000 40

Solution: “Step Searching” • • Saqqara. com software to enhance Oracle database Provide user feedback as they type in the query Show many matches in the database Different mechanisms for searching: – – by part number by alphabetical names by part family by picture even Centra presentation (c) David Strom Inc. 2000 41

AMP Old Screen Centra presentation (c) David Strom Inc. 2000 42

AMP Connect (con’t) • And can set to list parts that are available in specific countries! • Updated daily with over 200 item changes • Detailed drawings saves time for customers to pick the right item • Saved AMP over US$5 MM in production costs • Saved US$1 MM in translation costs Centra presentation (c) David Strom Inc. 2000 43

First Principle of e. Commerce: • Make it easy to buy! Centra presentation (c) David Strom Inc. 2000 44

Amazon. com • Services frequent readers with a variety of programs – Editorial comments – If you liked this book, you’ll like. . . – Notification of new books by author, topic – Simplified “ 1 -Click” ordering • Uses simple pages and email • Associates program for commission kickbacks • Gift certificates via email • And. . . lots of stuff to choose from Centra presentation (c) David Strom Inc. 2000 45

Use Affiliates Programs Wisely • They bring traffic to your doorstep • Nice revenue sharing model • Lots of them to choose from to model your own on: – Associate. Programs. com – Refer-it. com • Shopnow. com (payment processing) Centra presentation (c) David Strom Inc. 2000 46

A Different Take on Affiliates: Click. Rewards • Pays you in airline miles for your patronage • Accrue miles on many sites • You redeem benefits on their site Centra presentation (c) David Strom Inc. 2000 47

Amazon vs Borders • Borders link • Cookies vs logins • Who makes it easier to buy books? Centra presentation (c) David Strom Inc. 2000 48

Update your directories! • This one is more than a year old! Centra presentation (c) David Strom Inc. 2000 49

Another Side of Service: Repeat Business • Make the shopper feel part of the family • Shopping as entertainment (online auctions) • “Do what I mean” search function (Amazon again looks at common misspellings made in the previous 24 hours for book searches) • Periodic targeted email updates and reminders Centra presentation (c) David Strom Inc. 2000 50

Second Principle of e. Commerce: • Deliver solid service! Centra presentation (c) David Strom Inc. 2000 51

Dell positives • Most notable site for computer buyers • Customize the features you want via a web form • Simplifies and personalizes the shopping experience • WYSIWYB (buy) Centra presentation (c) David Strom Inc. 2000 52

Dell problems • Site is now very complex • Print ads contain “e. Value” codes • Too many pages to get to actual PC configuration Centra presentation (c) David Strom Inc. 2000 53

Now Compare with Other PC Makers • • • Gateway IBM Compaq Micron … which is easiest to customize your PC? Centra presentation (c) David Strom Inc. 2000 54

Third Principle of e. Commerce: • Individual customization is key Centra presentation (c) David Strom Inc. 2000 55

BMW Motors • • Example of what not to do Use gratuitous graphics Cheesy low-res videos Toys, not tools Centra presentation (c) David Strom Inc. 2000 56

You Never Want To See This Screen! Centra presentation (c) David Strom Inc. 2000 57

Compare with Subaru • Find specific information about each car • Can price options to your particular needs Centra presentation (c) David Strom Inc. 2000 58

A better example: fishing licenses • Simple, quick, and does the job with a minimum of clutter Centra presentation (c) David Strom Inc. 2000 59

How NOT to Design a Payment Screen • http: //www. netmar. com/new/norderform. shtml Centra presentation (c) David Strom Inc. 2000 60

Common mistakes with payments • Provide too few or too many order confirmation pages • Confusing methods and misplaced buttons on order page • Make it hard for customers to buy things • Don’t make your customers read error screens Centra presentation (c) David Strom Inc. 2000 61

Fifth Principle of e. Commerce: • Make payments easy! Centra presentation (c) David Strom Inc. 2000 62

Perceptions of Credit Card Snooping Still Exist • But are largely popularized by media, not consumers! • Internet fraud stories are still common from both buyer and seller sides • Just starting to see authentication services (such as Cybersource) ramp up • Trust will take a long time Centra presentation (c) David Strom Inc. 2000 63

Sixth Principle of e. Commerce: • Make the buyer feel secure! Centra presentation (c) David Strom Inc. 2000 64

How Should You Use Email? • When to communicate? • What to communicate? • When is email helpful and when is it spam and annoying? Centra presentation (c) David Strom Inc. 2000 65

Email Uses in e. Commerce • • Sending order acknowledgement Sending shipping notification Purchase receipt Telling customer when item is in stock or on sale • Responding to specific queries about service issues Centra presentation (c) David Strom Inc. 2000 66

Email Receipts Should Contain the Following Items • • • Total price, including shipping Your address and the store’s Items ordered Whether they are in stock or not When they shipped Bonus: order number and URL to view this info online, link to UPS/Fedex tracking system Centra presentation (c) David Strom Inc. 2000 67

When to Send a Customer Email? • To acknowledge the order was placed • To say items shipped (or not ) and money changes hands Centra presentation (c) David Strom Inc. 2000 68

Seventh Principle of e. Commerce: • Communicate effectively and frequently! Centra presentation (c) David Strom Inc. 2000 69

Communicate Effectively and Frequently • Get your response systems in place • Tie in your storefront with any existing customer relationship management tools and call centers • Send replies within an hour of initial order, within 24 hours of any query Centra presentation (c) David Strom Inc. 2000 70

Topic 3: Future Trends • e. Wallets and secure transactions • Caching technologies • Internet Appliances Centra presentation (c) David Strom Inc. 2000 71

e. Wallet Trends • e. Wallets will eventually go away • SET becomes a server-side issue • SSL still dominates e. Commerce transactions for many years Centra presentation (c) David Strom Inc. 2000 72

Caching Trends • More caching appliances as time goes on • Better and cheaper caching devices appear • Most ISPs will use them within a few years if they want to retain customers Centra presentation (c) David Strom Inc. 2000 73

Internet Appliance Trends • More of them and cheaper too • Still for SO/HO environments mainly, although that is changing • Already some vendor consolidation Centra presentation (c) David Strom Inc. 2000 74

Conclusions • • e. Commerce crosses many different skill sets Software is still too dicey in many areas Standards aren’t much use right now Suites don’t offer much in the way of integration • DIY may be the best solution Centra presentation (c) David Strom Inc. 2000 75

Thanks! • • David Strom +1 516 944 3407 david@strom. com Copies of this presentation and other e. Commerce resouces can be found at http: //strom. com/pubwork/ecommerce Centra presentation (c) David Strom Inc. 2000 76