Ecommerce and

Small Business

Chapter 14

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 Developing a Small Business
Estrategy

• Develop a strategy for ecommerce

• Implement strategy effectively
• Evaluate and revise

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 Potential Benefits

• Benefits can include :

– access to new markets
– improved customer responsiveness
– increased flexibility
– improved profits
– increased innovation
– better managed resources

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Opportunities for Small Business
• Marketing
– Depending on business can be critical
– See table 14.1 for list of Marketing Aspects on the
Internet
• Customer support
– Technology makes our business available 24/7
– One of the main tools that will reduce routine questions
over the phone is a frequently asked questions (FAQ)
page on the web.
• Market intelligence
-As market expands need additional details
• Procurement
-Small businesses save money on procurement of virtually
everything they purchase, turning those savings into
lower prices and increased market share.

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Opportunities for Small Business
cont.
• Operations
– Simplify processes electronically
• Sales transactions
– Expanding the market
• Public relations
– Reach your audience at reasonable cost
• Employee Retention and Morale
– Online training programs boost knowledge/
more productive.
– Use of ebusiness technologies help employees
feel challenged in a small company.

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Building the Ecommerce Presence

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 Operating a Small
Ebusiness
• Getting Online- Application Service Providers
• Marketing and Selling
• Trading Exchanges and Online Marketplaces
• Receiving Payment-Credit Card Processing
(more detail next slide)
• Procurement
• Training

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 Receiving Payment—Credit Card
Processing
Small ebusinesses can quickly set up credit card processing for their web-sites
through a variety of banks and merchant account providers.

• Merchant accounts- accounts that were able to accept credit card

transactions (e.g., Visa and MasterCard).
• Many of the banks required small businesses to establish holding accounts
of $5000 to $25 000 to ensure that fraudulent transactions would not be
defaulted to the bank itself.

• Holdbacks- example -10 percent, that would be retained in the holding

account for up to six months on a rolling basis to reduce the risk of bad
debts and fraudulent credit card use.

• Discount rate- the amount the credit card provider takes as a percentage of
sales/ normally less than 4 percent.
• Early online entrepreneurs charged up to 15 percent due to the high
perceived risk.
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 Challenges to Ecommerce
for Small Business
• Technological
• Financial
• Organizational
• Operational

• Expanded on in next few slides

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 Technological Challenges

• Most small ebusinesses will lack internal IT

expertise

• Need to ensure adequate support available

either internally or externally

• Valuable for internal expertise to be gained

through training where possible

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 Financial Challenges

• Large web strategies and other IT initiatives

can be very costly

• Need to determine true “needs” not just the

“wants”

• Develop systems that can be scaled up and

expanded easily

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 Organizational Challenges

• Small businesses will also face change

management issues

• Owner/manager needs to be promoter of

ebusiness

• Provide adequate training and support

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 Operational Challenges

• Volume of data can be small and yield limited

results from analysis - need to determine case
by case

• Ability to integrate can be limited if back

office not integrated

• Support for growth must be available

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