Effects of Online Commercialism LIS 250 Final Project Dre Weaver Andy Baker Chuck Gray Doug Garmager

Question: How has commercialism of the internet affected corporations and small businesses, and how are these corporations and small businesses still targeting those without internet access?

Positive Business Implications of E-Commerce Overhead Customer Service Sales Taxes

Overhead Less physical space Few employees, especially in sales Expansion of business less pricey Overall savings in overhead can positively impact a fledgling business.

Customer Service As Amazon.com model demonstrates that online business can actual improve on customer business. Don’t have to drive to store to speak with customer service personnel.

Taxes As of right now, online businesses are not required to pay sales tax. Provides large incentive to buy online. Streamlined Sales Tax Project may take away this benefit.

Negative Aspects of Internet Commercialism on the Business World Customer Problems Small Business Pitfalls Strategy Misconceptions Real World Examples…..

Internet Consumer Profile Higher level of education Greater Internet experience Credit card concerned E-shopping only accounts for 2% of total retail spending (as of 2002)

Small Business Pitfalls Difficult for entrepreneurs to perceive limits to growth Bad for business directors who guide decisions by a “flair for business” or a “gut feeling” Generally have a hard time handling a large amount of data Usually a lack of equity and financial resources to pursue strategies correctly

Common Internet Strategy Misconceptions “Get BIG fast” Initial strategy: price low, market heavily Misconception that unlimited growth is good Grow too quick, cannot provide quality service Forgotten Principles…… Learning curves Standards Formation Network Effects Economies of Scale

Real Examples of E-Commerce Failure Boo.com Heavily invested site that was too advanced, only accessible for 25% of users (Flash) “Ask the Builder” Too many response can be a bad thing….

E-Commerce & Retail “Any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services.” –US Census Bureau In 4th Quarter of 1999 e-commerce equaled .7% of total sales In 2nd Quarter of 2003 e-commerce equaled 1.5% of total sales

E-Commerce Buying Patterns “Customers are indifferent to good service but highly dissatisfied with bad service” Tracking buying patterns is much easier for retailers (dynamic pricing) Software for Consumers has developed out of this (Pricebots) E-tailers must design sites around these issues and learn from consumer patterns

Holiday Sales of E-Tailers This year, holiday sales expected to rise 42% to $12.2 Billion Responding to Security Issues, Online shoppers can place orders to be picked up at closest retail store Consumers have chosen to shop online to save time and energy that is generally wasted in holiday rushing

Influencing Consumer Buying The most successful sales on the internet involve items that can be “Described in Words” Customers Shop More Online When weather is Bad Controlling Demographics through customer profiles can help influence buying through pop-ups on rainy days

Case Study: Overstock.Com Targets Women aged 30-45 Median Income of $50,000 Free Cruise Influences Customers Resulted in 2,741 hits with 1,261 new subscribers to the newsletter 46.01% Conversion Rate keeps Customers informed of new products available and sales targeted at audience

Customer Targeting How are companies targeting consumers? Physical computing solutions Internet/Software based solutions

Physical Computing Solutions Hewlett Packard - Personal Computer Packages Starting at $800.00 Dell - Personal Computer Packages Starting at $600.00

Internet/Software Based Solutions AT&T - Broadband Internet Services Kmart - Internet Access through NetZero Wal-Mart - Internet access in-store and at home.