1. E-Commerce Opportunities for Limited Resources Rural Population Extension Worker Training Kimball P.Marshall, Ph.D., Alcorn State University kimball.p.marshall@netzero.net kimball.p.marshall@netzero.net Ilya Smolyaninov, Alcorn State University Igor Georgievskii, Alcorn State University Leigh Junkin, Alcorn State University

2. Chapter 1: Introduction Objectives of training manual Provide guidance to extension workers to encourage rural limited- resource people to begin small-scale Internet-based, e-commerce activities Rural, limited-resource populations must believe in the ability to use e-commerce for personal goals Extension workers must encourage this belief and provide support as skills are developed Expectancy Theory provides the theoretical framework Existing e-commerce private sector sites provide the opportunity Chapter 1: Slide 1

3. Chapter Outline Chapter 1: Slide 2 Chapter 2Explains how expectancy theory and the concept of locus of control can be applied to rural limited-resource populations Chapter 3Provides examples of success stories of rural populations that have used basic e-commerce to sell products made with rural life skills Chapter 4Provides guidance identifying rural life skill products appropriate for e-commerce Chapter 5Introduces simple approaches to e-commerce such as selling products on Internet auction sites Chapter 6Provides guidance in basic personal finance management skills for entering e-commerce Chapter 7Reviews what has been learned and encourages actions

4. Chapter 2: Building Confidence – Expectancy Theory and Locus of Control as Theories of Motivation Rural limited-resource populations 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 limited resources clients –Expectancy theory –Locus of control theory Chapter 2: Slide 1

5. 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

6. 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

7. Locus of control Expectancy Theory Locus of control can be tied to expectancy theory in that the individual must believe he or she can perform the required tasks, and that the tasks will lead to the intended outcome, which will result in the individual receiving the desired reward Chapter 2: Slide 4

8. 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 –May 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 Limited Resource Populations

9. 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

10. Chapter 3. Microenterprise Success Stories from Rural Communities Success stories will –build confidence –motivate –Stimulate vision –Provide reference group for the limited resources client Key success story illustrations include –Highland Harvest –Oyster Creek Mushroom Company –Indian Village Chapter 3: Slide 1

11. Examples of rural, microenterprise e-commerce activities can help rural, limited-resource people to understand that their rural life skills have value and that the products they make can be sold through e- commerce Chapter 3: Slide 2

12. Highland Harvest Highland Harvest, supported by Lightstone Community Development Corporation, is a very interesting example of how producers can join together to create an “on-line” shopping mall for high value-added, gourmet, food products. Through Highland Harvest, producers from small farms in Hampshire County, West Virginia, offer organically grown products directly to consumers over the Internet. By emphasizing finished products developed from organically grown produce, Highland Harvest is able to distinguish its products from commodities that do not command high prices. By teaming together, producers offer on one web site a variety of products to capture and maintain consumer interest. Strategy in action Chapter 3: Slide 3 www.lightstone.org/dev/shoponline/index.html

13. Chapter 3: Slide 4 www.lightstone.org/dev/shoponline/index.html

14. Oyster Creek Mushroom Company Strategy in action Oyster Creek Mushroom Company of Damariscotta, Maine is an interesting example of 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 on-line. Chapter 3: Slide 5 www.oystercreekmushroom.com

15. Chapter 3: Slide 6 www.oystercreekmushroom.com

16. Indian Village Strategy in action One of the most interesting rural e-commerce web sites is www.IndianVillage.com, an on-line shopping mall with many links to Indian related web sites such as Durango Silver Company that offers Bisbee Blue turquoise jewelry and cabochons through its E- Bay store. Other IndianVillage.com web site links shows the e- commerce activities of American Indian artisans who offer pottery, basketry, textiles, beadwork and various forms of Indian jewelry. www.IndianVillage.com Chapter 3: Slide 7 www.indianvillage.com

17. Chapter 3: Slide 8 www.indianvillage.com

18. Seek Local Area Success Stories From Clients –Find others who have sold products on the Internet family members, neighbors, work colleagues, friends –Ask questions How did they do it? What auction site(s) do they know about? Did they make money? Review Web Pages Cited –Print or display web pages –Ask clients to think of products they might sell –Discuss costs involved Time Supplies Compare costs with similar prices being sold on the Internet Chapter 3: Slide 9 Discussion Topics and Exercises

19. Chapter 4. Valuing Rural Life Skills and Products Chapter 4: Slide 1 The limited-resource client needs to recognize the market value of his or her skills and the products they can produce

20. Common Rural Life Skills A variety of job skills can product 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

21. Jams, Jellies, Candies, Relishes “Home grown” or “Gourmet” foods Chapter 4: Slide 3 Food Processing

22. Sewing Knitting Crocheting Quilting Leather goods Embroidery Fabric toys Chapter 4: Slide 4 Fabric Crafts

23. Furniture Toys Art objects Yard décor Dollhouses Mailboxes Chapter 4: Slide 5 Carpentry and Wood Working

24. Painting Photography Sculpture –Clay –Metal –Ceramic –Wood Pottery –Decorative –Functional Chapter 4: Slide 6 Visual Arts

25. Independent artists Musical groups Church choirs Chapter 4: Slide 7 Music

26. Rural authors Cultural or historical organizations Club fund raisers Genealogical materials Chapter 4: Slide 8 Book Publishing

27. Discover the Clients’ Skills and Products –Products that were made by oneself as presents or for using at home Explore Market Potentials Through On-line Store Searches –Similar products on Internet auction sites –How Internet auction sites work? Chapter 4: Slide 9 Discussion Topics and Exercises

28. Chapter 5: Slide 1 Chapter 5: Simple E-Commerce Approaches for Getting Started An online auction and shopping website is where people and businesses buy and sell goods and services worldwide

29. 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 Establishing 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 to the Internet auction site Chapter 5: Slide 2

30. Obtaining 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

31. Registration 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 email Chapter 5: Slide 4

32. Establish a Payment System Requirements for efficient, secure sales: Account to receive payments to –Local Bank account Secure payment method for customers –PayPal (https://www.paypal.com/) Chapter 5: Slide 5

33. 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

34. Selling the Product Monitor the process regularly –Check email and auction site Communicate with interested buyers –Reply to any information requests in a timely manner Promptly close the sale –Notify winning bidder –Confirm purchase Chapter 5: Slide 7

35. 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

36. Buyer and Seller Feedback Feedback is important to create a trustworthy online auction community Trust will build sales Chapter 5: Slide 9

37. 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 Online Exploration of Internet Auctions with Limited Resource Clients –Perform searches –Monitor auction activity –Determine shipping options and costs –Calculate realistic prices for products to be sold Chapter 5: Slide 10

38. Chapter 6: The Need to Keep Track – Financial Literacy, Record Keeping, Taxes and Internet Transactions Chapter 6: Slide 1 Financial Literacy Challenges of Limited Resource Populations The extension worker should help the Client to develop basic financial literacy skills needed for e-commerce Basic record keeping Sales tax Income tax How to get paid

39. Simple accounting approaches of keeping records Use IRS Schedule C as template Help Client organize simple ledger Chapter 6: Slide 2 Record Keeping

40. Sales Taxes Consult with State Tax authority to determine current policies –Sales tax may be State and County 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 3

41. 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 4

42. How to Get Paid: The Need for a Basic Bank Checking Account and Third Party Payment System Important challenge is to encourage limited resource client to develop a 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 and PayPal fees should be taken into consideration when setting product prices Chapter 6: Slide 5

43. Chapter 6: Slide 6 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 http://njaes.rutgers.edu/money/ffquiz The Need for Basic Record keeping –Clients should work in groups to review the IRS Schedule C (1040 form) –Keeping good records is critical to the success of any business

44. Chapter 7: Now Let’s Get Started Expectancy and Locus of Control Theory E-commerce success stories Common rural life skills can become marketable products Steps to begin e-commerce activity Financial management issues Chapter 7: Slide 1 Evaluation An evaluation process is important to ensure that any training program is effective and to provide for continuous improvement for future programs. An extension worker evaluation and a client evaluation is included—Thank you for taking the time to see they are completed.