Chương 3: Xây Dựng Hiện Diện Thương Mại Điện Tử | Môn Thương mại điện tử - Đại học Ngoại Thương

lOMoAR cPSD| 58605085 LEARNING OBJECTIVES
After reading this chapter, you will be able to:
A Understand the questions you must ask and answer, and the steps you should
take, in developing an e-commerce presence.
A Explain the process that should be followed in building an e-commerce presence.
A Identify and understand the major considerations involved in choosing web
server and e-commerce merchant server software.
A Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.
A Identify additional tools that can improve website performance.
A Understand the important considerations involved in developing a mobile
website and building mobile applications.
Scratch Builds an E-commerce Presence lOMoAR cPSD| 58605085 F ro m “ S c r a t c h ” uilding an e-commerce Bpresence from “scratch” can seem like a daunt- ing task. But that’s the
challenge that Mike Halligan and
Doug Spiegelhauer took on when they
decided to band together to create an Australianbased dog food
subscription service, aptly named Scratch.
Halligan originally had the idea
for the company when his family dog
fell ill and he began to research foods
to help improve her quality of life. He
found that the dog food market was
confusing, poorly regulated, and
overpriced. This type of revelation is
repeated often in the founding stories of many e-commerce companies.
Halligan’s background was in marketing, initially creating customized blogs for clients that
weren’t able to pay the prices charged by major marketers and then running an e-commerce
agency that worked with brands on e-commerce strategy. He also spent time as a general
manager for The 5th, a direct-to-consumer e-commerce brand selling watches, bags, and frames.
Although Halligan had ample experience in digital marketing, he lacked first-hand experience
in the pet food industry. While researching the way dog food ingredients were developed and
labeled on packaging, he met Spiegelhauer, who ran a company in the pet food industry.
The state of the dog food market in Australia was ripe for disruption. Regulation of the
industry is nearly nonexistent. In fact, there are laws that absolve pet food companies of the
obligation to disclose how much of each ingredient listed on the packaging actually goes into
the food. Ingredients like gelling agents, coloring agents, and processed cereals are routinely
found in dog food, and many companies remove grains to achieve the ‘grain-free’ designation,
but instead substitute less healthy products. The markup for pet food was roughly 80%, with
only 10% to 15% of the final retail price representing the actual ingredients used to make the
food. Consumers have been long uneasy, with major pet food brands earning poor marks for
trustworthiness. Furthermore, only 5% of pet food sales in Australia were taking place online at
the time Scratch was founded, presenting a tremendous opportunity. 167
The direct-to-consumer e-commerce business model, which allows a company to bypass
traditional distribution pathways, avoiding the inevitable price markups that occur at each point
in the supply chain, has seen a number of major successes in the past several years. Consumers lOMoAR cPSD| 58605085 168
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reap the benefits, saving money without having to sacrifice product quality. Depending on the
type of product offered, a direct-to-consumer e-commerce company may offer individual
purchases of items, or it may instead be a subscription service, where customers receive
products on a regular basis, typically monthly. Given the rapid emergence of this business
model, many other startups are seeking to replicate this type of success. Halligan and
Spiegelhauer saw a golden opportunity to seize on that customer dissatisfaction and create a
direct-to-consumer alternative that dog lovers would appreciate. Australia also happens to have
4.8 million dogs, more dogs per capita than any other place on the planet.
Halligan and Spiegelhauer launched Scratch in early 2018 with three overarching goals.
First, they wanted to eliminate the secrecy seemingly omnipresent in the dog food industry.
Second, they wanted to bring an element of joy and fun to their customers’ experience buying
dog food—in short, to “make customers smile.” Lastly, they wanted to be an environmentally
friendly business however possible, both in the materials and ingredients used. Scratch uses the
savings it obtains from shipping direct-to-consumer to offer ethically sourced kangaroo meat,
broad beans and chickpeas, omega-3 salmon oil for brain and joint health as well as shinier
coats of fur, and other essential vitamins and minerals.
Scratch’s value proposition to Australian consumers was simple—buying pet food the
traditional way pales in comparison to receiving a much better product shipped directly to your
door with superior customer service. Scratch started with enough capital investment to operate
for a year, offering just one product to customers in its home city of Melbourne. The company
has since grown to Sydney, Brisbane, Adelaide, and Canberra, and is developing a second
product geared for large dog breed puppies.
Scratch prepared for its launch by creating an online quiz to test whether dog owners knew
what was in their current pet food, with the hope that once pet owners realized how unhealthy
some of the ingredients included in existing brands might be, they would see the value in
Scratch as an alternative. They also put out a casting call for dogs in Melbourne to use in its
advertising. In the process, Scratch gained a valuable list of contacts for future marketing
efforts. It also has plans for lighthearted local events, such as a partnership with dating service
Bumble for mixers where single dog owners can meet; this is consistent with the founders’
second goal of creating fun experiences for their customers.
Scratch had some tough choices to make with its e-commerce setup. The company knew it
wanted to offer a subscription service, but providing the same amount of food to all dogs each
month didn’t make sense. Instead, Scratch wanted to allow dog owners to customize their
subscription frequency based on their dog’s precise nutritional requirements. A large dog, for
example, might need a new box of food every 20 days; a smaller dog might need one every 60
days. In the world of subscription services, this type of arrangement is extremely unusual,
requiring Scratch to develop an e-commerce platform that could provide these highly
customizable subscription options.
For that reason, Scratch ultimately settled on WordPress and WooCommerce to provide its
marketing and e-commerce functions. Many businesses choose Shopify for e-commerce lOMoAR cPSD| 58605085 169
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due to its ease of use, but it lacked the customizability that Scratch required as a result of its SOURCES: “About,”
unusual variable-frequency subscription model. WooCommerce was founded in 2008 by three Woocommerce.com/accessed December 2019; “Mike
WordPress enthusiasts who had shared ideas for commercial WordPress themes for years. The Halligan,”
company is now a major e-commerce player that powers 30% of all online stores and had Michaelhalligan.com.au/scratc h-dog-food, accessed
already been downloaded over 10 million times prior to the company’s purchase by Automattic, December 2019; “About,”
the company that owns and operates WordPress. Scratchpetfood.com.au/ about, accessed December 2019;
WooCommerce Subscriptions’ customizability allows Scratch to offer individualized “GoDaddy Gives Merchants
subscription plans based on the weight, age, and activity level of each dog. Scratch’s standard Online Boost with WooCommerce
7.5kg box is then sent at a fixed interval to the customer, but WooCommerce also offers the Integration,” Pymnts.com,
option to send highly targeted e-mails to these customers; for example, after a customer’s first October
order, they receive an e-mail explaining how the system works and when they’re going to get a
22, 2019; “Scratch: Subscription Dog Food Ruffling up the Pet
new box; once they renew and order a second time, they receive a different, more streamlined Food
e-mail. Customers receive options that allow them to delay orders based on the quantity of food
Industry,” by Eric Berkhinfand, Metorik.com, August 6, 2019;
remaining. An Australian company named Metorik, also based out of Melbourne, provides “Dog Lovers Assemble: You
further customizability to WooCommerce, allowing Scratch to dive deep into company data to Need
answer questions about how customers differ in purchasing habits from city to city; for example,
This New Subscription Service,” Theurbanlist.com, June 24,
the company can find out how their average subscription frequencies differ in their more 2019;
suburban markets compared to urban centers like Melbourne.
“Scratch Case Study: Changing The
WooCommerce allowed Scratch to set up its warehouse integration immediately and Dry Pet Food Business For The
seamlessly. When Scratch receives orders, the company doesn’t actively manage them; instead, Better,” by Marina Pape, woocommerce.com, November
its food manufacturer is automatically prompted to make more food using Scratch’s precise 2018; “Woof! Why Scratch Is
recipe, orders are automatically filled at the company’s warehouse, and they are shipped directly the Must-Try Dog Food for your
to the consumer. Although much of the savings from the direct-to-consumer model were used Mate,”
to improve the ingredients of the food, they’re also used for environmentally-friendly and Ellaslist.com, November 29,
attractive packaging. The box zips tight to preserve the smell and nutrition of the food, and 2018;
Gina Baldassarre, “Melbourne’s
WooCommerce even allows the company to customize its packaging with each dog’s name on
Scratch Has Created a Dog Food the box.
Subscription Service for ‘Pet Parents,’” Startupdaily.net,
The automation of order fulfillment allows Scratch to focus much more time on customer November 28, 2018.
service and customer retention efforts. Scratch plans to allow live customer service chat via n Chapter 2, you I
WooCommerce using Facebook Messenger or Intercom in the near future. Scratch also does learned about e-
Facebook retargeting when a potential customer adds a product to their cart but doesn’t buy it, commerce’s
YouTube marketing, and search engine optimization for specific searches indicating a high technological
degree of involvement in pets’ well-being, such as “pet daycare” or “pet hotel.” The company foundation: the
also devotes significant energy to their social media presence. The company’s Facebook page Internet, the Web, and
already has 2,000 followers and its Instagram feed has over 11,000, which makes sense given the mobile platform. In this chapter, you will
how popular dogs and pets in general can be on such a visual platform. Scratch’s Instagram feed examine the important
features dogs happily greeting their shipments of Scratch food, dog-themed jokes and tweets, factors that a manager
and positive customer testimonials. The company website features a simplistic, fun design, with needs to consider when a whimsical sense of humor. building an e-
Halligan and Spiegelhauer hope that their company continues to grow, but they plan on commerce presence.
doing so responsibly and sustainably. These values are what differentiate the company from its The focus will be on the
large competitors in the dog food market and may yet make them the latest directto-consumer managerial and
e-commerce company to become a customer’s best friend. business decisions you must make before you lOMoAR cPSD| 58605085 170
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begin, and that you will continually need to make. Although building a sophisticated e- direction is the key
commerce presence isn’t easy, today’s tools are much less expensive and far more powerful than factor in driving the
they were during the early days of e-commerce. At the same time, the proliferation of mobile development of your
devices and social networks adds complexity because firms need to build a presence on three project. For instance,
platforms: the Web, mobile, and social networks. In this chapter, we focus on both small and the mission of TheKnot
medium-sized businesses as well as much larger corporate entities that serve thousands of is to be the Internet’s
customers a day, or even an hour. As you will see, although the scale may be very different, the comprehensive, one-
principles and considerations are basically the same. stop wedding planning solution. WHERE’S THE
3.1 IMAGINE YOUR E-COMMERCE PRESENCE MONEY: BUSINESS AND
Before you begin to build a website or app of your own, there are some important questions you REVENUE MODEL
will need to think about and answer. The answers to these questions will drive the development Once you have defined
and implementation of your e-commerce presence. a mission statement, a vision, you need to start
WHAT’S THE IDEA? (THE VISIONING PROCESS) thinking about where
Before you can plan and actually build an e-commerce presence, you need to have a vision of the money will be
what you hope to accomplish and how you hope to accomplish it. The vision includes not just a coming from. You will
statement of mission, but also identification of the target audience, characterization of the market need to develop a
space, a strategic analysis, a marketing matrix, and a development timeline. It starts with a dream preliminary idea of
of what’s possible, and concludes with a timeline and preliminary budget for development. your business and
If you examine any successful website, you can usually tell from the home page what the revenue models. You
vision that inspires the site is. If the company is a public company, you can often find a succinct don’t need detailed
statement of its vision or mission in the reports it files with the Securities and Exchange revenue and cost
Commission. For Amazon, it’s to become the largest marketplace on earth. For Facebook, it’s to projections at this point.
make the world more open and connected. For Google, it’s to organize the world’s information Instead, you need a
and make it universally accessible and useful. The e-commerce presence you want to build may general idea of how
not have such all-encompassing ambitions, but a succinct statement of mission, purpose, and your business will generate revenues. The
basic choices will be described in Chapter 5. Basic business models include portal, e-tailer,
content provider, transaction broker, market creator, service provider, and community provider (social network).
The basic revenue model alternatives are advertising, subscriptions, transaction fees, sales,
and affiliate revenue. There’s no reason to adopt a single business or revenue model, and in fact,
many firms have multiple models. For instance, the Financial Times digital business model is to
both sell subscriptions and sell ad space. In addition, it sells unique photographs and gifts. At
TheKnot, a vertical portal for the wedding industry, you will find ads, affiliate relationships, and
sponsorships from major creators of wedding products and services, including a directory to
local wedding planners, all of which produce revenue for TheKnot. PetSmart, the most popular
pet website in the United States, has a more focused sales revenue model, and presents itself
almost entirely as an e-tailer of pet supplies. lOMoAR cPSD| 58605085
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WHO AND WHERE IS THE TARGET AUDIENCE?
Without a clear understanding of your target audience, you will not have a successful e-
commerce presence. There are two questions here: who is your target audience and where can
you best reach them? Your target audience can be described in a number of ways: demographics,
behavior patterns (lifestyle), current consumption patterns (online vs. offline purchasing),
digital usage patterns, content creation preferences (blogs, social networks, sites like Pinterest),
and buyer personas (profiles of your typical customer). Understanding the demographics of
your target audience is usually the first step. Demographic information includes age, income,
gender, and location. In some cases, this may be obvious, and in others, much less so. For
instance, Harley-Davidson sells motorcycles to a very broad demographic range of varying
ages, incomes, and locations, from 34-yearolds to 65-year-olds. Although most of the
purchasers are middle-aged men, with middle incomes, many of the men ride with women, and
the Harley-Davidson website has a collection of women’s clothing and several web pages
devoted to women riders. While the majority of men who purchase Harley-Davidsons have
modest incomes, a significant group of purchasers are professionals with above-average
incomes. Hence, the age and income demographic target is quite broad. What ties Harley-
Davidson riders together is not their shared demographics, but their love of the motorcycles and
the brand, and the lifestyle associated with touring the highways of America on a powerful
motorcycle that sounds like a potato popper. In contrast, a company like TheKnot is aimed at
women in the 18-year-old to 34-year-old demographic who are in varying stages of getting
married, with lifestyles that include shopping online, using smartphones and tablets,
downloading apps, and using Facebook. This audience is technologically hip. These women
read and contribute to blogs, comment on forums, and use Pinterest to find ideas for fashion. A
“typical” visitor to TheKnot would be a 28-year-old woman who has an engagement ring, is
just starting the wedding planning process, has an income of $45,000, lives in the Northeast,
and is interested in a beach wedding. There are, of course, other “typical” profiles. For each
profile for your website you will need to develop a detailed description.
WHAT IS THE BALLPARK? CHARACTERIZE THE MARKETPLACE
The chances of your success will depend greatly on the characteristics of the market you are about
to enter, and not just on your entrepreneurial brilliance. Enter into a declining market filled with
strong competitors, and you will multiply your chances of failure. Enter into a market that is
emerging, growing, and has few competitors, and you stand a better chance. Enter a market where
there are no players, and you will either be rewarded handsomely with a profitable monopoly on a
successful product no one else thought of (Apple) or you will be quickly forgotten because there
isn’t a market for your product at this point in time (the Franklin e-book reader circa 1999).
Features of the marketplace to focus on include the demographics of the market and how
an e-commerce presence fits into the market. In addition, you will want to know about the
structure of the market: competitors and substitute products.
What are the features of the marketplace you are about to enter? Is the market growing, or
receding in size? If it’s growing, among which age and income groups? Is the marketplace
shifting from offline to online delivery? If so, is the market moving toward traditional websites,
mobile, and/or tablets? Is there a special role for a mobile presence in this market? What
percentage of your target audience uses a website, smartphone, or tablet? What about social
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the products and services you want to offer on Facebook, Twitter, Pinterest, Instagram, or blogs?
How many blogs focus on products like yours? How many Twitter posts mention similar
offerings? How many Facebook Likes (signs of customer engagement) are attached to products you want to offer?
The structure of the market is described in terms of your direct competitors, suppliers, and
substitute products. You will want to make a list of the top five or ten competitors and try to
describe their market share, and distinguishing characteristics. Some of your competitors may
offer traditional versions of your products, while others will offer new renditions or versions of
products that have new features. You need to find out everything you can about your
competitors. What’s the market buzz on your competitors? How many unique monthly visitors
(UMVs) do they have? How many Facebook Likes, Twitter followers, and/or Pinterest
followers? How are your competitors using social sites and mobile devices as a part of their
online presence. Is there something special you could do with social networks that your
competitors do not? Do a search on customer reviews of their products. You can find online
services (some of them free) that will measure the number of online conversations about your
competitors, and the total share of Internet voice each of your competitors receives. Do your
competitors have a special relationship with their suppliers that you may not have access to?
Exclusive marketing arrangements would be one example of a special supplier relationship.
Finally, are there substitutes for your products and services? For instance, your site may offer
advice to the community of pet owners, but local pet stores or local groups may be a more
trusted source of advice on pets.
WHERE’S THE CONTENT COMING FROM?
Websites are like books: they’re composed of a lot of pages that have content ranging from text,
to graphics, photos, and videos. This content is what search engines catalog as they crawl
through all the new and changed web pages on the Internet. The content is why your customers
visit your site and either purchase things or look at ads that generate revenue for you. Therefore,
the content is the single most important foundation for your revenue and ultimate success.
There are generally two kinds of content: static and dynamic. Static content is text and
images that do not frequently change, such as product descriptions, photos, or text that you
create to share with your visitors. Dynamic content is content that changes regularly, say, daily use the initial website as
or hourly. Dynamic content can be created by you, or increasingly, by bloggers and fans of your a home base and spin-
website and products. User-generated content has a number of advantages: it’s free, it engages off related or nearby
your customer fan base, and search engines are more likely to catalog your site if the content is sites, leveraging the
changing. Other sources of content, especially photos, are external websites that aggregate investment in design
content such as Pinterest, discussed in the closing case study in Chapter 1. and technology. But there are also
KNOW YOURSELF: CONDUCT A SWOT ANALYSIS weaknesses and threats.
A SWOT analysis is a simple but powerful method for strategizing about your business and Lack of financial and
understanding where you should focus your efforts. In a SWOT analysis you describe your human resources are
strengths, weaknesses, opportunities, and threats (SWOT). In the example SWOT analysis in typically the biggest
Figure 3.1, you will see a profile of a typical startup venture that includes a unique approach to weakness of startup
an existing market, a promise of addressing unmet needs in this market, and the use of newer companies. Threats
technologies (social and mobile platforms) that older competitors may have overlooked. There include competitors that
are many opportunities to address a large market with unmet needs, as well as the potential to could develop the same lOMoAR cPSD| 58605085
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capabilities as you, and low market entry costs, which might encourage many more startups to enter the marketplace.
Once you have conducted a SWOT analysis, you can consider ways to overcome your
weaknesses and build on your strengths. For instance, you could consider hiring FIGURE 3.1 SWOT ANALYSIS
A SWOT analysis describes your firm’s strengths, weaknesses, opportunities, and threats. SWOT analysis
describes a firm’s strengths, weaknesses, opportunities, and threats lOMoAR cPSD| 58605085 174
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or partnering to obtain technical and managerial expertise, and looking for financing FIGURE 3.2 E-COMMERCE PRESENCE MAP
opportunities (including friends and relatives).
DEVELOP AN E-COMMERCE PRESENCE MAP
E-commerce has moved from being a PC-centric activity on the Web to a mobile and tablet-
based activity as well. While around 70% of e-commerce retail and travel revenues are still
generated by purchases made from a desktop computer, increasingly smartphones and tablets
are being used for purchasing. Smartphones and tablets are also used by a majority of Internet
users in the United States to shop for goods and services, explore purchase options, look up
prices, and access social sites. Your potential customers use these various devices at different
times during the day, and involve themselves in different conversations depending on what they
are doing—touching base with friends, viewing photos on Instagram, tweeting, or reading a
blog. Each of these are “touch points” where you can meet the customer, and you have to think
about how you develop a presence in these different virtual places. Figure 3.2 provides a
roadmap to the platforms and related activities you will need to think about when developing your e-commerce presence.
Figure 3.2 illustrates three different kinds of e-commerce presence: website/app, social
media, and offline media. For each of these types there are different platforms that you will need
to address. For instance, in the case of websites and/or apps, there are three different platforms:
traditional desktop, tablets, and smartphones, each with different capabilities. And for each type
of e-commerce presence there are related activities An e-commerce presence requires firms to consider the three different kinds of presence, and the platforms and activities associated with each type of presence.
you will need to consider. For instance, in the case of websites and apps, you will want to engage
in search engine marketing, display ads, affiliate programs, and sponsorships. Offline media,
the third type of e-commerce presence, is included here because many firms use multiplatform
or integrated marketing where print, television, or radio ads refer customers to websites and
apps. The marketing activities in Figure 3.2 are described in much greater detail in Chapters 6 and 7.
DEVELOP A TIMELINE: MILESTONES
Where would you like to be a year from now? It’s a good idea for you to have a rough idea of
the time frame for developing your e-commerce presence when you begin. You should break
your project down into a small number of phases that could be completed within a specified
time. Six phases are usually enough detail at this point. Table 3.1 illustrates a one-year timeline
for the development of a startup e-commerce company.
Note that this example timeline defers the development of a mobile plan until after a
website and social media plan have been developed and implemented. There is a growing trend,
however, to flip this timeline around, and begin with a mobile plan instead (sometimes referred lOMoAR cPSD| 58605085
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to as mobile first design). Mobile first design has both advantages and disadvantages that will
be examined more fully in Section 3.6.
HOW MUCH WILL THIS COST?
It’s too early in the process to develop a detailed budget for your e-commerce presence, but it
is a good time to develop a preliminary idea of the costs involved. How much you spend on a
website, for instance, depends on what you want it to do. Simple websites can be built and
hosted with a first-year cost of $5,000 or less if all the work is done in-house by yourself and
others willing to work without pay. A more reasonable budget for a small startup using available
tools and design services such as WordPress might be $10,000 to TABLE 3.1
E-COMMERCE PRESENCE TIMELINE P H A S E A C T I V I T Y M I L E S TO N E Phase 1: Planning
Envision e-commerce presence; determine Mission statement personnel
Phase 2: Website Acquire content; develop a site design; Website plan development arrange for hosting the site Phase 3: Web
Develop keywords and metatags; focus on A functional
implementation search engine optimization; identify potential website sponsors Phase 4: Social media
Identify appropriate social platforms and A social media plan
content for your products and services plan Phase 5: Social media
Develop Facebook, Twitter, and Pinterest Functioning social implementation presence media presence Phase 6: Mobile plan
Develop a mobile plan; consider options for A mobile
plan porting your website to mobile devices lOMoAR cPSD| 58605085 176
C H A P T E R 3 B u i l d i n g a n E - c o m m e r c e P r e s e n c e FIGURE 3.3
COMPONENTS OF A WEBSITE BUDGET
While hardware and software costs have fallen dramatically, websites face significant design,
content development, and marketing costs.
$25,000. Here the firm owner would develop all the content at no cost, and a web designer and
programmer would be hired to implement the initial website. As discussed later, the website
would be hosted on a cloud-based server. The websites of large firms that offer high levels of
interactivity and linkage to corporate systems can cost several hundred thousand to millions of
dollars a year to create and operate. Large firms often outsource their web development and
hosting entirely, although many large firms have recently changed and brought the entire web
effort in-house (see the closing case study, Dick’s Sporting Goods: Taking Control of Its E- commerce Operations).
While how much you spend to build a website depends on how much you can afford, and,
of course, the size of the opportunity, Figure 3.3 provides some idea of the relative size of
various website costs. In general, the cost of hardware, software, and telecommunications for
building and operating a website has fallen dramatically (by over 50%) in the last decade,
making it possible for very small entrepreneurs to build fairly sophisticated sites. At the same
time, while technology has lowered the costs of system development, the costs of marketing,
content development, and design have risen to make up more than half of typical website
budgets. The longer-term costs would also have to include site and system maintenance, which
are not included here. The costs of developing a mobile site and apps are discussed in Section 3.6. lOMoAR cPSD| 58605085
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3.2 BUILDING AN E-COMMERCE PRESENCE: A SYSTEMATIC APPROACH
Once you have developed a vision of the e-commerce presence you want to build, it’s time to
start thinking about how to build and implement that presence. Building a successful lOMoAR cPSD| 58605085 178
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e-commerce presence requires a keen understanding of business, technology, and social issues,
as well as a systematic approach. E-commerce is just too important to be left totally to
technologists and programmers.
The two most important management challenges are (1) developing a clear understanding
of your business objectives and (2) knowing how to choose the right technology to achieve
those objectives. The first challenge requires you to build a plan for developing your firm’s
presence. The second challenge requires you to understand some of the basic elements of e-
commerce infrastructure. Let the business drive the technology.
Even if you decide to outsource the development effort and operation to a service provider,
you will still need to have a development plan and some understanding of the basic e-commerce
infrastructure issues such as cost, capability, and constraints. Without a plan and a knowledge
base, you will not be able to make sound management decisions about e-commerce within your firm.
Let’s assume you are a manager for a medium-sized industrial parts firm in the United
States. You have been given a budget of $100,000 to develop an e-commerce presence for the
firm. The purpose will be to sell and service the firm’s customers, who are mostly small machine
and metal fabricating shops, and to engage your customers through the website, perhaps via a
blog and user forum. Where do you start? In the following sections, we will examine developing
an e-commerce website, and then, at the end of the chapter, discuss some of the more specific
considerations involved in developing a mobile site and building mobile applications.
First, you must be aware of the main areas where you will need to make decisions (see
Figure 3.4). On the organizational and human resources fronts, you will have to bring together
a team of individuals who possess the skill sets needed to build and manage a successful e-
commerce presence. This team will make the key decisions about business objectives and
strategy, technology, design, and social and information policies. The entire development effort
must be closely managed if you hope to avoid the disasters that have occurred at some firms. FIGURE 3.4
FACTORS TO CONSIDER IN DEVELOPING AN E-COMMERCE PRESENCE
Building an e-commerce presence requires that you systematically consider the many factors that go into the process. systems development
methodology for understanding the business objectives of any system and designing an life cycle (SDLC) a appropriate solution lOMoAR cPSD| 58605085
B u i l d i n g a n E - c o m m e r c e P r e s e n c e : A S y s t e m a t i c A p p r o a c h 179 You will also need
methodology for understanding the business objectives of any system and designing an to make decisions
appropriate solution. Adopting a life cycle methodology does not guarantee success, but it is far about hardware,
better than having no plan at all. The SDLC method also helps in creating documents that software, and
communicate objectives, important milestones, and the uses of resources to management. telecommunications
Figure 3.5 illustrates the five major steps involved in the systems development life: infrastructure. The demands of your • Systems analysis/planning customers should drive • Systems design your choices of • Building the system technology. Your • Testing customers will want
• Implementation and maintenance technology that enables them to find what they want easily, FIGURE 3.5
SYSTEMS DEVELOPMENT LIFE CYCLE view the product, purchase the product, and then receive the product from your warehouses quickly. You will also have to carefully consider design. Once you have identified the key decision areas, you will need to think about a plan for developing the project. There are a number of different methodologies for building information systems such as websites. One of the most traditional methods is the systems
Systems Analysis/Planning: Identify Business Objectives, System Functionality, development life
and Information Requirements cycle, described in the following section.
In the systems analysis/planning step of the SDLC, you try to answer the question, “What do
we want this e-commerce site or app to do for our business?” The key point is to let the business THE SYSTEMS
decisions drive the technology, not the reverse. This will ensure that your technology platform DEVELOPMENT
is aligned with your business. We will assume here that you have identified a business strategy LIFE CYCLE
and chosen a business model to achieve your strategic objectives (see Chapter 5). But how do
you translate your strategies, business models, and ideas into a working e-commerce website? The systems
One way to start is to identify the specific business objectives for your site, and then development life
develop a list of system functionalities and information requirements. Business objectives are cycle (SDLC) is a
simply capabilities you want your site to have. lOMoAR cPSD| 58605085 180
C H A P T E R 3 B u i l d i n g a n E - c o m m e r c e P r e s e n c e System manager expect them to do. functionalities are
Table 3.2 describes some basic business objectives, system functionalities, and information types of information
requirements for a typical e-commerce site. As shown in the table, there are ten basic business systems capabilities
objectives that an e-commerce site must deliver. These objectives must be you will need to business objectives achieve your business
capabilities you want your site to have
TABLE 3.2 SYSTEM ANALYSIS: BUSINESS OBJECTIVES, SYSTEM
FUNCTIONALITIES, AND INFORMATION REQUIREMENTS FOR A TYPICAL E- COMMERCE SITE
B U S I N E S S O B J E C T I V ES YS T E M F U N C T I O N A L I T YI N F O R M AT I O N R E Q U I R E M E N T S Display goods Digital catalog
Dynamic text and graphics catalog Provide product information Product database
Product description, stocking numbers, inventory levels (content) Personalize/customize product Customer on-site tracking
Site log for every customer visit; data mining capability to
identify common customer paths and appropriate responses Engage customers in On-site blog; user forums
Software with blogging and community forum conversations functionality Execute a transaction Shopping cart/payment system
Secure credit card clearing; multiple payment options
Accumulate customer information
Customer database Name, address, phone, and e-mail for all customers; online customer registration
Provide after-sale customer Sales database
Customer ID, product, date, payment, shipment date support
Coordinate marketing/advertising Ad server, e-mail server, e-mail, Site behavior log of prospects and customers linked to campaign manager, ad banner
e-mail and banner ad campaigns manager Understand marketing
Site tracking and reporting system
Number of unique visitors, pages visited, products effectiveness
purchased, identified by marketing campaign
Provide production and supplier Inventory management system
Product and inventory levels, supplier ID and contact, links
order quantity data by product objectives. The system functionalities information
types of information systems capabilities you will need to achieve your business objectives requirements for a
information requirements system are the
the information elements that the system must produce in order to achieve the business information elements objectives that the system must produce in order to achieve the business objectives. You will need to provide these lists to system developers and programmers so they know what you as the lOMoAR cPSD| 58605085
B u i l d i n g a n E - c o m m e r c e P r e s e n c e : A S y s t e m a t i c A p p r o a c h 181 system design
greater detail than Table 3.2 indicates. To a large extent, the business objectives of an e- specification
commerce site are not that different from those of an ordinary retail store. The real difference description of the
lies in the system functionalities and information requirements. In an e-commerce site, the main components in
business objectives must be provided entirely in digital form without buildings or salespeople, a system and their
24 hours a day, 7 days a week. relationship to one another logical
System Design: Hardware and Software Platforms design
Once you have identified the business objectives and system functionalities, and have developed describes the flow of information at your e-
a list of precise information requirements, you can begin to consider just how all this commerce site, the
functionality will be delivered. You must come up with a system design specification—a processing functions
description of the main components in the system and their relationship to one another. The that must be
system design itself can be broken down into two components: a logical design and a physical performed, the
design. A logical design includes a data flow diagram that describes the flow of information at databases that will be
your e-commerce site, the processing functions that must be performed, and the databases that used, the security and
will be used. The logical design also includes a description of the security and emergency emergency backup
backup procedures that will be instituted, and the controls that will be used in the system. procedures that will be
A physical design translates the logical design into physical components. For instance, the instituted, and the
physical design details the specific model of server to be purchased, the software to be used, the controls that will be
size of the telecommunications link that will be required, the way the system will be backed up used in the system physical design
and protected from outsiders, and so on. translates the logical
Figure 3.6(a) presents a data flow diagram for a simple high-level logical design for a very
basic website that delivers catalog pages in HTML in response to HTTP requests from the design into physical
client’s browser, while Figure 3.6(b) shows the corresponding physical design. Each of the
main processes can be broken down into lower-level designs that are much more precise in components
identifying exactly how the information flows and what equipment is involved. outsourcing
Building the System: In-house Versus Outsourcing hiring an outside
Once you have a clear idea of both the logical and physical designs for your site, you can begin vendor to provide the
considering how to actually build the site. You have many choices, and much depends on the services you cannot
amount of money you are willing to spend. Choices range from outsourcing everything perform with in-house
(including the actual systems analysis and design) to building everything yourself (in-house). personnel
Outsourcing means that you will hire an outside vendor to provide the services involved in translated into a
building the site rather than using in-house personnel. You also have a second decision to make: description of system
will you host (operate) the site on your firm’s own servers or will you outsource the hosting to functionalities and
a web host provider? These decisions are independent of each other, but they are usually ultimately into a set of
considered at the same time. There are some vendors who will design, build, and host your site, precise information
while others will either build or host (but not both). Figure 3.7 on page 182 illustrates the requirements. The alternatives. specific information requirements for a
Build Your Own versus Outsourcing Let’s take the building decision first. If you elect to system typically are
build your own site, there are a range of options. Unless you are fairly skilled, you should use a defined in much
pre-built template to create the website. For example, Yahoo Small Business provides lOMoAR cPSD| 58605085 182
C H A P T E R 3 B u i l d i n g a n E - c o m m e r c e P r e s e n c e FIGURE 3.6
A LOGICAL AND A PHYSICAL DESIGN FOR A SIMPLE WEBSITE lOMoAR cPSD| 58605085
B u i l d i n g a n E - c o m m e r c e P r e s e n c e : A S y s t e m a t i c A p p r o a c h 183 FIGURE 3.7
CHOICES IN BUILDING AND HOSTING
You have a number of alternatives to consider when building and hosting an e- commerce site.
templates that merely require you to input text, graphics, and other data, as well as the
infrastructure to run a sales-oriented website once it has been created.
If your website is not a sales-oriented site requiring a shopping cart, one of the least lOMoAR cPSD| 58605085 184
C H A P T E R 3 B u i l d i n g a n E - c o m m e r c e P r e s e n c e WordPress
expensive and most widely used site building tools is WordPress. WordPress is a website open source content
development tool with a sophisticated content management system. A content management management and website
system (CMS) is a database software program specifically designed to manage structured and design tool
unstructured data and objects in a website environment. A CMS provides web managers and content management
designers with a centralized control structure to manage website content. WordPress also has system (CMS)
thousands of user-built plug-ins and widgets that you can use to extend the functionality of a organizes, stores,
and website. Websites built in WordPress are treated by search engines like any other website: their
processes website content content is indexed and made available to the entire web community. Revenue-generating ads,
affiliates, and sponsors are the main sources of revenue for WordPress sites. Other similar
website building tools are provided by Google Sites, Wix, Squarespace, and Weebly. While
these are the least costly ways to create a website, you will be limited to the “look and feel” and
functionality provided by the templates and infrastructure supplied by these vendors.
If you want more customization than using a pre-built template can provide and have some
programming experience, you can build the site yourself. Here too, there are a variety of options.
You can choose to build the site truly “from scratch,” coding it using HTML and CSS (see
Chapter 2), and adding interactivity with CGI scripts, JavaScript and other programming tools
(see pages 206–211). You can also use web development tools such as Adobe Dreamweaver CC
and Microsoft Visual Studio, which enable developers to quickly create web pages and
websites,. On a larger, enterprise-wide scale, companies may choose to use top-of-the-line
prepackaged site-building tools such as Sitecore Commerce, which enable them to create a
sophisticated e-commerce presence truly customized to specific needs. Figure 3.8 illustrates
the spectrum of tools available. We will look more closely at the variety of e-commerce software available in Section 3.3.
The decision to build a website on your own has a number of risks. Given the complexity
of features such as shopping carts, credit card authentication and processing, inventory FIGURE 3.8
THE SPECTRUM OF TOOLS FOR BUILDING YOUR OWN E-COMMERCE SITE
management, and order processing, the costs involved are high, as are the risks of doing a poor
job. You will be reinventing what other specialized firms have already built, and your staff may lOMoAR cPSD| 58605085
B u i l d i n g a n E - c o m m e r c e P r e s e n c e : A S y s t e m a t i c A p p r o a c h 185
face a long, difficult learning curve, delaying your entry to market. Your efforts could fail. On the
positive side, you may be better able to build a site that does exactly what you want, and, more
importantly, develop the in-house knowledge to allow you to change the site rapidly if necessary
due to a changing business environment.
If you choose more expensive site-building packages, you will be purchasing state-ofthe
art software that is well tested. You could get to market sooner. However, to make a sound
decision, you will have to evaluate many different packages, and this can take a long time. You
may have to modify the package to fit your business needs and perhaps hire additional outside
vendors to do the modifications. Costs rise rapidly as modifications mount. A $4,000 package
can easily become a $40,000 to $60,000 development project (see Figure 3.9). FIGURE 3.9
COSTS OF CUSTOMIZING E-COMMERCE SOFTWARE PACKAGES
While sophisticated site development software packages appear to reduce costs and increase
speed to market, as the modifications required to fit the package to your business needs rise, costs rise rapidly. co-location when a
had the skilled staff in place and had extensive investments in information technology capital firm purchases or
such as databases and telecommunications). However, as web applications have become more leases a web server
sophisticated, larger retailers today rely heavily on vendors to provide sophisticated website (and has total control
capabilities, while also maintaining a substantial internal staff. Small startups may build their over its operation) but
own sites from scratch using in-house technical personnel in an effort to keep costs low. locates the server in a
Medium-size startups will often purchase a website design and programming expertise from vendor’s physical
vendors. Very small mom-and-pop firms seeking simple storefronts will use templates like facility. The vendor
WordPress. For e-commerce sites, the cost of building has dropped dramatically in the last five maintains the facility,
years, resulting in lower capital requirements for all players. communications lines, and the machinery In the past, bricks-
Host Your Own versus Outsourcing Now let’s look at the hosting decision. Most and-mortar retailers in
businesses choose to outsource hosting and pay a company to host their website, which means need of an e-commerce
that the hosting company is responsible for ensuring the site is “live,” or accessible, 24 hours a site typically designed
day. By agreeing to a monthly fee, the business need not concern itself with many of the the site themselves
technical aspects of setting up a web server and maintaining it, telecommunications links, nor (because they already with staffing needs.