E Commerce - Using the Internet to Grow your Business

There are many different ways of using the Internet to your advantage. It is a highly cost-effective business tool if used correctly and is a great way of reaching thousands of potential customers at just a click of a button.

If you can create a product that is universally in demand and accessible through the Internet, then you are on to a winner.

Here are just a few ideas of how the Internet can be used to a commercial advantage:

• With the Internet, you are able to obtain up-to-date quality sales opportunities not readily available elsewhere. Fast changing industries such as the fashion business can gain immensely, by finding out about the latest trends, what the market is buying and being able to respond to it before their competitors.

• Those businesses who mail out to many different organisations can gain financially. With post, or even fax, you pay for each separate mailing or call. With electronic mail, the cost of sending to 50 addresses is about the equivalent of sending to 5 companies via Royal Mail.

• Imagine a magazine publisher with journalists in different towns. At present, each journalist types the copy, then faxes or posts it to the office where it is passed to the sub-editor who amends it before it is retyped and made up into pages. With the Internet, each journalist types the story, mails it electronically by email to the sub-editor who amends it onscreen and passes the computer file to be automatically formatted and made up into pages. No retyping or associated errors. No faxes being lost on people’s desks. There is nothing lost in the post and it doesn’t take three days to get there. You can also automatically check the work for spelling and grammar errors if you want to. Examples of highly successful Internet business are: Google, Friends Reunited and eBay etc.

• With the introduction of pay-per-click advertising, new businesses with little or no experience can sell products straight away.

• There are very few overheads involved. To start your Internet business you do not need a flash office or lots of employees. Many people earn in excess of £1,000,000 per year by selling goods on eBay! Many of them do this in their spare time.

More and more businesses are using the Internet as a place within which they can both advertise and sell. The great thing about the Internet is that it is fast, easy to use, the number of users is growing every year, your overheads are low and you don’t have to directly interact with the customer.

Many people are setting up businesses from their homes and it is possible to make a fortune by simply trading on the Internet from the comfort of your own home. Friends Reunited was initially set up from home by a couple who wanted to find a way to contact old school friends. They recently sold a percentage of the business for £30,000,000 and still retained a stake in the company.

The Basic Benefits of E-Commerce

The benefits of e-commerce include:

• Increased sales – this is the first thing that people consider when dealing with e-commerce;

• Decreased costs – your overheads are low;

• Increased profits – due to the fact that your overheads are low;

• The size of your market expands from regional to national or national to international;

• You can reach a specific target audience through pay-per-click advertising.

Internet Terminology

The Internet is rife with different terminology. Here are a few terms to help you along with their basic definition:

URL

Definition: When you go to a web page, the URL of that page is everything that is showing up in the address window of your browser including the http:// and all that comes after it.

Also Known As: Uniform Resource Locator or website address.

Domain name

Definition: The main part of the address of a website. This must be purchased and can be used by you if you own it or rent it.
Also Known As: Website address or URL.

Blog or Web Log

Definition: A blog (short for “web log”) is a type of web page that serves as a publicly accessible personal journal (or log) for an individual. Typically updated daily, blogs often reflect the personality of the author.

Browse

Definition: To follow links in a page, to shop around in a page, exploring what’s there, a bit like window shopping. Browsing a web page is different from searching it. When you search a page, you find a search box, enter terms, and find all occurrences of the terms throughout the site. When you browse, you have to guess which words on the page pertain to your interests. Searching is usually more efficient, but sometimes you find things by browsing that you might not find by searching because you might not think of the “right” term to search by.

Browsers

Definition: Browsers are software programs that enable you to view www documents. They “translate” HTML-encoded files into the text, images, sounds and other features you see.

Cache

Definition: In browsers, “cache” is used to identify a space where web pages you have visited are stored in your computer. A copy of documents you retrieve is stored in cache.

Case sensitive

Definition: Capital letters (upper case) retrieve only upper case. Most search tools are not case sensitive or only respond to initial capitals, as in proper names. It is always safe to key all lower case (no capitals), because lower case will always retrieve upper case.

Cookie

Definition: A message from a web server computer, sent to and stored by your browser on your computer. When your computer consults the originating server computer, the cookie is sent back to the server, allowing it to respond to you according to the cookie’s contents. The main use for cookies is to provide customised web pages according to a profile of your interests.

Download

Definition: To copy something from a primary source to a more peripheral one, as in saving something found on the Web (currently located on a server) to a disk or a file on your local hard drive.

Favourites

Definition: In the Internet Explorer browser, a means to get back to a URL you like, similar to Bookmarks.

FTP

Definition: File Transfer Protocol. Ability to rapidly transfer entire files from one computer to another, intact for viewing or other purposes.

Host

Definition: A computer that provides web documents to clients or users.

HTML

Definition: Hypertext Markup Language. A standardised language of computer code, imbedded in “source” documents behind all web documents, containing the textual content, images, links to other documents (and possibly other applications such as sound or motion), and formatting instructions for display on the screen. When you view a web page, you are looking at the product of this code working behind the scenes in conjunction with your browser. Browsers are programmed to interpret HTML for display.

Internet

Definition: The vast collection of interconnected networks that all use the TCP/IP protocols and that evolved from the ARPANET of the late 60s and early 70s. Note, “internet” (with a lower case “I”) refers to any computers that are connected to each other (a network), and are not part of the Internet unless they use TCP/IP protocols. An “intranet” is a private network inside a company or organisation that uses the same kinds of software that you would find on the public Internet, but that is only for internal use. An intranet may be on the Internet or may simply be a network.

IP Address or IP Number

Definition: (Internet Protocol number or address). A unique number consisting of 4 parts separated by dots, e.g. 165.113.245.2

Every machine that is on the Internet has a unique IP address. If a machine does not have an IP number, it is not really on the Internet. Most machines also have one or more Domain Names, which are easier for people to remember.

Purchasing a Web Domain Name

The first step to getting started on the Internet is to purchase and register a domain name. A domain name is the text name corresponding to the numeric IP address of a computer on the Internet. A domain name must be unique. Internet users access your website using your domain name.

A domain name is basically the main part of the address of a website.

For example, How2become’s domain name is: www.how2become.co.uk. You can purchase many different domain names, each with a different ‘level’ name. For example .com (commercial) is a generic top-level domain (TLD) used on the Internet’s Domain Name System. It was one of the original top-level domains, established in January 1985, and has grown to be the largest TLD in use. It is consistently pronounced as a word, dot-com, and has entered the common language this way. Although .com domains are officially intended to designate commercial entities (others such as government agencies or educational institutions have different top-level domains assigned to them), there has been no restriction on who can register .com domains since the mid-1990s.

Examples of domain names:

.ac.uk - academic (tertiary education and research establishments) and learned societies;
.co.uk - commercial/general;
.gov.uk - government (central and local);
.ltd.uk - limited companies;
.me.uk - personal;
.mod.uk - Ministry of Defence and HM Forces public sites;
.net.uk - ISPs and network companies;
.nic.uk - network use only;
.nhs.uk - National Health Service institutions;
.org.uk - non-profit organisations and charities;
.plc.uk - public limited companies;
.police.uk - police forces;
.sch.uk - schools (primary and secondary education).

The choice of domain name for your business is totally down to you. One of the important things to remember is that it should be catchy and easy to remember. Try to think of a good name for your website.

Purchasing a Web Domain Name

Once you have decided on your domain name you need to see whether it is available to purchase. The Internet has been operating for many years and you may find that someone has already registered the name you are after.

There have been examples of top tier domain names selling for tens and even hundreds of thousands of pounds. My advice to anyone who is starting out in business is to buy a domain name that is available for a low annual cost. Most .co.uk domain names can be purchased for around £1.99 per year. The .com version of domain names can cost anything up to £10 per year.

There are many different web hosting sites where you can search for, and purchase domain names.

Here is a list of some of the more commonly used web hosting sites:

www.oneandone.co.uk

www.reg-123.co.uk

www.webfusion.co.uk

To search for a domain name is simple. Just enter the name of your chosen domain into the search bar on any hosting site and it will tell you if it is available or not.

Hosting

The World Wide Web is a massive collection of websites, all hosted on computers (called web servers) all over the world. The web server (computer) where your website’s html files, graphics etc reside is known as the web host. Web hosting clients simply upload their websites to a shared (or dedicated) web server, which the ISP maintains to ensure a constant, fast connection to the Internet. You will find that most domain registration companies will also provide web hosting for you at a low annual fee.

Building a website

Whether your business warrants a website or not only you can decide. Before you make your decision it is worth bearing in mind that more and more people are using the Internet each year. Internet traffic is growing every day, which means you could, as a result of this, gain more customers to your site.

Whether you are going to trade on the Internet or not I would still advise that you get yourself a website. You can then direct customers to your site and keep them informed of all services and products you are selling. Customers can also have easy access to your contact/address details and can be kept up to date of your products and services via a weekly or monthly newsletter.

The biggest decision you will be likely to make is who to get to create your website. You may decide to do it yourself and there are many web hosting companies, such as www.oneandone.co.uk, who will provide you with a complete web creation package. I would only recommend you build your own website if you have knowledge of such systems as, speaking from personal experience, it can be extremely frustrating if you don’t.

Paying someone else to build your website

There are literally hundreds of companies out there who will create your website for you, all at different costs. If you are going to be selling a product via the Internet then it is certainly worth considering paying a professional company to do the work for you. However, before you part with your money make sure you pay them a visit first and ask them questions about the service they can provide you. It is also worth getting a ‘branding session’ with the company so that they can get a feel for what type of service you are hoping to provide. Whilst they are the web design specialists, you are the person who knows what you want. Here are some of the more important questions you may wish to ask a web designer before you agree to a contract:

• What timescale will my website be completed within and will there be a contract to back this up?

• Are there any ‘hidden costs’ that I need to take into consideration?

• How qualified is the web designer?

• Will he/she keep me updated of any progress?

• What is the turnaround time and cost for any future alterations?

Here is a list of companies who offer web design solutions. 

www.enginecreative.co.uk

www.wisdom.co.uk

Other web designers:

www.webcreationuk.com

www.evolutiadesign.co.uk

www.cj-design.com/

You can also search for a UK web designer by visiting the following sites:

www.ukwda.org/

www.web-design-directory-uk.co.uk/

Internet Advertising

Once you have your website you will want to direct traffic to it. Traffic is another term for visitors. If you are selling your product predominantly via the Internet then you will definitely need traffic. Don’t expect people to find your website just because you have one. You have to go out there and advertise the fact that you have a website and there are a number of ways in which you can do this:

Search Engines

Major search engine sites such as Google, Yahoo, Altavista, MSN, Ask and Miva are widely used by the Internet user. Google accounts for 70% of all usage and is therefore the most profitable of all the search engines. A search engine does exactly what it says – ‘searches’. The user of the site types in a word or phrase and the search engine provides him or her with a number of choices. Some of those choices are provided by the means of natural listings and the remainder by sponsored links.

Natural Search Listings

Natural search listings are those listings that appear at the discretion of the search engines and that do not incur a charge to the listed site. In most search engines, these are the “main” results.

Search Engine Optimisation

Search Engine Optimisation (SEO) is the process of increasing the amount of visitors to a website by ranking high in the natural search listings of a search engine (see previous page).

The higher a website ranks in the results of a search, the greater the chance that site will be visited by a user. It is common practice for Internet users not to click through pages and pages of search results, so where a site ranks in a search is essential for directing more traffic toward the site. SEO helps to ensure that a site is accessible to a search engine and improves the chances that the site will be found by the search engine.

Many web developers are skilled in SEO and will be able to provide you this service at a cost. An example of a web developer who specialises in SEO is www.wisdom.co.uk or www.enginecreative.co.uk.

Sponsored Links

Sponsored links are basically a form of ‘paid advertising’ on Internet search engines such as Google, Yahoo or MSN. They are predominantly text based ads appearing at the very top and on the right hand side of search engine results. How far up you appear on the listings of a search engine will be dependant on both the search engine’s own criteria, how well your adverts perform and how much you are willing to pay each time somebody clicks on your advert.

With pay-per-click advertising you create your own ads and choose keywords, which are words or phrases related to your business. When people search on a search engine using one of your keywords, your ad may appear next to the search results. The beauty of this method is that you are now advertising to an audience that’s already interested in your business. People can simply click your ad to learn more about you, and hopefully make a purchase.

The problem you have to overcome with this method is getting people to actually buy your product after they have clicked through to your site.

Google vs Other Search Engines

The major advantage of Google as a means of ‘paid for advertising’ is that approximately 70% of all Internet search engine users actually use Google as their first choice. With Google you will get more traffic to your site as there are more users. In terms of sponsored links Google rewards those advertisers who have a high click through rate (CTR) compared to their competitors. The click through rate is the number of clicks on an advert divided by the number of times it was displayed (impressions) and is presented as a percentage. For example, if there are 100 impressions of the keyword ‘wedding’ and your advert is clicked through 10 times out of the 100 impressions, your click through rate would be 10%. If your competitors have a click through rate that is less than yours, your advert will move higher up the listing. Basically, the higher up the listing you go the more clicks you will get. The aim is to get to the top!

However, the majority of other search engines such as Yahoo base their sponsored search listings on how much an advertiser is prepared to pay, per click. The click through rate does not come into it. The advantage with Yahoo over Google is that you can see what your competitors are bidding per click, therefore enabling you to outbid them and move up the rankings if you can afford to.

Make sure your adverts are relevant

By this we mean make sure they are relevant to the words and phrases you are bidding on.

For example, if you are selling golf equipment you would not want to bid on the phrase ‘Fire Brigade’. Instead you would want to bid on keyword phrases such as ‘golf equipment’ or ‘golf clubs’ etc.

Make your adverts match the phrase or keyword you are bidding on. A good trick used by many experienced pay-per-click advertisers is to match the advert with the phrase or keyword you are bidding on. By doing this you are more likely to increase your click through rate and therefore get more traffic to your site for less money.

Test the market first

If you decide to sell your product via Internet search engines, make sure you test the market before you start spending out hundreds of pounds on your advertising campaigns.

One of the biggest mistakes people make when advertising through sponsored links is that they waste money when starting out. They want their ads to be right at the top of the tree and are prepared to pay heavily for it.

It is far better to bid at a low price initially and test your adverts to see if they create a good click through rate. If the click through rate is good and you are not selling anything then you may need to make some changes to either your product or your website in order to change this situation.

Do not bid high prices on your adverts before you know that you have a product that people want to purchase. It is pointless spending £8 on advertising for every product that you sell for £5 as you would be losing £3 per sale!

Start your bids low and only increase them once you know that your product sells.

To move onto the next section of the Business Start Up Course, entitled 'Business Marketing Tips', please click here.