Chapter 3: Online Business Strategies

3.1. Internet Goals

There are 5 goals for Online Businesses and The Strategies to reach them.
Goal 1: Selling Online - The most well known goal for Online Businesses where one is
looking for an extra channel to push your products whether it's make-up, clothes, shoes,
pet products etc.
Strategy: To reach sales targets and reduce shopping cart abandons, you'll need to
focus on an all-in-one eCommerce site complete with catalogs, products, shopping cart,
shipping and a payment gateway and that provides an immersive and seamless
shopping experience. It should not be forgotten to add extras like upselling,
recommended products, product galleries and plenty of credible product information to
help meet your sales and orders targets.
Goal 2: Building Community - this goal applies particularly well to non-profit
organizations like Churches, local Government organizations, Community
organizations, Charities etc - they need to have online conversations/discussions with
their current members and attract new ones.
Strategy: To build an online community, you'd need to nurture a social site with a
discussion forum and post regular news on a blog to keep visitors coming back. Make a
space for photo-uploads to show what's going on in your community, post podcasts of
speeches or presentations for your visitors to download in a members-only area. Make
sure members know about your site and that they contribute as well!

Goal 3: Automating Customer Service - are you spending a large part of your day
getting interrupted by customer care phone calls instead of working on your business?
You need an Online Business to be automating some of that for you.
Strategy: Some simple ways to build a online self-help portal you would be to build a
highly customized webform that qualifies your customers requests before they reach
you. It would be good to focus on publishing a well organized FAQ page and direct
customers to how-to and do-it-yourself articles on your site that you've published before

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they ask for live help. Not only is this good for your customers but it's good for search-
engine optimization too!!
Goal 4: Generating New Leads - if you're a business that's selling high-value high-
margin products (especially in the B2B arena) and you're having a tough time with the
cold-calling and outbound marketing then you need your Online Business to be
generating leads.
Strategy: A bit like automating customer service, you'll need customized webforms that
qualify sales with questions such as: what products is the customer interested in? Price-
range? Intended purchase period? Focus on publishing high quality information on your
products and your services (features, price, value proposition) with calls-to-action to
make an inquiry after which you can follow-up with a phone call. Set aside space to
publish customer testimonials and positive customer feedback, websites make it easier
for your customers to refer you onwards because they just pass your URL to your
friends.

Goal 5: Amplifying Voice - need to get your message out there at minimal cost.
Strategy: You need to focus on email marketing and blogs. Does your site have a
incentivized email subscription box like a "Sign-up Here for our monthly specials?" or a
"Sign-Up Here for our 5-part email series on recession proofing your small business".
This will get you visitors opting-in to receive communications from you which you need
to follow up with email-marketing. Too much push-marketing for you? Don't forget you
can use your blog to publish material and pull visitors as well by posting your blog
headlines on small and niche blog/news-aggregators and slowly building up from there!

3.2. Internet Presence

What is “Internet presence”?
“Internet presence” is a new term to describe everything related to the way you and your
business appear online. Internet presence includes the basics – like your website – but
it also includes what people are saying about you (called “online reputation”), whether or
not you appear prominently when people search for the product or service that you

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offer, how you appear compared with your competitors, whether or not you’re getting
new business leads from the Internet, and more.
Why is Internet presence important?
Internet presence is important because, today, individuals increasingly make buying
decisions based on what they discover online. Even if they are referred to you,
prospects are likely to use the Internet to find out more about you and your company
before choosing to do business with you.
A positive Internet presence increases the likelihood that prospects will find you and
choose to do business with you, while a negative Internet presence means they either
won’t find you, or they’ll choose to do business with your competitor. If you’re not getting
new business leads as a result of your Internet presence, it means that your competitor
is getting them instead of you.
How do we improve your Internet presence?
Internet presence can be improved by systematically working on all of these essential
building-blocks:
1. Social Media. Identify the most effective social media platform(s) for the
business and the kind of people you’re trying to reach, by uncovering your hidden
“buyer personas”. Then Social Media Butterflies completely manage those
platforms for you, by creating content through which you and your business can
engage with your clients and prospects.
2. Reputation Management. Manage your online reputation by monitoring the
Internet for reviews or mentions of your business, and learn techniques for
encouraging clients to review your business favorably. Create an abundance of
positive material online about you and your business.
3. SERP (Search Engine Results Page) Analysis. Analyze and improve the way
your business looks on search engine results pages by influencing what the
search engines say about you in their listings.
4. Online Directory Listings. Place your business into the major online directories
and monitor your appearance there, including Google Places for Business, Yelp,
Open Directory Project, Manta, and more.

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 5. Vendor/Partner Reciprocity. Search for opportunities to link your website to the
vendors and partners that you work with, thereby increasing inbound links and
traffic to your website.
6. Analytics. Install a comprehensive suite of website analytics to monitor your
website and the behavior of people who visit, to help ensure that you are getting
found and to increase the amount of time visitors spend on your website.
7. Compatibility. Regularly check your Internet presence against new versions of
web browsers as they are released, and new hand-held devices (such as
smartphones and tablets) to make certain that you are visible and looking great
to everyone online.

3.3. Direct Selling Model

A direct sales business model involves the marketing of a product or service directly to
the customer without the use of advertising, distribution or retail outlets. A direct-selling
approach utilizes a sales staff that employs personal demonstrations and presentations
to explain the uses of potentially complicated or involved services.

While nearly all direct selling companies such as Avon or Pampered Chef have online
stores, are consumers still attending and hosting parties and purchasing products from
consultants? Or, is the home party business model that directs selling was built on
becoming the equivalent of an in-car cassette player—near extinction? Here are three
reasons why direct selling organizations will continue to thrive even in the face of
online shopping:
1. Relationships Can’t Be Formed with Websites
While online shopping is becoming more and more popular, relationships—both with the
friends and family they attend a party with and with the consultant—continue to be a
driver of consumers holding at-home parties. Seventy-four percent of US adults have
purchased products from a direct seller. Having a party is an experience. It can be a

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great excuse to spend time with people you care about, in addition to shopping from the
comfort of your (or a friend’s) home.
There’s also the perk of persona attention. If it’s a Pampered Chef party, for example,
the consultant can recommend specific cooking tools to use to create a specific recipe;
if it’s an Origami Owl party, the designer will show you several different ways to wear a
single piece of jewelry. While the consumer can buy these products online, in person
they can receive education, a demonstration and a personal recommendation.
2. Trust: A Key Component of the Direct Selling Model
Some types of products, such as nutritional products, are a prime example of a
purchase that consumers are far more likely to move forward with when the
recommendation comes from someone they can trust.
According to Nielsen, 92% of consumers trust recommendations from people they
know. McKinsey adds that word of mouth recommendations are the primary factor
behind 20 to 50% of all purchasing decisions. It stands to reason then, that even if a
consumer has not heard about a particular product, if a person they trust invites them to
a party to learn more, they will likely attend with an open mind to be a part of the food
and the fun and to see what this brand is all about.
In addition to trusting the product recommendations of friends and family, the majority of
consultants already use the products that they demonstrate and love them. Consultants
know that they will be more successful if they have a passion for the product. Many
look at parties as a chance to channel that passion to new and existing customers to
build long-term relationships versus making quick sales. For the hosts of the parties
(many of whom are already product advocates), holding parties affords the opportunity
to get rewards—read: free products.
For some brands, the party model will continue strong even amidst consumer affinity for
making online purchases. For others, staying competitive in the direct selling industry
requires a shake up in the direct sales business model.
3. New Direct Selling Business Models Emerge to Stay Relevant
For Beachbody, the parent company of the popular P90X and Insanity workouts,
infomercials are used to sell DVDs but also as a lead capture/sourcing point. Customers

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who purchase the DVDs and meet certain criteria are being fed back to consultants
(known as “coaches”) who then motivate and support the customer’s success on their
program and can also receive commission on the sales of additional home fitness
programs and supplements such as Shakeology, a meal replacement drink, to these
customers. The coaches earn commission for sales of supplements and additional
home fitness programs.
So, to answer the original question, the direct selling industry is not dead or dying. The
foundation for the party model will support it into the foreseeable future, but it does need
to keep a keen eye on marketplace trends which dictate how people like to consume
product information and buy products so that direct sales models can evolve to keep
pace. New tools will continue to be leveraged, like UStream for parties that are held as
a broadcast versus in person and LeapFactor, a tool used to make party catalogs
available on mobile devices. It will be interesting to re-visit this argument again as the
next generation, who grew up on iPads, texting and Facebook evolves the direct sales
model. And so the story continues.

3.4. Internet Retailing

For generations, home shopping from catalogs has flourished, and television shopping
channels have been attracting millions of shoppers for more than a decade. However,
these methods have drawbacks: Paper catalogs are sometimes inaccurate, and
television shopping is limited to what is shown on the screen. Also, many people are
troubled by the waste of paper used in catalogs that just get tossed out.

Like any mail-order shopping experience, e-commerce enables you to buy from home,
24 hours a day, 7 days a week. But EC overcomes some of the limitations of the other
forms of home shopping. It offers a wide variety of products and services, including the
most unique items, usually at lower prices. Furthermore, within seconds, you can get
very detailed information on products, and you can easily search for and compare
competitors’ products and prices. Electronic retailing (e-tailing) is the direct sale of

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products through electronic storefronts or electronic malls, usually designed around
an electronic catalog format and/or auctions.

A. Electronic storefronts. Hundreds of thousands of solo storefronts can be found

on the Internet, each with its own Internet name and Web site. Electronic
storefronts may be an extension of physical stores such as Home Depot, The
Sharper Image, or Wal-Mart. Others are new businesses started by
entrepreneurs who saw a niche on the Web. Examples of these are
Amazon.com, CDNow, Peapod, and Virtual Vineyards, (described at the book’s
Web site).

There are two types of storefronts, general and specialized. The latter sell one or new
products (e.g.flowers, wines, or dog toys). The general storefronts sell many products.
Goods that are bought most often are computers and computer-related items, books
and magazines, CDs, cassettes, movies and videos, clothing and shoes, toys, and food.
Services that are bought most often online include travel services, stocks and bonds
trading, electronic banking, insurance, and job matching. Directories and hyperlinks
from other Web sites and intelligent search agents help buyers find the best stores and
products to match their needs. Storefronts may or may not be affiliated with electronic
malls.

B. Electronic malls. An electronic mall, also known as a cybermall or e-mall, is a

collection of individual shops under one Internet address. The basic idea of an
electronic mall is the same as that of a regular shopping mall—to provide a one-
stop shopping place that offers many products and services. Representative
cybermalls are Downtown Anywhere (da.awa.com), HandCrafters Mall
(rocksworld.com), America’s Choice Mall (mall.choicemall.com), and Shopping
2000 (shopping2000.com).

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As is true for vendors that locate in a physical shopping mall, a vendor that locates in an
e-mall gives up a certain amount of independence. Its success depends on the
popularity of the mall, as well as on its own marketing efforts. On the other hand, malls
generate streams of prospective customers who otherwise might never have stopped by
the store. Each cybermall may include thousands of vendors. For example,
shopping.yahoo.com and eshop.msn.com include tens of thousands of products from
thousands of vendors.

Issues in e-tailing
The following are the major issues faced by e-tailers:
• Channel conflict. If the seller is a click-and-mortar company, it may face a conflict
with its regular distributors when it sells directly online. Known as channel conflict, this
situation can alienate the regular distributors and has forced some companies (e.g.,
lego.com) to limit their B2C efforts; others (e.g., automotive companies) have decided
not to sell direct online. However, a better approach is to try to collaborate in some way
with the existing distributors whose services may be restructured.

• Order fulfillment. E-tailers face a difficult problem of shipping very small quantities to
a large number of buyers. This can be expensive, especially when returned items need
to be handled.
•Viability of online e-tailers. Most of the purely online e-tailers (excluding service
industries) were unable to survive and folded in 2000–2002. Companies had problems
with customer acquisition, order fulfillment, and forecasting demand. Online competition,
especially in commodity-type products such as CDs, toys, books, or groceries, became
very fierce, due to the ease of entry to the marketplace.

• Conflicts within click-and-mortar organizations. When an established company

decides to sell direct online, on a large scale, it may create a conflict within its existing
operation. Conflict may arise in areas such as pricing of products and services,
allocation of resources (e.g., advertising budget) and logistics services provided to the

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online activities by the offline activities (e.g., handling of returned items purchased
online). As a result of these conflicts, some companies have completely separated the
“clicks” (the online portion of the organization) from the “mortars” (the traditional brick-
and-mortar part of the organization). This may increase expenses and reduce the
synergy between the two.

• Lack of funding. The so-called dot-com companies enjoyed almost unlimited funding
between 1995 and 1998. After “burning” lots of money and being unable to generate
profits quickly, the sources of funding dried up, resulting in many bankruptcies.
• Incorrect revenue models. Many dot-com companies were selling at or below cost
with the objective of attracting many customers as well as advertisers to their sites.
The idea was to generate enough revenue from advertising. This model did not work.
Too many dot-com companies were competing on too few advertising dollars, which
went mainly to a small number of well-known sites such as AOL and Yahoo!

3.5. Internet Marketplaces

A Marketplace is an ecommerce platform that enables Individuals as well as Business
to either list their items for sale or set up online storefonts on the marketplace platform
and leverage the platform and its services [search, viewing product information, buying,
payment, order management etc
What does a marketplace do? In order to facilitate conduct of trade, a marketplace
may support any or all phases in the lifecycle of a transaction. It may be useful to
organize commerce activities into three stages, representing the fundamental steps that
parties must go through in order to conduct a transaction.
1. The Connection: searching for and discovering the opportunity to engage in a
commercial interaction.
2. The Deal: negotiating and agreeing to terms.
3. The Exchange: executing a transaction.

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Recently, the idea of Internet Marketplaces has been proposed as a new form of
making data and computational services available to a broad public. Like in a traditional
marketplace these services are made available by providers and can be purchased by
customers. In contrast to traditional marketplaces, however, customers do not receive a
personal copy but pay for the use of the service. The Internet is hereby used as a
communication medium for both requesting and delivering the service. This is a very
important difference to on-line shopping over the Internet or electronic commerce,
where the Internet is typically only used to initiate a service request and the actually
delivery is by, for example, surface mail.

Having a private online store usually is a great idea, but is in no way a simple and
effortless experience. For a small or medium business, especially if you’re just starting
it, selling on online marketplaces might be an easier and quicker way to achieve profit.
In this series of articles, we will briefly describe each of the major marketplaces on the
Internet to help you understand their difference. So let’s start with the advantages and
disadvantages of three of the largest marketplaces on the Internet – Amazon, eBay and
Etsy.
Amazon – the Big Dog
Amazon is the world’s largest online retailer and it’s been online for nearly 20 years, so
they have enormous experience and expertise in e-commerce. It was started as an
online bookstore but soon extended its activity, letting everyone use their platform to sell
almost anything they want… for a fee, of course.
Pros:
1. Unmatched traffic. Amazon.com is the fifth most visited website in the United
States, so you can only imagine what kind of selling possibilities it provides. The
number of merchants is large as well though, so you have to constantly look for
ways to stand out from the crowd.
2. Reliable platform. The Amazon’s system prevents possible fraud from
customers and ensures them of their order’s safety as well. This two-way security
brings additional trust – most people tend to use well known marketplaces such

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 as Amazon as it’s generally considered to be safer than smaller competitors or
private online stores.
3. Straightforward cost system. Selling on your own online store might inflate the
marketing costs to heights you wouldn’t have ever expected and it’s not easy at
all to determine future profits. Amazon, on the other hand, collects a fee for each
item sold, usually a percentage of the price – and that’s pretty much it.
Cons:
1. Major competition. Amazon has a lot of merchants you’ll have to compete with.
Even if you manage to outsmart them all, there’s nothing that would stop the
marketplace from identifying that your products are profitable and offering them
to the customers itself. At better price and better conditions, of course.
2. Withholding your money. Depending on the situation, you won’t get your
money for 14 to 90 days after selling an item. For smaller sellers, it might cause
some difficulties of running business.
3. Rarely a second chance. There are numerous cases when Amazon closes a
merchant’s store without any obvious reasons. Just a couple of negative reviews
can evoke substantial problems, even though they make up only a small
percentage of all your customers. The only way to completely avoid this is to
satisfy every single customer, which might prove to be rather difficult.
eBay – the Ultimate Online Auction
A contemporary to Amazon, eBay has similar presence on the internet, but the business
model is slightly different. The largest C2C (consumer to consumer) marketplace on the
internet, it provides a possibility to sell nearly anything you want by setting up an auction
as well as by a fixed price.
Pros:
1. Plenty of potential customers. eBay.com ranks as the 7th most visited website
in the United States, and most of these visitors can become your customers if
you know how to reach them.
2. The auction system. If you’re selling rare or unique items, the auction system
might prove to be your best friend, as the price can inflate to unexpected levels. If

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 your merchandise is widely available, selling with a fixed price might prove to be
a better choice though.
3. Increased trust. eBay has anti-fraud systems in place, increasing the confidence
of customers, as they are ensured they’ll get their money back if they don’t
receive exactly what they ordered. This usually leads to increased sales, as trust
is one of the most important issues when buying online.
Cons:
1. The dominance of PayPal. eBay requires that all transactions are made through
PayPal. While this increases security of both parties, it might cause some
unexpected problems which can range from withholding your earnings for a long
time to an overall closure of your account.
2. Counterfeit items. If you’re selling items that can be easily counterfeited, such
as perfumes, clothes and other branded merchandise, you might find some
competition that offers the same items for a much lower price. They are almost
certainly fake, but they can easily get lost in the ocean of products offered on
eBay, resulting in you losing potential customers.
3. The auction system. Yes, it’s one of the main advantages of this selling system,
but have in mind that if your items are easily accessible, you shouldn’t expect
extensive bid wars on them. This might make you lose some profits you may gain
in other marketplaces.
Etsy – the Leading Marketplace for Hand-Crafted Goods
A fairly new marketplace which was started in 2005, Etsy was created as a meeting
place between those who produce handmade merchandise or want to sell vintage items
that are at least 20 years old and those who are looking to buy such items.
Pros:
1. The audience. The visitors of Etsy.com usually know what they’re looking for
and have a little more sophisticated taste than the ones of the previous
marketplaces. This might lead to additional sales if you produce your own goods
or have something really stylish to sell.

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 2. Customization of the store. Etsy has probably the most beautiful interface for
your store and you can craft it to suit your (and your customers’) needs the best.
A good home page of your store on Etsy could be that little something that brings
extra sales.
3. A good place for starters. If you’re an aspiring designer or manufacturer of
unique, hand-made items, this might be the best marketplace to start selling. It
won’t overwhelm you with its vastness as eBay and Amazon would, and again,
the people here are usually looking for something different, so it’s a great place
to shine.
Cons:
1. Lesser amount of customers. Etsy is not as popular as its major competitors,
although it still is near the top 50 of the most visited websites in the USA,
showing considerable growth in recent years.
2. Limited range. If you don’t sell vintage or hand-made items, you can’t sell on
Etsy – it’s simple as that. Therefore if your products don’t fall in these categories,
you should look for other marketplaces to do your business in.
3. Lots of talent. If you don’t create something that is high quality as well as
different from the others, you might face some difficulties selling in this
marketplace, as there are lots of very talented sellers who don’t raise their prices
to unaffordable levels. There’s always the all-important area of marketing though,
so everything is possible.

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