E-Commerce and Magazines: Programs and Ideas that Work

1. E-Commerce and Magazines: Programs and Ideas that Work presented by: David Strom Port Washington NY USA david@strom.com, +1 (516) 944-3407 Strom MPA NY 12/00

2. What This Course is Not About • Mathematics of Public Key Cryptography • In-depth discussion of Visa® and MasterCard® operating regulations for eCommerce • Legal advice for eCommerce issues related to operating a web storefront • Writing your own storefront systems from scratch Strom MPA NY 12/00

3. Why This Tutorial • A successful magazine must incorporate and coordinate print and web editions • Any web site will eventually get involved in selling something online • Good storefront design and tactics will increase sales • Tough to evaluate various payment systems and products • Tough to stay on top of current eCommerce technologies and still run your publication! Strom MPA NY 12/00

4. For Future Reference • Copy of this presentation (Powerpoint), links to sites and resources: www.strom.com/pubwork/ecommerce Strom MPA NY 12/00

5. Course Topics • Good and bad web storefront design, defining successful and secure eCommerce ventures • What are the things a magazine person should know about eCommerce and web publishing? • Overview of working Internet payment systems • Choosing service providers or suites • Installing and operating your own magazine web site Strom MPA NY 12/00

6. Course Approach • Overview of major payment systems and storefront products • Give real-life examples and online demos • Help relate information to your own situation • Provide insight into different approaches, technologies • Discuss pros and cons of each • Multiple Q&A sessions Strom MPA NY 12/00

7. Recommended Books • Magdalena Yesil's Creating the Virtual Store : Taking Your Web Site from Browsing to Buying (1997) • Dan and Emma Minoli's Web Commerce Technology Handbook (1998) • Phil Greenspun's Database Backed Web Sites Strom MPA NY 12/00

8. Thanks • Marshall Rose • Stephanie Denny • … for their help in preparing this presentation Strom MPA NY 12/00

9. My Background • I’ve been involved in the Internet for some time • Have used most of the products we demonstrate • Have consulted to a few of the vendors, but still have strong opinions • Founding editor-in-chief of Network Computing magazine • Built several hi-tech publishing web sites Strom MPA NY 12/00

10. My Beliefs • My perspective is from the consumer’s viewpoint, as well as from the publisher’s • I believe that coordinating print and web is a natural evolutionary step for magazines • Most eCommerce has had accidental success to date • The web is a very different animal from print! Strom MPA NY 12/00

11. Topic 1: Introduction to Internet Marketing • Advantages and disadvantages • Speed of adoption is immense! • Different kinds of approaches Strom MPA NY 12/00

12. Internet Marketing • Look good to the public, • be on the cutting edge • Supplement traditional channels, • be real-time • Focus on global niches, • be high-content • Avoid the trailing edge, • the competition is already doing it Strom MPA NY 12/00

13. Advantages • Direct, one-to-one marketing opportunity • Allows you to learn useful information and build subscriber relationships • Relatively inexpensive medium compared to advertising, direct mail or telemarketing • Capacity to be a major distribution channel • Results are measurable, sometimes Strom MPA NY 12/00

14. Internet is Cheapest Cost Per Contact • Internet: $.98 • Direct mail: $1.68 • Telemarketing: $31.16 • Tradeshows: $162.00 Penton Research, www.penton.com, 11/97 Strom MPA NY 12/00

15. Obstacles to Wide Deployment • Easy forms of payment • Trust in the system • Perceived benefits and profits • Technology and infrastructure still primitive Strom MPA NY 12/00

16. What can go wrong on the Internet • Store is offline • Overall lax security with ConEd bills • Visitors steal your subscriber lists and other privacy glitches • Credit card fraud • Shopping cart hacks • Stealing your domain name Strom MPA NY 12/00

17. General security practices • Make sure you protect your web site! • See “Ten ways” article from Winn Schwartau • Limit access, isolate servers, lock down scripts, so forth Strom MPA NY 12/00

18. Accidental downloads • Ikea hack • Others such as Nissan, DeBeers, Butterball • Even Amazon’s affiliate email addresses were briefly exposed! Strom MPA NY 12/00

19. Other notable privacy mistakes • Real Networks collecting user song playlists • Amazon.com displaying book buying habits of corporations • Infobeat sending email addresses to their advertisers • This can happen to you! Strom MPA NY 12/00

20. What Went Wrong • All collected key information without their customer’s knowledge or approval • All were leading edge companies that should have known better • All quickly corrected their mistakes and informed the public Strom MPA NY 12/00

21. Some Lessons Learned • Consumer control of privacy is essential • most folks simply want the choice of opting out • The granularity of control must be fine, e.g., • over number and frequency; • over categories of interests; and/or • over (indirect) dissemination to third-parties • If you promise privacy protection, make sure you actually deliver it throughout your site! Strom MPA NY 12/00

22. Preventing Credit Card Fraud • Don't accept orders unless full address and phone number present • Be wary of different "bill to" and "ship to" addresses • Be careful with orders from free email services • Be wary of orders that are larger than typical amount • Pay extra attention to international orders • When in doubt, call the customer to confirm the order • Use software or services to fight fraud • When you’ve found fraud, contact your merchant bank immediately Strom MPA NY 12/00

23. Be Aware of Shopping Cart Hijacking • Example Strom MPA NY 12/00

24. Stealing your domain name • Typo.net and AmericaOffline.com • Both sell ad space for things like: • amazom.com • www.eartlink.net • acivilaction.com vs civil-action.com • whitehouse.gov vs. whitehouse.com Strom MPA NY 12/00

25. Dealing With Rogue Domains • bestbuys.com vs bestbuy.com • United Airlines vs untied.com • Use same colors, try to go after same audience • Lawyers are standing by to take your call… • Use various tools to track down offenders: • companysleuth.com • dejanews.com • whois.userland.com • bannerstake.com Strom MPA NY 12/00

26. And The New Domain Suffixes • Seven new ones approved to begin this spring: • .biz, .pro, .coop, .museum, .aero, .info, .name • Others are certainly on their way • New registrars and new procedures to make things more complex Strom MPA NY 12/00

27. Topic 2: What Becomes Success? • Overview of eCommerce market • Review physical storefront success factors • Propose some definitions • Define success for the web • Draw up eCommerce principles Strom MPA NY 12/00

28. Let’s Keep Our Perspective • Size of US movie industry -- $7B! • Size of adult video rentals - $6B! • Total US music sales -- $6B! Strom MPA NY 12/00

29. Ticketmaster • Started 11/96 • US$20 million/month via the web in sales • Ten percent of total sales via the web • Generating lots of new single ticket buyers, people who don’t like to order via the phone Strom MPA NY 12/00

30. Then there is Disney.com • Web site Daily Blast signing up 15k members/month • Sales via web are equal to 3x-5x of physical Disney store! Strom MPA NY 12/00

31. Sad State of Today’s eCommerce Marketplace • Poor quality tools • Hard-to-find stores • Limited payment methods • Credit card snooping perceptions • Older browser versions can’t view latest sites Strom MPA NY 12/00

32. Case in Point: Buying a Bike Rack • Item not carried: outdated catalog • Telesales not familiar with web • No cross-sell or substitutions online • Needed three phone calls to complete purchase Strom MPA NY 12/00

33. Compare Moviefone vs. BAM • BAM web site doesn’t carry event information in real time • BAM orders are fulfilled weeks later, and no indication on web site of sold-out events • MF: Real time ordering, easy navigation via web and phone • MF: no surcharge on tix, no waiting in long ticket lines! Strom MPA NY 12/00

34. Let’s Learn From the “Real World” • Compare what works for physical stores • Try to extend to the web Strom MPA NY 12/00

35. Critical Success Factors for Physical Storefronts • Location • Branding • Good service • Good product selection • Proper pricing and margins • Traffic Strom MPA NY 12/00

36. First Problem: • None of these translate on the ‘net! Strom MPA NY 12/00

37. Now Try to Agree on Definitions for Web Stores • What determines a good location? • Position on a search page • Nearness to popular destination • Ad on a popular server • What determines branding? • Memorable domain name • Popular search category destination Strom MPA NY 12/00

38. An Example of bad location: Montana Meats • Link • Can’t they afford their own domain name? • “/~” is BAD NEWS! Strom MPA NY 12/00

39. Determining Traffic • Hard to do -- is it hits, page views, registered users? • [HITS = How Idiots Track Success] • Hard to measure -- do you count gifs? Use log files? • No general agreement on any metrics! Strom MPA NY 12/00

40. Traditional Advertising Doesn’t Apply Anymore • Can’t measure anything • Every site has its own banner sizes • The Web is not TV Strom MPA NY 12/00

41. One Working Definition of Success: • SURVIVAL! • If a site is still running after 12 months, and getting more traffic, it is a success. Strom MPA NY 12/00

42. Does a site actually have to sell something? • Many actual eCommerce sites don’t do the complete transaction • Require faxes or telephone calls! • Some merely have catalogs Strom MPA NY 12/00

43. Principles of Good eCommerce • Easy to find merchandize • Good service • Individual customization is key • Simple navigation • Make payments easy • Make buyer feel transaction is secure • Communicate effectively and frequently Strom MPA NY 12/00

44. Danish eShopper Survey (2/99) • Why people shop on the web • Convenience and ease of use are the main reasons people buy • After you have deliberately looked for information about a product or service, how often do you buy it? Almost always, only 2%! • Only 5% of their visits to eCommerce sites are to buy! Strom MPA NY 12/00

45. First Principle of eCommerce: • Make it easy to buy! Strom MPA NY 12/00

46. Amazon.com • Services frequent readers with a variety of programs • Editorial comments • If you liked this book, you’ll like... • Notification of new books by author, topic • Simplified “1-Click” ordering • Uses simple pages and email • Associates program for commission kickbacks • Gift certificates via email • And ... lots of books, toys, electronics, etc. to choose from Strom MPA NY 12/00

47. Use Affiliates Programs Wisely • They bring traffic to your doorstep • Nice revenue sharing model • Lots of them to choose from to model your own on: • AssociatePrograms.com • Refer-it.com Strom MPA NY 12/00

48. A Different Take on Affiliates: ClickRewards • Pays you in airline miles for your patronage • Accrue miles on many sites • You redeem benefits on their site Strom MPA NY 12/00

49. Amazon vs Borders • Borders link • Cookies vs logins • Who makes it easier to buy books? Strom MPA NY 12/00

50. Update your directories! • This one is two plus years old Strom MPA NY 12/00