A Beginners Guide to e-Commerce: Tools for Profit Extension Worker Training

1. A Beginners Guide to e-Commerce: Tools for ProfitExtension Worker Training Kimball P.Marshall, Ph.D., Alcorn State University kimball.p.marshall@netzero.net Ilya Smolyaninov, Alcorn State University Igor Georgievskii, Alcorn State University Leigh Junkin, Alcorn State University March 15, 2008

2. Chapter 1: Introduction – Objective, Premises, and Content of this Training Manual • Objective • Provide guidance to Extension workers to encourage rural people to begin small-scale Internet-based e-Commerce activities • Premises • Rural populations must have confidence in their ability to use e-Commerce for personal goals. • Extension workers must encourage this confidence and provide support as skills are developed. • Expectancy and Locus of Control theories provide theoretical frameworks for building confidence in rural populations who are just beginning internet businesses • Existing e-Commerce private sector sites provide opportunities for all skill levels to enter e-Commerce Chapter 1: Slide 1

3. Content of Remaining Chapters Chapter 1: Slide 2

4. Chapter 2: Building Confidence – Expectancy and Locus of Control Theories of Motivation • Rural populations may face many e-Commerce barriers • Lack of information and experience • Lack of knowledge about similar people • Lack of role models • Two key theories of managerial psychology can help clients achieve goals • Expectancy Theory • Locus of Control Theory Chapter 2: Slide 1

5. Expectancy Theory • Expectancy Theory involves establishing three basic beliefs: • The individual must believe that he or she can perform the required tasks. • The individual must believe that performing the tasks specified will lead to the intended results of the task. • The individual must believe that, as a result of successfully achieving the desired outcomes, the individual will achieve the reward that the individual desires. Chapter 2: Slide 2

6. Locus of Control Theory Locus of Control refers to whether an individual perceives himself or herself as having the ability to achieve personal goals or whether the individual perceives their fate as controlled by external conditions Internal locus of control You believe you can set and achieve your own goals External locus of control You believe you must depend on others to set and fulfill goals Chapter 2: Slide 3

7. Expectancy Theory Locus of Control Theory Self Reliance Chapter 2: Slide 4

8. Challenges Facing Rural e-Commerce Beginners • Persons with an internal locus of control • Have confidence in their ability to perform desired tasks • Recognize that this ability allows them to achieve personal goals • Persons with an external locus of control • Might not believe that they can accomplish the desired tasks • Lack confidence in their ability to achieve personal goals • The Extension worker’s challenge is to build clients’ confidence • In their goals • In their ability to achieve their goals • In their ability to perform the necessary e-Commerce tasks Chapter 2: Slide 5

9. Discussion Topics and Exercises • Explore clients’ desires for financial, social and psychological rewards from self-owned business ventures • Free flowing discussions with groups of clients and extension workers can help clients identify desired rewards (financial, social and psychological) • All members of the group should be encouraged to share their ideas with one another • Explore clients’ awareness of neighbors who produce and sell products on a small scale for “extra cash” • Entrepreneurial small farmers who engage in truck farming activities • People who participate in local farmers markets • Persons who are known to make special products such as jams, jellies, toys, quilts or other craft products Chapter 2: Slide 6

10. Chapter 3. Microenterprise Success Stories from Rural Communities • Success stories will • Build confidence • Motivate • Stimulate vision • Provide reference groups for beginning clients • Key success story illustrations include • Oyster Creek Mushroom Company • Indian Village Chapter 3: Slide 1

11. Examples of rural, microenterprise e-Commerce help people understand that rural life skills have value and that their products can be sold through e-Commerce Chapter 3: Slide 2

12. Oyster Creek Mushroom Company Strategy in Action www.oystercreekmushroom.com Oyster Creek Mushroom Company of Damariscotta, Maine shows how e-Commerce can serve specialty food niche markets. The Web site explains that the company grows “the very best” Shiitake Mushrooms, as well as a variety of fresh wild mushrooms, and offers dried mushrooms, mushroom powders, flavored mushroom oils, and gift boxes. The site also tells the owners’ personal story, educates customers about wild mushrooms, offers recipes, and allows customers to purchase online. Chapter 3: Slide 3

13. www.oystercreekmushroom.com Reproduced with permission from Dan Heydon, Oyster Creek Mushroom Company Chapter 3: Slide 4

14. Indian Village Strategy in Action www.indianvillage.com One of the most interesting rural e-Commerce Web sites is www.IndianVillage.com, an online shopping mall with many links to Indian related web sites such as Durango Silver Company that offers turquoise jewelry and cabochons through its eBay store. Other IndianVillage.com Web site links displays American Indian artisans offering pottery, basketry, textiles, beadwork and Indian jewelry. Chapter 3: Slide 5

15. www.indianvillage.com Reproduced with permission from John Hartman, Durango Silver Company Chapter 3: Slide 6

16. Discussion Topics and Exercises • Seek local area success stories from clients • Identify family members, neighbors, work colleagues, and friends who have sold products on the Internet • Ask questions such as • How did they do it? • What auction site(s) do they know about? • Did they make money? • Review Web pages success stories • Print or display Web pages • Ask clients to think of products they might sell • Discuss costs involved • Time • Supplies • Compare prices of similar products being sold on the Internet • With client, search Internet stores and online auctions Chapter 3: Slide 7

17. Chapter 4. Valuing Rural Life Skills and Products Rural clients need to recognize the market value of his or her skills and the products they can produce Chapter 4: Slide 1

18. Common Rural Life Skills • A variety of job skills can produce marketable products appropriate for high-margin e-Commerce sales: • Food processing • Fabric crafts • Carpentry and wood working • Visual arts • Music • Book publishing Chapter 4: Slide 2

19. Food Processing • Jams, jellies, candies, relishes • “Home grown” or “gourmet” foods Extension workers can help with health regulations and licenses Chapter 4: Slide 3

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

21. Carpentry and Woodworking • Furniture • Toys • Art objects • Yard décor • Dollhouses • Mailboxes Chapter 4: Slide 5

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

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

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

25. Discussion Topics and Exercises • Discover the clients’ skills and products • Products that were made as presents or to use at home • Explore market potentials for client-made products • Seek similar products on Internet auction sites • Note final prices and bid patterns • Observe intensity of bid activity in the final hour of the auction • Note number of different sellers offering similar products Chapter 4: Slide 9

26. Chapter 5: Simple E-Commerce Approaches for Getting Started ONLINE AUCTIONS Online auction and shopping Websites are where people and businesses buy and sell goods and services worldwide Chapter 5: Slide 1

27. Things Clients Need to Know About Selling Online • Obtain Internet access and an e-mail address • Register as a seller on an Internet auction site • Establish a payment system to receive your money • Create a listing to offer your product • Actively sell your product during the offering time • Arrange payment and shipping • Buyer and seller feedback through the Internet auction site Chapter 5: Slide 2

28. Obtain Internet Access and an E-mail Address • Free Internet access is often available in the community • Free e-mail accounts are available through several reputable internet sites Internet Cafes Churches Libraries Coffee Shops Schools Chapter 5: Slide 3

29. Register as a Seller • Basic Steps: • Enter basic information • Choose your User ID and password • Click on the register link at the top of most Internet auction pages • Get a confirmation e-mail Chapter 5: Slide 4

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

31. Create a Listing • Decide what to sell • Complete online listing form • Auction format • Fixed price format • Classified ad format • “Store” format • Select a category • Specify a title • Write a description • Take digital photographs • Beginning and ending times for the auction • Other listing information Chapter 5: Slide 6

32. Sell the Product • Monitor the process regularly • Check e-mail and the auction • Communicate with interested buyers • Reply to information requests quickly • Promptly close the sale • Notify winning bidder • Confirm purchase Chapter 5: Slide 7

33. Payment and Shipping • Monitor payment method • Ship product when payment is received • Pack product properly • Insure the product • Get a tracking number • Use a reputable carrier • USPS • UPS • FedEx • DHL Chapter 5: Slide 8

34. Buyer and Seller Feedback • Use the auction site process for buyer and seller feedback • Feedback is important to create a trustworthy online auction community • Trust builds sales Chapter 5: Slide 9

35. E-CommerceCheck-sheet,Sales Listing Worksheet, and Sales Log Chapter 5: Slide 10

36. Chapter 5: Slide 11

37. Discussion Topics and Exercises • Work with clients to identify free computer and e-mail access resources • Churches, public libraries, schools • Ask friends and relatives for assistance • Demonstrate how to use e-mail and the Internet • Demonstrate Internet auctions with clients who are beginners. • Perform searches • Monitor auction activity • Determine shipping options and costs • Calculate realistic prices for products to be sold Chapter 5: Slide 12

38. Chapter 6: Financial Literacy, Records, Taxes and Internet Transactions • The Extension worker should help the client develop basic financial literacy skills needed for e-Commerce • Basic recordkeeping • Sales tax • Income tax • How to get paid? Chapter 6: Slide 1

39. Recordkeeping • Simple accounting approaches of keeping records • Use IRS Schedule C as template • Help client organize simple ledger Chapter 6: Slide 2

40. Schedule C Chapter 6: Slide 3

41. Simple Ledgers Chapter 6: Slide 4

42. Sales Taxes • Consult with state tax authority to determine current policies • Sales tax may be state, county, or city specific • Most states do not require the Internet seller to pay sales tax on out-of-state sales • Local Extension worker assistance will be important • Assist with setting up a sales tax account if necessary Chapter 6: Slide 5

43. Personal Income Taxes • Profits from e-Commerce sales are subject to taxes • Federal, state, and local income taxes • Self-employment taxes • Portion of e-Commerce revenues should be set aside in a bank account • Forms to become familiar with • IRS Form 1040 Schedule C • IRS Schedule SE • State income tax form (state-dependent) • Again, local Extension worker assistance will be important Chapter 6: Slide 6

44. How to Get Paid: The Need for a Basic Bank Checking Account and Third Party Payment System • Important challenge is to encourage clients to develop trust in credit and banking systems • Bank checking account is critical for e-Commerce selling • PayPal third party payment account is strongly advised • Provides a safe and secure method to purchase goods • Speeds up the seller’s receipt of funds from a sale • Bank, PayPal, and shipping fees should be taken into consideration when setting product prices Chapter 6: Slide 7

45. Discussion Topics and Exercises • Financial literacy discussions • Discuss how client feels about banks and payment systems • Discuss client’s current method of handling personal finances • Include information about credit and interest rates • See the Financial Fitness Quiz at http://njaes.rutgers.edu/money/ffquiz • The need for basic recordkeeping • Clients should work in groups to review the IRS Schedule C (1040 form) • Keeping good records is critical to the success of any business Chapter 6: Slide 8

46. Chapter 7: Now Let’s Get Started We have addressed these key issues… • Expectancy and Locus of Control Theories • e-Commerce success stories • Common rural life skills can become marketable products • Steps to begin e-Commerce activity • Financial management issues Let’s bring these opportunities to our Clients! Chapter 7: Slide 1

47. A Trainer’s Checklist for Introducing E-Commerce to Clients Chapter 7: Slide 2

48. Evaluation Evaluation is important to ensure that the training program is effective and to provide for continuous improvement. Evaluation forms are included in the manual. Thank you for taking the time to see that they are completed. Chapter 7: Slide 3