e-commerce as a strategy for improving business vitality
TRANSCRIPT
E-commerce as a Strategy for Improving Business Vitality: Lessons Learned from Small Rural Businesses
EDA University Center for Economic Development
David L. BarkleyProfessor and Co-DirectorEDA University Center for Economic Development
R. David LamieAssociate Professor and Extension SpecialistInstitute for Economic and Community DevelopmentEDA University Center for Economic Development
Deb MarkleyCo-Director
The Situation E-Commerce an actively
growing small business strategy for many rural-based firms
Significant e-commerce strategy adoption lags expected in rural areas
Case studies provide in-depth examples for other rural small businesses to emulate
No national database of case studies exists, mainly scattered and diverse efforts
Project Overview
Review of Existing E-Commerce Case Study Projects
Identification of Good Examples and Development of New Case Studies
Distillation of E-Commerce Best Practices for Rural SMEs
Development of Curriculum Guidebook for Extension Professionals Working with Rural SMEs
EDA University Center for Economic Development
I. Goals
Identify Businesses in a variety of Economic Sectors
• Agriculture/Food Products• Manufacturing• Arts• Tourism/Recreation• Retail/Wholesale Trade• Services
Identify Businesses of Different Sizes and Organizations
• Lone Eagles• Family Businesses• Cooperatives• Corporations• Small and Large Employers
Selecting Case Studies
EDA University Center for Economic Development
*Identify Businesses from Different Parts of the County
* Identify Businesses where the Adoption of E-commerce Significantly Impacted Sales or Costs
*Identify Businesses with Varied E-Commerce Structures• B2B• B2C• Internet only• Bricks and Mortar and Internet
Kansas Colorado
Iowa Maine
North Carolina New Mexico
South Carolina Minnesota
West Virginia Montana
Idaho Colorado
Oregon ?????????????
EDA University Center for Economic Development
Methodology for Selection of Businesses to Interview
Literature Review
and Internet
Search of E-commerce
Programsand
Businesses
RUPRI Centerfor Rural
EntrepreneurshipNewsletter
Request for
Information
Leads Leads Leads
LeadsLeads Leads Leads Leads Leads
Interview Procedures We conducted extensive reviews of
websites, news stories, and other available published information, and solicited examples on entrepreneurship network listserve
Initial Telephone Interview
Face-to-Face Interview (2-3 hours)
Draft Case Studies Reviewed and Approved by Businesses
Several examples follow…
Voyageur Canoe OutfittersGun Flint Trail, Minnesota Provide outfitting services, trip planning,
lodging for people traveling in the Boundary Waters Canoe Area
Full e-commerce site so that people can do all their trip planning and booking online if desired
Have launched a non-profit endeavor, with link on their website, for Pink Paddles, selling pink canoe paddles to raise funds for breast cancer research – full e-commerce site as well
Prepare daily blog on life in the BWCA which allows them to make and keep a personal connection with clients (and future clients); includes a live chat feature
Black Magic Kennels Off the Beaten Path, Minnesota
Start-up enterprise offering Mushing 101 weekends (dog sledding)
This start-up site is used primarily now as an advertising vehicle for their newly created Mushing 101 weekend trips
Also includes blog (not daily) to help connect clients (and future clients) with their newly developing product lines
Currently a part-time venture in support of their competitive sled racing activities
Sivertson GalleryGrand Marais, Minnesota
Brick and mortar art gallery, with website, that features local artists as well as one of the largest collections of Inuit art
Full e-commerce website created to help expand their seasonal sales (tourism related)
Use the website to alert customers to new one-of-a-kind pieces of artwork, particularly Inuit art – provides a direct marketing opportunity and they don’t have to wait for customers to return to the store; extends their geographic reach
No opportunity to physically expand the gallery so e-commerce site allows them to expand virtually
Service Provider: Boreal ISPGrand Marais, Minnesota
Non-profit ISP created to provide high-speed Internet service to Grand Marais and some surrounding areas; also provides technical support, e.g., website development
The development of this ISP was instrumental in the other three businesses being able to expand their e-commerce capabilities
High-speed access was essential for the gallery (given volume of pictures used)
Technical assistance provided was essential since there are no other service providers in the local area
Stained Glass ExpressWaterville, Maine
Sell glass and supplies to stained glass hobbyists; do fabrication and repair
Within last year, developed a full e-commerce site focused on selling glass and supplies
Taken a slow, incremental approach to establishing e-commerce capability because they have so many products
Shopping online for supplies is more difficult than doing it in person – can make substitutions of colors more easily in person than online; online orders can require more customer service
Nautical AntiquesJonesport, Maine
Sells nautical antiques (mostly imported) online
Has a “retail” store only to legitimize his online business, i.e., give him a physical address, but 96% of business is online
Seen 20% growth each year (for about 10 years) until last year – increased competition
Taken courses to develop his e-commerce skills but is at a point where he needs to upgrade significantly to keep growing
Wintergreen HerbsWinslow, Maine
Sells herbs and vegetables as part of community supported agriculture (CSA) initiative
Website serves two purposes – information about farm and CSA; weekly information and ordering for herbs and vegetables
Not full e-commerce site since people buy memberships of some type and just order online
Innovation on traditional CSA approach since there’s choice – something ordering online allows farm to do
Mainely MetalsGardiner, Maine
Manufacture rural mailboxes that swing away, making them snowplow and vandal resistant
To expand sales of a product developed by father and grandfather, had to use e-commerce – now accounts for about 50% of sales
Full e-commerce site allows them to tap a national market
Developed own e-commerce skills through CEI classes
Eolian FarmsNewcastle, Maine
Sells fiber and fiber-related products (raw and processed) derived from her llamas and sheep
Lifestyle entrepreneur who uses website for (1) informational purposes and (2) product sales
Has experimented with different e-commerce approaches – started with PayPal but had too many problems; now uses an E-Bay store with a link on her website
Sales online cover the costs of e-commerce
Columbia Falls PotteryColumbia Falls, Maine
Wholesale (5%) and retail pottery (95%) through retail store and online
Developed website to expand off-season (outside tourist season) and out of region market
E-commerce sales are allowing her to grow the business while reducing and eventually eliminating the retail store (too much for her as she gets older)
E-commerce allowing her to achieve her long term goals for the business – have her do less business management and more art
Service Provider: Women’s Business Center at Coastal Enterprises, IncWiscasset, Maine Provider of e-commerce training
both in the classroom, online, and web-based (self paced)
Most of the Maine e-commerce businesses took advantage of these classes to build their skill sets – not great private sector resources to provide these services in rural Maine
Moved more recently to online classes as a way of reaching more rural entrepreneurs, with good reviews so far
Sterling Bio-Technologies CorporationSterling, Colorado
Manufacture natural skin care products under their own brand, Würx, and do private label manufacturing
60% of business is private label manufacturing and more than half of their private label sales have come through their website, including major client in Japan
Full e-commerce site to sell their own products; website serves as informational for private label clients
Only 10% of their business is retail; e-commerce generates about 30% and is growing
Service Provider: Wesst Corp Market Link Program 15 week program (3 hours per session)
designed to help businesses deliver a “perfect pitch” about their business (5 minute pitch with products
Pre-requisite for participation in www.wesstartisans.com – developed the website because they were working with rural artisans and realized that none had their own website
Has served 55 artists since 2000 – now have about 20 artists on the site and about 25% have developed their own website
Just getting started on a search engine optimization grant project – based on other case studies, this is a very important service that is missing in most rural areas; key challenge for e-commerce
Taos Architectural CopperTaos, New Mexico
Copper bathroom sinks and copper lighting
Established web presence through www.wesstartisans.com because he didn’t have the staff or own capacity to develop his own website
Was very successful in selling products when actively buying Google ad words – sink sales went from 1 per month to 1 per week; as soon as they stopped, sales dropped
Website sales continue but he uses site for informational purposes with homeowners (“look at site and then talk to me”)
Not making the investment of time or money to really optimize the site
Gail GoldenTaos, New Mexico
High end, handmade silver jewelry; primarily retail and custom sales (although some is wholesale through Sundance catalog)
Saw participation in www.wesstartisans.com as a good value from a marketing standpoint – needed a web presence since very few of her sales are local (in spite of tourism in the region)
Full e-commerce site but also uses website for informational purposes – galleries find her via the website and then purchase to sell in gallery
Just now developing her own website and building her skills to manage it
25% of her sales come directly through the website – this is the base of her business; gallery and custom sales are more variable
Blue Smoke SalsaAnsted, West Virginia
Bricks and clicks specialty food store focused on high-end market
Resisting VC’s encouragement to work with WalMart
Web hosting at distant site, placing site on high-speed network
E-commerce sales more profitable than regular marketing channels --- plans more e-commerce in future
Bundling own products with others’ products to increase traffic, both in-store and at website
Songer WhitewaterFayetteville, West Virginia
Whitewater and related (outsourced) outdoor adventures
Bought into legacy specialized on-line reservations system with several other similar outfitters
Calls customers to verify complicated reservations --- necessary nice touch!
Web presence key to attracting customers familiar with whitewater rafting, but not familiar with Songer (highly competitive market)
Louis Williams & SonsHendersonville, North Carolina
Sells Makita power tools, not at rock-bottom prices, but couples with on-site sales and service --- serving regional market and avoiding direct competition with large-volume big box stores
Offers full line of tools (1,500) and parts (15,000), unlike competition, allowing them to reach construction, rental, and other business customers
Invested in specialized legacy system that might not be serving their needs well presently. But, find it difficult to make a large new capital investment once staff are trained and owner is personally vested.
Midwest eServices, IncSalina, Kansas
• Markets commercial and public properties (e.g. empty schools) on eBay, LoopNet, and Cityfeet for real estate firms in the Midwest
• Focus on quality by providing an abundance of high quality photos and solid local information
• Refers leads to lead real estate agents in contracted firms
• They’ve found a niche but realize it might not last forever given low barriers to entry in a competitive market
Lakeland ExpressSeneca, South Carolina
Inventor/Entrepreneur relocated to rural community (and state) for combination of cost-savings and lifestyle reasons (live on lake and near family)
95% of business is on-line and there is little interest in more bricks and mortar retail due to associated expenses
Sells non-owned product lines to help drive traffic to site
Dessin Fournir Companies Plainville, Kansas
High-end custom household furnishings sold through 15 designer showrooms – B2B
Designed in Plainville, produced in California, materials from Europe --- heavy reliance on Internet --- sophisticated operation!
Large presence in Plainville◦ Plainville chosen based on family
ties◦ Nearly 200 employees, 2 full-time IT
staff, $50k hardware/$100k software annually
◦ Renovating downtown existing buildings
Brush Art Corporation Downs, KS
Full-service marketing and media services company --- nearly all client interaction is now handled over Internet
Internet reduced “cycle time” to 2 weeks from 4 months; nearly tripling project completions (past 10 years)
Greatly reduced costs; travel, phone, fax, shipping (e.g. UPS 30-40/day to 2-3/day (past 6 years)
Time savings allowing new venture development --- secured marketing websites allowing dealer networks to produce customized yet consistent materials
$2.4M investment in e-commerce!
Additional Cases (Details
Forthcoming)
Mountain One – Leland, IA
Doll-making supplies
Grown Locally - northeast IA
Locally-grown farm products
Farmchem - Floyd, IA
Equipment and service provider for crop input dealers
Some Things We’ve Learned So Far
There is no apparent singular or “right” way to deploy e-commerce strategy. “Jazz” is an appropriate metaphor.
Though problematic, lack of local Broadband Access is not an insurmountable barrier.
Shortage of technical skills can be overcome by savvy outsourcing of services◦ Web design◦ Hosting◦ Maintenance◦ Content Development and Management
E-Commerce requires continual investment of time and dollars --- it is an evolutionary process that integrates well with continuous business strategic thinking and planning
E-Commerce Training Initiatives Are On Target! We Have Work To Do!
Next Steps
Conduct Additional Case Studies (Two in Montana identified)
Categorize Information Several Ways◦ Business Type◦ Entrepreneur Type◦ Products and Services Offered via Web◦ Other?
Distillation of Best Practices and Lessons Learned into Practical Wisdom
Development of Curriculum Guidebook◦ Integration into E-Commerce Programs◦ Integration into Entrepreneurship
Training Programs (e.g. FastTrac)
Questions?
E-commerce as a Strategy for Improving Business Vitality: Lessons Learned from Small Rural Businesses
EDA University Center for Economic Development
David L. BarkleyProfessor and Co-DirectorEDA University Center for Economic Development
R. David LamieAssociate Professor and Extension SpecialistInstitute for Economic and Community DevelopmentEDA University Center for Economic Development
Deb MarkleyCo-Director