David L. Barkley Professor and Co-Director EDA University Center for Economic Development R.
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David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute for Economic and Community Development EDA University Center for Economic Development Deb Markley Co-Director EDA University Center for Economic Development 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 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 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 EDA University Center for Economic Development *Identify Businesses from Different Parts of the County Kansas Colorado Iowa Maine North Carolina New Mexico South Carolina Minnesota West Virginia Montana Idaho Colorado Oregon ????????????? * 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 EDA University Center for Economic Development Methodology for Selection of Businesses to Interview Literature Review and Internet Search of E-commerce Programs and Businesses Leads Leads RUPRI Center for Rural Entrepreneurship Newsletter Request for Information Leads Leads Leads Leads Leads Leads EDA University Center for Economic Development Leads 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… 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 ecommerce 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 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 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 Non-profit ISP created to provide highspeed 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 Sell glass and supplies to stained glass hobbyists; do fabrication and repair Within last year, developed a full ecommerce 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 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 ecommerce skills but is at a point where he needs to upgrade significantly to keep growing 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 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 ecommerce – 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 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 ecommerce 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 ecommerce 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 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 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; ecommerce generates about 30% and is growing 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 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 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 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 instore and at website 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) Sells Makita power tools, not at rockbottom prices, but couples with onsite 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. • • • • 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 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 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 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! 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 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! 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) David L. Barkley Professor and Co-Director EDA University Center for Economic Development R. David Lamie Associate Professor and Extension Specialist Institute for Economic and Community Development EDA University Center for Economic Development Deb Markley Co-Director EDA University Center for Economic Development