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    Development of an e-business

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    (1)Discuss the strategic issues faced by the company in launching and developing their e-business ventures.
    (2) Provide your recommendations and analysis.

    CASE STUDY II-5

    The CliptomaniaTM Web Store

    Cliptomania, LLC, a limited liability corporation, sells clip-
    on earrings on the Internet at www.cliptomania.com.
    Cliptomania is owned and operated by the Santo family—
    father Jim, mother Candy, and daughter Christy. Its business
    is conducted from the lower level of the Santo home in
    Indiana, but it sells non pierced earrings throughout the
    United States, Canada, Ireland, Australia, and New Zealand.

    Most people who wear earrings have pierced ears,
    so stores offer a limited assortment of non pierced
    earrings. Those who want clip-ons have a very difficult
    time finding appealing choices. Cliptomania sells nothing
    but non pierced earrings, and it offers its customers a
    choice of hundreds of different styles of clip-ons.
    Although the percentage of people who want clip-ons is
    small, the total number of potential customers available to
    Cliptomania on the Web is huge. The Santos have found
    an underserved market niche. According to Candy:

    A lot of our buyers are first-time buyers on the
    Internet, and some of them are older women. But
    you would be surprised how many teens and young
    twenties buy because for one reason or another they
    have had trouble with pierced ears. There are young
    mothers whose babies ripped the earrings out of their
    ears and their ears cannot be pierced again. And
    there are people like me who have problems with
    scarring forming keloids and don't want any unnecessary
    scars. There are people for whom piercing
    their ears is against their religious beliefs.

    Some women are so thrilled to find us—they
    will tell me that they have this problem or that problem
    and ask which of the earrings will work best for
    them. Because there are several different types of
    clip mechanisms, I can often help them out.

    Our customers are pretty evenly distributed by
    age from pre-teens to the elderly. We had not anticipated
    it, but we estimate that we get some 5 percent of our
    sales from the cross-dresser and transgender population.

    The Santos want Cliptomania to become the first
    name someone thinks of when looking for non pierced
    earrings. They concentrate on providing a quality product

    Copyright © 2010 by E. W. Martin. This updated case replaces an
    earlier version © 2007.

    at a competitive price with outstanding customer service.
    They have worked diligently to provide quality, honesty,
    and friendliness through the Cliptomania Web site. For
    example, Cliptomania has a very liberal return or exchange
    policy that allows customers to return or exchange any
    item within 30 days for any reason without question. Less
    than one percent of their customers return any items.

    First established as a Yahoo! store in November of
    1999, Cliptomania has had spectacular growth in sales
    during a very difficult period for retailing. Although it sells
    only clip-on earrings, by June 2003 Cliptomania was the fifth
    largest jewelry store on Yahoo! in terms of gross sales.

    Yahoo! store customers are encouraged to rate their
    satisfaction (or lack thereof) with their experience with the
    store. If they choose to rate the store, in two weeks (by
    which time they should have received their purchases) they
    are sent an e-mail pointing to an online rating form to complete.
    The ratings are on the following scale:

    Excellent Better than I expected. Tell everyone that
    Cliptomania is a great store.

    Good Everything went just fine.

    OK There were a few problems, but I would proba

    bly still order from Cliptomania again.

    Bad There were real problems. I would be reluctant

    to order from Cliptomania again.

    Awful I had such a bad experience that I want to

    warn everyone about Cliptomania.

    Although the default rating (already checked) is Good, an
    amazing 81 percent of Cliptomania's ratings have been
    Excellent! Ninety-eight percent of Cliptomania's ratings
    have been either Excellent or Good, so Cliptomania
    quickly earned a five-star Yahoo! rating for service.

    In addition to a numerical rating, the rating form provides
    space for customers to submit specific comments
    that are available to the store through a database.
    Cliptomania has received a great deal of effusive praise
    such as the following:

    I am very pleased and satisfied with the service I
    received from Cliptomania. The customer service
    representative was polite, helpful, and patient with
    me being a new customer ordering with a credit card.

    The service was superb! I am also very pleased with
    the earrings. They are light, comfortable, and no
    pinching of my ears. And the cost you cannot beat.
    I am so thrilled with this. I plan on ordering more
    earrings from them, and have told several of my
    friends about this Web site. It is hard to find good
    quality clips, and I found just what I was looking
    for, and more. Working with the customer service
    representative was just like talking to a friend.
    I appreciated that.

    Hist ory

    In the mid-1990s, Jim and Candy Santo were living in New
    Jersey near New York City. Candy was the development
    director for a large nonprofit organization that provided a
    broad continuum of care for the homeless, and before that
    she had been executive director of a crisis line. Jim had a
    long-time career in insurance sales that he still continues.
    According to Jim:

    In 1998 I went out to buy earrings for an anniversary
    present for Candy, and I could not find a good selection
    of nice clip-on earrings anywhere. I looked
    everywhere I could think of in the New York metropolitan
    area. I could find plenty of earrings for
    pierced ears, but it was clear that all the stores had
    decided that they could not sell enough clip-ons to
    justify carrying an adequate stock in their stores.

    I knew that there must be millions of people in
    the world who wanted clip-ons and could not find what
    they wanted, so this appeared to be a great opportunity
    to sell them on the Internet. This intrigued me, but I
    knew little about the Internet or jewelry so I started
    staying up at night and working weekends doing
    research on jewelry and how to sell via the Internet.

    After 13 months of research I concluded that the
    Internet was the ideal medium for this type of business.
    Earrings had a high markup, you could get started with
    little capital, and the Internet was the way to access the
    widely distributed market for clip-on earrings.

    The Santos decided to try to sell clip-ons on the Web, and
    Candy came up with the name Cliptomania for their new
    Web store. They decided that if the URL Cliptomania.com
    was available and the name Cliptomania
    had not been registered
    as a corporate name, they would go forward with
    the endeavor. They employed a patent and trademark attorney
    who checked and found that the corporate name
    appeared to be available. And they were able to purchase
    the URL Cliptomania.com
    from Network Solutions, so
    they decided to go ahead.

    Case Study II-5 • The Cliptomania TM Web Store 309

    On Thanksgiving day, 1999, traditionally the beginning
    of the Christmas holiday sales season in the United
    States, they went live with the Cliptomania store on the
    Web, operating out of one small room of their home in
    New Jersey. Their total capital investment was $10,000,
    which came from their savings. Although Jim had hopes
    that Cliptomania would grow, they expected it to be a sideline
    activity that they would take care of in their spare time
    while continuing their regular jobs.

    Setting Up the Web Store

    Neither Jim nor Candy had any expertise in the creation of
    a Web site, so Jim had devoted a lot of time and effort to
    determining how they would go about setting up the
    Cliptomania Web site. Jim found that one way would be to
    contract with an Internet service provider (ISP) for the
    computer resources required, purchase several software
    packages to perform the various functions that would be
    needed to run the store, and design the site and write the
    HTML code to set up the pages. The problem was that they
    did not have the personal experience or any IT development
    background to design the site and write the code or to integrate
    the various software packages. To hire someone to do
    all of that would be expensive, and they might have little
    control over the process or the result.

    The other alternative was to pay a vendor for hosting
    a store. For a price, the vendor provides the computer
    resources and integrated software as well as templates for
    setting up the Web pages that provide the basic Web store
    structure but allow you to customize them to suit your
    business. The Santos chose this option and contracted with
    Yahoo! to establish their Cliptomania Yahoo! store.

    Yahoo! provided templates for setting up the home
    page and the pages that displayed images of and described
    the items offered, as well as for navigation across the site.
    Yahoo! made it easy to add and delete items offered for
    sale and to make changes in the images and descriptions of
    these items. It used a shopping cart approach that holds
    selected items there until the customer wishes to place an
    order. Then it provides an online order form with the
    selected items detailed and accepts a credit card number
    and other billing information from the customer. Yahoo!
    then sends the completed order to Cliptomania and
    presents the customer with a page confirming that the
    order has been placed with Cliptomania. By checking a
    box, the customer can request that the order also be
    confirmed by e-mail.

    Another company, Paymentech, is integrated with
    Yahoo! to validate the credit card by making sure that the
    customer address on the order is the same as the billing
    address of the credit card. After Cliptomania accepted the
    order, Paymentech collected the money from the credit

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    Part II • Applying Information Technology

    card company and deposited it in Cliptomania's bank
    account once a week.

    Jim was very concerned with transaction security via
    the Internet. When he was doing his research, he had read
    that 40 percent of the transactions on the Internet were
    fraudulent. He also read that Yahoo! had the best security
    among the vendors providing support for Internet stores.
    In addition to encryption to restrict access by outsiders
    to credit card numbers and other financial data, the
    Yahoo!/Paymentech combination detected and eliminated
    most fraudulent purchases, and that was crucial to Jim. The
    outstanding security and the ease of setting up and operating
    the store were the main reasons the Santos decided to
    go with Yahoo! as their vendor.

    The Yahoo! store also had a "back office" that collected
    and made available data about Cliptomania's Web
    site transactions. The Santos got a historical report for
    each month showing the number of customers that
    visited the store, the number of page views, the average
    number of page views per customer, the number of
    orders, the income, the number of items sold, the average
    number of items per order, and the dollar value of
    the average order. This report also included daily and
    yearly totals. They could also print out graphs showing
    the volatility and seasonality of their orders. On many
    orders they could find what search engine sent the
    customer to Cliptomania and what search terms were
    used, and this information could be summarized by
    search engine. All of this information was of great value
    to the Santos in managing the store and evaluating the
    effect of their marketing efforts.

    When Cliptomania was started in 1999, there was
    only a $100 monthly charge for the Yahoo! store.
    However, over the years Yahoo! has changed its pricing
    structure and as of 2003 it charged $49.95 per month for
    hosting, $0.10 per item carried per month, a 0.5 percent fee
    on all sales, and a 3.5 percent revenue share on sales that
    originate through a Yahoo! Store search.1 Paymentech
    charged $0.20 for each credit card transaction it processed,
    in addition to the percentage of the amount of the sale
    charged by the credit card company (typically 2.5 percent
    to 3.5 percent).

    Designing the Cliptomania Web Site

    Jim and Candy did most of the set up work on the original
    Web pages themselves, with some help from a freelance consultant
    they employed to help them with problems that were
    beyond their technical capability. Since then Candy has
    learned the basics of the HTML language. The consultant

    1 For current charges see http://smallbusiness.yahoo.com.

    is still available to the Santos via telephone and the Internet
    for tougher questions, although they have had to turn to him
    less and less often.

    Before starting the store the Santos examined a number
    of Web stores and they had a pretty good idea of what
    they liked and what they didn't like in these Web sites.
    Candy explains what they wanted to do:

    I designed the logo in the banner at the top of our
    page. I wanted the "t" to be dangling down from the
    "p" like an earring hanging down. We chose the
    burgundy and gold colors for our page because we
    wanted to give the impression of a quality jewelry
    store and not look like the typical Web store with
    bright colors crying for your attention. We put our
    names—Jim, Candy, and Christy—on the front page
    and we use personal pronouns throughout the site
    because people need to know that we are real people.
    Some people call before they will place an order on
    the Internet because they feel the need to talk to a
    real person and have a sense that we are legitimate.
    A lot of our buyers have been first-time buyers on
    the Web. We are asking them to make a leap in faith
    and we want them to feel comfortable about making
    that leap.

    From the start we put the various categories of
    products that customers can click on down the left
    side of the page. The names of these categories are
    very important because they must guide the customers
    to the products that they like. I have set things
    up so that no more than six items appear on one
    page. I do this because I think that most people don't
    like to scroll down a page—they will only look at the
    top items. Also, our pages load fast, which is important
    when people are coming in through regular
    phone lines. Customers often mention how nice it is
    that our pages load so fast.

    Getting Items to Sell

    Initially one of their biggest problems was finding sources
    from which they could get earrings to offer in the
    Cliptomania store. They searched yellow pages on the
    Internet for jewelry wholesalers and manufacturers and
    called lots of them. Half of them did not exist any more, and
    the rest were not very helpful. They finally found a man in
    Virginia who bought overruns and closeouts, so in the
    beginning most of their stock was not the most attractive.
    Jim remembers:

    We were very naive in the beginning. We got any
    stock we could get because we were almost desperate.
    We didn't know anything about jewelry, about

    what styles were popular, or about fashion. And we
    are in the fashion industry, so there was a big learning
    curve there. But somehow we survived.

    I knew there was a jewelry district in
    Manhattan, so I took a day off from my insurance
    business and went to the city to the fine jewelry area,
    the diamond district. I tromped around for five or six
    hours before I concluded that I was in the wrong
    area. Finally someone had mercy on me and told me
    where to find the fashion jewelry area. That was a
    major breakthrough.

    We finally found the wholesalers that would
    provide the kind of product we were looking for.
    These wholesalers had the product, but they were
    relatively expensive because they were several layers
    down from the manufacturers, and each layer tacked
    on its expenses and profit. After searching everywhere
    for manufacturers, we finally found this
    woman manufacturer/wholesaler out on Long Island
    who got all excited about what we were doing. We
    started getting stock from her and developed a relationship
    with her. She told us that we should go to
    the manufacturers' International Fashion Jewelry,
    Accessories and Gifts (IFJAG) national show in
    Rhode Island, which is very difficult to get admitted
    to. She got us an invitation that allowed us to get into
    that invaluable show that we now go to each
    February and September.

    Before we went to the show, manufacturers'
    reps wouldn't talk to us because at that point we
    weren't buying in large enough quantities to interest
    them. But when we went to the show and got to talk
    directly to the manufacturers, some of them connected
    with our passion to offer quality products for
    women who don't want to pierce their ears. Some of
    the manufacturers would say: "I think you've got a
    good idea, and you remind me of my wife and I
    when we were your age. We're going to gamble on
    you. I'm going to take orders from you that I would
    kill any rep of mine if he came in with them." They
    started providing stock to us that we couldn't have
    gotten otherwise.

    That was the beginning of some mutually
    beneficial relationships. Since then we have grown
    to the point that we are ordering in such volumes that
    we are higher up on their customer lists. Some
    manufacturers will now make special manufacturing
    runs for us. At the 2003 February show one of the
    manufacturers said that it was time that we had our
    own exclusive earrings, and that manufacturer
    designed some for us and we have had our own
    special designs ever since.

    Case Study II-5 • The Cliptomania TM Web Store 311

    Early Growth

    The year 2000 showed steady growth in Cliptomania's
    sales. The Santos had only three orders in January, but by
    the end of the year, they were up to more than one order a
    day. In 2001, Cliptomania's sales continued to grow rapidly
    to where sales had more than quadrupled over its sales for
    the year 2000. Candy recalls:

    Jim and I both had full time jobs and Christy was a
    student. We took no pay out of the business for the
    first two years—we just plowed everything back in.
    We started with pure sweat equity.

    It started very, very slowly. When we got to
    one order a week we were celebrating. But it just
    grew and grew. Around October of 2001 I left my
    full-time development director job because I was
    really burning-the-candle-at-both-ends at that point.
    I took a part-time job where I could just go to work
    and leave it behind when I came home.

    The Move to Indiana

    In December 2001, the Santos sold more than they had in
    the entire year 2000. They were running out of space for
    operating out of their small house in New Jersey. Candy
    was originally from Indianapolis, Indiana, and she began
    to think about getting away from the high costs of New
    Jersey to the Midwest where the costs of space were much
    lower. She explains:

    I could see after the holiday season of 2001 that we
    would not be able to handle the next holiday season
    out of the space in which we were working. If you
    needed packing material you either went up into the
    attic or out into the garage. We didn't have separate
    offices—we were all trying to work out of one room.
    After we searched for a suitable space in our area and
    found that everything available was far too expensive,
    it dawned on me that the people on the Internet don't
    care whether you are doing it out of high-cost New
    Jersey or lower-cost Indiana.

    Jim provides another perspective on the move:

    Another reason we moved to Indiana was to change our
    lifestyle. Candy and I recognized that if I continued to
    work 80 hours a week, I was going to kill myself. Our
    expensive lifestyle wasn't giving us any quality of life.

    Also, I think that the events of 9/11/2001 had
    something to do with it. We lost several friends and
    some neighbors in the World Trade Center disaster.
    Moreover, after 9/11 thousands of people who felt
    vulnerable living in Manhattan wanted to move out of

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    Part II • Applying Information Technology

    the city. They bid up real estate by 50 percent in our
    neighborhood across the river in New Jersey, so we
    could sell our house easily and at a very good price.

    In March 2002, we took a trip out to Indiana,
    and after that trip we decided to move. We sold our
    house in New Jersey and bought our present one in
    Indiana. We got twice the house for half the money,
    the equity in our New Jersey house paid for our new
    home, and we now have no mortgage. That was a big
    plus in enabling us to devote the time necessary to
    bring Cliptomania to the point where it could fully
    support the three of us and enable us to hire adequate
    help to make sales 24/7 without having to cover every
    day on our own.

    When they moved to Indiana, Candy quit her part-
    time job. She has been full time with Cliptomania since
    then. Also, Jim cut back his insurance agent job to half
    time and has since hired his own help to continue to build
    his insurance clientele in Indiana.

    Later Developments

    In 2004 Candy began to question the use of Paymentech to
    verify and process credit cards. She explains:

    Paymentech proved to be very expensive and difficult
    to work with. In credit card processing there are
    three costs to us: the monthly fee we pay for the
    service, a per transaction fee, and the percentage that
    the credit card company gets. In addition to a hefty
    monthly fee, Paymentech was charging us 20 cents
    for each transaction, and in addition was charging us
    30 cents for any credits or voids.

    I went to our local bank and they set me up
    with a group called Nova that was much lower cost
    to us. Nova only charges us 10 cents per transaction
    and they charge nothing on the credits. Also, the
    monthly fee is less and the percentage that the credit
    card company keeps is almost a full percentage point
    less than it was with Paymentech. That adds up
    quickly.

    Furthermore, I am dealing with either my local
    bank or Nova, and they are much easier to deal with
    than was Paymentech. They provide much better
    support at substantial savings.

    Clipt omania' s Oper ations

    Candy is Cliptomania's CEO and Christy is Customer
    Relations Manager. In addition to sharing responsibility
    for receiving and processing orders with Christy, Candy
    maintains the Web site, chooses the styles of earrings to

    stock, orders the stock, sets the prices, and manages the
    inventory.

    Customers access the items for sale by clicking on
    one or more of the categories arranged vertically along the
    left side of the main page. Therefore, Candy carefully
    chooses the categories and selects the words to describe
    them. Candy also produces the images of the items that are
    shown and writes the descriptions that appear alongside
    the pictures. According to Jim:

    Candy describes each earring very honestly so that
    the customer knows exactly what she is getting. But
    she has the gift of wording it in such a way that the
    person reading about it thinks that she will look like
    a million bucks when she wears our $10 earrings.

    The quality of the pictures is critical. The
    customer cannot pick up an earring and look at it
    like you would in a brick-and-mortar store, so if she
    does not feel she is seeing the real thing and is not
    attracted to the earring, she is not going to buy it.
    Candy also does all of our imaging and her pictures
    look great!

    Earrings are fashion items, so the market is continually
    changing. Candy changes Cliptomania's Web page
    almost every day as new items are added, old ones are
    removed, items are featured during special times of the
    year, items are put on sale, the categories are reorganized,
    and so on.

    Buying Earrings to Stock

    About half of their sales are for fairly standard items that
    sell year in and year out. But the other half are fashion
    items that are very dynamic. Candy and Christy try to keep
    abreast of fashion trends to choose what to stock. There is a
    long lead time in ordering and receiving fashion items—in
    fact many decisions must be made at the national manufacturers'
    show in February. Therefore, they depend heavily on
    the manufacturers whose judgment they trust to help them
    decide what will be hot for the next year.

    With the dynamism and long lead times of the fashion
    business, keeping adequate stocks of the good sellers
    while not getting stuck with items that don't sell is a continuing
    challenge for Candy. She describes the problem:

    We do about 60 percent of our business in the last
    third of the year—September through December.
    September is the latest that I can order fashion items
    and expect to get delivery before Christmas, so I
    have to make decisions as quickly as I can figure out
    what items are going to be hot for Christmas. In
    mid-December the manufacturers worldwide close

    Case Study II-5 • The Cliptomania TM Web Store 313

    down, and don't open back up until mid-January.
    They have the IFJAG show in February, so they
    won't really start making the stock to fill the IFJAG
    orders until March and I will be lucky to get the new
    stock in May. When I order in September I figure it
    is going to have to hold me until May, but I don't
    want to overbuy on something that will have passed
    its peak by the time February rolls around so I will
    be sitting on it forever.

    Many of the newer fashion items are designed and
    manufactured in the United States. Many of the standard
    items that do not change are made overseas where costs are
    much lower. Even the standard items can be difficult to
    maintain in inventory because the lead times on them are
    long and delivery schedules can be uncertain. Candy
    sometimes runs out of some of her standard earrings that
    are best sellers because of shipping problems in getting
    deliveries from China.

    Candy gets lots of helpful information that is
    gathered by the Web site, which helps her with stocking
    decisions. She can see how many people visited, how
    many put items in the basket but have not bought yet, what
    they put in the baskets, and which search engine they came
    from and what search terms they used. She can get online
    graphs showing sales trends by item as well as for total
    sales. She can request summaries for various time periods
    and sort by gross receipts or number of items sold.

    Candy also uses an Excel spreadsheet she developed
    that has a line for each item Cliptomania sells. It shows
    the Cliptomania product code, the name of the item, the
    cost per unit, the total number she has received, the dollars
    she has invested in the item, how many they have sold, the
    number damaged or lost in the mail, gross receipts for the
    item, total net margin, the vendor of the item, the vendor's
    product code, the current inventory, and the value of the
    current inventory. But even with all this information, there
    is still a lot of judgment involved in deciding what to stock
    and how much to order.

    Processing Orders

    Cliptomania operates out of the lower level of the Santos'
    home in Bloomington, Indiana. There is a large workroom
    that contains the inventory in wide shallow drawers in
    cabinets and small plastic containers in cubbies along one
    wall. There is also room for assembling and packing
    orders, two desks with computers, and workspace for
    receiving orders. In addition, there are two offices and a
    storeroom for packing materials and reserve stock.

    There are four PCs connected by a network, along with
    a fax machine and a printer. They have two high-speed lines
    coming into a router on the network, one from a telephone

    company and the other from a cable company, so that they
    can continue operations if one vendor's lines go down for
    some reason. Once a month Candy backs up key records onto
    a zip drive and puts it into their safe deposit box at the bank.

    In addition to the security features provided by the
    Web site provider, they have firewalls to deter break-ins to
    their own computers. They have many different layers of
    security to make it more difficult to break into their store
    either physically or electronically, including central security
    alarm systems for their house.

    When an order comes in on the computer, Candy or
    Christy checks Nova's assessment of whether the billing
    address the customer has given matches the address for that
    card in a central database. If these addresses are not the
    same, it is a red flag that the order may be fraudulent. She
    also looks all orders over for other indications that they may
    be suspicious. If it appears that there might be problems,
    she can call Nova to obtain the telephone number of the
    issuing bank and call it to determine whether or not the card
    is legitimate. If she cannot verify that the card is legitimate,
    she can cancel the order, which does occur, but rarely.2 If
    everything seems all right, she checks the inventory to
    make sure the items are available and, if so, prints out the
    picking ticket and the mailing label for shipment. The order
    is then assembled. Each pair of earrings is wrapped in
    plastic padding; the more expensive ones are also placed in
    an attractive box. Once the earrings are protected, they are
    placed in a small corrugated cardboard shipping box. For
    some kinds of clip-ons, a set of printed instructions for
    putting on the earrings is inserted. Then the box is sealed,
    and the mailing label is affixed. Once a day, the completed
    orders are taken to the local U.S. Post Office3 and mailed.
    Most orders go out the same day that they are received. The
    shipping options and charges for shipping and handling are
    detailed on Cliptomania.com.

    After the orders are put into the mail, Christy sends
    each customer an e-mail thanking her for the order, telling
    her it has been shipped, spelling out the return policy, and
    where appropriate, encouraging her to read the instructions
    in the box describing how to put on the earrings.
    Candy explains:

    We found early on that customers were having trouble
    with some of the earclips because they didn't
    know how they worked—they were twisting them
    and breaking them. So I made a graphic and wrote

    2 Their credit card verification process has been very effective. There
    have been very few instances in their history where they were charged
    back on a credit card transaction.
    3 The boxes are too small to make it feasible to use a package service such
    as UPS.

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    Part II • Applying Information Technology

    directions showing how to put them on properly and

    we include these instructions in the box with the

    earrings.

    Some customers are not comfortable ordering over
    the Web, so Cliptomania also accepts orders by mail or fax.
    Such orders are relatively rare (less than 2 percent), which
    is fortunate because it is more work to process them as the
    information has to be manually entered into the computer
    and the credit card processing must be done manually. Mail
    orders sometimes include items that were in stock when the
    buyer decided to make the purchase but are sold out by
    the time the order is received by Cliptomania. Initially the
    Santos accepted personal checks in payment of mail orders,
    but they have had enough problems with this that they now
    only accept credit cards and U.S. Postal Money Orders as
    payment.

    Cliptomania also reluctantly accepts orders over the
    phone. They discourage phone-in orders because this
    requires someone to sit at the computer and enter the order
    while talking over the phone, and this is quite time
    consuming for their small staff. Despite the following plea
    on the "how to order" page, they still receive and handle
    several phone-in orders a week:

    Please do not use our phone number to place an order.
    We are a small family-run store and that would overwhelm
    us. We would be happy, however, to answer
    any questions you may have at that number.

    One of Cliptomania's PCs is a laptop. The office
    printer has two trays, one with plain paper and the other with
    mailing labels. Things are set up so that if the Santos go on a
    trip they can log onto the network via the laptop, process
    orders from the Web as though they were in the Cliptomania
    office, and print out the orders and mailing labels.
    Workers can come in and pack and mail the orders, and
    Cliptomania's operations can continue uninterrupted.

    Foreign Sales

    About 10 percent of Cliptomania's sales are to customers
    outside of the United States. Selling overseas has some
    challenging aspects. There is the language problem—
    their overseas sales are restricted to English-speaking
    countries—Canada, Ireland, Australia, New Zealand, and
    English-literate persons in Japan. Initially Cliptomania
    sold earrings in the United Kingdom, but because of long
    delays in clearing British customs, they no longer accept
    orders from there.

    The cost to a foreign customer is considerably higher
    than in the United States because of higher shipping cost
    and import duties that may be charged. A major problem is

    verifying the validity of credit cards. On the other hand,
    currency exchange is not a problem as the credit cards take
    care of that—Cliptomania bills in dollars, and the customer's
    credit card is charged in his or her local currency at
    a reasonably good exchange rate.

    Although Canadian import duties on jewelry make
    Cliptomania's earrings cost as much as 60 percent more
    for Canadians than they cost for Americans, the majority
    of their foreign sales are to Canadians. Overseas customers
    may pay even more than Canadians because shipping costs
    are higher.

    In July 2003, Cliptomania attempted to expand its
    presence in Japan. They had been told that Japan could be
    a big market for clip-ons. They tried to set up a Japanese
    language Web site, but were not successful. Eventually
    they wrote off the Japanese experiment as a failure, but
    they still accept orders from there as long as they are in
    English.

    In 2003, a man from Mexico e-mailed Cliptomania
    and was adamant about needing three pairs of thin hoop
    earrings. Although they do not usually sell in Mexico,
    Candy worked with him and describes what transpired in
    this case:

    Mail theft is rampant in Mexico, and has been for at
    least 10 years. As the U.S. Postal Service does not
    serve his area, the customer said he would pay for
    UPS or FedEx shipping. The shipping costs
    exceeded the costs of the earrings as neither company
    would ship by ground due to theft problems.
    The customer was afraid a money order would not
    reach us, so he sent his credit card number by three
    different e-mails and the expiration date by a fourth.
    And then the whole order had to be manually done.
    The time it took to research this and all the e-mails
    sent back and forth added up to a loss to us if we add
    the value of my time. He was thrilled with his earrings,
    but I am convinced we have made the right
    choice not to sell in Mexico!

    Marketing on the Web

    Marketing on the Web is primarily a matter of getting
    potential customers to visit your Web store. For several
    years, Jim spent half time as Cliptomania's Vice President
    for Marketing and half time with his insurance business,
    but Jim's son, Greg, has recently taken over most of
    Cliptomania's marketing efforts.

    The primary way that potential customers find the
    Cliptomania store is by searching on a term such as clip
    earrings
    on a search engine such as Google, Yahoo!
    Search, or Microsoft's Bing. When Cliptomania got started

    in late 1999, search engines on the Internet were still
    listing sites by relevance based on the site's fit with the
    search terms. In very quick order, Cliptomania was listed
    number one on all the search engines when someone
    searched for clip-on earrings. But soon the environment
    changed radically. Jim explains:

    When the dot-coms went "dot bomb" in 2000, the
    whole environment got even more dynamic—it
    went ballistic. Since I was devoting lots of time to
    keeping up with what was going on, I quickly
    caught on to the fact that the industry somehow had
    to generate revenue and profits instead of just
    expanding its customer base. This is when Yahoo!
    went from a modest fixed monthly charge to adding
    fees based on volume.

    About this time the GoTo search engine
    started charging for listing position. There was not a
    fixed price for the top positions. You stated how
    much you would pay per click for each of your
    search terms, and if you bid high enough you could
    be number one or number two on a GoTo search.
    But if you did not pay you might be down on the
    second or third page where 95 percent of the people
    would not find you. I jumped on this and immediately
    agreed to pay GoTo (which changed its name
    to Overture and eventually became Yahoo! Search
    in 2005). We had an instant increase in our business!
    Within a week, it was very obvious that our sales
    were up significantly, and they stayed up.

    At the start we paid one cent whenever GoTo
    sent a person to our site. However, only 1.2 percent
    of these clicks resulted in a sale, so the cost was
    about 83 cents per sale. That cost was quite acceptable,
    but since that time our cost per click has
    increased to where the cost per sale can eat up most
    (or sometimes all) of the profit on that sale.
    However, we are willing to pay a high price because
    we view this as an acquisition cost—hopefully a
    good proportion of these buyers will be repeat
    customers who will come directly to Cliptomania
    without going through a search engine (which is one
    reason why we encourage people who visit our store
    to bookmark us).

    People search the Web by entering combinations of
    keywords, and the search engine produces lists of Web
    pages that are related to these search terms. Today there are
    two ways that your Web store may appear on search engine
    results—sponsored links and relevancy ranked listings.
    The sponsored links appear at the top and along the right-
    hand side of the results page. Search results ranked by

    Case Study II-5 • The Cliptomania TM Web Store 315

    relevancy appear below the top-level sponsored links and
    may go on for page after page. A Web site may appear both
    as a sponsored link and on the relevancy ranked listings.

    Search Engine Advertising

    Sponsored links are the major way Cliptomania advertises
    on the Web. Your sponsored link is an advertisement,
    and you get to write the short description that is
    displayed as the sponsored link. You want this description
    to attract potential customers so that they will click
    on it to visit your store, but you want it to realistically
    describe your offerings because you do not want persons
    who have little probability of buying to click and cost
    you money.

    To establish a sponsored link on Google AdWords,
    you bid a specified amount that you are willing to pay per
    click on a Google search for a specific search term. Thus,
    you must specify the search terms that you are interested in
    and you may bid a different amount for each of your specified
    terms. You may not pay the amount you bid for each
    click as you actually are charged one cent more than the
    next lower bid on that term. You can specify your search-
    targeted keywords as broad matches, phrase matches,
    exact matches, or negative matches.4

    The amount that you bid determines your position
    among the sponsored links for that term—the highest
    bid gets the top position, the next bid gets the second
    position, and so on. For several years, Cliptomania tried
    to be among the top three positions on its major search
    terms.

    The Cliptomania site includes over a hundred
    search terms, but most customers access them through a
    small number of terms such as "clip earrings" or "clip-on
    earrings." Cliptomania only pays for the terms that are
    used by most customers because it doesn't make sense to
    pay for a search term where a person will click on your
    site and find that she has no interest in buying your
    product.

    The placement of your sponsored links can change
    instantaneously as your competitors can change their bids
    at any time. If you want to stay at the top of the sponsored
    listings, you have to pay close attention to what is going on
    so that you can respond to competitors' moves. However,
    there are limits to what you can afford to pay per click
    without losing money on each resulting sale. The search
    engines provide tools that allow you to analyze the results
    you get from your sponsored links so that you can make
    informed decisions about how much to bid on each of your
    search terms.

    4 Explanations for these terms can be found on the Google Web site.

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    Jim and Candy's son, Greg, has examined their strat

    egy in pay-per-click advertising and sharpened its focus.

    Greg explains:

    In a search for a longer term that includes "clip-on
    earrings" we have what is called a general match
    which means that if we don't have a specific term set
    up that matches the search term then the search
    engine will default to a general search on clip-on
    earrings. So if somebody does a search on "little girl
    clip-on earrings" and we don't have that term there is
    no problem—a Cliptomania advertisement still
    comes up—but we don't pay the 10-cent minimum.
    Instead, we pay what we bid on the term "clip-on
    earrings," which is much higher. So I am going
    through and adding those more specific terms to bid
    on. These terms are converting for us at a higher
    percentage because they are very specific terms, and
    they cost less per click because there are fewer
    people bidding on them.

    We have set up specific search terms for any
    non-pierced term (non-pierced, clip-on, clip, clasp,
    etc.). There are lots of them and we find new ones all
    the time. Our conversion rate on these terms once we
    set them up is pretty high. We don't have to bid high
    on them so we are converting at a lower cost per
    click. Also, I am setting up specific search terms that
    include the words men, boys, male, guys, etc. A certain
    percentage of men, particularly the young men,
    are going to be non-pierced, so we want to be in the
    top five for those searches. And the child-related
    terms are good too, as they will convert at a higher
    rate than more general terms. Only one in twenty
    women have non-pierced ears, but a higher percent of
    children and young men who want to wear earrings
    will have non-pierced ears.

    The recession in 2009 caused Greg to modify his
    approach to advertising:

    My approach to advertising Cliptomania on the
    Internet is different right now than it was in the
    past. Currently, it is mostly like "damage control."
    The cost per acquisition for bidding on the top 3 spots
    for Cliptomania's most common search terms can
    be as high as, and often higher than, the net first-
    time sales they generate. There is a lifetime value of
    a customer, but in this economy I have to be pragmatic
    about how long it will take to realize a profit
    from aggressively bidding for customers. So my
    goal is to try to keep Cliptomania on the first page
    of paid advertising for our most common search

    terms, but I avoid the top position unless it is relatively
    inexpensive to occupy. The few times in the
    past year that I have deviated from this approach by
    aggressively bidding for the top positioning have
    demonstrated that the extra cost was not justified by
    the relatively few extra sales that were generated.

    The Relevancy Listings

    Although the sponsored links are important, according to
    Greg about three-fourths of the clicks Web sites receive
    come from the relevancy listings, so it is very important to
    appear among the top few relevancy listings. If you are not
    on the first page, most of the searchers will not find you.
    Therefore it is very important to understand how the search
    engines work and how they determine their relevancy
    rankings. For competitive reasons Google and the other
    Web search companies are reluctant to explain exactly how
    their search engines determine their rankings, but each of
    them has a different algorithm for determining its relevancy
    rankings. As of this writing Google is the dominant
    search engine, and it seems to have the most complex
    approach to its relevancy rankings. The following excerpts
    from the Google Web site explain in general how its search
    engine works:

    The process by which we find content to include in
    our search index is known as "crawling." Google is a
    fully automated search engine that uses computer
    programs known as "spiders" to "crawl" the Web
    and find sites for inclusion in our search index.

    The spiders analyze the Web pages for relevant
    terms and phrases that characterize the content of the site,
    and Google includes these terms in the giant index that it
    uses when you perform a Google search. Google's Web
    page explains:

    Google goes far beyond the number of times a term
    appears on a page and examines all aspects of the
    page's content (and the content of the pages linking
    to it) to determine if it's a good match for your
    query.

    The following presents what Google reveals on its
    Web site about its relevancy rankings.

    Search results are generated automatically using
    algorithms that weigh numerous factors about the
    quality of a given Web page and its relevance to a
    user's search query. Google doesn't accept payment
    either to include sites in our search results or
    to improve or alter the ranking of sites in our
    search results.

    Google uses PageRank to examine the entire
    link structure of the Web and determine which pages
    are most important. It then conducts hypertext-
    matching analysis to determine which pages are
    relevant to the specific search being conducted. By
    combining overall importance and query-specific
    relevance, Google is able to put the most relevant
    and reliable results first.

    PageRank Technology: PageRank performs
    an objective measurement of the importance of
    Web pages by solving an equation of more than
    500 million variables and 2 billion terms. Instead
    of counting direct links, PageRank interprets a link
    from Page A to Page B as a vote for Page B by
    Page A. PageRank then assesses a page's importance
    by the number of votes it receives. PageRank
    also considers the importance of each page that
    casts a vote, as votes from some pages are considered
    to have greater value, thus giving the linked
    page greater value. Important pages receive a
    higher PageRank and appear at the top of the
    search results. Google's technology uses the
    collective intelligence of the Web to determine a
    page's importance.

    Hypertext-Matching Analysis: Google's
    search engine also analyzes page content. However,
    instead of simply scanning for page-based text
    (which can be manipulated by site publishers
    through meta-tags), Google's technology analyzes
    the full content of a page and factors in fonts, subdivisions,
    and the precise location of each word.
    Google also analyzes the content of neighboring
    Web pages to ensure the results returned are the
    most relevant to a user's query.

    In summary, Google combines at least two major factors
    to determine the ranking of Web sites in response to a
    search: (1) how well the content of the site matches the
    search terms and (2) the quality of the Web site defined
    primarily by the number and quality of the Web sites that
    link to it.

    In regard to the page content component of the ranking,
    it is important that the crawlers find indications of the
    content that people may be searching for on the page. For
    example, Cliptomania has a number of what they call
    "bead earrings," but many potential customers search for
    these as "beaded earrings" and may not find Cliptomania's
    store under that search term. Also, Web crawlers cannot
    deal with images, so if your content is in images, it will not
    show up on searches unless the images are also described
    in text. For example, if you are a dude ranch that features
    horseback riding and emphasize that in pictures but not in

    Case Study II-5 • The Cliptomania TM Web Store 317

    text, the Web crawlers will not rank you high on "horseback
    riding" searches.

    Other Marketing Approaches

    Jim experimented with "site-targeted advertising" through
    Google AdSense where Google places an ad for you on
    Web pages that are found via related searches. These ads
    would not appear on one of Cliptomania's competitor's
    pages, but might appear on the page of someone who sells
    scarves or beauty products or on other categories that Jim
    might specify. You may pay by the click or by how many
    persons view your ad. Google pays the person who
    allowed your ad to appear on his page and charges you for
    your clicks or views. After trying this type of advertising,
    Jim decided that it was not profitable and discontinued
    that approach.

    Jim will not accept ads for related products on
    Cliptomania's Web pages. He says:

    We don't like the idea of cluttering up our store with
    links that send people away and they may not come
    back. Furthermore, we have worked hard to provide
    superior service and achieve an outstanding excellence
    rating. We have control over how you are treated
    when you deal with us, but if we refer you out to
    another site we lose that control. If someone gets bad
    service from a store we sent them to, they might associate
    that experience with us, and our good reputation
    is too important to risk.

    The Santos have established another Web site, www.
    earringinformation.com, that contains a lot of information
    about non-pierced earrings including information on how
    to adjust them, what styles are best with different shaped
    faces, and other interesting information and ideas. This site
    also extols the virtues of Cliptomania and encourages
    visitors to click to visit Cliptomania, so this site is a
    marketing tool for the Santos. Although Jim will not
    accept advertising on Cliptomania.com, he does allow ads
    on www.earringinformation.com
    and receives some
    revenue from this source.

    Like many Web businesses, Cliptomania also owns
    quite a number of URLs with names that are similar to
    Cliptomania or have to do with clip-on earrings. For example,
    if someone in desperation keys in the URL www.
    cliponearrings.com, his or her browser will pull up the
    Cliptomania Web site. Cliptomania gets some business via
    these URLs, and it is relatively inexpensive as it only costs
    a few dollars a year to maintain a URL.

    Another marketing approach involves the use of
    e-mail. Cliptomania has a file containing the e-mail
    addresses of all its customers. It also has a box on its home

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    page where a visitor can provide an e-mail address. About
    eight times a year, Candy sends everyone in this file a
    promotional e-mail. Candy cites examples:

    For the Twelve Days of Christmas (December 26

    through January 12) everything in the store is a fixed

    percent off. I give our customers a jump on that by

    sending out an e-mail that lets them get the discount

    a few days before other visitors so that they can get

    the most desired stock before it sells out.

    These e-mails can be very effective. I sent out

    an e-mail around April 25 that said: "Here comes

    Mother's Day, graduation, wedding season and

    proms. If you or someone you know doesn't have

    pierced ears we have what you need for these occa

    sions." That produced a tremendous spike in our

    sales over a two-week period.

    Incidentally, repeat customers provide a lot of
    Cliptomania's business. Through their eclectic product
    offerings and outstanding service, the Santos have built a
    very loyal customer base, so a sale to a first-time customer
    is just the beginning of a very productive relationship for
    Cliptomania. They also get a lot of new business by word
    of mouth from satisfied customers.

    Jim is always seeking ways to increase sales so he
    continues to search for and experiment with new marketing
    approaches so that Cliptomania doesn't fall behind.
    However, the Internet is such a dynamic environment that
    not all Jim's initiatives work out well. He has spent several
    thousand dollars each year on experiments that were failures,
    but he realizes that in such a dynamic environment
    you must take some calculated risks.

    Changing W eb Service Pr o viders

    In 2006, the Santos began to have problems with the service
    that Yahoo! was providing. Customers were reporting
    that they were having trouble placing orders, and
    Cliptomania was being charged more than once for some
    transactions. They called in their consultant to help them
    deal with these problems but were not able to resolve
    them all.

    To make a long story short, it turned out that the consultant's
    company, NetProfits Internet Consulting, had also
    become a Web service provider and was serving a number of
    former Yahoo! customers. In the fall of 2006, Cliptomania
    switched to this new Web service vendor with the URL
    Cliptomania.net.
    The new vendor charged substantially less
    than Yahoo! and provided services that in many ways were
    better than those Yahoo! offered, so Cliptomania is no
    longer a Yahoo! store.

    Advantages of the New Store

    Jim and Candy's son, Greg, who joined the family business
    in 2006, says that the new vendor's software offers a
    number of somewhat subtle advantages that he is taking
    advantage of to improve Cliptomania's performance. Greg
    is particularly concerned with improving Cliptomania's
    performance on the relevance rankings on Web searches.
    Greg notes:

    The new site has two improvements that are helpful.
    First, the new store allows for meta-tags for each
    product, while the Yahoo! store only allowed a metatag
    on the main page. A meta-tag is a description that
    the customer does not see, but is available to the Web
    crawlers. Second, the Yahoo! store severely restricted
    the length of product descriptions, but the new store
    can have longer descriptions. Both of these allow us
    to include more descriptors that can be picked up by
    the Web crawlers and thus increase our relevancy
    rankings.

    For example, the meta-tag gives me the
    opportunity to be specific about the type of gem
    stone in the earring. In the product description that
    the customer sees we may describe the earring as a
    gem stone, but in the meta-tag I can be more specific
    and describe the gemstone as garnet—the
    January birth stone—which allows people to do
    more specific searches.

    As another example, in our product descriptions
    we describe our earrings made of beads as
    "bead earrings," while some customers may
    search for them as "beaded earrings" and not find
    ours. In the meta-tag we can call them beaded
    earrings and thus be found by searching on either
    term.

    An Unforeseen Consequence of the Change

    When the Santos changed Web service providers from
    Yahoo! to NetProfits Internet Consulting, they operated
    the two stores in parallel for a while, giving the
    new store the URL Cliptomania.net
    and keeping the
    old one as Cliptomania.com.
    When they switched over
    to the new store, its URL remained Cliptomania.net
    rather than Cliptomania.com.
    Although this small
    change did not affect Cliptomania's position on its
    sponsored links, it had serious consequences for
    Cliptomania's relevancy rankings. Before this change,
    Cliptomania.com
    was among the top five in the
    relevance rankings on most searches for non-pierced
    earrings. However, by late December the Santos discovered
    that neither Cliptomania.com
    nor Cliptomania.net
    was in the top 100 of the relevancy rankings on the

    major search engines—they had fallen off the radar!
    The Santos had been so busy handling the Christmas
    rush that they had not monitored the relevancy rankings
    so they do not know exactly when the rankings
    collapsed.

    The Santos had retained both the Cliptomania.com
    and the Cliptomania.net
    URLs, but the information on all
    the earrings for sale was on Cliptomania.net.
    If someone
    went to Cliptomania.com, he or she was automatically
    transferred to Cliptomania.net, so the store was indirectly
    available via Cliptomania.com.

    This change seems to have confused the search
    engines, some more than others. Cliptomania.net
    gradually
    rose in the relevancy rankings on Yahoo! Search and
    MSN Search to where by February they appeared on the
    first or second pages. However, neither Cliptomania.net
    nor Cliptomania.com
    appeared in the top 100 of the
    Google relevancy rankings. Greg tweaked the content of
    their pages every way he could think of to try to increase
    their relevancy on Google, the most popular search
    engine, to no avail. On March 1, the Santos finally gave
    up and returned the store content to Cliptomania.com.
    In
    about a week Cliptomania.com
    was near the top of the
    Google relevancy rankings and also near the top of
    the other search engines. Things were back to normal, but
    the Santos have no idea how many sales Cliptomania lost
    due to this episode.

    Challenges

    Although the Santos have had to overcome many difficulties
    and problems, Cliptomania has been an outstanding
    success. During a period where most Internet retailers
    have struggled, Cliptomania has done relatively well.
    Started as a part-time sideline for Jim and Candy,
    Cliptomania is a thriving business despite the downturn
    in the economy.

    Up through 2005 Cliptomania's yearly dollar sales
    grew at least 20 percent a year. However, in 2006
    Cliptomania's sales leveled off for the first time. Jim
    explains:

    I am sure that some of our lack of revenue growth
    was due to the problem with our search engine relevancy
    rankings, but there were also other factors
    involved. When the price of gasoline hit $3.00 a
    gallon that summer we got the number of orders that
    we expected, but they were much smaller. It is obvious
    that people were buying earrings with their
    disposable income. Although our number of orders
    in 2006 was up about 20% over 2005, the total
    dollar sales for 2006 was about the same as
    2005. Also, the advertising is getting much more

    Case Study II-5 • The Cliptomania TM Web Store 319

    expensive, so the cost of doing business went up and

    our profits went down.

    The year 2006 was the beginning of difficult times
    for retailers who sell discretionary items such as earrings.
    By 2010, Cliptomania's sales were down almost 40 percent
    from the peak in 2006. Although many of its competitors
    have gone out of business, Cliptomania has remained
    profitable because it has a good reputation, loyal customers,
    low fixed costs, and (other than the Santos' initial
    investment) it has been financed entirely from revenues so
    it does not depend on bank financing. Times have been
    hard, but Candy is confident that when the economy
    recovers Cliptomania will be back on a growth path.

    In 1999, when Jim and Candy started Cliptomania,
    they had little competition as a specialized Web store.
    Today, however, competition is fierce. If you do a search on
    "clip-on earrings," you will get over a million responses.
    Jim explains his competitive situation:

    We have competition from stores that exclusively
    sell clip earrings, fashion jewelry stores that sell clip
    earrings on the Web, and big portals like eBay,
    BizRate and Shop.com that do not stock products
    themselves but present the goods of others. All this
    competition is vying with us for position on the
    relevancy search results and bidding for position of
    ads on the Web pages, which is driving up the cost of
    our basic advertising.

    As an example of the intensity of competition, when
    a person types Cliptomania into the Google search box
    rather than keying in the Cliptomania.com
    URL, the
    results page includes advertisements for some Cliptomania
    competitors. It appears that these competitors are bidding
    on Cliptomania's trademarked name as a search term! On
    one of these ads the top line, the one the user clicks on,
    contains Cliptomania in large letters, a blatant attempt to
    mislead the customer. The Santos don't know how often,
    but it seems certain that some people click on one of these
    ads thinking that they are going to the Cliptomania store.
    One confused lady called Cliptomania to complain about
    poor service on a product she purchased from a competitor
    that she thought was Cliptomania. Despite repeated
    requests from Candy, Google has refused to block ads
    from appearing in the results of searches on the
    Cliptomania trademark.

    The Web is a jungle out there, and it is still evolving
    rapidly. Jim explains:

    The Web is so dynamic and so competitive that we

    have to keep running hard just to keep up. I look at

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    Part II • Applying Information Technology

    other successful Web stores and try to learn from them.
    And I devote a lot of time and energy to identifying and
    keeping up with new developments and trends relating
    to the Internet. For example, an obvious trend in this
    country is to go mobile. Everyone has a cell phone, and
    the Internet is going on the cell phone. The URL for
    mobile ends with .mobi, so we have purchased our
    most critical URL terms with the .mobi ending. If
    someone wants to shop for clip earrings through her

    cell phone we want Cliptomania to be found, so I have
    purchased those URLs just to protect our turf.

    We are lucky that we started when we did.
    Today there is no way that we could be successful
    starting Cliptomania from scratch, but we have
    reached the point where we believe we can continue
    to prosper despite competition, downturns in the
    economy, and a few missteps like we had when we
    changed service providers.

    © BrainMass Inc. brainmass.com October 10, 2019, 6:18 am ad1c9bdddf
    https://brainmass.com/business/e-commerce/development-of-an-e-business-538089

    Solution Preview

    (1)Discuss the strategic issues faced by the company in launching and developing their e-business ventures.
    The first strategic issue faced by the company in launching and developing their new e-business venture was to set up the website and make it functional. Jim and Candy decided to pay a vendor for hosing the website and use the computer resources of the vendor for their business. At the inception they used Yahoo Store. However, the services of Yahoo Store gradually became more expensive. Using the services of a vendor made it easy for Jim and Candy to commence their e-business. Since there was not much professional help, the two owners had to design their own website. Another strategic issue was that of credibility. Customers often phoned in to talk with real people before they placed orders.
    One of the most important issues that were related to the business was finding the ...

    Solution Summary

    The CliptomaniaTM Web Store case study is explained in a structured manner in this response. The answer includes references used.

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