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Small Business Webinar
October 23, 2007
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Copyright 2007 MODASolutions Corp. All Rights Reserved.
How Small Businesses prefer to Checkout
Agenda:
How Small Businesses Buy Online and Pay OnlineKaren Webster, President, Market Platform Dynamics
eBillme Online payment option for Small BusinessLesley Purtell, eBillme
Questions Online chat in Go to Webinar
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2007 Market Platform Dynamics
Cracking the Catalyst CodeB2B Online Purchasing and Payment Trends: How Small Businesses Buy and Pay Online
October 23, 2007
Karen Webster [email protected]
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Key Insights
Small business online purchasing and payment behavior mirrors consumer behavior.
The accounting department plays an important role in the purchasing andapproval process of small businesses.
Credit is important feature but there is an increasing interest in using debit-like options online .
Transaction security is a chief concern and small businesses prefer not to
disclose payment card information when transacting online. Built-in controls and end-to-end monitoring of payment and shipping are
highly valued.
The market is big enough for new entrants and products.
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Objectives and Research Questions
In 2007, MPD conducted a survey of U.S. small businesses (under < $10M in annual revenue)to better understand the online buying, payment, and purchasing behavior of small business.
Research Area Key QuestionsOnline spend preferences
What do SBs buy online?
How often do SBs buy online?
How much do SBs spend online?
Online payment preferences
What payment instruments are used to make online purchases?
What is the relationship of type of purchase to type of paymentinstrument used?
Online purchasing processes
Who buys and who authorizes online purchases and paymentdecisions?
How does the profile of the decision maker impact the payment optionselected?
What are the most critical features of an online payment solution?
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Methodology
Internet-based survey of 721 respondents
Survey was organized into three sections1. General respondent andcompany information
Collected SB demographic information such as annualrevenue, industry segment, geographic location, and years inoperation
2. Company payment andprocurement process
Collected information on what SBs buy online, how often, howmuch they spend, and how they pay.
3. An alternativepurchasing process
Tested attributes of a hypothetical solution for appeal.
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7
The Sample At A Glance
AnnualRevenue
$100 to $499K,16.6%
$1 to $4.9M,32.5% $500 to $999K,
17.2%
Less than$100K, 14.6%
$10M or more,8.8%
$5 to $9.9M,10.2%
Number of Employees
1 to 4, 18.0%
100 or more,
18.0%
21.0%25 to 49, 8.0%
50 to 99, 11.0%
proprietorship,
9.0%
5 to 9, 16.0%
RespondentRole
Executive or
senior m gmt,
19.9%
Purchasing o r
procurement,
3.8%
Administration,
22.9%
Other: , 2.6%President, CEO,
or owner, 36.5%
Accounting or
fin ance, 14.3%
Years inOperation
7 to 9 years,
11.4%
1 to 3 years,
6.4%
4 to 6 years,
11.4%
Less than one
year, 1.4%
10 years o r
more, 69.3%
Business and respondent details (n = 721)
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Survey Says Company Payment and Procurement
Process
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2007 Market Platform Dynamics
SBs Are Very Active Online
70%64% 59%
0%10%20%30%
40%50%60%70%80%
Percent That MakeOnline Purchases Percent That UseOnline Banking Percent That UseOnline Banking toPay Bills
The smallest SBs (earning less than $100,000) had the lowest penetration rate of online banking with the penetration rate growing as the SB increases in size.
n=721
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2007 Market Platform Dynamics
Why They Dont Shop Online
SBs
of all sizes expressed concern about the security of online transactions.
Revenue Segment Primary Reasons Why
They Dont Shop Online
AR less than $100K Not secure, no credit card
$100K =< AR < $1M Not secure, not offered by suppliers
$1M =< AR < $5M Not secure, not offered by suppliers
$5M =< AR < $10M Not secure, no credit card
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2007 Market Platform Dynamics
What They Buy
84.9%
63.9%
43.2% 44.0%
18.3%
51.2%
0%10%
20%
30%40%
50%
60%
70%
80%
90%
Office supp lies (e.g., toner,paper, staples)
Office techno log y (e.g.,compu ters, pr inters,software)
Printing or shippingservices
Publications (e.g., boo ks,news articles, researchreports)
Raw materials
Travel and entertainmentexpenses
(n=502)*
*Data limited to responses from SBs that make purchases online.
For the largest purchase category, office supplies, nearly half of SBs (45.9%)
make monthly purchases, followed by 26% that make weekly purchases.
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2007 Market Platform Dynamics
How They Pay
0.5%
1.7%
2.6%
4.0%
10.6%
11.1%
21.0%
45.5%
0% 10% 20% 30% 40% 50%
Cash by mail
EFT (e.g. transfer from checking account)
Personal debit card
Corporate debit card
Personal credit card
Check by mail
Supplier credit
Corporate credit card
(n=423)*
*Data limited to responses of SBs that purchase office supplies online
The smaller the SB (in terms of annual revenue), the less likely it used corporate credit cards to make online purchases (or any payment device tied to credit, such as supplier credit),
suggesting that credit availability is an issue for small SBs.
Q. What payment methoddoes the company typically
use to purchase office supplies?
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2007 Market Platform Dynamics
Who Calls The Shots
As the SB grows in size, the approval of purchases shifts to senior management or, even more predominantly, to individuals within the accounting department.
M indicates where over 25%makethe purchase A indicates where over 25%approvethe purchase
CEO Sr. Mgmt Account-ing Procure-ment Admin-istration
$0 < R < $100K M, A
$100K < R < $500K M, A M
$500K < R < $1M A A M
$1M < R < $5M A M, A M
$5M < R < $10M M, A M, A
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2007 Market Platform Dynamics
Cracking the Catalyst CodeSurvey Says . . .
An Alternative Payment Process
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2007 Market Platform Dynamics
Attributes Of A Hypothetical, Alternative Purchasing And Payment Solution
1. Online purchases can be made without owning a credit card
2. Online purchases are made without a line of credit extended3. Online purchases are made without disclosing payment card
information
4. Online purchases are approved before payment is released tothe merchant
5. Online purchase approval and payment can be tracked online6. Online purchase history can be set up to download into the
companys accounting software
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2007 Market Platform Dynamics
Most And Least Appealing Attributes
29.3%
13.5%
34.3%31.0%
35.5%
19.3%15.9%
21.5%
5.4%9.0%
4.8%
13.3%
0%
10%
20%
30%
40%
Online
purchasescan be madewithout
owning acredit card
Online
purchasesare madewithout a line
of c reditextended
Online
purchasesare madewithout
disclosingpayment card
information
Online
purchasesare approv edbefore
payment isreleased
Online
purchaseapproval andpayment can
be trackedonline
Online
purchasescan be set upto download
into thecompanysaccounting
software
% That Found It Appealing % That Found It Unappealing
(n=502)*
* Responses limited to responses of SBs that make purchases online.
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2007 Market Platform Dynamics
Cracking the Catalyst CodeConclusions And Recommendations
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2007 Market Platform Dynamics
Revenue SegmentLess than $100K
n = 123 $100K =< R < $1M
n = 219 $1M =< R < $5M
n = 232 $5M =< R < $10M
n = 147
Ave. # of Employees 1 to 4 1 to 10 10 to 24 100 or more
Ave. # of Years inOperation
10 or more 10 or more 10 or more 10 or more
Representative Industries Very concentrated: mostlyprofessional services, someretail
Concentrated: mostlyprofessional services, someretail, construction
Less concentrated: professionalservices, construction,manufacturing, retail
Least concentrated: professionalservices, construction, high-tech,manufacturing, retail
Bank Online? No Yes Yes Yes
Buy Online? Yes 60% Yes 78% Yes 70% Yes 65%
If They Dont, Primary
Reasons Why?
Not secure, no credit card Not secure, not offered by
suppliers
Not secure, not offered by
suppliers
Not secure, no credit card
Who Makes Purchases CEO CEO, Admin Admin Admin, Accounting
Who Approves Purchases CEO CEO Sr. Mgmt, Accounting Accounting
What They Buy Online Office supplies Office supplies, officetechnology
Office supplies, officetechnology, T&E purchases
Office supplies, officetechnology, T&E purchases,
publications
How Often They BuyOnline
Quarterly, followed by Monthly Monthly, followed by Quarterly Monthly, followed by Weekly Weekly, followed by Monthly
How Much They SpendOnline/Transaction
Between $10 and $99 Between $100 and $500 Between $100 and $500 $100 to $500 and $500 to$1,000
How Much They SpendOnline/Year
Low( < $10K/year)
Low( < $15K/year)
Mid-Range(>$15K & $25K/year)
Essential Attributes of aPayment Solution Does not require a credit card Does not require disclosingpayment card information
Does not require a credit card Does not require disclosingpayment card information Offers additional controls likepurchase approval and tracking
Does not require a credit card Does not require disclosingpersonal information Offers additional controls likepurchase approval and tracking
Does not require a credit card Does not require disclosingpayment card information Offers additional controls likepurchase approval and tracking
What We Learned: Survey Results Snapshot
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2007 Market Platform Dynamics19
Implications Of The Findings
The line between SBs personal and business payment methodsblur.
Alternative SB payment solutions must appeal not only to theCEO, but to accounting too.
SBs, wary of online security, are more likely to prefer an onlineoption where payment card information does not have to bedisclosed.
SBs want a process with fewer moving parts integration withaccounting and online banking has a high appeal.
There seems to be plenty of interest on the part of SBs toconsider alternative online payment methods.
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2007 Market Platform Dynamics
Cracking the Catalyst CodeThank You.
Karen Webster [email protected]
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Copyright 2007 MODASolutions Corp. All Rights Reserved.
Cash Payment Options forSmall Business
Welcome
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eBillme Overview
Customers shop online, by phone, or by catalogPay with cash through online bill payPay from banks, credit unions, or bill pay portals (~13,000FI)
84 Million Online Banking Customers Are
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84 Million Online Banking Customers AreReady. To Shop at Your Site
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Leverage Online Banking
Large and active customer andbusiness base of 84 M source: eMarketer
Larger than American ExpressCard holders, Discover Cardholders or active PayPal users
64% of Small Businesses bankonline
Trusted, established
infrastructure 80% of online shoppers trustonline banking source: Forrester Research
source: eMarketer
North America in Millions
Online Bill Pay Online Banking
120
100
80
60
40
20
02002 2006 2009
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Small Business Service
Small business and SOHOs bank online, shop online, and repeatmore than the average consumer.
eBillme for SB and SOHOs. Cash payment option for Online and Call Center purchases No Credit: SB with no or limited credit can purchase without the use of
personal credit cards
Control over purchases: Managers now have control over thepurchasing processes with easy integration to accounting software IT Shops Manager Approves Controller Pays Books Updated
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eBillme Business Users
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eBillme User Experience
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eBillme at Checkout
Fast - Secure Checkout No need to enter personal financial numbers
No applications No pre-sign up required No authorizations No declines
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Business Submits Order
Business submits the order confirming that they selected eBillme andintend to pay eBillme for their order using online banking
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Order Confirmation
Order is complete
Payment instructions appear on merchants order confirmation page
eBill arrives simultaneously by email, forward eBill to accounting
Pay eBill at ANY US bank, credit union, or bill pay portal that offersonline bill payment
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Bill B P i S i
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eBillme Buyer Protection Service
Merchant BenefitsMerchant Benefits
New Premium ServicesNew Premium Services NO chargeNO charge
Increase Sales and Repeat OrdersIncrease Sales and Repeat Orders
Enhance Customer SatisfactionEnhance Customer Satisfaction
Reach New CustomersReach New Customers
Covert Price Sensitive and HesitantCovert Price Sensitive and HesitantShoppersShoppers
Price Protection : Get the bestpossible price
Return Guarantee : Provides amoney-back guarantee
In Transit Protection : Protectsfrom loss, theft, or damages that
may occur during shipping Payment Protection : Safeguards
against unauthorized transactions
A comprehensive package ofconsumer protection services.
Offers peace of mind with every
purchase.
R d i M h O i l C
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Reducing Merchant Operational Costs
No chargebacksNo NSFsNo fraud liability
No extra fees No up front fee No monthly fee No charge for refunds No charge for reporting No charge for exception handling
Reduce talk time in the call center
Reduce checks and manual processingReduce processing costs: eBillme fees rangefrom 1 2% per transaction
Costs
Bill D li R lt
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eBillme Delivers Results
Very popular
with a large number of consumers who consider online shopping a risky endeavor.
Don Cohen, Managing Partner, Tool King
The 40% increase in AOV is staggering, and the cost savingshave been significant .
Mark Crary, Dir. Of Marketing, pcRUSH.com
Our average order values have skyrocketed
compared to our other payment options.
John Congdon, CIO, bowlingball.com
60% Transaction Cost Savings
20% AOV Increase
13% ROR
We implemented eBillme as a customer retention solution and have seen a 6.2%
adoption rate . Dean Bellone, Founder, CompSource40 Hour Implementation
E er one Wins ith eBillme
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Everyone Wins with eBillme
Small BusinessesSecureConvenient and familiarNo costsAlternative to credit cardsAccounting integration and controlNo prior signup requiredBuyer Protection
MerchantsIncreased salesDecreased costsOptimized customer satisfactionGuaranteed fundsZero liabilityLeverage Online Banking userbase
eBillme at your Checkout
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eBillme at your Checkout
Cash Payment Options for
Small Business
Questions and Follow up
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Questions and Follow up
Karen WebsterMarket Platform [email protected]
Lesley PurtelleBillme/ [email protected]
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