The Internet is so pervasive it's hard to recall the time when itmmerce sites and finds out how to make buying on the Internet more inviting. didn't have commercial significance. To begin with, most sites simply said "here we are, aren't we clever", but in the last year, electronic commerce has taken off. Service providers like CompuServe had electronic malls for years, but the UK versions were weak, featuring only a handful of names. Worse still, the stores often presented a tiny fraction of their product range. This showed a stunning disregard for the nature of the medium.
It might be tempting to start with a small pilot, but consider how buying CDs differs in a shop from on-line. In a record shop it doesn't cost you anything to browse; it even warms you up in winter. You can look at album covers, check out tracks, even ask to hear one. Shops are great for browsing.
The web, despite what the software's called, isn't. It costs you to be there, it's slow and there's often limited information.
On the other hand, an on-line CD shop, with all available CDs in its database, is wonderful if you know what you want. Try looking for a classical CD in the high street. It takes five minutes to find the classical section, buried under the stairs next to sound effects. It is tiny and only contains Mozart's Greatest Hits. So, you go to the counter and ask, only to be faced with a look of complete amazement that anyone should want something that requires the assistant to engage more than ten brain cells. In the end, you give up.
Compare this with the on-line experience. When you know what you want, you can get to it in seconds with a decent search engine. It's a bit like the difference between a paper book and a CD version. The paper book is better for reading through, but the CD is superb if you want to find something specific. On-line selling is all about fast presentation of a wide range of goods. Forget the small, careful pilot that will give you inappropriate information - it's with your full range that you can really motor.
More to life than selling
The sales department would have him hanged for heresy, but David Birch, director at E-cash and telecommunications consultants Hyperion, thinks we shouldn't be obsessed with simple credit card sales. Electronic commerce is a lot more than this.
"You need a broader vision. We've been doing some interesting work on integrating purse cards like Mondex with the Nokia Communicator to get the ability to spend money in small amounts. For example, spending one pence to get some information - it's a whole new business that isn't possible with credit cards." Birch argues that high-street names need to have a single, consistent identity, whether on-line or in the shop. "An example is the projection of supermarket loyalty schemes on to the web. What companies should be doing is taking existing competencies rather than business models on to the Internet."
The BT Trading Places site, developed by TDS Internet is a good example of this. The idea is to provide a trading environment where it is possible to choose quickly between a range of vendors. Although the demonstration environment suffers from minimal products, it's a fascinating concept.
Announce what you need - toner cartridges, perhaps - and create instantaneous bargaining and a market price war.
BUPA, too, recognises that there's more to the Internet than traditional selling. Uwe Natho, IS director of BUPA, splits Internet business processes into four. "There's the general public with general information, and the professional (medical) community looking for answers to specifics such as healthcare information and how to make claims. Then we can use the Internet to take some of the business processes to the customer. For example, monitoring how a claim is progressing. Finally there is our intranet, providing communications within the company. Our corporate accounts like the idea of the Internet as a tool; some corporate customers insist on having communications via the Internet. Also, doctors see the advantages of communicating with their community throughout the world as a way of keeping current."
Natho points out that customer contact isn't all about selling. "We're running a recruitment programme using newspapers, but referring applicants to the BUPA site to get detailed job descriptions, giving much more detail than is possible in ads. We've been getting pretty good feedback. The next step is to Email in CVs. Then why not load these into our HR system?
When someone becomes an employee it can be automatically moved to their active file."
David Birch has a similar experience. "A further example (of business benefits) is recruitment. Every time someone comes to us through the web site we save several thousand pounds over using an agency. You have to take all parts of your site seriously. It's not just a big brochure with other stuff tacked on."
Where's your site?
You could have the best site around, but it's a waste of money unless it can be found. Many companies include their web site on advertising.
This is fine in a newspaper, but less valuable if it is going to be flashed up for half a second at the end of a television commercial. Probably the main benefit here is to make people aware that you have a web site, so they can go and look for it.
There are more focused reminders within conventional processes. The Barclaycard Profile point system involves filling in a form in the catalogue and posting it - but it also refers customers to the web site where selections can be ordered instantly. Of course, search engines and listings are important too. A popular game is getting your name to appear as high as possible in a search engine return. It's also worth remembering the classified listings, such as the UK Directory and Yell.
Probably the single most valuable initial exposure, though, is conventional media coverage.
Entranet's Nick Spooner stresses this. When Entranet put together Eagle Star's web site (see box) the company mercilessly worked the media, generating a wide awareness of the service through over 130 articles, including a front page in the Sunday Times. By using the editorial space of a paper (the bit people actually read), rather than advertising, the Eagle Star site was made much more visible. What's more, this approach doesn't just say here's the address, but tells you about what the site can do for you.
Making use of conventional media will become harder. Being the first to offer a service is news. Being the fifty-ninth is dull. Soon it will be necessary to pick out some particularly juicy connection to get the media involved. Become a pop star's favourite web site; break some silly world record - do whatever it takes to make real media coverage, because this will give a huge boost to customers awareness.
A question of trust
The traditional problem with doing business over the Internet is trust.
While most customers are happy to give a credit card number over the phone, they seem less happy sending it electronically, not knowing where in the world their transaction is taking place, or who might be intercepting the information. Secure technology is increasingly robust, but technology itself isn't enough - trust has to be built. It's here that big name companies may benefit since, rightly or wrongly, many are prepared to trust a name they know above a newcomer.
This theory is rather dented, however, by the experience of the Internet bookshops. BookPages and the Internet Bookshop offer their customers a choice of payment facilities, including faxing credit card details or posting payment, yet more than 95% of customers are happy to enter their credit card details. For the band of value between #5 (below which credit card payment isn't economic) and #100 (above which, many people are reluctant to buy something unseen), it seems that we are less concerned about using our credit cards on-line than media reports suggest.
Time for another look?
As Hyperion's David Birch points out, Internet business is still in its infancy. "The mass Ecommerce market isn't about PCs, it has to be about televisions, phones and other consumer devices."
There's a long way to go. But if your image of business on the Internet is limited to Tesco and Interflora, it's time you had another look.
SITES FOR SORE EYES
Eagle Star: www.eaglestardirect.co.uk
iCat (links to many Ecommerce sites): www.icat.com
Eagle Star: in sure hands
Nick Spooner, MD of Entranet, the consultancy behind the Eagle Star web site, believes they have taken an unusually business-driven view of using the Intranet. "It starts back in the business. What we've seen is web companies turn up, do a marketing pitch and build a heavy, graphics-laden site no one wants to use. We're focused on on-line commerce as a new sales channel. There's no magic; the first thing to do is market research."
Part of the feedback from this market research is unhappiness with waiting times. "The web is a great technology, but you've got to wait. For the consumer market we need formidable response. On the Eagle Star site we expect less than eight seconds from hitting the quote button to seeing a result. By having a local script do validation you don't have to go back to the server every time."
The Eagle Star site has achieved around 100,000 quotes in four weeks, netting a six figure revenue figure. As with the book companies (see battling bookshops), confidence in the Internet is greater than is generally perceived, with 90% of buyers using credit cards direct.
Internet commerce: battling bookshops
Far from killing off the bookshop, as some predicted, the Internet is ideal for the book trade. Few shops can stock more than a small percentage of titles, and books being fairly small and robust make excellent mail order products.
Britain has two major Internet bookshops, the Internet Bookshop and BookPages, which offer all books in print - well over a million - via fast databases searches and added value services. From the booksellers' viewpoint, the Internet is a low-cost shop window that enables more targeted marketing than a real shop. If revenue is any measure of success, the Internet Bookshop is doing well. Sales reached over #800K in the half year up to June, a rise of 89% over the previous six months.
Neither of the existing Internet bookshops is concerned about the arrival of the high street names Dillons and Waterstones on the Net. With 75% of orders exported, they believe UK high-street names will have little meaning abroad. The Internet bookshops hope to differentiate on cost and service. For example, the Internet Bookshop often lists the price of a book in the US and the UK; you can order whichever is cheaper. For business books this makes little difference in delivery time, but can halve the cost.
The Internet Bookshop also has a good example of database marketing providing customer service, with "Jenny, your personal librarian" at the bottom of the page. Select from author's name, publisher or type of book, and you will receive an Email whenever a new book is published. Neat. But as BookPages' Simon Murdoch points out, Internet businesses always have to monitor customer service. "We have to show that we're not just a database, but a human organisation. We have to create that trust. If you order something and don't hear anything for weeks, it devalues that trust." Both bookshops agree that speed of response to Emails is an example where they could, and are beginning to, do better.
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