Say what you like about the Internet, but it can't be denied that it is the biggest advance in mass communication since the invention of the printing press. When you work in the IT sector on a day-to-day basis, it's easy to take the ability to source information and services from anywhere in the world at the touch of a button for granted. Nevertheless, if you step back and look at the phenomenon objectively, it can still take your breath away.
Now that the world has started coming to terms with the rapid growth of such a powerful communications medium, IT vendors and analysts alike are encouraging companies to stop simply marvelling at the technology.
Instead, IT departments are being told to start using it in a structured, mature manner to increase their revenue streams.
Consequently, the Ecommerce concept has suddenly become a hot topic.
Flagship Ecommerce projects have hitherto been restricted to larger companies with lots of money to throw at the problem. Online ticket booking, food shopping and interactive malls have been made popular by companies with the resources to employ expert staff or third-party consultants in their bid for cyber sales. For a small company that wants to expand its sales channel, it can be much more difficult to know where to begin. Who are your likely customers to be on the Internet? How can you make your system secure? What initial steps should you take in constructing an Ecommerce solution?
Because an Internet presence puts you so clearly in the public view, it is vital that you get it right. Otherwise, a potentially revenue-boosting initiative could turn into a major source of embarrassment.
Six steps to success
According to Jon West, marketing director at electronic communications consultancy IS Solutions, there are six steps that a company should follow when setting out its Ecommerce strategy. Firstly, he said, an organisation must put in place an underlying communications strategy to support the Ecommerce solution. It is vital not to put the chicken before the egg, he explained, warning that some companies have foolishly tried to write the strategy after they have chosen the software. There is no point selecting the software until you have a solid, carefully thought out technology foundation to put it on, he explained.
Software selection and technical infrastructure is the second stage in an Ecommerce project, he argued, while the third stage involves the implementation of connectivity and security solutions. Once all this is in place, it will be possible to construct your site. This represents the fourth stage in a successful Ecommerce project, said West. The construction of interfaces from the Ecommerce system to the rest of the business systems is the penultimate step, and store management is the final stage.
When many people hear the word "Ecommerce", they automatically think of business-to-consumer sales. The idea of selling CDs, jeans or books to eager consumers is attractive, and many companies think that this is where their fortunes will lie. Nevertheless, said Netscape's senior systems engineer Dusin Rnic, business-to-business Ecommerce is just as important, and yet it can be overlooked when a company constructs its Ecommerce strategy.
Business-to-business Ecommerce was previously only an option for those companies rich enough to afford an EDI solution. The trouble with EDI is that it is designed for the construction of long-term electronic links between customers and suppliers who anticipate being together for a long time. Smaller companies were unable to afford EDI links because of their complexity and expense. Larger companies may still be interested in EDI in some areas, but as business relationships become more prone to change in a competitive market, the technology is becoming less relevant in certain areas. Buying expensive, carefully constructed precision engineering equipment on a regular basis from a trusted supplier may be an ideal application for an EDI system. Trying to buy 500 floppy disks for your office from the cheapest supplier that you can find on the Web would be very difficult if not impossible to do using EDI.
According to Piers Hogarth-Scott, director at Web consultancy Bluberry New Media, business-to-business Ecommerce may be a great place to start.
"Business-to-business is where most of the money is at the moment, although business-to-consumer Ecommerce is rapidly growing," he said. "Businesses tend to be more aligned with the Internet, and there are also economies of scale." Apart from the fact that you will be taking a small number of more valuable orders, the likelihood is that a business customer will be more confident and experienced than a non-technical consumer when it comes to buying over the Internet, he believes.
IS Solutions' West thinks that business-to-consumer sales are often a logical progression for a company that has initially set up a business-to-business site. He said that it can be easier to set up a business-to-business Ecommerce system simply because a company is likely to be aware of who its business customers are, enabling firms to target them rather than trying to sell to an amorphous consumer customer base. This may make it easier to build intelligence into the system using business rules customised for individual business customers, he suggested.
Many smaller companies may be daunted by the idea of constructing a technical infrastructure designed to handle an unknown quantity of customers. They may consider themselves out of their depth when using new technology such as Web servers, middleware and catalogue management software needed to organise their product listings. One way to cut through the whole tangled mess is to get someone else to do it for you. Simple Internet service provision is becoming a commodity, as is demonstrated by free consumer-oriented Internet services from the likes of Dixons. Some ISPs are now touting themselves as value added service providers who can construct and host an Ecommerce solution for their customers. Examples are companies such as TCS with its Emporia service offering, and NetBenefit.
One advantage of siding with a host service provider is that you may be able to take advantage of the interfaces to credit card clearing services.
This will enable you to verify a customer's credit worthiness online, so that you can confirm their order while they are still connected to your server.
The hosted approach can eliminate one of the most difficult problems for potential Ecommerce players, which is capacity scoping. Because new Ecommerce players have no final reference, they can only guess at the number of customers likely to access their site. It is very difficult to estimate the frequency of access, and even harder to predict patterns of activity that future visitors will follow. John Robinson, managing director of NetBenefit, told PC Week that many smaller companies will choose to enter at the virtual server level, sharing server space with other customers' Ecommerce sites that are also hosted by the service provider.
If the company's site proves to be very successful, then it can be migrated to its own server at a later date.
Adopting this approach also enables companies to avoid falling into the budget trap. Often, companies launching an Ecommerce site may get carried away and spend an inordinate amount on building the system. It is easy to become too enthusiastic about the technology, especially when reading case studies about larger companies' implementations. Nevertheless, believes Ian Hendry, director of sales and marketing at TCS Consultants, it is vital that you start your project with some projections about the expected return on investment.
"We have spoken to larger clients, one of them being a retail chain with a great presence in the high street. That company spent a lot of money on Ecommerce initially and it got stung," he explained, adding that it entered the market too quickly and didn't achieve the financial return that it expected. "Now it is unwilling to change."
When planning your Ecommerce architecture, it is definitely worth devoting some of your investment capital to the creation of links with your business systems. If you already have an automated order processing system then it would be folly to make your staff transfer incoming Web-based product orders manually to the new system. It may cost a little more to put the links in place, but they will come in useful when you develop the contribution that your Ecommerce site makes to your overall revenue.
According to a survey conducted by large IT consultancy Cambridge Technology Partners this year, at least 90% of organisations that perceived their Ecommerce systems to be successful had made some attempt at integrating them with existing IT systems in the company. The survey, entitled Business on the Web: A survey of the top 500 European organisations said that only 3% of organisations with successful Ecommerce implementations had made no attempt to do so, compared with a third of companies that perceived their Ecommerce solutions to be unsuccessful.
Hendry believes that integration is relatively simple in most cases.
Using transaction processing or messaging middleware to pass orders from one system to another is not a difficult procedure, he argued. Companies may have to decide whether they want orders to be passed from one system to another on a batch processing basis, or whether they want orders fed through in real time. You may be able to avoid buying a middleware product altogether if you can persuade your database to write flat file documents that can be read by the destination system. Alternatively, ODBC is a universally-accepted database transfer standard.
There are some protocols that you should know for future reference when developing your business Ecommerce system. The Open Buying on the Internet standard is relatively embryonic but is being hailed as a potential saviour for standard business-to-business Ecommerce. It is a standard for high-volume, low-value transactions and has been created by the OBI Consortium, a collection of influential organisations including IBM, Visa and Microsoft.
An even more recent standard is the Internet Content Exchange (ICE) standard, which was announced this October by a collection of companies including Vignette, which originally announced the initiative to produce the specification in January. ICE will enable companies to distribute information including product catalogue data to each other using a standard format based on the XML language. An ideal application for this protocol would be the automatic distribution of product information from a company's Ecommerce site to a cyber shopping mall which displayed multiple companies' products, for example. However, both of the standards, which theoretically cover the business-to-business and business-to-consumer worlds between them, have a long way to go before they are adopted by the market. They are something to consider for your Ecommerce site in the future.
Meanwhile, there are more immediate considerations for companies that have come this far. Firstly, promoting your Web site to potential customers is an issue. If you plan to maximise the revenue generated by the site, then there are several approaches that you can take. Firstly, make sure that the site is publicised on all your company literature, from invoices to brochures. A potential mailing campaign to existing customers might draw in some more business through the new medium, while registering yourself with the major search engines will enable people to stumble across your site more easily. Encouraging reciprocal links with relevant sites will increase your profile, and factoring the site into potential advertising campaigns may also be useful.
One thing to remember is that if your site succeeds beyond your wildest dreams, you must have the infrastructure to deal with it. It can be frightening when your orders suddenly double overnight. This is highly unlikely with most Ecommerce sites, however. Generally, anecdotal evidence suggests that any revenue increases will remain at less than 10% in the short term.
Again, the awareness and confidence of the customer base is a key issue here. However, it is worthwhile remembering that companies supplying physical goods will have to think carefully about the infrastructure supporting manufacturing and delivery of the product. If you suddenly begin to get orders from overseas customers that you hadn't expected, you must still fulfil them, even if order volumes from the region are high. Failure to do so will destroy customer confidence in your Web site, and potentially in your company too.
Because customer confidence is such a major factor, other issues such as security will also be important to the fledgling Ecommerce player.
Using technology such as digital certificates and publicising the firewall technology that you or your host service provider will doubtless be using may help to alleviate customer fears. However, a careful balance must be found here too, as you don't want to give too much information away to potential hackers.
At the end of the day, some of the more eager analyst predictions - that if your company is not on the Web in the next six months, it will simply be too late - are perhaps a little too sensational. Nevertheless, planning some form of Ecommerce strategy will help you to stay one step ahead of the competition, or at least to match them and prevent the success of their own Web-based sales initiatives from damaging your market share.
CASE STUDY: Wedgwood
Chinaware and crystal manufacturer Wedgwood has easily covered the #340,000 that it spent on its Ecommerce system. The company, which turns over #3,250 million every year, has already taken #3,750,000 of orders using the Ecommerce functions on its Web site.
The company wanted to make it easier for selected customers to buy goods, and so it created an Ecommerce system that would hook into the AS/400-based JD Edwards enterprise resource planning package that it uses to process all Wedgwood's orders.
Martin Harvie, IT development executive for Wedgwood, told PC Week that he commissioned Internet consultancy and software vendor ABS to build an Ecommerce system based on Windows NT and Microsoft's Internet Information Server. Significantly, Harvie chose not to replicate product information from the AS/400 on the Web server. Instead, customer queries made to the Web site are fed straight through to the AS/400, which delivers the relevant product information from its database to the Web server on an ad hoc basis.
This is then channelled through to the customer's Web browser.
Harvie has demonstrated the ease with which a Web site can be linked to an existing company system. When a customer places an order, instead of storing it in a database for subsequent batch transfer to the order processing system, the Web server sends it straight through to the AS/400.
"Once we get the order information, it is simply placed into the normal transaction-based system that we use for other orders," he said. "Initially, we built up orders on an Access database on our NT server. When a customer committed the order, it was marked in the file and a batch process would transfer the data from Access to the AS/400. Now, however, we are taking a completely transparent approach to the user."
Harvie avoided the need to use a credit card clearing system by restricting system access to account customers only. This reduces any security risks, he concluded.
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