Lessons Learned
The Internet has been in existence for a number of years, but significant levels of civilian use have been limited to less than a full decade. Still, these first few years have yielded some valuable lessons for E-commerce newcomers? benefit. Siebel and House (1999) identified 9 lessons worth listing:
1. ?Zapping,? the warp speed version of ?just browsing,? the electronic counterpart of every retailer?s pet peeve, is a Web norm. (Siebel and House, 1999, p. 67) Your Internet site will probably be just like your brick and mortar store. Some customers will come to see what you have to offer, and some will compare your products against your competitors. Many will not purchase your products or services.
2. Choose the most effective method of advertising for your business. Your on-line choices are Search Engines (big directories), Hub Sites (small, focused directories), and Gateway Ads (advertising on other organizations? sites). Limiting yourself to on-line advertising might not yield the best results, so do not rule out conventional advertising. (Siebel and House, 1999, p. 67-83)
3. Be seen at the ?front door? or entry portal for popular sites. This is best accomplished by partnering with winners (e.g., AOL). (Siebel and House, 1999, p. 74)
4. Give more than ?Brochureware.? Brochureware is a term describing sites that only provide information about your organization, similar to the paper brochures one might pick up at a lobby display. Visitors must ?get something for visiting your site. (e.g., free information, interactive entertainment or ads, recipes, etc.). If your site does little more than provide brochure information, people will not repeat their visit.
5. Your website must be convenient and easy for customers to use. If it is not, they will become frustrated, and they will not return.
6. Close the loop. ?The most attractive web site in the world cannot manage its own traffic.? Therefore, you must have the process and resources in place to ensure the site is truly interactive. (Siebel and House, 1999, p. 84) Otherwise, visitors will not return.
7. Don?t go it alone. Form strategic alliances with successful E-commerce players. (Siebel and House, 1999, chap. 3) It?s difficult for a new start-up site to draw attention. One of the best ways to draw attention is to ally with an already successful and popular E-business.
8. Improve as you go. You must make continual improvements to your website. (Siebel and House, 1999, p. 88) If you do not, your customers will grow bored of it.
9. ?Before you spend the resources for even an elementary website, define exactly what you expect that presence to accomplish for your company.? (Siebel and House, 1999, p. 90) This is probably the most valuable lesson of all. Those who fail at E-commerce generally do so because they entered into it without a well-developed plan. As with conventional business, poor planning often results in failure.
The lessons listed above are valuable, indeed, and they are definitely applicable to any strategy for establishing an E-commerce presence.
A Proposed Model for Developing an E-Commerce Strategy
Introduction.
Before discussing the steps necessary to implement an E-commerce strategy, some description of E-commerce is required. Generally speaking, E-commerce or electronic commerce encompasses all electronic means of conducting business transactions, and numerous technologies are available. Current E-business technologies include the World Wide Web (WWW), integrated voice response (IVR) systems, kiosks, e-mail, hand held digital appliances, cell phones, ?smart? call centers, smart cards, and others. (Seybold & Marshak, 1998, p. 33-38) The technologies are numerous, and a fully integrated E-commerce strategy would employ a combination of the available technologies. However, this research report most often makes reference to Internet/WWW capabilities because most new initiates to E-commerce envision websites as their primary technology for electronic business. (Downes & Mui, 1998)
Electronic commerce over the Internet may be either complementary to traditional business or represent a whole new line of business. Electronic commerce can be defined loosely as ?doing business electronically.? Electronic commerce includes electronic trading of physical goods and intangibles such as information. This encompasses all the trading steps such as on-line marketing, ordering, payment, and support for delivery. Electronic commerce includes the electronic provision of services, such as after-sales support or on-line legal advice. Finally, it also includes electronic support for collaboration between companies, such as collaborative design. (Timmers, 1998)
Several business models have evolved in the e-commerce world. A business model is the method of doing business by which a company can sustain itself ? that is, generate revenue, and each model has several sub-designs with which they are more narrowly defined. There are a couple of models our prospective decision-maker may choose. One possible model for consideration is the Brokerage Model. Brokers are market makers who bring buyers and sellers together and facilitate transactions. The transactions can be in business to business (B2B), business to consumer (B2C) or consumer to consumer (C2C) markets. A broker makes its money by charging a fee for each transaction it enables. One sub-design of the Brokerage model is the Virtual Mall. This is a site that hosts many on-line merchants. The mall typically charges setup, monthly listing, and/or per transaction fees.
A more logical model, because it resembles a conventional business model, for our company is the Merchant Model. Merchant model users are classic wholesalers and retailers of goods and services (increasingly referred to as ?e-tailers?). Sales may be made based on list prices or through auction. In some cases, the goods and services may be unique to the web and not have a traditional ?brick-and-mortar? storefront. The best Merchant Model sub-design for our use is the ?Surf-and-Turf? design. This is a traditional brick-and-mortar establishment with a web storefront. Under this concept, a business stakes out a place on the web through a website, or establishes its ?turf?. Then, the business registers this site with various search engines such as Yahoo, AltaVista, or HotBot. When potential customers ?surf? the web, they are guided to the registered website, or turf, where they can conduct transactions directly with the business.
It is not necessary to select an E-commerce business model before developing a business strategy. More to the point, business people who are about to enter into E-commerce should not begin developing their business strategies with a preconceived notion of the model they will use. Rather, the appropriate model should be dictated by the research and analysis conducted while developing a strategy.
Several sources (Downes & Mui, 1998; Geist, 1999; Gibbons-Paul, 1999; Rappa, 2000; Siebel & House, 1999; Seybold & Marshak, 1998; Stuart, 2000; Tapscott, Ticoll & Lowry, 2000; Timmers, 1998) provided blueprints for developing strategic plans for E-commerce. Although they varied slightly, they were very similar in their recommendations for plan development. Seybold and Marshak (1998) provided the most comprehensive treatment, and their recommendations were the easiest to understand. Therefore, the model recommended herein was derived significantly from the Seybold and Marshak model and supplemented by some of the variations identified in the other sources.
Prerequisites.
Entering into E-commerce should not be taken lightly. As it is with any other business venture, there is risk involved. Seybold and Marshak (1998, p. XVI) identified several prerequisites to optimize the likelihood for success. An organization about to embark on a voyage into E-commerce should meet the following prerequisites:
1. Visionary leader. The organization must have a leader who can envision the opportunities available through E-commerce and be willing to act on them.
2. Perseverance. The organization must have the perseverance to follow its E-commerce transition through to fruition.
3. Significant investment. The organization must be willing to invest the time, effort, finances, and other resources to ensure the venture?s success. If the organization does not have sufficient capital to support the venture, it must find sufficient capital backing from outside sources. (Siebel and House, 1999, p. 122)
4. Partnership. The organization must establish a solid partnership between business pragmatists and the information technology (IT) professionals who will enable the E-commerce effort. The organization should also be prepared to form strategic alliances with other, already successful E-commerce businesses. (Siebel and House, 1999, p. 122)
5. Team effort. The organizational leadership must acquire consensus on the need and wisdom of entering E-commerce among the organization?s members, and the leadership must ensure participation by the entire organizational membership in the E-commerce effort. Without both, the E-commerce effort will be viewed as an individual?s or a small group?s program, not the organization?s program.
If the organization can meet all of these prerequisites, it is ready to embark on its E-commerce adventure.
The key rule of E-commerce.
?No matter how high tech you get, it?s still about the customers. Technology drives E-business, but it?s not about technology. It?s about using technology to empower yourselves and your customers.? (Siebel and House, 1999, p. 126) The key word in this quote is customers. Customers should be the focus of every E-commerce venture, not products, services, or technology. We must give the customers what they want or need. Otherwise, customers will find someplace else to shop. We are ?moving from a world in which Henry Ford could offer his Model T customers ?any color, so long as it?s black,? to one in which customers everywhere are demanding it ?their way.? (Siebel and House, 1999, p. 188) Those who fail to grasp this fact routinely fail because they put their emphasis on their products and services or on ?bells and whistles? rather than placing it on their clients or customers.
Steps for building an E-commerce strategy.
Seybold and Marshak (1998) studied more than forty companies that were successful in implementing E-commerce strategies, and they identified five key strategy-building steps that were common to all forty companies. Although they are not cited in the exact language or in the same sequence, these steps are also common to the other research sources. The following five steps should form the core of any strategic plan for E-commerce: (a) make it easy for your customers to conduct business, (b) focus on your true end-customer, (c) design customer-facing business processes, (d) use technology to enable your company to be profitable, and (e) promote customer loyalty. (Seybold & Marshak, 1998, p. 6)
As noted above, customers should be the focus of E-commerce efforts. Their experiences with making transactions with your business should be free of frustration; better yet, they should be enjoyable. If their experience is hassle free, they will be inclined to conduct more business with you. If it is not, the customer will become frustrated, and he will either give up or seek an easier alternative. Anyone who has attempted to purchase an item over the Internet from a website where ?you can?t get there from here? can verify what this is all about. Accordingly, making it easy for customers to conduct business with you is an imperative.
There are several things you should do to enable frustration free interaction with your customers:
1. First of all, do not skimp on your IT investment! Cutting corners in IT development may save some money up front, but this savings is often short lived because it comes at the expense of easy use. Ensure that you IT budget is sufficient and invest at least 50 percent of your IT dollars in making it easier for your customers to do business with you. (Seybold & Marshak, 1998, p. 10)
2. Whatever system you employ, it should not waste the customers? time. Customers will expect your system to save them time. If it is slow, unresponsive, or time consuming to maneuver through multiple layers or links, they will lose patience and go elsewhere. (Seybold & Marshak, 1998, p. 11)
3. Remember who your customers are as individuals. If your company compiles data on your customers, you should cross-reference your databases to ensure you know who your customers are. Many people have experienced the situation where they receive a membership solicitation from a credit card company when they already are a member. This immediately signals a lack of knowledge on the company?s part, and many people find this oversight either insulting or annoying. (Seybold & Marshak, 1998, p. 12-14)
4. Make it easy for customers to order and procure services. Make all the information the customer needs to place an order available in whatever venue or device they are using (phone, computer, Kiosk, etc.), and be sure to provide the means for customers to complete transactions without having to change venue. For example, if a customer starts a transaction through your website, they should be able to complete the entire transaction through the website. Having to conduct product or service research on-line and then having to place the order by phone is both inconvenient and irritating. You should force customers to interact with secondary information or ordering sources as a last resort only. It?s wiser to let them complete transactions themselves, and provide help or personal interaction only when it?s asked for. (Seybold & Marshak, 1998, p. 15)
5. Provide service that exceeds customers? expectations. This can be accomplished by providing personal attention to each customer, by providing proactive services (order status tracking, etc.), and by customizing products and services to meet individual customer?s needs or expectations. (Seybold & Marshak, 1998, p. 16-17; Siebel & House, 1999, p. 183)
In focusing on your end-customer, the objective is to identify exactly who your customers are, then adapt your products and services to meet their needs. We are interested in the people who actually use our products or services, not in middlemen, such as retailers or brokers, who appear to be the customer. In E-commerce, we can identify our end-customers in several ways. You can identify them by setting up vehicles for direct feedback from your customers. You can use the latest technologies to collect customer data (smart cards, customer ID cards, product ID codes, etc.), develop a data warehouse to build individual customer profiles, and provide incentives for customers to identify themselves to you. Alternatively, you can make arrangements with your middlemen (retailers, brokers) to provide you with their data files of individual customer information. (Seybold & Marshak, 1998, p. 19-31) Once you have identified your customers, you can begin cataloguing their preferences, likes and dislikes, and you can begin tailoring your products and services to meet their individual needs.
The ?customer-facing? term refers to the processes and technologies with which your customers interact. Some of the customer-facing technologies a business may use are the Internet, integrated voice response (IVR) systems, kiosks, e-mail, hand-held digital appliances, cell phones, ?smart? call centers, smart cards, etc. (Seybold & Marshak, 1998, p. 33) These are the means by which customers can conduct E-commerce transactions, and the processes supporting them should be designed with the customer in mind. Stated differently, businesses must design the processes customers will use to conduct E-commerce transactions from a customer prospective. In other words, your business processes must support the customers? needs, not merely your business? needs. Many of the technologies noted above can provide customers with the ability to initiate and complete transactions on their own. They should be allowed to do so. When customers can complete most transactions using technology, middlemen (brokers, agents, retailers) should perform only functions that cannot be completed with technology. This implies that brokers, agents and retailers should only perform functions the customer really values but cannot do on his own. To employ technologies to their full capabilities, we should use them to identify where the holes in our processes are (i.e. which ones do not satisfy customer?s needs) and prompt change. To accomplish this, we must also develop a system that provides a method for storing and accessing customer information. With the appropriate customer information and feedback data, we can continually refine our processes to satisfy customer needs. (Seybold & Marshak, 1998, p. 34-38)
There are a number of ways to use technology to enable your company to be profitable. The following list is not all-inclusive, but it covers some important recommendations for enabling profitability through technology:
1. Always think beyond current technology and enable for E-commerce of the future. (Seybold & Marshak, 1998, p. 39) This is a philosophy driven by the rapid rate of technological change over the past decade. For example, the average amount of time for computer technology to double microprocessor speed has been eighteen months. (Siebel and House, 1999, p. 7) Although this rate of change may not last indefinitely, it does draw attention to the fact that the computer technology we are using today may be outdated in less than two years. With this in mind, we must make our plans with an eye on the future. Building a strategy with today?s technology in mind will cause us to fall behind our competitors and our customers? expectations.