WHY GO TO THE WEB?
The Web opens up a whole new market for goods and services. It creates opportunity for a multifaceted arena that offers new efficiencies for sales, marketing, customer service, shipment tracking, inventory monitoring, and many other aspects of the total business model.
Choice has always been the Holy Grail for consumers. Today’s consumers have a wide variety of commerce choices: traditional businesses, mega discount stores, catalogs or direct market mail, and the Web. The Web, taken as a whole, is a powerful medium where consumers browse, research, compare, and then buy online or, after doing their “window shopping” online, make the purchase at a brick-and-mortar business. Businesses that keep in mind the consumers’ desire for choice, and integrate into their website the appropriate means for customer interactions, will succeed.
This being said, the Web will not open vast new markets for every business. However, it can extend a significant degree of power to businesses that recognize how to leverage the efficiencies of this new arena. A good example is 3Com (www.3com.com) which, through its website:
- Offers products and services to a global audience.
- Provides many different technical support features online.
- Offers software downloads including drivers, updates and fixes, which prior to the website would have been mailed to the customer.
- Offers an online store.
- Provides an educational center with online courses.
In short, 3Com’s business and customer base didn’t change — the Web changed the way 3Com services its market — it did not create a new market. Still, overall, 3Com’s business is enhanced by its web presence.
Big companies with plenty of technical expertise and buckets of money have always been able to build their own e-commerce systems, complete with a secure server, a high-speed Internet connection, and custom software. Luckily, costly e-commerce barriers are rapidly tumbling allowing any business to have a credible web presence. What was once expensive and difficult is quickly becoming affordable and easy to use.
Look Before You Leap
Established businesses shouldn’t jump rashly onto the e-commerce bandwagon. They must first institute a well thought out plan upon which to build their e-commerce business model. If you neglect this important step, you risk losing your already established identity, your good reputation, and your customers. Two examples of not looking before leaping are the widely reported Toysrus.com 1999 holiday shopping season fiasco and the KbKids’ website problems. According to survey conducted by Robertson Stephens, a leader in Equity Research, Investment Banking and Sales & Trading, in early 2000, 44% of the shoppers surveyed stated that due to their unhappy experiences with KBKids.com, it was unlikely that they would shop on the online toy retailer again. Perhaps if these retailers had scaled down their initial online effort as Bloomingdales.com did, their website and reputation would have fared better.
Both websites have learned from their mistakes. KBkids.com completely redesigned its web operation. But before creating the new website the KBkids.com designers, web producers, and writers conducted surveys and usability studies, participated in conference calls and held one-on-one meetings with KBkids.com shoppers. The result is a new sleek, innovative website with many customer-friendly features along with the functionality and back-office features needed to keep customers happy.
Toysrus.com took another tack — partnering with the etailing giant, Amazon.com. The two companies entered into a ten-year deal that draws on each company’s core strengths. Amazon.com fulfills orders, handles customer service, and uses its expertise in front-end site design to build a powerful customer-support environment. Toysrus.com and parent company Toys ‘R’ Us identifies, purchases, and manages inventory, using its clout to get the hottest toy lineup. Revenues are split, and risks are shared.
The Challenge
Creating a business model for e-commerce starts with the following basic challenge: Can you define your company? Next, can you state your goals for the company? Finally, — within the aforementioned context — can you state what role e-commerce can play in helping your company maintain or change its identity?
| The Top 10 Website Categories as of September 2003 | |||
|---|---|---|---|
| Category | Unique Visitors as of August 2003 | Unique Visitors as of September 2003 | % Change |
| Retail-Food | 8,324,000 | 9,732,000 | 16.9% |
| Weather | 38,100,000 | 41,757,000 | 9.6% |
| Sports | 48,169,000 | 52,633,000 | 9.3% |
| Retail-Flowers/Gifts/Greetings | 23,576,000 | 25,373,000 | 7.6% |
| Entertainment-TV | 44,085,000 | 47,154,000 | 7.0% |
| Hobbies-Lifestyles-Food | 22,959,000 | 24,322,000 | 5.9% |
| Hobbies/Lifestyles-Home | 26,384,000 | 27,909,000 | 5.8% |
| Online Trading | 10,739,000 | 11,256,000 | 4.8% |
| Entertainment-Music | 62,210,000 | 65,116,000 | 4.7% |
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