E-Commerce: Is E-Commerce Right for You?
Sean Toomes, international marketing director for Norgren (Littleton, CO), couldn't agree more. "E-business is here. It's not some vision for the future. Without it, you are dead--possibly sooner rather than later," he says. "Don't make the mistake of believing that e-business capabilities are optional; they are mandatory. As the global village turns into the global marketplace, U.S. manufacturers must turn from 'bricks and mortar' to 'clicks and mortar' if they are to remain competitive."
What Is E-commerce?E-commerce uses the Internet's information-sharing technologies to pursue and expand business objectives among potential partners. Four types of e-commerce exist:
Information access enables customers to search and retrieve information from public domain and proprietary data archives. Communication services provide methods for people to exchange information, discuss ideas and improve cooperation. Virtual enterprises are business arrangements in which trading partners separated by distance can engage in joint business activities, as if they were a single enterprise.
Shopping services allow people to seek and purchase goods or services through electronic networks.
The difference between e-commerce and traditional commerce is the extent to which e-commerce combines information and telecommunications technology, and business processes. The combination of these makes it practical to do business in ways that could not otherwise be done.
Why E-commerce?The only reason to implement e-commerce is to improve business. The global marketplace, combined with the Internet's communication potential, is presenting businesses with wider markets and more competition.
Many companies find that having a Web site helps establish their image. For a relatively low investment, you can make your product or service known to vast numbers of people. Even if you only have a local business or clientele, your image can be enhanced by a Web presence.
The Internet's graphical nature makes it a natural for displaying products and describing services. Full-color brochures can be created and displayed without the high cost of printing. As product lines develop, additions and changes can be made to a Web site without having to reproduce printed materials. Forms can also be displayed that allow customers to place orders online. Security issues have been addressed, making online credit purchases safe.
Establishing a Web PresenceDeveloping a Web site can take time and cost money. But how much time and money depends on the client. According to Del Merenda, chairman and CEO of i-Mark Inc. (Hartford, CT), setting up an e-commerce site depends on the availability of the information. "An e-commerce site is one thing. But if you're going to put true transaction information on the Web, whether it's selecting products, right down to the specific functionality of that product or buying it online, it requires a fair amount of data preparation," he says. "If the company has the data prepared, we can bring up a catalogue within 90 days. If this data is all electronic, we can bring it up within 30 days. If it's not well-prepared, it could take 6 months. The main driver is how organized and well-prepared is the content."
Once the decision to go online has been made, the company needs to decide which products to offer at its virtual branch. It is not necessary to put your entire product line on the Internet. A good idea would be to pick items that are easily displayed and sold online. Products sold online should also be easily shipped and not easily damaged.
When it comes to designing and building a site, some may choose to do it themselves. But for most people, it makes more sense to hire an outside firm to develop and host the site. For the technical aspects, it is probably better to have someone help than do it alone.
Stephen Collucci, Ph.D., president of Interact Multimedia (Mishawaka, IN), advises that when choosing a Web designer, manufacturers should look at the company's track records and client base, and ask for references. The technology is really secondary to the level of trust that is established between the manufacturer and the developer. Manufacturers should look at the developer's staff and try to establish a certain comfort level. Manufacturers should look for a developer that is willing to dis-cuss their needs. "We need to understand what the manufacturers need, how their products are organized, the various distribution channels, and what is good and not so good about their interactions with their clients currently. Ultimately, we try to give them an electronic solution that has the most bang for the buck," says Collucci.
Regardless of whether a company chooses to hire a Web developer or design its own site, it is vital that the site's layout, content and security features are carefully planned. A well-designed, easy-to-navigate site is crucial to online success. Cheryl Alley, manager of electronic and marketing events for Colfax Power Transmission (Quincy, MA), says her company tried to build a site based on the customer's requirements. "We found that they're looking for information available at all times," she says. "They're looking for literature that they can download...I want people to be able to log onto our Web site, look up the maintenance manual and download the one or two pages needed to fix the machine. There is also an entire section of our site devoted to contact information."
Remember, too, that not all computers are created equal. Some online customers have older computers that connect at slow speeds. These simply cannot handle intensive graphics and audio. If you want to incorporate flashy graphics and sound into a site, offer online customers the option of viewing a straight HTML file.
Making People Buy OnlineCompanies still have trouble with one of the most basic business fundamentals--turning e-commerce site visitors into buyers. Potential buyers hold back for a number of reasons. At many sites, it's too hard to get from the home page to the sales-confirmation window. Customers complain about flashy graphics that slow the loading of Web pages and about excessive shipping charges.
Online commerce sites are attacking the problem by streamlining pages so they load faster and shorten the checkout process. They're also using technology to track shoppers so they can focus their sales pitches. Others, like sensor manufacturer Yamatake (Phoenix), have plans to tailor their sites for each customer. "We plan on having more links to more proprietary information so that customers can go in online and look at order status and get specific pricing for an item," says Jim Halvorson, director of sales and marketing for sensor products. "We may also have a shopping cart specifically set up for a customer's particular classification. Then, they can use a password, and it will show...their specific pricing. It will be more customized and tailored. That way you will probably get more purchase orders."
Toomes agrees. "Customized, private Web areas form another part of Norgren's ongoing e-business strategy," he says. "The company is developing one-to-one Internet environments exclusive to individual customers. These will be used to achieve optimum communication and enhanced project management facilities. This is an extension of our strategy of tailoring our offering to meet our customer's specific needs."
Once a site is up and running, virtual shopkeepers need to let customers know about it. "You have to drive people to your Web site," Halvorson says. "The question is how are you going to do that. We advertise to point people to our Web site. You have to do things like that and go to shows. You have to get the word out. You still have to build market awareness of who you are. You have to do that in conjunction with offering a place to buy products."
Any business venture takes time to grow. People have to become aware that the business exists; then they have to learn to trust it before they will become repeat customers. E-commerce is no different. Results will be directly related to the amount of effort expended.
E-commerce and DistributorsThe Distribution Research and Education Foundation of the National Association of Wholesaler-Distributors (Washington, DC) funded a study that found manufacturers are still unsure whether the Internet can replace distributors as a way to provide product information to customers. Similarly, a majority of distributors believe the Internet will not replace their sales and communication functions. Many manufacturers certainly seem to feel this way. "Our site was not designed to bring business directly to Bosch, but rather to bring business to our distributors," Gingerich says. "The most important part of our site was connecting the buyer with the actual seller. And even if someone wasn't ready to buy directly, the leads that the distributor would get from our e-commerce site would convert at about 20 percent to 30 percent, which is better than any other advertising or promotion we do."
Other manufacturers are more pragmatic. "Distributors must see this as an opportunity, not a threat. If they can demonstrate that they can add value to our overall offering, then the benefits of e-business are there for the taking," says Toomes.
However, the study found that distributors are uncertain about whether their manufacturers will be investing in traditional channels during the next 5 years. The report shows manufacturers must carefully evaluate the business needs of their channel partners before implementing new technologies. However, current supply chain participants are unsure which channel will dominate, because manufacturers have expanding choices of intermediaries to perform marketing channel functions.
Whether or not distributors go the way of the dinosaurs, many feel that e-commerce is here to stay. "I would say that within 5 or 6 years, every significant manufacturer will have e-commerce capability. From our experience, people are charging ahead with e-commerce. Some are moving faster than others, but I don't think there is one person that we've heard from that has not decided to pursue some kind of e-commerce strategy. The fundamentals are there," states Collucci.
The ultimate goal of the Internet should be to try and reach a new generation of people coming into the workplace who are used to getting information in this manner. But they will still use traditional channels. "I think the new generation of people who have graduated from college have internalized the Internet," Alley points out. "That's their primary source of information. We really want to be there for them. And we want to give our distributing partners another way to interact with us, and with customers. So the Internet is really a supplement to a lot of the traditional advertising and marketing channels."
Merenda agrees. "The future of e-commerce and manufacturing will see more personalization. Manufacturers are going to want to share content more with their distribution channels and give their distribution channel the opportunity to give their users access to this same information. It's increasing collaboration between manufacturer and distributor," he says.