Ecommerce and Web Strategies
How
Dell Keeps From Stumbling
BusinessWeek
subscription required
This is the kind of story I love...company uses technology really well and makes
piles of money in the process. You see, I think technology is terrific.
I'm really NOT that cynical. But the problem is that most companies DON'T
get the most from their computer systems. Consider Dell and Cisco.
Cisco has this highly touted Web-based information system that back-fired on
them and resulted in very surprising losses with major inventory write-offs.
Some critics blame too much reliance on a flawed sales forecasting system.
But a true winner appears to be Dell, who claims to have only five days of
inventory and is working to get it down to two days. This article in the
5/14 issue of my favorite print business publication (WSJ is my favorite online
service, but that's another story) briefly reviews the things Dell does to
tightly integrate their supply chain. Capabilities include:
1. A powerful supply chain management system, that allows Dell to
precisely control, within a few hours, their shipments from vendors;
2. Integration with their sales and marketing departments, as well as
their Web site, to shift demand if they see their stocks are getting too low.
This is one of the major benefits of their direct sales model - they're talking
directly to customers, and can have an direct impact on buyer's purchases, as
opposed to trying to work through intermediaries.
3. Machine-to-machine integration with their major vendors allows very
fast supply chain management. And they're working on the vendors that
don't have that capability.
The current economic downturn may actually help Dell. Because their
systems are so efficient and responsive, they can cut their prices faster than
their competition and thereby gain market share. Not bad. If you're
trying to figure out if supply chain management can be a good thing for your
company, you should check out this story, and Dell.
Myths and Realities
Information Week
This article is two years old but it still highlights some basic wisdom
regarding setting up your ecommerce site. In fact, it's amazing how
dead-on this writer was. I've boiled down the myths that the author
identifies:
1. It's easy to do. It ain't, particularly if you're trying to
integrate your back-end systems or are creating a larger site. Even with
smaller companies, there's more to it than you think.
2. It's cheap. It ain't. See number 1.
3. Everybody's doing it. They're not. In 1998, this
refutation was very accurate. And today, it's still accurate. It's
amazing how few companies are doing true ecommerce.
4. It's lucrative. Most people still buy in a real store, with
real products that they can feel and touch. For most retailers, ecommerce
still represents a pretty small part of their overall revenue.
5. The Web levels the playing field. Nope. Look at who are
the dominant players. Yeah, a little guy might make a living, but brand
awareness still exists, and customers still flock to the known names. Remember
that while the Web makes it easier to buy from the little guy, it also makes it
easier to buy from the big guy.
6. The Web leads to disintermediation. In other words, the myth
was that resellers, distributors and dealers would get aced out. Well, it
hasn't happened. Why? First of all, because all the engineers and
writers who proclaimed this knew squat about the way business systems work.
They thought that intermediaries were nothing but middlemen who added nothing
but cost to the final product. But in reality, they provide value beyond
just adding a markup. They stock product. They provide added
support. They sell and install. The Web has done more to facilitate
manufacturers' relationships with their channel than to eliminate the channel.
When I was employed at a big software company years ago, I heard one executive
say, "We can ship skid-loads of products very well. But we really
suck at shipping one product at a time." Ecommerce doesn't change
that.
7. The Web would mean the end of mass marketing. The myth was
that the Web meant one-to-one marketing with no need to waste dollars on mass
marketing (billboards, radio, TV, magazine and newspaper advertising, etc.).
In truth, once you get someone to your Web site, you CAN do one-to-one
marketing. But that is expensive, risks the customer's privacy, and
doesn't get them to your site in the first place. In the final analysis,
you need both.
8. The Web would mean product commodization. In other words,
people would only buy from the lowest priced vendor with no other
considerations. This was another myth created by people with no sense of
business principles. The purchasing decision rests on lots of issues like
brand, customer service, delivery, buying experience, etc. Price is only
one decision criteria and the Internet doesn't change that.
Connecting
the e-com dots
ZDNet
This is a very interesting article describing how businesses have migrated from
a brick and mortar facility to either a 100% online business or a hybrid of both
real-world and cyber-world sales. The article makes the case for the
hybrid. You're going to need the physical space anyway to store your
inventory for your Web business. Plus, the real store will provide you
with marketing opportunities for your Web outlet, maintain relationships with
vendors, and help with market research by having face-to-face contact with your
customers. The Web site can promote your store, allowing people to get
information online, and then actually buy at your store.
Introduction
to Public-Key Infrastructure
Introduction to SSL
iPlanet
Everything - and I mean EVERYTHING - you want to know about public key
encryption. It's pretty technical, but you can pick your way through the
material to find a useful explanation.
Ten
Dimensions of Service
BizRate
This is an interesting section of the FAQ that deals with the criteria that
BizRate, an Internet rating service, uses to evaluate etailers and other Web
sites. If you're thinking about making your ecommerce site better, then
you'd better be thinking about the whole picture, not just Web site design and
promotion. These ten "dimensions" are what BizRate uses.
You should too. The dimensions are:
- Ease of ordering
- Product selection - Did you have enough choices?
- Product information - Was there enough information, and was it relevant?
- Price - How was the price compared to other stores?
- Web site performance - How was the ease of navigation, appearance, and the
speed of the site?
- On-time delivery - Did you get it when they promised?
- Product presentation - Did the product you got match what you ordered?
- Customer support - did you get email updates and were they responsive to
questions?
- Shipping and handling - Were there enough shipping options and how was the
pricing?
- Privacy - Did they clearly explain their privacy policy?
How
to build your site into a five star business
Wall Street Journal
Based on an interview with the CEO of BizRate, the article offers a few key
points to remember when making your site attractive to shoppers:
1. Make it convenient for your shoppers. Don't ask them to fill
out the information more than once, don't surprise them with information on the
last screen (like shipping charges or disclaimers) and make sure your systems
are running smoothly so that the transaction doesn't fail or cause error
messages.
2. Make your site FAST. If your customer wants to buy something,
and that is probably why they're visiting your site, do everything you can do
make it fast and easy for them.
3. Deliver the right product, the product the customer was expecting,
and deliver it on time. Provide outstanding customer service. Send
emails to update customers on the status of the order, and answer customer
inquiries with blinding speed.
Model
Privacy Statement
Truste
Every site should have a privacy statement. The nice folks at Truste have
provided an example of one. Obviously, you need to customize it to your
situation, but this is a great starting point. And since you'll want to
get their seal on your site, this is an ideal template to use. If you're
NOT building a Web site, this can also be a handy document to read to know what
you should be worried about.
Building
an effective linking strategy
clickz.com
This is the first of what promises to be a series of articles on a relatively
new technique for getting higher placement in some search engines. Trying
to get other sites to link to your site is a marketing strategy as old as the
commercial use of the Internet. However, it is becoming even more
important as search engines begin to analyze the number of links to your site.
Some search engines assume that the more links to your page, the better and more
relevant it is. This series promises to be a continuing source of useful
information as you try to market your Web site.
How to Select a
Domain Name for Your Company
Web Marketing Today
This article discusses various ideas to help you decide on a domain name (or
names). They include:
Make it short - it's easier to remember and harder to misspell.
Make it memorable - Amazon.com, Google.com and others are short and easy to
remember. Or try rhyming or rhythmic names, like Fogdog.com.
Avoid confusion with others - be careful with hyphenated domain names, or
inserting additional words, like "the", to get close to the domain
name you're looking for.
Get one that's hard to misspell - and if you're stuck with one that has
multiple potential spellings (like Gadwall), get the spelling variations as
well.
The article also points to some online tools to help you select a domain
name.
Money Matters
CIO Magazine
An editorial that summarizes the problems with the dot com frenzy. The
author is more than a little smug at the fallout. Hmmm. I couldn't
have said it better myself.
Intranets bring
employees into the loop
USA Today
Need some ideas for your corporate intranet? Don't have one yet?
This short article shows what a few other companies are doing. In an era
of low unemployment, organizations are looking for ways of improving employee
communications, fostering corporate culture, and offering additional services to
employees. Some examples include:
-the ability to manage 401K plans and investments
-providing a concierge service
-providing tax forms
-distributing company announcements, news, and competitive information
Tell
your Web clients: Do it right, or don't bother
Sm@rt Partner
We started off the 8/14/00 issue with a quote from Rule 1 of this
article...essentially, no animated stuff. Other rules to make your
ecommerce site more effective include: real-time inventory so that users don't
have to wait until checkout to see if an item is in stock; avoid buttons that go
to a feature that doesn't exist; calculate and display shipping costs before
checkout; users must be notified by email if a shipment is going to be delayed;
unanswered emails become the responsibility of the CEO after 48 hours; no big
photos of products - only thumbnails which link to those photos. But wait,
there's a problem. Your Web designer probably believes those rules don't
really apply to him (or her).
Edward
Jones: The Last Not-Com Brokerage
The Standard
This is a story to warm the cockles of your heart. Edward Jones is
profitable, growing and refuses to play the online trading game. And
they're being proven right. As the other players fight over what is
becoming a commodity, Edward Jones relies on personal relationships and steady
customers. The best description of what they're going for with each
customer is a "cozy" relationship. Can you use "cozy"
to describe your relationship with eTrade?
Hollow.com
Forrester
This is an excellent, and danged cynical, column by George Colony, Chairman of
Forrester. His point is that the typical CEO of a dot.com company lacks
"depth, experience, and common business sense." He believes that
they're not trying to build companies, they're only trying to QUICKLY build
IPO's, and are in it solely for the short term and the cash. The
established companies with CEO's that actually know how to build organizations,
manage sales forces, do intelligent marketing, and deliver value to the customer
will be the winners. This is a terrific article and I encourage you to
read it. The insight you gain will be useful the next time you talk with
some dressed-in-black dot-com CEO who claims that traditional businesses
"don't get it" and that speed to market is the only thing that counts.
Middleware
Demystified
CIO Magazine
If you've always wondered what middleware was, but were afraid to ask, this
article may be of assistance. It's not comprehensive, but it does provide
a good primer and lists some of the products that fit each variation on the term
"middleware."
Hope
Springs Anew for Web Retailers: Study Shows Many Are Making Money
Wall Street Journal
In contrast to the Forrester report last week, this one is a little more upbeat.
38% of e-retailers are making money, while 72% of existing retailers who moved
to the Internet are making money on their catalog operations. It's worth
noting that the article doesn't say how MUCH money is being made - just that
there are some profits. The gist of both reports indicates that existing
retailers who move to the Web are in better shape because they don't have to
blow as much money on marketing - they already have customers and recognizable
brands. They also know how to service customers, which is something sorely
missing from many dot-com startups.
Eating
Their Own Dog Food: Cisco Goes Online to Buy, Sell and Hire
Wall Street Journal
If you're curious about Cisco, this is an interesting article. But even
more useful are the ideas you can get for your own organization. Cisco is
obviously a highly automated company and intensely uses the Web and their
intranet. Things they do include:
-filing expense reports online
-employee evaluations
-resume submission and management
-on-demand employee training
-purchasing of software and other supplies without purchase orders
-integration with vendors' scheduling and production systems
-customer support
-customer product inquiries
-ecommerce
-sales tracking (they report sales three times a day)
Interestingly, the standard measure of productivity (sales per employee)
hasn't gotten better in the years that Cisco has been making this investment.
However they can point to specific savings in areas of marketing and customer
support as evidence of the value of the system.
There's a lot of good material in this article and I highly recommend it if
you're trying to figure out how to use the Internet to grow your business.
How to
process online credit card transactions
CNET
Curious about how the process works? While this tutorial is not in-depth,
it does outline the basic process that is used to get the money into your
account. This page is part of CNET's Web builder section, so it's written
for a programmer, but the average tech-aware CEO, who knows his way around an
acronym or two, should be able to gain something from this article.
Our Wired Town
CIO Magazine
This longish article describes the heavy use of technology in Buffalo Grove,
Illinois. Using Notes to integrate a variety of databases from different
departments, and delivering that information to police and fire units, the city
has dramatically increased the information sharing and productivity of their
workers. This article is useful as a source of ideas for municipalities.
And more generally, it highlights the need to have a vision for where you want
to take your technology, an understanding of its capabilities, and the need to
get your staff and management involved.
Retail
2000 focuses on XML for supply chains
Computerworld
This article focuses on supply chain management for retailers using XML.
Even if you're not in retail, this article does a nice job of showing how XML
can be used to do more than just place orders. In fact, according to
WalMart, there are some concerns about sharing too much data. This is
worth a look if this technology is of interest to you.
Forrester
Says Most E-Tailers Will Fail Within the Next Year
Wall Street Journal/AP
Yahoo
Chicago Sun Times
The market is too crowded. Everyone thought they could make a fortune. But
profits haven't come, venture capital has dried up, and the IPO market is
evaporating. If there's no money to fund the losses, there's no company.
One estimate is that there are currently 30,000 pure online retailers and that
25,000 of them will be gone or acquired in the next year. Lawyers and
consultants are already getting lots of calls from desperate etailers looking
for help. The prediction is that the big companies will be OK, but that
there will be a shake-out and consolidation.
The benefits of an
online transaction marketplace
energycentric.com
This is a promotional piece on one particular B2B exchange. It does a
pretty good job of explaining what these exchanges do, and the benefits to both
buyers and sellers. Note that it is specific to this particular site, but
you'll be able to get the gist. The article splits into two sections -
benefits to sellers and benefits to buyers. Note that many of the benefits are
"perfect world" scenarios, and the article assumes that lots of
procedures are in place to make the technology and the concept work. But
as an introduction, this piece is worth a look.
Is Your Web Site
Shoppable?
CNET
This is a good article discussing the basic things you can do to make your site
more productive. The ideas range from helping your customers easily find
the products they're looking for, to providing excellent customer service.
If you're considering an ecommerce Web site, this article rates a visit.
Set
up shop online with these storefronts
PC Computing
This excellent article will be useful to those of you considering a basic
ecommerce site. The introduction is a little too urgent about the need to
be on the ecommerce bandwagon. But the piece does evaluate some of the
best sites and gives some useful guidance. There are two sections
evaluating free and non-free ecommerce sites.
Submission
Tools and Shortcuts
ZDTV
This is just a collection of links to the submission URL's for the biggest
search engines. Certainly a good place to start when trying to promote
your Web site.
A
CEO's Internet Business Strategy Checklist
Gartner Group, 4/19/99
While much of this report is the usual consultant-speak, there actually is a
checklist of things to consider when looking at Internet initiatives.
While not comprehensive, these questions should be helpful to focus your
strategy.
The Truth About
XML
CNET
A nice short article that describes what XML is useful for and what it is not.
Gives a good overall description of the technology. XML is a markup
language that is designed to allow the interchange of formatted data between
different computer systems. In other words, sort of generic EDI.
But wait,
there's more
CIO Enterprise Magazine, 10/15/99
About 1,000 words that basically says that having all the cool ecommerce tools
in the world won't help you if you can't provide decent, and HUMAN, customer
service. Sometimes, you just have to get a real person involved. If
you forget about that, you'll lose your quickly lose your customers.
Big retailers
proving less than adept at getting online
CNET, 10/11/99
Describes why the big companies are having such problems developing their
ecommerce sites. The problems resolve down to one major issue - they cost
too much, and these profitable companies (and their shareholders) have trouble
swallowing the losses that are inevitable in a Web start up. Costs involve
the need to attract high-priced staff, marketing and development costs,
cannibalization of revenue from existing brick-and-mortar businesses, and long
periods of losses before becoming profitable.
In addition, executive management can get distracted by the project,
forgetting about the bread-and-butter core business.
On the other hand, some traditional retailers have done well online.
And if they're smart, they'll use ecommerce and real commerce to complement each
other.
SOHO:
Should You Set Up Shop Online?
ZDTV
While not a particularly exhaustive treatment of the subject, this short piece
discusses the reasons your company might want to start selling online, the
different methods of setting up your ecommerce operation, and some ecommerce
hosting suppliers. This can serve as a very good introductory article.
Why should I put my company on the Web?
Apke Computer Service
Discusses some of the reasons why you should put your company on the Web.
I disagree with some of the suggestions, like recognizing your employees on your
site. What an invitation to recruiters! But overall, it's a useful
piece. It's not exhaustive, but might give you some ideas. And it
can help you make the decision to get going.
The
Third Annual WebBusiness 50/50
CIO Magazine
This is a great article discussing how many companies are using their intranets
and extranet. It can be a great way of stimulating ideas within your own
organization.
A
Fine and Private Page
inc.com
This column discusses some of the cheaper ways you can provide extranet-like
services without having to bust the budget. They include
"unlisted" URL's on your site for information you need to provide to
your customers, but the rest of the world doesn't need. You can add
password protection if the material is really private.
And if you're thinking that integrating your ecommerce system with your order
entry and business systems is complicated and expensive, you're right. But
most ecommerce sites simply have a manual interface to their back-end systems.
Of course, that's why customers get unhappy when they find out via email that
the stuff they ordered is out of stock. And that message doesn't arrive
until three days before Christmas. But that's another story.
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