E-commerce starts chapter with a new hold on reality
Houston Business Journal - by Al Massey
Well, the dirty little secret is out: e-commerce is all about business, not technology. The dot-com shakeout is in full swing, and it seems the only ones landing on their feet are those with a solid business model and sound marketing strategies.
Until recently, all entrepreneurs had to do was throw an "e" in front of a product or company and append a "dot-com," and venture capitalists lined up to shove money at them. Start-ups armed with nothing more than enthusiasm, energy and a "we-can-change-the-world" attitude launched companies that attracted millions while losing billions.
It seemed that the more money they lost, the more investment capital they attracted. The spin-doctors were in control, churning out press releases extolling the virtues of the dot-com crowd. When they attracted fewer customers and were faced with court injunctions, the dot-comers said that was really a good thing and was simply a confirmation of their business model.
The world of e-commerce public relations spin reached dizzying heights this month when Amazon.com issued a release cramming so much information on the page that, for a short moment, it was easy to miss the fact that the best growth business on the Web was in the throes of a slowdown -- an earnings release, layoff announcement and profit promise all in one fell swoop.
Welcome to the Net, but be sure and bring along a safety harness.
There's ever-increasing skepticism, particularly in the investor community, proving once again that Newton was right: "What goes up, must come down." A quick look at the evening news reveals that people aren't quite as gullible as the spinners would hope.
PHASE TWO
The first phase of the "new economy" was about innovation, but the next phase will have a more sober quality to it. Big, established companies are discovering that their advantages of scale, along with their established brands, loyal customer base and long-standing relationships with suppliers are just as valuable online as they are offline.
Nevertheless, old-line brick-and-mortar companies are going to have a rocky road getting online in any meaningful way if they can't rise to the challenges of the new economy and develop innovations while becoming leaner and more agile.
There are growing concerns about privacy and security on the Web and increasing doubt that a Web-only business model leads to, much less maximizes, profitability. These are growing pains and a natural part of the e-business maturity process.
At the most fundamental level, successful e-businesses recognize that e-commerce is a business issue. Sound business strategies lead to e-commerce strategies, and once they have been developed, business practices and supporting technology must be defined and implemented. E-commerce requires a long-term commitment to a perpetual process of market awareness, product and strategy development, implementation and execution.
If e-commerce is to continue to thrive, more attention needs to be given to the care and feeding of the most important asset of any business -- the customer. Online retailers learned from the mistakes of 1999 and, for the most part, beefed up the customer relations part of their Web sites this past holiday season, with favorable results.
Online holiday sales were up by 76 percent compared to 1999, with the average order size increasing by 27 percent, according to the Boston Consulting Group. This rise can be directly attributed to a growing level of customer trust in the online channel. Savvy retailers re-designed their sites, bolstered fulfillment and delivery systems and added customer service features. Throughout 2000, both traditional and pure-play Internet retailers made investments toward improving the consumer experience.
More than 30 percent of online shoppers access two or more channels to resolve customer service problems, according to a December 2000 report by Forrester Research. Customers need more than one way to get in touch with a retailer. Phone and e-mail solutions remain the preferred option, but many forward looking companies are pushing the envelop and adding chats, searchable "frequently asked questions" and in-store kiosks to their customer support services.
In addition, 84 percent of retailers surveyed by Forrester place the majority of customer service efforts on the post-purchase experience. However, leading retailers are already offering real-time customer assistance prior to purchase.
THE MORNING AFTER
So it's time to wake up. It's the morning after, and it's sad to note that Wall Street doesn't love the hot-dots anymore. Of course it's disheartening, but how long can love be expected to last if nothing is brought to the relationship but a cool name and a killer APP?
Before singing the "IPO blues" it's time to start embracing and implementing some proven business tenets that were around long before the Internet.
The top four needs of customers, according to the Research Institute of America, are value for their money, solutions for their problems, concern for their needs and answers to their questions. Smart business leaders will make whatever adjustments are necessary to optimize their customers' buying experience and remember words of wisdom from William Bernback of the advertising agency Doyle Dane & Bernback, "Those who are going to be in business tomorrow are those who understand that the future, as always, belongs to the brave."
Al Massey (almas@hal-pc.org), Tech Now columnist, is a Houston-area computer journalist.
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