E-Commerce - e-commerce Definition

E-commerce levels the playing field and lets small organisations compete with large

As with anything new, different people have different views about what e-commerce is. It is not uncommon to find commentators defining e-commerce as marketing and selling over the internet. But that is far too narrow.

E-commerce is about doing business electronically and - as well as internet-based selling - includes:

Making supply chains more effective.

Providing improved post-sale support.

Much quicker (electronic) distribution.

Better teamwork through faster and more effective internal communications.

E-commerce has been around for many years in the form of EDI, etc. However, it is the internet that is bringing it to the fore - and the key aspect of e-commerce is doing business over the internet.

GROWTH

Staggering predictions abound over where the internet is going. For example, radio took 38 years to get to 50 million users. PCs took 16 years to get to 50 million. TV took 13 years. The internet took 4 years.

With around 130 million users worldwide, and a new one being added at the rate of around one every second of every hour in every day, growth is unprecedented.

Sitting on top of the internet is electronic commerce. The e-commerce marketplace is now the fastest growing part of the world economy. Worth $12 billion / 11 billion ecu in 1997, it is forecast to grow to around $350 / 321 ecu to $500 / 458 ecu billion by 2002. A mere 150% compound annual growth.

What all this says is that, here is a technology that offers outstanding opportunities to do things differently. And, because of the low cost of setting up global reach, many SMEs can compete with their large company competitors with great effect for the first time.

This is especially true where the SME focuses on a niche and does it well. E-commerce can play a major part in this.

What e-commerce offers is:

GLOBAL ACCESS - the death of distance. An SME company can promote things to people all over the world from its one office. As long as it can deliver what it supplies to the location of the buyer, then it has a business with a global market.
For example, Scaife is a company based in the north of England which sells bacon and pork all over the world via the internet. It has worked out how to ship it there and have it arrive in an edible condition. That said, the local supermarket is usually cheaper - but when living abroad many would love to have English bacon.
The importance of this is that, while the internet can make some of the buying process global, the seller has to make the whole process global (like effective delivery).

SPEED OF DELIVERY. If the consumer is buying something that can be delivered electronically (information, for example) then they can get it more quickly.

The internet is all about exchanging information - that is all it does. It does it as quickly around the world as it does to your next door neighbour. And it does it inexpensively.

SUPPLY CHAIN IMPROVEMENTS. Big companies are starting to look at this one. They are interested in the whole supply chain, not just their supplier and their customer. The reason is that, the more people further up the chain who know about what the end user wants and is doing, and the more people further down the chain who know what is coming and when, the more efficient the supply chain.

DISINTERMEDIATION (one of those new words) - or knocking out the middleman. There are pieces of supply chains that only add value by distributing product or service - they don't add value to the product or service per se. A bookseller is an example. Some online booksellers are often 30 / 40% less expensive, after you've paid the postage charges. Book selling will change. They will be disintermediated.

RESPONSIVENESS. Customers like answers quickly. Using the internet allows a customer to search information on the company's web site. If they can't get an immediate answer they can at least ask the question, get an automated acknowledgement to the question and get a human-driven response the next day. That way, the company appears to be responding to the question when the customer asks it, and then answering quickly too.

AVAILABILITY. The internet never closes. Non-internet financial firms offer 24-hour banking every day by having people available at any time. Most SMEs would find this difficult.

However, if the customer can get a response from the internet (perhaps they want a piece of information about a product) then they can get that any time they want. This sort of approach works well, especially when dealing with global customers - most of whom habitually work different hours from any particular company.

GREATER PERSONALISATION. As people search for economies of scale, we end up with lowest common denominators. But, consumers want to be treated as individuals. By monitoring what people look at on its site, an SME can then offer to send them a regular update about those things and only those things.

For the SME which is prepared to change, then, e-commerce represents an impressive set of opportunities. The more you use your imagination, the more you can create something that people will pay for and / or will save you money.

E-commerce is an enabler. Being enabled is about removing restrictions that we have (consciously or unconsciously) had to accept in the past. The internet takes away many of the advantages that big companies have over the SME, such as working globally.

SUMMARY

Electronic commerce over the internet is being talked about everywhere. It is already changing the way business is being done. It represents huge opportunities for those prepared to work out how they can adapt and adopt.

Done properly, it will bring real competitive advantage over other businesses - small and large.

As with any opportunity, there's choice. But those who ignore it could well be turning opportunity into threat.

EXAMPLES OF ELECTRONIC COMMERCE

Example	Opportunity for others
Amazon sells books over the internet at prices usually lower than high street booksellers do.	Look for things that are sold from a shop front and work out how to replace the shop front with the internet. Support that with low cost distribution.
Hullachan Pro sells specialist dancing shoes. It does so, globally, over the internet, quoting significant increases in volume of sales in its now far more global market.	Does your client have a specialist product where demand per square mile is low, but over the world would be very respectable indeed?
A 15 year old started a soccer site on the net - this became a real business and he ended up giving his out-of-work father a full time job while he carried on studying.	Let your children use the internet and encourage them to think of possibilities - and when they come up with something that can't be done, let them try it. The usual reason things can't be done is because it couldn't last time we tried it.
The West London Training and Enterprise Council has an intranet that is used to keep staff up-to-date with what's going on. It has integrated the screensaver with it so that everyone sees the intranet and its headlines any time their computer is idle for a few minutes.	How does the company communicate general information inside and outside the organisation? How does it make sure that people see it?
An agency for contract workers has asked its people to send in their CVs by e-mail so that it can put them straight into the computer, cutting out the work of scanning or retyping.	Are any of your client company staff retyping or scanning? Get the information electronically to start with. Some years ago, the CEO of BOC said that information could only come into his office by non-electronic means if it were impossible to send electronically.
Want to know where your parcel is - if it's going via FedEx, then go to its web site and find out. This has reduced the number of calls and automated the process.	Do customers ring your client up to find out status information? If so, it can save cost and provide a 24-hour service by allowing them to find out the answer via the internet.
Eagle Star sells insurance over the internet - it has taken out the cost of brokers and the people customers used to phone and who filled in the computer forms for the customer.	Does your client have a product where the cost of sale is significant and where customers ring up and buy from it? If so, can they connect to the internet and buy automatically? (But always give them the option of talking to a real person as well / instead!)
Want to manage your bank account? Use online banking to move money about, pay bills, etc. In effect the bank is letting you, the customer, do what it had to pay the teller to do before.	When dealing with customers, does anyone at the company enter information on their behalf and if so, could the customers do it themselves? True, they won't all do it, but as long as a significant number do, the company can save staff time.


Home - Clients - Information Sheets - Search Engines - Domain Names - Links - Contact Us