Do you wonder whether e-commerce will go away if you wait long enough? Don’t hold your breath because by the year 2002, companies that are not using some form of electronic commerce might lose their competitive edge and go out of business. But how do you separate the hype from the reality? How quickly should you jump in and where do you begin lectronic commerce uses integrated technologies to streamline external business procedures and to facilitate trade with customers, suppliers and business partners. Although e-commerce uses tools like EDI, imaging and bar coding, the most engaging e-commerce applications use the Web, with sites offering anything from online banking to paint balls or cars. The hype Several years ago, thousands of companies rushed to create Web sites. Only many did so without a marketing strategy and a plan for next steps. Their static sites were built to disseminate company information and marketing material. Although relatively easy and inexpensive to set up, static sites do not offer much-if any-return on investment. Today, the compilation of these Web sites is referred to as “the electronic flea market”.With the frenzy quieting, companies began to appreciate e-commerce and the Web as the powerful tools they can be. Today many sites offer interactive browsing through catalogs and online purchasing and payment. Examples of these include virtual stores set up by many retailers; some like Wal-Mart, which already operated “real” stores, and others like Land’s End who did not previously have retail stores. Still there is a new breed of companies like Amazon.com that were born on the Web. Major banks now offer online banking with the ability to check account balances and cleared checks, make transfers and pay bills. In some e-malls, a brokering system is used to check your request across multiple suppliers and offer the lowest price.Web sites offer convenience and comfort, and a very attractive feature stores cannot offer: self-service. You can shop when you want with no sales pressure, and get consistent answers to questions by typing a key word in the search engine. Often special deals are offered to Web customers only. While some consumers like this new shopping experience, others are hesitant. Statistics indicate that although many shoppers browse the Web to research a product, they end up making the purchase in a “real” store. This is true with larger purchases such as household appliances, cars and computers. On the other hand, music CDs, computer peripherals, books and other “smaller” items are bought pervasively online.Although most e-commerce sites have been business-to-consumer oriented, self-service sites quickly are becoming a desired solution for business-to-business transactions. Many companies are creating “dynamic” Web sites where customers, suppliers and business partners can do collaborative forecasting or consolidated purchasing and share information to help everyone make better decisions. Dynamic Web sites are great tools for exchanging purchasing and billing transaction sets, but they can also be used to tie together other business processes together that require the interactive flow of information between trading partners. This approach may be more expensive to set up and maintain, but offers by far the largest return on investment.IBM claims that it costs a bank $1.07 each time a customer performs a transaction at the counter compared to a penny when the same is done using the Web. Airlines boast huge cost advantages from the use of their dynamic sites as well. An airline ticket that is generated and purchased directly from the airline company costs $8 to process, while e-tickets cost a mere $1. These savings per transaction translate into millions of dollars in cost savings when you consider how many transactions are exchanged in these organizations each day. The reality Most businesses that have set up shop on the Web do not quote stellar sales. There are exceptions. Cisco Systems ($3 billion online sales in 1997) and Dell Computer ($6 million monthly in online sales in recent months) say their e-commerce sites are a huge success, while Amazon.com reportedly is still not making money, despite selling over $100 million in books and music in 1997. How can you be sure that your project will pay off? By far the biggest concern about using the Web for electronic commerce is the perceived lack of security. Although you can use electronic signatures and encryption (data scrambling), many are concerned about the openness and vulnerability of the public Internet. This inhibits many businesses from putting their mission critical applications on the Web. But encryption and authentication are readily available.Another major stumbling block to the success of many Web sites is the lack of scalability. Companies rush to bring their business to the Web without properly adjusting their infrastructure. Unnecessary delays in processing when a customer is online translate into the customer abandoning the site. Predicting volume can be tricky as unexpected spikes may occur. But system scalability is critical to ensure that the e-commerce system can grow as demand increases. The key to success is e-commerce applications that beat the old 800 number and fax methods.Most importantly, e-commerce requires back-end system integration in order to be effective. Customers expect subsecond response and current information from an e-commerce site. But integration is costly. For every $1 spent creating the front-end, you can expect to spend an additional $4 to integrate with the back-end.Another thing to look out for is expectation of cost savings. It is unrealistic to expect e-commerce to produce a quick return on investment. E-commerce should be viewed as long-term investment strategy. Simply put, e-commerce is the cost of doing business and you will be disappointed if you expect a fast return on investment.Is it possible to use e-commerce successfully? Absolutely! E-commerce should be an executive-driven initiative and not another IT project. It can win you new customers, more sales and lower expenses. Just don’t wait too long.
