E-commerce levels the playing field
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. But the Internet took four 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. And sitting on top of the Internet is e-commerce, the fastest growing part of the world economy.
E-commerce is about doing business electronically. As well as selling and marketing over the Internet this includes
- making supply chains more effective
- providing improved post-sale support
- quicker (electronic) distribution
- better teamwork through faster and more effective internal communications
E-commerce has been around for many years in the form of Electronic Data Interchange (EDI), but it is the Internet that is bringing it to the fore. The Internet offers outstanding opportunities to do things differently. And because of the low cost of setting up global reach, small businesses can compete with their large company competitors for the first time.
What does e-commerce offer?
- global access – the death of distance. A small business can promote its products to people all over the world from one office, as long as it can deliver to the location of the buyer.
- speed of delivery – if the consumer is buying something that can be delivered electronically (information, for example) then they can get it more quickly.
- exchange of information – the bulk of any business transaction is about exchanging information. The less time and energy spent on these exchanges, the more of them the organisation can have (and therefore the more business it can do). 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 suppliers and customers, as 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) knocking out the middle(wo)man. There are links in supply chains that only add value by distributing a product or service – they don't add value to the product or service per se.
- responsiveness – customers like answers quickly. Using the Internet allows a customer to search for information on the company's website. 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. 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 small businesses would find this difficult. However, if the customer can get a response from the Internet, 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, a small business can then offer to send them a regular update about those things and only those things.
For the small business that is prepared to change 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.
Done properly, it will bring real competitive advantage over other businesses – small and large. This is especially true where the business focuses on a niche and does it well. Its impact on some fields of business may be relatively gradual, but there are none that will remain untouched.
E-commerce in action
Example |
Opportunity |
Amazon sells books over the Internet at prices usually lower than high street booksellers |
If you sell your product from a shop front, work out how to replace the shop front with the Internet. Support that with low cost distribution. |
Hullachan Pro now sells dancing shoes globally over the Internet, quoting significant increases in volume of sales. |
Do you have a specialist product where demand per square mile is very low, but globally would be very respectable indeed? |
An agency for contract workers now receives CVs by e-mail so it can put them straight into the computer, cutting out the work of scanning or retyping. |
Are any of your staff retyping or scanning? Get the information electronically to start with. |
Want to know where your parcel is? If it is going by FedEx then go to its website to find out. This has reduced the number of calls and automated the process. |
Do customers ring you up to find out status information? Save costs 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 staff who filled in computer forms for the customer. |
Do you have a product where the cost of sale is significant and where customers ring up to buy it? Could they connect to the Internet and buy automatically? (But always give them the option of talking to a real person as well.) |
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 the teller was paid to do before. |
When dealing with customers, does anyone at your company enter information on their behalf – could customers do it themselves? They won't all do it, but if a significant number do you can save staff time. |
Allery Scotts are Internet consultants. A longer version of this feature, and many others, appears on their e-business website.
Reviewed June 2007
last updated : 15/06/2007
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