The opportunity to generate e-commerce revenues has enticed many companies to set up online storefronts.
Consumers are able to find just about any product, including books, movies, mortgages, and live lobsters, on the Net. However, those companies concerned with speed-to-market, often fly headlong into disaster because they tend not to think through a strategic plan for integrating e-commerce solutions into their overall operations. If you want to ensure that your aspiring e-business is a success, don’t make the same mistake.
The digital economy still offers untapped markets for cyberexplorers, giving birth to new business models almost overnight. With the rules constantly changing, it is premature to say which models and innovative strategies will flourish on the Net.
Most of the hype has centered around business-to-consumer (b-to-c) e-commerce, namely e-tailers such as Amazon.com; online auctions such as eBay; and communities like iVillage. Now Amazon-once the darling of Wall Street-has analysts wondering if its model is flawed. The dotcom has yet to turn a profit, despite a huge customer base and $1.6 billion in annual revenues.
The new gold rush on the Net is business-to-business (b-to-b) trading, which outpaces b-to-c e-commerce-$157 billion in revenues compared to $22 billion in 1999-according to Merrill Lynch. Jupiter Communications predicts that b-to-b commerce will mushroom to $6.3 trillion by 2005, while b-to-c should top $184 billion.
Some b-to-b sites are horizontal marketplaces, bringing together buyers and sellers from different industries. Most are vertical or geared toward a specific industry, like emerging player Rooster.com (where farmers will be able to buy supplies). B-to-b marketing also encompasses exchanges, auctions, catalogs, and community.
Sites engaged in b-to-b marketing differ from those involved in b-to-c, as they generally require private networks restricted to specific business partners, and a standard platform for the exchange of information between businesses. Payment is usually by predetermined credit terms versus verified credit card payments, and transactions are conducted using electronic data interchange (EDI).
More importantly, consumer loyalty tends to be higher in the b-to-b environment. It is more expensive for online retailers to keep consumers coming back to their sites, than it is for them to ensure repeat visits from other businesses. B-to-b models generally require a large cash outlay and excellent technology skills. You don’t have to know about farming to sell fruits and vegetables to consumers online. But you do need to understand the industry if you want to create an e-marketplace for farmers and suppliers.
With e-marketplaces, the key is being able to streamline the purchasing process, reduce transaction costs, create efficiency, and improve delivery time, says Jeannie Diefenderfer, senior vice president of procurement for Verizon Communications, who is responsible for purchasing $20 billion in goods and services each year-some of it from online suppliers.
There are some fundamental principals that apply whether you use the Web as an alternative channel to sell products, provide services to consumers, or facilitate trading between businesses. Your site must be easy to navigate, require minimal wait time, and provide valuable content or essential information such as product description and price. Personalization, customer service,