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eBusiness
Mark Ryan
October 2002
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I want to talk about ebusiness,
or is it ecommerce? I'm getting really fed up with the complete rubbish being published by some "experts." What’s the difference between ecommerce and ebusiness? How does etrade fit in with all this? I’ve asked a number of these so-called experts to explain the difference and received completely different, contradictory answers. I'm relatively up-to-speed on matters financial and matters computing, so if I'm confused, what chance the rest of the population? I looked in the “World’s most trusted dictionary” (well that’s what it says on the front) and found the following: Business – the practice of making one’s living by engaging in commerce. Commerce – the activity of buying and selling, especially on a large scale. Right, that’s all sorted then. Now can we just get on with it? We’ve all heard about new businesses being valued at millions and billions (it doesn't really matter whether we're talking about dollars or pounds with such ridiculous figures) when they've never made a profit and never look like making a profit. Is this ebusiness? Well, as far as the vast majority of UK organisations are concerned, no it isn't. It's just some very greedy and perhaps rather silly investors looking for a fast buck (or pound). Most of us won't find untold riches by creating one of these "dot.coms." In fact, most of us won't get rich at all. I need to buy a new car, and am looking around at some small, slightly sporty models from mainstream manufacturers. Being an ecommerce guru (regular readers may remember how I became such a guru) I tried to order details on a number of models over the Internet. I can't say the response was poor, because I didn’t receive any response. Should I jump on the anti bandwagon and start telling everyone that ecommerce has failed me? Well no. I actually telephoned some of the manufacturers, asking them to send me the same details. Again no response. I even tried to arrange a couple of test drives in person by visiting the showroom. Again no response. What does this prove? Well, it proves that the problem isn’t with ecommerce. My purchasing experience was equally bad using two more traditional methods. This doesn't prove that the major motor manufacturers’ ecommerce is failing, but that they have very real problems with the whole sales cycle. The technology behind using the Internet for ecommerce is actually rather simple. (It must be if I've successfully installed it). This is bad because anyone who sells a communications product will tell you they can set up an ecommerce solution. Ecommerce isn’t about the technology. It’s much simpler than that. Look at all the high-profile ecommerce ventures. Most of them are selling traditional products we all know and understand. There’s nothing new here. Companies are successful because they either have a great product or because they’re able to sell a commodity product more effectively than their competitors. Let’s talk about books. Everyone who professes to know about ecommerce likes to talk about books. This is either because the product is well-defined and low-value (therefore low risk) or it’s because they’ve read something someone has written somewhere about buying books on the Internet. When selling books on the internet (or mail-order) it makes sound business sense to send all the books from a multiple order in a single parcel. What happens to the business model when you undertake to send each book from a multiple order as it arrives? I ordered three books at the same time and agreed to pay one lot of postage. However, one book was in stock, one took three days to arrive and the last took over a week. In order to keep me happy, the ebookshop (good use of ejargon here…) undertook to send me each book under separate cover as it became available. They therefore incurred three post and packing charges and had to prepare three separate batches of paperwork. Assuming their accounting, order processing, warehousing and dispatch systems were fully automated (ha ha) they still wasted over £5 in excess postage on a deal valued at under £25. The real rub here is that they didn't ask me if I minded waiting for all three books to become available. They should have managed my expectations, acted in both our best interests and sent me a single parcel. Before you go off to make your millions out of such ventures, please ensure you’ve dealt with the business model. I mean the processes and products you’ve spent the last 30 years perfecting. I know it's simple, but if you run say a fashion goods shop and are used to selling 10 pairs of jeans each week, make sure you can cope with taking orders for the 1000 pairs your ebusiness budget has estimated. I know it's boring, but you should make sure you can get hold of 1000 pairs of jeans each week, or you'll have to consider the working capital requirements of holding far more stock. If you want to e your business, learn from others who already have such a business model. For example, a customer in your shop will keep trying on jeans until they find a pair that fits. Savvy mail-order and eshoppers (more ejargon here…) however, will order 2 or 3 pairs in different sizes, expecting to send back the 2 pairs that don't fit (and expecting you to foot the postage for the returns, and deal with the appropriate credit on their payment.) All this assumes you will find the additional 990 weekly customers of course. If you'd like a discussion or even a heated debate, please get in touch with Cynare |
Copyright Cynare Ltd 2002
Last updated 25/06/2003