IT strategy: Electronic retail – Are all customers caught in the net?

The latest appalling jargon word in an industry already bursting withis still far from being big business. Lotus Development’s Internet supremo Victor Aberdeen begs to differ. them is “etailer” – not a strange south American mammal, but an “electronic retailer”. But so far, the results for etailers trying to sell their wares online have been almost as feeble as the name itself.

The supposed boom in electronic commerce has spawned a huge new business in conferences, books, consultancy and other sources of advice for vendors panicking that they would be left behind.

What hasn’t materialised so far, though, are spectacular profits for the etailers, or significant new services for the customers, because of the Net, the most common medium for the new e-commerce.

According to Forrester Research, the most common use of the Web by businesses is still as a marketing tool, with over 80 per cent of companies doing no more than putting up a simple publicity page with contact details.

As far as actual transactions go, business-to-business systems have had a headstart, mainly because there is a precedent for this in technologies such as electronic data interchange, an expensive way of exchanging business information on dedicated networks, which is now migrating to the Net.

The dream of closing down all those expensive branches and selling to consumers via the Internet still seems far away. Popular myth blames the well-publicised mistrust of the Internet’s security for this, but recent studies indicate that the great public objections are more fundamental – money and ease of use.

A new study conducted by Jupiter Communications found that 65 percent of those that use the Internet regularly – an estimated 60 million – have never made a purchase online. The threat to the traditional high street seems limited so far.

But of Web surfers who fail to purchase online, 77 percent said they would shop on the Net if there were more discounts; 64 percent of Net virgins said bargains would attract them.

Another new piece of research, from Forrester Research, says that 90 percent of company Web sites have failed to deliver on expectations, largely because they are so unfriendly for customers to use. Most of them break the most simple Web design rules, and 62 percent of US surfers who try to buy online give up because it is too difficult or complicated, says the report.

It may be worth persevering – 95 percent of those who successfully make a purchase are satisfied and repeat the experience. There have been some notable pioneers such as Tesco Online and the bookstore, but on the whole the e-commerce revolution has not yet happened.

The IT industry, as usual, is quick to blame the millennium bug. “Companies know they have to get on the Web and start trading, but that takes large new servers and software, and their budgets are tied up in the Y2K bug,” said one IT consultant.

The cost of setting up a serious trading site is certainly encouraging some firms to stay out of e-commerce or to opt for cheap solutions that do not provide users with any added value.

But many of the excuses do not ring true. While people are using the Internet to obtain information, it will take as long for them to see online shopping as a natural route as it took for people to use ATMs rather than queueing up in the bank. And in some sections of the population, that was years.

So, vendor needs to provide an incentive to use the Net. They need to offer greater convenience or lower prices than the stores, or clear added value, and they need to consider whether their products lend themselves to being sold electronically. Software, or bulk commodity goods, do, because the customer does not need to feel or view them in advance. Items, like clothes that need to be examined in detail are far less suitable.

In other words, “etailers”, stop making excuses and start asking the customers what they really want.

Caroline Gabriel is a group editor in VNU’s IT portfolio

Victor Aberdeen, Internet product manager, Lotus Development UK

I truly believe that almost every business can be an e-business. It’s not surprising that Forrester Research has stated that the most common use for the web is still as marketing tool. This is because there are few businesses out there that can’t work better if they communicate better.

An example of a new public service for using the Internet is a doctor’s surgery. We communicate with the receptionist: why not simply book an appointment on the Internet, instead of getting the receptionist to do it? The receptionist finds our records, and passes them to the doctor – but the doctor could review those records on a database. The doctor sends us to a pharmacy with a prescription – but the local pharmacies could communicate with the surgery, giving valuable feedback about whether prescriptions were picked up, and when. The pharmacy could even communicate with drugs companies. The opportunities to change a process which has been the same for several hundred years are plentiful.

In this example, good e-business, just like good business, relies on interaction, not just pushing information onto other people. Few businesses do enough to encourage feedback from employees or customers – even when we use technology, we simply push data one way, whether we’re sending out a memo on paper, or in e-mail. As long as we do that, we’re wasting an opportunity that e-business and the internet can exploit.

Technology projects have a well-deserved reputation for expanding out of control. Trying to do too much can be worse than doing nothing at all. Instead, concentrate on how to change the way people work – and that means changing how they communicate. And that means thinking about e-business first, and your IT infrastructure later; then, and only then we will see the spectacular profits rolling in.

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