Many millions of words and manycolumn-miles have already been written extolling the virtues of the Internet and how itwill change all our lives forever. But what substance underlies the hype? How will theInternet really affect you? And how can you prepare your business to take best advantageof the opportunities the Internet represents?
In this article we look at the ways inwhich companies are making the most of the world wide web.
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WHERE NEXT WITH THE NET?
Most companies with products of any interest to the general public have by now establisheda web site and are using the ubiquitous ‘www’ address to advertise their business, brandor product, writes Tony Parkinson, managing director of Option Systems Limited. Of thosecompanies who do not currently have web sites, most are hidden from the public or are notactively soliciting new business (for example, a manufacturer solely supplying Marks andSpencer).
Web sites work well as inexpensiveadvertisements for your company and products, but are by their nature passive publicity;people have to be looking for you or your products in order to find your web site. To gaingreater visibility one possibility is to use ‘banner advertising’, where your company orproducts are advertised on popular web sites, a further refinement being to have youradvertising linked to key words used when searching the web using one of the popularsearch engines. In reality, this form of advertising is just another targeted campaign,with similar effects to that of advertising in lifestyle publications.
Much discussion has also been made of ‘pushtechnology’, where a profile of an Internet user is built up, either by the userexplicitly indicating interests, or by ‘smart agents’ inferring one’s interest from websites visited or searches made. This profile may then be used to target advertising tousers who are most likely to be interested in it. This aspect of the Internet is still inits infancy.
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E-COMMERCE
Further uses are being made of the Internet, including the current favourite buzzword,E-commerce, which generally refers to the electronic purchasing of goods on-line. This isworking extremely well for certain types of goods such as books (try Amazon Books at
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By GlobalDataConcerns about security of credit cardsales over the Internet, which were aired by scaremongers in the early days, have largelydisappeared. Dealing with reputable companies on-line is generally agreed to be as secureas telephone ordering.
APPAREL CHALLENGES
Apparel faces some different challenges to book and CD retailing, specifically thoseassociated with colour and size. These are well known to mail order companies, who atleast have some control over the printed representations of the garments. Pictures shownon the web however, have colour matching problems at the picture taking (or scanning)stage, as well as being dependant upon the colour adjustment and capabilities of theuser’s display screen. Size inconsistencies mean that consumers often order two or threesizes at a time, and return the ones that don’t fit.
One company that has had an electronicordering facility for some time is Racing Green (www.racinggreen.co.uk), but their intention is that you buy from theircatalogue, and use the Internet as an ordering (rather than selling) medium. Thiscircumvents the colour problem. From the retailer’s point of view, this technology ishighly useful in that it can function unattended 24 hours a day, and simplifiesadministration. In effect the user is entering his own order, invoice and payment, and allthe retailer has to do is to pick and despatch the goods.
Companies like Next (
The Internet offers an excellentopportunity to get into direct consumer sales if this is appropriate for your business,and can be achieved without compromising your existing channels. But you should also beaware that your business may come under attack from competitors on the Internet,especially from direct selling US companies whose prices are ‘apparently’ VAT free.
One company which has recognised thesavings to be made by direct selling on the Internet is the computer and supplies companyAction (www.action.com), which passeson some of the savings made in the form of slightly discounted prices for users placingtheir own orders. The subtle difference here is that the majority of Action’s customersare actually companies, most of whom are frequent buyers who require some incentive tospend what is probably a longer amount of time placing their orders.
A less successful example is an attempt byone well-known shirt manufacturer to implement an on-line ordering system for itsretailers, which largely failed for several reasons. The system was intended for retailersto order a wider range of sizes than they normally carried, but this presumed that theretailers would have Internet access from their shops. In reality, they would normallyphone through an order whilst the customer was in the shop, as this was faster and gaveimmediate confirmation back to the customer. Also, the order details had to be enteredboth via the Internet and into the retailer’s own tracking system.
COMMUNICATION PROBLEMS
This highlights one of the problems of business-to-business communications – the doubleentry of information into both the retailer’s and supplier’s computer systems. What isneeded is a single point of entry for both systems, which is where EDI comes in. EDI(Electronic Data Interchange) has been around in the UK clothing industry for nearly 20years, and has been a pre-requisite for dealing in volume with UK multiples for most ofthat time. Indeed, in the US where the major retailers have thousands of branches, thishas become the only viable alternative for communication between businesses.
But EDI has its shortcomings. As a standardfor communications, it has suffered from too much customisation for each major user, andmany companies supplying several multiples have to run separate systems for each customer.Also, EDI requires a significant financial commitment from both parties, and is thereforeonly effective where a high volume of trade takes place.
What is needed (and what there is a gap inthe market for) is a product to fill the niche between low volume ‘consumer’ trade andhigh volume ‘multiple’ trade. This is where the Internet could come into its own.
Another major use of the Internet is forenquiry purposes, and a number of the international carriers now have Internet-basedparcel tracking, so that the location of any parcel may be tracked without the need forranks of telephone operators answering calls (for example, www.dhl.co.uk). The user benefits in reduced overheads. Similaradvantages accrue to Railtrack (www.railtrack.co.uk),where passengers can plan their journey themselves and print a hard copy if required, andBritish Airways (www.british-airways.com)where you can get flight details, seating plans and airport information as well as on-linearrival times for each flight.
The American designer company
The Internet also provides a simple way ofkeeping your customers (and your own sales force) up to date with stock availability andspecial offers. This can be via interactive enquiry, or by sending availability reportselectronically (e-mail) rather than pieces of paper by post.
So what should you do now? You can surveyyour key customers, agents, representatives and customer service personnel to determinetheir requirements. Do they have access to the Internet? Would they use it to checkavailability of stock? Track orders? Place orders? Browse your collection? It is importantto understand these requirements before embarking on any project.
We at Option Systems believe thatE-business will be a growing part of all our business to business trading. Our clients arealready making extensive use of the Internet to keep their staff, agents, customers andsuppliers up to date, and we have launched an E-business order tracking module. This willbe followed by the E-business stock availability module, and we are looking ar uses of theInternet for system to system ordering, as this is where considerable cost savings can bemade.
