Sept 2

How to Get the Buzz on E-Biz
Sun Review September 2, 2000

Whether you're a major retailer or a small one-man operation, the online marketplace poses new problems and offers innovative solutions.

Although the Internet is a field on which everyone can play without a huge financial outlay, it still may not be nearly as level a field as many aspiring e-businesses could hope for. The more progressive large companies on the Web are already deeply involved in using the Internet to improve their purchasing tools and purchasing power, and in bringing in administrative systems such as accounting, payroll and human resources to the Web.

Such solutions may pay off in the end, but it can cost tens or even hundreds of thousands of dollars to implement. The challenge for small business is to learn how to take advantage of the Web on a limited budget and with limited personnel.

Sure, there are overnight successes on the Internet, but for every dot.com that thrives, there are more that flop. Many dot.coms will become dot.bombs - they'll fail.

Online or offline, you need a sustainable business model. If you don't have that, you don't have a business.

Here are some quick rules of thumb to determine whether you should start an e-business:

1.You sell a product line that can be delivered economically and conveniently.

2.You have a desire to market to customers outside your own geographical location and a product that will have broad appeal.

3.There are significant economic advantages to going online, such as lower rent, labour, inventory and printing costs.

A fourth factor might be whether you can economically draw customers to your site. Chasing a mass market - going head-to-head with Amazon.com, Priceline.com and the like - means you'd better have a seven- or eight-figure marketing budget because your competitors will.

But the good news is that there is still plenty of room for those who have targeted shrewd niches and developed solid business plans.

The phenomenon of the always-on, always-there, everywhere Internet is expected to have far greater impact over the next several years in the business-to-business (B2B) arena than in the business-to-consumer (B2C) category. Changing the way people shop (B2C) will take a much bigger shift.

There are certain merchandise categories that will be slow to succeed online. Take the example of women's fashion, where shoppers will want to try the clothing on and touch it before making a purchase. With commodities like consumer electronics, online retailing is the way to go. The B2B approach involves conducting old-economy business with new-economy tools to cut transaction costs while maintaining existing transactions and increasing customer satisfaction.

These days, savvy business people are focusing on CRM (customer relationship management). eCRM, the online equivalent, uses Web technology to create a team relationship among different business divisions in a company, and between the team and its clients to obtain and retain customers.

Many companies view eCRM as an integral component of their business' Internet strategy, and a natural extension of their call centers. Smaller businesses can check out off-the-shelf versions from companies such as Interact Commerce Corp (www.interactcommerce.com) and Multiactive (www.multiactive.com), or farm out CRM to solutions providers such as Salesforce.com.

Another way to make use of B2B technology to boost your profits is by squashing product and overhead costs through e-procurement. Specialized websites called marketplaces or vertical portals have been created where people with similar business interests and needs can trade and talk B2B 24 hours a day.Such disparate functions as purchasing a box of paperclips, a ton of steel or airline tickets can all be handled through the B2B marketplace.

Knowledge management, one of those ephemeral terms that seem to mean nothing and everything simultaneously, is another key component of your B2B Internet strategy. Almost every company has vast stores of raw data and real-world experience, information that can be found in databases, filing cabinets, e-mail, sales reports, and the brains of staff members. Accessing that data and manipulating it into usable forms can be difficult and time-consuming. Leverage your information resources through the use of groupware or teamware, software that allows your team to collaborate via an Intranet or website. Collaboration tools such as Lotus Notes (www.lotus.com) and Microsoft's Exchange Server (www.microsoft.com) let you share e-mail, databases, documents and more.

If all of this sounds a bit overwhelming for your small business, rest assured that help is on the way. ASPs (application service providers), online vertical marketplaces, financial services companies and other B2B vendors are beginning to cater to small and medium-size enterprises. They're offering online procurement services, hosted CRM and marketing applications, and easy access to online exchanges where small businesses can sell their products to larger enterprises. These new B2B offerings are designed to be economical and easy to use.