In the words of Irving Wladawsky-Berger, General Manager of IBM Corp’s Internet Division in Somers, New York, the World Wide Web offers a range of possibilities for the potential consumer that range all the way from the truly useful to the less than sublime. And then there is the widely held assumption that the Web […]
In the words of Irving Wladawsky-Berger, General Manager of IBM Corp’s Internet Division in Somers, New York, the World Wide Web offers a range of possibilities for the potential consumer that range all the way from the truly useful to the less than sublime. And then there is the widely held assumption that the Web and other online media for electronic commerce, or e-commerce, offer a qualitatively new sort of consumer-merchant site of exchange that means a new set of rules.
By Gary Flood
If that is true, then a lot of the questions getting asked about the viability of e-commerce become even more pressing. Will it be push? Pull? Does branding matter? Do banner ads work at all? Do customers want flash and sizzle and a zillion GIFs, or will they give up if setting up the transaction takes longer than a typical ATM visit? If you can do everything in cyberspace, what happens to the value chain? Or barriers to entry? Where are the women in cyberspace, who according to demographics and popular wisdom do most of the actual retail decision making in families? Does the security of e-transactions actually really concern consumers, or is that an industry self-generated phantom phobia?
More questions than answers
As the old reggae song has it, there are indeed more questions than answers. There are held to be wildly successful examples of businesses adding value through e-commerce, though it may depend on your definition of value and e-commerce: Fed Ex gets enormous press attention and mindshare for its legendary package tracking system, for instance, but no-one knows if it makes money on it; and Digital Equipment Corporation says it has saved $14.7m in the first year of putting up an internal intranet, cutting costs on printing internal telephone directories and company benefit brochures and the like, yet as we all know it is in general a woefully unprofitable business overall. It is assumed that the Web is the future for a lot of business transactions we do in person or by phone or mail today, yet only a very small fraction of business is happening solely through this ‘new’ medium – for example, according to Bob Leonard, co-founder and senior executive vice president of TicketMaster Group Inc, since it launched an Internet-only ticket buying service two months ago, results have been promising – yet the figure, $3m, represents just over 1% so far of the entertainment giant’s $2,000m annual turnover. Nicholas Grouf, president and chief executive of intelligent agent specialists Firefly Network Inc, jokes that a lot of the Web suffers from the neutron bomb effect – there are a lot of structures still standing, but no people!
Potential is there
All three executives, plus many others, are gathered in San Francisco this week to debate the problems and conundrums raised by the specter of e-commerce, at a gathering called Business Online 97, organized by a group including consulting firms Giga Information Group and Arthur D. Little, and the CommerceNet e- commerce consortium of 500 vendors and organizations. The potential for e-commerce is there, was certainly the message of the opening day Tuesday, but to achieve it we may need to remember some general truisms of business before we get too hung up on the technology (be it deployment language choices, browser wars, bandwidth challenges, and so on). Wladawsky-Berger has a neat analogy that may offer us a way to get back on track. The Web is probably not going to turn out like the steam engine – an invention that created huge new industries like the railway companies. It is more like the printing press, which transformed an already existing industry, book production. Books existed before the printing press; it is simply that their reproduction and distribution was very difficult, and automating that changed the field enormously. Thus mass marketing rules and assumptions probably still apply, though they need to be extended for the Web. Furthermore, according to a number of speakers, e-commerce, by which one usually understand
s a consumer-merchant one to one relationship, as opposed to any back-end business-to-business activity, which is probably the hidden six-eighths of this particular iceberg, is not happening because not enough vendors have thought the consumer experience through sufficiently, seeing it from their point of view, and have worried more about setting up Web malls. A lot of people are out there on the Web, but few of them are buying, points out Wendy Brown, vice president for electronic commerce at proprietary on-line service America Online Inc. We’re all getting a lot of eyeballs but not many transactions. The reason is not that customers are not looking to buy anything, but that they don’t see enough added value in doing it this way. We need to make it all easier, safer, more compelling. America Online’s biggest individual item sold online is greeting cards, which sounds a bit ho-hum. But that’s missing the point, argues Brown; once a consumer has bought something they’ll buy something else later. The company is experimenting with a range of both push – pop-up advertisements, content links, promotions and sales offers and pull techniques – keeping a database of anniversaries and dates for customers so they can be reminded to send a card to a loved one, or buy them a gift, promoting big brands that customers know, and increasing use of tickers and alerts, to increase its share of e-commerce.
The aim of the exercise is to provide less technology and more value, she argues. The same point was made by Mario Vecchi, senior vice president of Time Warner’s cable modem offshoot the Excalibur Group, in Stamford, Connecticut. How many telephone users know or care what CCS/SS7 (common channel signaling/signaling system 7) means? he asks rhetorically. E- commerce, then, according to its practitioners and observers, is more about capitalism than computer science, and the Web is simply another sort of village marketplace, where the art of the merchant salesman and the shrewdness of the peasant buyer are attributes that both remain necessary.