Focus on Technology: How to plan for e-commerce
Business magazines these days are full of articles insisting that to survive in the 21st century, companies must have their own e-commerce Web sites. Furthermore, these sites must let the companies' customers perform a variety of functions, such as placing orders and checking the status of earlier orders or even the suppliers' inventory.
But what those articles don't discuss are the cost-effective alternatives to such complicated, expensive sites. Nor do they explain how to go about planning for and implementing a site as part of an overall e-business strategy. Without such a strategy, even the most comprehensive site may not be successful. This article explains the different kinds of e-business functions, sites and site arrangements that are possible. In a future article, I'll outline the steps to creating an e-business strategy.
Good, better, best?Here's the shocking truth: Full-blown e-commerce Web sites are not essential for every wholesaler! As with whirlpools, air-conditioning systems, valve-control systems, etc., Web sites have different degrees of functionality:
- A site can be as basic as containing a company's name, address, phone and fax numbers, a list of the product lines carried, and the ability for a visitor to send e-mail to the company -- the feature that is the most widely used function in e-business today. In effect, the site is an online brochure for the company that provides a direct link for communicating with the appropriate people.
- A more functional site would also contain a series of "radio buttons," each labeled with the name of a product line, service or manufacturer. Clicking a product-line button results in a list of the products/services, and clicking on one of those names results in detailed information about the product/service. Clicking on the name of a manufacturer takes the viewer to that company's home page.
- E-mail is an inexpensive way to enable customers to enter orders. Keep in mind, though, that such orders are not electronic order entry, because someone must re-key the e-mail information into the wholesaler's main system. Customers key in product codes, quantities and customer information, and send the form to the wholesaler.
- A step beyond the e-mail order-entry form is the "shopping cart" method of order entry (very common among consumer e-tail sites). When the user clicks on the form's radio buttons and information about a specific product appears, another button labeled something like "click here to purchase" also pops up. In turn, clicking that button brings up a box in which the user can type the quantity of items to be ordered. When the viewer is finished selecting, he clicks on a "review" button to review or revise the order, and then clicks on a "send order" button to actually place the order. However, the shopping cart method is much more complex and costly to set up and maintain than the methods mentioned earlier.
- A full-blown site allows customers to use everything described for the shopping cart method. It also allows users to review orders already placed or even check their accounts-receivable status.
Of course, the full-blown site is the most expensive approach and demands considerable sophistication about electronic business from its owner.
Owning vs. renting a siteAn e-business site does not have to "reside" on the wholesaler's main computer. If it does, however, a "firewall" (software program) is needed to deter unauthorized people and hackers from accessing confidential or damaging data. Some distributors "host" their site on a computer used for nothing else and not attached to the main system. When the data on this dedicated computer is needed, it is transmitted to the main computer for processing. The information can also flow from the main computer to the dedicated computer.
Another option is to have a site hosted by a third party. Internet service providers or ISPs, among others, allow distributors to place e-business software packages and company data on their computers. It's like renting the use of someone else's computer, with the rental company handling all the hardware and data communications chores. The distributors update data on the third-party computer as necessary, and the third-party computer automatically transmits transactions (such as sales orders) to the corresponding distributor's system.
Some of these services -- called application service providers or ASPs -- allow distributors to rent both the computer and the e-business software. ASPs make it very easy for distributors to have a site; all the distributors have to provide is the data needed to fill the site. The downside is that distributors cannot customize the site's format or the functions of rented software.
A variation of this kind of outsourcing an e-business site is the "portal," a publicly available site that contains icons for various business categories (e.g., plumbing fixtures). It also may contain the names of specific wholesalers, who pay for the listing.
When a category icon is clicked, summary information for each subscriber in that category (e.g., a PVF distributor) is displayed. Then, when the icon for a specific subscriber is clicked, information and perhaps an order-entry form are displayed.
Wholesalers who have a site on a portal don't have to do nearly as much publicizing of their site's address as they otherwise would; they get a lot of traffic from viewers searching by business category. Yahoo! is one example of a portal.
E-business software optionsWholesalers who don't want to rent the use of e-business software can obtain their own software, which comes in three "flavors."
Tool kit software allows a company to use just about any format and content desired and interface the e-commerce site with its main business system. This approach is very flexible, but it requires technical employees or outside programmers to create a site and make any changes to it.
Packaged applications are programs that can be used as is, with some degree of customization. Packaged applications do not require in-house technical people, and a site can be set up faster than via a tool kit. However, interfacing with the main system may be difficult and probably will require contracting with an outside programming firm.
Of course, the company can always just get a whole new business system that has many e-commerce functions built in. Although this is usually the most expensive and painful option, it does eliminate the need for interfacing to the main system. It may be the best alternative for distributors with a weak main system.
In the next installment on e-business, I'll outline how to create and implement an e-business strategy.