Dotting the i's and crossing the t's for success in e-commerce: it's more than adding Dot.com

Success in the burgeoning field of e-commerce requires some lateral thinking — and much more than simply adding dot.com after your company name.

Those companies — particularly small businesses — that create new business models and successfully streamline their supply-chain experience the most significant benefits from going online, according to a recent Murdoch University study.

Associate Professor Simpson Poon

Associate Professor Simpson Poon, Director of Murdoch's Centre for E-Commerce and Internet Studies and author of the study says: "There is a significant relationship between those who achieve success and the things they have done in their e-commerce initiatives.

"To be successful, many firms have also set up new business initiatives and convinced others they deal with to use the Internet."

Professor Poon says a typical scenario when a business manager contemplates going into e-commerce is:

"You take your e-commerce consultant's advice and carry out a strategic analysis on your business by identifying which business processes can benefit from e-commerce.

"You feel the future can only be brighter and better, and you are now truly a 'dot.com' company, with a 'http://' address to give out.

"Your vision of financial independence and investors bestowing big dollars is not far off."

Not the full picture, says Professor Poon. Being successful in e-commerce means much more than just setting up a website.

His recent study of 224 small businesses with email addresses and websites has revealed that those who achieved success in e-commerce did more than just go online.

"The study examined the role of management in the firm in terms of initiating and developing e-commerce," says Professor Poon. "Those who created new business models and successfully streamlined their supply-chain experienced the most significant benefits.

"Those with less-aggressive approaches, such as putting forward plans based on existing business activities, did not experience the same success."

For example, one traditional graphics design company which moved into the web-designing business reaped major benefits from their newly-developed business. Although this company is still sourcing traditional graphics design projects, a significant amount of resources has also been dedicated to their new business initiative.

Professor Poon says this makes sense considering everyone was doing more or less the same thing.

"It is how you apply innovation to attract new business opportunities, investment and customers that counts," he says.

"Sometimes the existing business model is not 'e-commerce friendly'. In such cases one might have to take a bold move to embrace a new, but sometimes unproven, opportunity and take full advantage of e-commerce."

Professor Poon suggests an evolutionary rather than revolutionary approach, but concedes that it is a difficult choice and many small businesses do not have the resources, or will, to do it.

"In the world of e-commerce, rewards seem to go to those who can assume the risk," he says. "I believe a small business can only fully benefit from e-commerce by creating values for those in the supply-chain, such as suppliers and customers.

"In other words, achieving a win-win situation."

Customers and suppliers must be the first beneficiaries from a business's venture into e-commerce activities — sometimes before the small business itself. Examples of 'value-adding' activities included improved billing cycle, accuracy, flexibility and effectiveness.

"In e-commerce, mutual benefit are the key words, and e-commerce strategy should be based around this," Professor Poon says.

Professor Poon provides a number of tips for importers and exporters planning to extend their businesses internationally through e-commerce.

"Electronic commerce presents un-precedented opportunities for importers and exporters to extend their businesses in a cost-effective fashion," he says.

To really benefit from e-commerce, business managers need to plan in detail — pinning down what is the short-to-medium term business strategy; understanding that it is not the 'technology' itself providing the competitive advantage, but how the technology is used to enable the business model to grow beyond its physical limits and allow those on the supply chain to benefit equally.

"More than other forms of technology, e-commerce can be a great enabler, but at the same time a rapid destroyer if one's e-commerce strategy is not well-planned," Professor Poon says. "Therefore, an integrated strategy to address business, technology and human-resources requirements is needed."

Generally speaking, importers and exporters face similar issues, but from different ends of the supply chain.

"The import/export cycle relies on information gathering, making contact, setting up business deals, information exchange and goods delivery," Professor Poon says. "All of which can be enhanced by use of the Internet and e-commerce in a progressive fashion."

Tips & Hints

Professor Simpson Poon, who has ten years' experience in researching and consulting in e-commerce and specialises in small business e-commerce and virtual organisations summarises the steps managers can take to gain the advantage of global e-commerce:

1. Obtain Internet access by at least having a reliable email account and a web presence, albeit a simple one. It is the contents not the colours that count. Register a domain name for your company. If you can get a .com extension it will sound more global than a .com.au one.
2. Monitor the amount of requests for online transaction. If there are not a lot of requests and if you are comfortable with the current payment arrangements, then leave online payment to the next stage of development.
3. On your webpage, at least provide corporate information, means of contact, business profile, email feedback and maybe niche expertise which makes your company unique. But do not put up your whole inventory list. Those who are genuinely interested will contact you for further information. Provide enough information to demonstrate that you are experienced and trustworthy.
4. Make sure you have your website listed with directory services (e.g. Austrade) to provide maximum exposure. Although generic portal sites (e.g. Yahoo!) are useful to a point, you need to really target your potential customer. List your service with those who would be your potential customers' first contact point (e.g. Chambers of Commerce, Export Enquiry Services). Often, once initial contact is made, subsequent exchanges can also be carried out through telephone or fax, before actual business deals are struck.
5. Ensure you have a good collection of online information sources where you can re-visit for further information. Examples of such sites are Austrade, Department of Foreign Affairs and Trade and their counterparts in the foreign countries where you are importing from or exporting to.
6. Encourage document and formal exchanges to be done via email with confirmation. Use read-only formats such as Adobe Acrobat files. This provides a means of written record and also helps to save the trouble of having de-colourised fax sheets if you are still using a thermal fax machine. But don't do away with your fax machine altogether yet!
7. Make sure you have a printed copy of correspondence and backup your computer system regularly (at least weekly). Instal anti-virus software and make sure your work computer is not another game or public access machine, which is likely to be infected by computer viruses and to have data erased by misbehaving games programs.
8. If your transaction volume is high or your partnering firms demand you to exchange documents through more secure channels such as Electronic Data Interchange (EDI), then you may want to consider using services such as ImportNet or ExportNet offered by Tradegate ECA. There are also software packages allowing you to send EDI documents over the Internet without joining a bureau service.
9. Remember e-commerce cannot substitute for face-to-face contact and other fact-finding activities. Therefore, it may still be necessary to rely on traditional media such as phone, fax or traditional networking to ensure your continuing success.
10. Don't abandon the business wisdoms you have gained over the year.

The keyword in e-commerce is 'Commerce'. Ultimately, it is doing business with an organisation run by human beings.