The Blossoming of eCommerce

by Mark Wheeler, Technology & Business Magazine

After a shaky past, Australian businesses are driving great value from electronic business. Mark Wheeler learns how a fresh approach is sometimes all it takes.

The return of ecommerce to the forefront of the business agenda has been gathering momentum now for some time. Over the past 10 years, ecommerce (like many other technologies) has entered our consciousness amid much hype and has been over-enthusiastically pursued. Soon after came disillusionment and businesses moved their attention elsewhere, but now ecommerce (and more broadly e-business) appears to be undergoing a steady but far more realistic rise. Organisations have again begun to put faith back into electronically based business but with a more appropriated and considered approach.

Way back in the early and mid ’90s, the booming IT business was matched in the wider business world by an eagerness— almost urgency—to establish a presence on the Web. If you didn’t have a Web site you didn’t really exist, so Web sites began to pop up like daisies in the springtime. Like many things it coincided generally with the rise of the Internet, the mainstream uptake of computers and home computing, and became known as the dot-com era.

With the slackening off of all things dot-com, ecommerce activity went through a period of relative unpopularity and by 2001 wariness of failure saw business investment in ecommerce dwindle. It’s what analyst firm Gartner called the “Ecommerce Hype Cycle Timeline”. Gartner’s analysis places the year 2000 at the “peak of inflated expectations” and the period between 2001 and 2004 as the “trough of disillusionment”. Dramatic terminology, yes, but it does explain what the mood was like.

Martin North, general manager at Fujitsu Consulting, gets very excited when he talks ecommerce these days. But looking back on these early phases he says: “A lot of Internet business failed to deliver the value to organisations. I recall talking to several CEOs around 2001 who felt they were hoodwinked. They felt that this would be a whole new way of doing business but got no value out of it. There was a wave of skepticism, and a feeling that it was a waste of time, effort and money. All this hype was there, and it was nothing but hype.”

“The dishonesty of a lot of the e-business hype over the past couple of years has been that it [hype] pushed that one size fits all,” says Bruce Arnold, director of Australian Internet analyst and consulting firm Caslon.

“Not all businesses are the same—some are big, some are small, some have different relationships with their customers and some have a quite different competitive environment.” Figuring out what works for each individual business and how ebusiness actually mightbenefit your organisation represents the great challenge in years to come, but also serves to explain how it might have failed in the past. It really goes beyond just having a Web site, instead moving towards the discovery of how your businesses processes, interactions, services and function can be improved through an ecommerce strategy.

Arnold points out that the smart businesses will be those who work out what is appropriate for their business. In some cases all the Web site will need to be is a splash page—a business card giving details of how and when to get in contact. At the other extreme—and getting equal value for money—are people who will have restructured their business because being online is a crucial part of the service or function they offer.

Enriching web sites

Commercial real estate portal PropertyLook is one such business that actually emerged out of those years Gartner coins as the “trough of disillusionment”. According to its general manager Wally Scales, it arose initially out of joint venture by the “big four” Australian commercial real estate players as a defensive strategy to cover the market space. It has since tailored itself into a clever portal that helps match people looking for commercial property with suitable estate agents. Working in much the same way as Domain.com or even jobs Web site Seek.com, PropertyLook primarily functions as a portal where real estate agents can advertise their commercial listings.

A key problem starting out in 2001, says Scales, was that unlike residential property listings which were quick to make the move to Web-based portals, commercial clients tended to be older and less inclined to embrace the Web as a resource for researching the market.

With that in mind, PropertyLook’s business model is structured around search engine optimisation, meaning that it is not necessary for a customer to know that PropertyLook exists but Googling for commercial property would hit quickly on the portal.

The challenge was to make the Web site user friendly and intuitive so that unfamiliar customers would be comfortable using it, as well as developing it into something that offered not just listings, but a place to thoroughly research the market. Scales explains: “In a newspaper the idea is to put in minimal information and the interested parties enquire of the agent for more information.

On the Web it works in reverse—if you don’t provide a whole lot of information upfront, because that listing is surrounded by a whole lot of other listings for similar types of stock, the viewer simply moves onto the next one. They are surrounded by choice and so if there is not a rich level of information, you will lose out.”

Since 2001 the commercial real-estate market has very much adopted this model and PropertyLook now ranks in the fi rst few hits in most searches. In October 2005 the site’s traffic had increased by 290 percent on its 2004 traffic. But as the penetration of higher bandwidth spreads and market expectations grow, the challenge to innovate and offer a richer and more tailored service has also evolved.

Virtual tours are nothing new in real estate Web sites, according to Scales, but the inclusion of flash-based virtual tours that offer more than just a spin around a room are now being made available. “A traditional virtual tour usually includes a 360-degree pan. In my opinion these are becoming dated because they are expensive to produce. What we are actively promoting on our Web site now is a flash-based animation which also features a professional voice over. It’s a far more versatile tour. To date the file sizes have been too large to run online, but with flash you can deliver a professional, rich, online tour with a voiceover for the same cost,” he says.

Another innovation currently under development for the Web site is the use of map-based searching. “Using GIS (Geographic Information System)-based technology you’ll simply start with a map and drill down towards the area you are after. On the side you’ll have some parameters that you can use to refine your search. Because it’s map driven you can see exactly where it’s situated, and if you click on a particular dot on the map it will bring you into the detailed information for that properly listing,” says Scales. “We are also tracking the Google Earth phenomenon [a satellite imaging and mapping service offered by Google] carefully. I think this is where a big part of property searching is heading in the future.”

Other functions have recently been included to PropertyLook such as an online booking facility for agents wishing to sell by auction. By completing an online form the auctioneer will be notified by e-mail and the booking published in an “upcoming auctions” section of the site.

And PropertyLook is also tackling customisation the site. “Once you subscribe to the Web site, you are able to enter a customised environment where everything is laid out and delivered up the way a customer wants it, and all the content that is irrelevant to them doesn’t even feature. Instead of viewers looking at generic info they will be looking at highly customised information according to their requirements,” Scales says.

But How?

PropertyLook’s Web site is a great example of improving the customer experience—providing content-rich, customer-facilitated functionality—something that Fujitsu’s Martin North says is one of the three domains where a business can pursue ecommerce, depending, of course, on the nature of the business. And the customer experience is perhaps the key area where, in the past, Web sites were lacking. At the forefront of businesses revisiting ecommerce is a drive to make the Web site something more that a brochure for the organisation.

Business might also choose to concentrate their efforts internally in the organization-the second domain. North says, “This is about leveraging the info that you have in the organisation and drawing insight from it and being able to spray it back out to the points of interaction with customers or the point of decision making inside the organisation—this whole issue of business intelligence. The next wave of ebusiness is around making sure that you’re leveraging the information you have in your organisation and creating real opportunity.”

The third domain, according to North, can come from driving back into the supply chain to work with suppliers towards supply chain optimisation and rationalisation. “It’s real cycle procurement, helping you to manage your inventory better, have quicker turn around and greater efficiency,” he says. Arnold agrees. “It’s what’s called the glass pipeline,” he says. He sees the big benefits of ecommerce coming from the logistics end-being able to do ordering, tracking, invoicing-the whole supply process-and maintain visibility and control over it.

But Arnold points out that for many businesses the thinking might need to begin closer to Earth. Before this level of restructuring is really viable there are plenty of more fundamental elements that should be addressed. “If you look long term and strip out the hype, overall people are find that there are no silver bullets. The challenge facing businesses really is aspiring to best practice. Everything from making sure that your site is usable, making sure that your site actually has content or services that are appropriate to you customers, right through to managing your e-mail properly. It might sound trivial but I think it really is an issue for Australian businesses.”

The risk and the possibilities

The real challenge for companies looking to take the big (daunting) steps will be to work out where to invest these technologies and how to actually transform the business to leverage against them. Ultimately the difficult part is not really the technology but changing the processes of the organisation and the culture of the organisation. Dell is the classic example of what can be achieved, says North. “Dell changed the paradigm around building computers. What you now have is a self-configuration Web site, and what it does is take out this whole idea of keeping inventory because effectively they build in line with orders. That fundamental shift in terms of the computer construction has tipped the balance—Dell got a start. Rather than holding inventory and waiting for people to come and buy it, what Dell did is take the order and then order the parts and then put it together and turn it around in a real-time. It’s a real-time procurement cycle that is driving off the back of the order.”

“The key thing that Dell did was to say ‘that’s wasted capital sitting there in inventory, we won’t have inventory anymore, in fact we’ll have inventory through our suppliers and well have a real-time network that allows us to pull the components together to be able to deliver the computer’.” What faces businesses looking to emulate the likes of Dell—revolutionising the way they structure their business—is clearly intimidating.

But the benefits in terms of cost reduction and new opportunities are attainable. North says many people still see this kind of approach as a technology project, and the risk is that “there will be another wave of big, expensive technology failures because, there is no such thing as a technology project, there is only a business project with technology content”.

“Almost always, all of these things are more about changing the way businesses work or the culture or the processes or the interactions with customers, and so failures stem from not fully understanding the degree of transformation that’s required to be able to do it,” he says. “You’ve actually got to recognise that every time you do one of these things you’ve got to not only address the technology dimension but the people and culture that surround it. Something like 75 percent of projects fail, not because the technology is wrong but because the people are wrong.”

It becomes critical not to try and take on too much, and to consider what elements will offer the highest value and concentrate on these, North says. “There are lots of different options for organisations; do I focus on the customer experience; do I focus internally; or do I focus on the supply chain? You need to select the right things to do in the right order.”

“You need to have a view of where the biggest value points in the business actually are, and decide how much value doing this will have compared to doing that,” says North.
“You need to make some assessment of the risks that are involved in delivering these things and you’ve got to make some sort of prioritization based on that. Don’t try and do everything. Just pick a few things and do them well.”

And lastly, of course, is security. As you build greater connectivity with your customers and partners, and capability across the Web, the data flow and exchange can balloon. It significantly enhances questions of security around the data. North says that in his experience these things are very often not formed properly in this type of project where everything from ID protection through to security and data issues must become important.

The steady return of ecommerce to the business mindset is clearly matched by the advantages and benefits that a clever approach can offer. And with a future boasting such things as video streaming and greater bandwidth, the possibilities for richer interactions with customers and between businesses are vast. The scale and size of an organisation will have little bearing on its presence on the Web. There is great potential for smaller organisations to leverage against technology—no longer so expensive to create a comparatively significant presence on the Web.

The next few years to 2008, according to Gartner, will see ecommerce activity continue its steady progress, towards the “plateau of productivity”. But until this time ecommerce will remain a source of innovation and real opportunity for many businesses. Ecommerce, at least for now, is enjoying a stroll up Gartner’s delightfully named “slope of enlightenment”.

Executive Summary

• Ecommerce has gone through a period of hype and under-delivery, but today it is rising again as businesses apply technology it in a far more useful and strategic way.
• In the past a Web site was little more than a brochure for the company, but today Web sites can offer richer content and user-enabled services.
• There are three key areas where a business can concentrate its efforts—enriching its Web site, leveraging information it already has, or the supply chain.
• Key to successful is assessing where benefit can actually come from and how to better leverage against technology
• The greatest challenge for business will be not the technology but the change in culture required to benefit from it.
• These will be different for every business, so it’s important to concentrate on key areas and develop priorities.

• The risks are large, but the benefits are real and great and apply equally to businesses big and small.

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