E-commerce will become profitable for some companies, especially in the next four to eight years, not only because of advances in technology, but also because that's when there will be a new generation of consumers - today's generation of Nintendo and Game Boy warriors who have grown up 'pointing and clicking'.
There is a huge potential waiting for companies who learn how to use the online world for business. Business-to-business applications are efficient and cost-effective - invoicing, transferring documents, ordering stock can all be done at the click of a 'send' button.
The business-to-consumer sites are also sophisticated, as well as user-friendly, whether they are for banking, shopping or advice. I've mentioned a couple of companies that haven't met their projections, but here's one that has. The Great Barrier Reef Online Visitors Bureau site was set up by three people and built on a shoestring. These people were experts in the region and invited people to their part of the world, rather than sending travellers to a destination as traditional travel agents do. After three years the company was turning over a million dollars a year. In early 2001, with a name change to Travel Online, it has more than 50 individual web sites and turns over a million dollars a month.
Travel is an industry particularly suited to the Internet. People who travel frequently are generally computer literate, time-poor and have a good disposable income. There are newsgroups where you can get advice and the experiences of other travellers, and travel is well-suited to advancing technology, like video streaming. Research has shown that the majority of travellers now use the Internet when planning a holiday, though most are still using it for looking, not booking. They get the information on a destination, then go to their local travel agency to fix up the details. However, according to Forrester Research, online travel sales will skyrocket to US$129 billion by 2017.
There are a number of lessons for any business from online travel e-commerce. Success could come from thinking a little laterally, becoming a specialist in a particular field or targeting the right consumer. If you were to open a traditional retail shop in a shopping mall that only sold, say, darts, I don't think your chances of survival would be good. But, remembering that the Internet consists of your computer connected to millions of other computers around the world, your target audience could become every darts player on the planet who owns a computer.
One big mistake many online businesses make is that they see the Internet only as a distribution mechanism. It is much more than that: it's a virtual world that you can actually 'move about' in. If you have a company that specializes in, say, vintage car parts, you can do a lot more than just put up a web page. You will find newsgroups for all types of cars in cyberspace - enthusiasts that chat, swap stories and give advice to each other. My advice to anyone with a specialist web site is to get out there in amongst your potential customers and sell yourself, 'work' the sites, let them get to know and trust you and, apart from the business, you can have a lot of fun meeting people with similar interests.
'Clicks n bricks' is very much the buzz phrase at the moment and it simply means having a traditional business as well as an online operation. This makes a lot of sense, as the online presence may not have to be profitable in its own right if it is driving customers into the physical location.
So...does your business need a website?
Quite possibly, but carefully considering the following questions will help you decide.
- Why do you want a website?
- Does your product suit the online environment?
- What is your potential market?
- How do you reach that market?
So many people, when asked why they are building a website, answer along the lines of 'because everyone else has one'. This is not a sufficient reason to build a website.
There are many other far more valid reasons such as:
- To make money
- to extend brand awareness
- to expand an existing customer base
- to increase existing customer loyalty
- to make the business more efficient
- to find out more about this new medium
Let's take the last point. An important part of any business is investing in research and development, and if that's the sole reason for building a website, it can be money well spent. As with any new venture, hands-on is the best way to learn, but also as always in business, do a business plan. Outline exactly what you want to achieve with a site, get quotes on how much it will cost to set up and maintain, and give yourself forward projections. Again, as with any new venture, make sure you have the energy and enthusiasm to stick to the plan.
There is a saying that came out of Silicon Valley: 'Failure leads to success'. Now, this was probably penned by one of those highly paid executives that took a fall in the 'tech-wreck' to justify his previous position, but it is true. A lot of people tried to fly before the Wright Brothers took off and a lot of people had been chatting between two cans down a piece of string before Bell got the telephone to work.
Becoming an expert or specialist in your field is a key ingredient for success on the web, whether it be small or big business. Take the Nine Network and Microsoft. They have invested millions in the website ninemsn.com.au. It will be successful, not because of the dollars backing the venture, but because of who they are and what they'll bring to the site. One partner is an expert in producing television programs and magazines, the other in producing the technology to make the content work. It's already the most popular site in Australia and, when interactive television becomes mainstream, they'll be in a fine position to take the high ground.