Tech.knowledge.me - March 2001

Is Your Business Ready for E-Commerce?

by Chris Sanborn

Do small and medium-sized businesses really need a presence on the Internet? News from around the country shows that the Internet is not just for big companies anymore. Consider the case of the Kansas farmer’s wife who put up a Web site to sell tumbleweed. The bush, of course, is nothing but a nuisance in that part of the country, and she probably did it as a gag. However, the orders started flowing, and the farmer’s wife soon had a tumbleweed by the tail.

When you, as a small business owner, hand out business cards these days, people often look to see if you have a Web site. If you’ve got nothing but a phone number, customers reach conclusions that are not altogether flattering. They want to see what you’ve got. Why can’t you show them? Nor is the Web just about selling anymore. It’s also a powerful engine for buying supplies at the best price, on the best terms, and with much less hassle. In short, the Web has become a precision management tool. By going to Web-based purchasing, British Telecom cut the cost of processing a typical purchase order from $113 to $8, and that was in addition to an average 10 percent reduction in the cost of goods themselves.

But even these seemingly corporate functionalities are no longer the sole preserve of big companies. In San Francisco, the Midsummer Mozart Festival uses its Web site to sell CDs and concert tickets as well as solicit donations. And Pat’s Garage, also in the San Francisco Bay area, allows car owners to schedule appointments and check up on the status of repairs to their cars via e-mail.

Two factors have combined to make e-commerce feasible for the Main Street shop — a stunning fall in cost, and the sudden arrival of affordable service providers to make it easy. Over the past three decades, according to The Economist magazine, the real price of computing power has fallen 99.999 percent, and "the cost of communications has plummeted far more steeply than that of any previous technology." But even the cheapest tools are not worth much if you don’t know how to use them. Some small business owners think they don’t have enough technical knowledge to start an Internet presence for their company, but the situation is changing. If you can order a book online, you can operate e-commerce software for your business. It’s that straightforward. Designing and installing can be complicated, but all that can be outsourced affordably these days, with no capital up front and no need to hire specialists.

Here are some tips: Don’t make your site hard for the user to figure out — studies show you have about five seconds to grab the attention of a visitor. Succinctly define who you are and what products or services you provide. Don’t over-engineer. Audiences get frustrated with long download times, so design the site for speed. Keep your site fresh with new content so customers will want to return to the site. Don’t forget security issues. Don’t forget your telephone number (it happens.) Most importantly, don’t go it alone.

Fortunately, business owners can get help, thanks to the emergence of what are called Applications Service Providers (ASPs). They design Web sites that will work for your customers, and that includes all the back-end software needed to transact sales by credit card, track delivery, and allow customers to view their accounts, among other things. It’s your site, but somebody else does the hard part for you. In the language of e-commerce, the ASP "hosts" the site – meaning they buy and maintain all the gear, monitor your site around the clock, track all the "next generation" options, handle all the upgrades – all of this at their offices, with their people, for a monthly service fee that is well within the budget of most small businesses. Last year there were just a few dozen ASPs. Now there are several hundred. Cahners In Stat, an Internet market research firm, estimates that ASPs will be renting total e-commerce solutions to some 3 million business customers by 2004, most of them small and mid-size companies.

To understand what’s going on here, put yourself in the shoes of a manager in the early 1900s. Businesses all around you are beginning to install telephones in their offices. Just how long are you going to wait? Like the telephone revolution, e-commerce is, at bedrock, a customer-access revolution. Not recognizing this creates a business risk that borders on reckless. Find out about it. The only high-risk course is to remain uninformed — like the hapless businesses who saw the telephone as a fad, and whose failure rate as a direct consequence must have approached 100 percent.

Chris Sanborn
Chris Sanborn is vice president of marketing, business services for Nevada Bell, which provides development and hosting services through its Online Office offering.