E-Commerce

Luxembourg Business - February 1998

Coming of age Business learns to use the Internet Initially businesses were wary of the Internet, seeing more problems than advantages. But greater understanding of the potential of the medium is prompting a new approach which is forecast to raise the value of Internet sales to one percent of the global economy within the next three years.

<*dv_0*> We have heard many people claim that the Internet is evolving at such a rapid pace that it is impossible to predict what it may resemble in, say, six months time. When did we hear this first? Over six months ago?

What is actually happening is that the way people use the Internet is changing: in some aspects the change is rapid, in others it is more gradual. But what is noticeable is that many organizations do not understand the potential being offered, sometimes beneficial, sometimes detrimental.

Some manufacturers are now offering their wares for sale via the WWW. This is a major step forward and sales can be completed more efficiently for the manufacturer; on the other hand, the agent, distributor, or retailer could end up missing out on the sale.

ERIN advises its corporate client base to identify their requirements before coming up with a solution. It may not be difficult to take a corporate decision to launch a WebSite. But why? What do you want to achieve? If the answer is based on competitors being there or another unsubstantiated reason, then the answer is lacking. The reason should be based on business requirements.

One major component of the Internet is E-mail: businesses which have integrated such facilities can make substantial savings in both communication charges and staff time. However, many individuals do not understand its use and feel the need to print a copy of each message received and sent.

The other major Internet component, the World Wide Web, can also be mis-used. A WebSite should be designed and used to assist organizations in becoming more efficient, using the Internet instead of letting the Internet use it.

Diverse solutions Electronic commerce is a term which itself has evolved. At ERIN, we recognize that another philosophy has replaced the term and relegated it to a sub-set of what it once purported. Electronic business (E-Business, in Internet jargon) covers a multitude of activities on the Internet, including electronic commerce and electronic transactions.

Electronic commerce solutions vary enormously. Most involve ordering a product or service via a facility on a WebSite, which may or may not involve debiting accounts, whether credit card or another. Internet sales are predicted to approach 1% of the global economy within three years, a staggering thought.

Electronic transaction solutions are being adopted throughout the world. Financial service sector organizations, including banks, recognize that the cost of processing financial transactions without involving manual processing, is vastly reduced.

The first wave saw the introduction of Automatic Teller Machines (ATMs) which are now used by so many, primarily because of their convenience. Now people are choosing banks which allow them to authorize financial transactions without leaving their home or office.

Such systems require close attention to detail, particularly in the design phase, and have many critical success factors. Security is the primary concern of all financial organizations; users also want security but first look for an efficient system unnecessary delays are unacceptable.

But organizations can do business over the Internet in other ways too. Corporate publishers are now starting to examine charging for previously-free information. Many such cases have seen a drop in readership of around 60%. Terrible! one may cry.

<*dv_2*>But look at it from another perspective: the other 40% must believe the information is of sufficient high quality to warrant paying for it. In these cases, advertisers are happy - they see users being interested in the information and logically are therefore to be more likely interested in the products and services being advertised.

Many business domains have been identified for integrating successful Internet-based solutions. These include recruitment, ordering flowers, books, and CDs, on-line banking, making reservations, marketing services, advertising, and more. Also, using the Internet as a carrier for international telephone calls is now much more advanced that initial attempts over the past couple of years.

Not only has the way organizations publish information on the Web changed, but so too has the way in which people use the Internet. The integration of electronic mail with WebSites, databases, and including other interactive features is already providing much more opportunity than has previously been realized.

<*dv_1*> Without knowing it, many Internet users are taking part in on-line research projects and surveys, often sponsored by advertisers who gain valuable insight into user trends.

Until now, companies interested in marketing their services and products over the Internet envisaged more problems than advantages. The view of limited market potential, concerns about security, legal constraints, and the difficulty of setting up effective Web applications are some of the reasons why business managers in general have not invested heavily in on-line services. This has now changed. The evolution has begun.

This article first appeared in the October 1999 issue of Luxembourg Business. It is the Copyright (1999) of International City Magazines (ICM S.a.r.l.) and we use it with their kind permission.