Traditional Clicks and Mortar Businesses:
(Dinosaurs) Learn to Fly
E-commerce is not the kiss of death for
big, traditional brick-and-mortar business.
However, it does means that business-as-usual is forever changed.
Adaptation is imperative for survival.
E-commerce is the exchange of value
electronically across enterprises or between enterprises and customers.
Technologies such as Internet protocol (IP), web browsers, web
application servers, and hypertext markup language/extensible markup
language (HTML/XML) have made it possible. Adopted at breakneck speed, E-commerce racked up 1998 sales
of $300 billion in the US. In
the US, it is projected to be worth $970 billion by 2002.
E-commerce creates new business life
forms such as dot.com startups, new food chain intermediaries such as
application service providers (ASPs), and innovative commerce transactions
such as online auctions. Comparison
between the dot.com companies and traditional business reveals two very
different traits. dot.com
companies are characterized by little-to-no earnings and stratospheric
market caps while traditional business are the exact opposite.
What is evolving is a hybrid, called clicks and mortar.
Five Levels of Evolution
The evolution from traditional business
to E-commerce means undergoing five levels of change.
Level 1 (static) is merely putting
information on the Internet. The
customer grabs data from the web site with this low cost, HTML-based
Level 2 (interactive) is dynamic
information delivery with 2-way communication.
Customers can search catalogs for goods, check status of orders,
and personalize content with such online merchandising.
Level 3 (transaction) is integrating
secure financial transactions into core systems like business-to-business
(B2B) ordering, provisioning, billing, and payment.
There are analytical tools and capabilities for personalizing
information. This translates
into better customer service and offerings.
Level 4 (transformational innovation)
is E-business where new products, services, and brands become available as
offerings. Changes to the
industry value chain also occur. Interaction
is driven by the lifetime value of the customer.
Highly personalized service across all delivery channels become
routine. It requires both
front end and back end system and business integration where both operate
as one enterprise.
Level 5 (self-adapting organization) is
E-business plus. This is
characterized by extended, leveraged knowledge management about partners
and customers; continuous learning in decision making; customer value
management; and value chain management.
Can Traditional Businesses Compete?
Traditional businesses can effectively
compete for E-commerce because they are established.
They have “the goods” when it comes to production and delivery
capabilities. They also own
“the content” when it comes to intellectual property, databases,
entertainment, and well-known brands.
They have a proven track record for working together with
suppliers, channel partners, and complementary business partners.
Their deal making skills, capabilities, and capacity are known from
previous successes. Furthermore,
they have the brainpower of skilled people and a system for managing
customer relationships and production.
Finally, their customer base is the most important asset of all.
Can Traditional Businesses Survive?
In 1998, E-commerce captured one
percent of the US gross domestic product (GDP) of $32 trillion. By 2002, estimates for E-commerce are less than seven
percent. E-business is where
the real action will be. Therefore,
survival is a matter of traditional businesses making an evolutionary leap
into the electronic medium. They
must develop a new business sense, grow smarter, and add new capabilities
conducive to the Internet. The
business climate has just started to change and there is time to adapt a
clicks and mortar strategy.
E-commerce savvy means
focusing on the customer’s itinerary
using Level 5 tactics,
establishing partner integration via
extended intranet and internet tools, and
harnessing legacy customer/partner
using E-commerce for strengthening
existing relationships and making new ones;
creating a digital nervous network with
reactive, intranet capabilities and systems;
building intelligent, multi-channel
relationship management processes, and
applying advanced decision analytics
that define the new E-business instinct.
Survival Plan and Strategy
Surviving and thriving the coming of
E-commerce means executing a strategic plan.
The plan should have the following steps:
Empower a Chief E-commerce Officer who
can pull together lines of business and lead them in one direction.
Implement basic E-commerce capabilities
Leverage corporate assets to do things
that the dot.com challengers can not.
Inspire a climate of creativity,
technical sophistication, and optimism for transformation.
Expect reinvention to be gradual but
timely and with the continual motivation to succeed.
Web sites are under continual change
and renovation. Experimentation
and testing what works is “normal” on the Web but must be done at an
aggressive pace. It is
important to know where the business is going and how it is using
E-business to either supplement existing commerce or establish new
business. Be aware of the following common mistakes made when
Underestimating the marketing required
to drive attention to your web site – also known as the “If they build
it, they will come” fallacy.
Not getting partnership/supply chain
relationships dealt with from the beginning.
Underestimating the E-business response
volume and the absolute demand for supporting 24-7 infrastructure.