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I Want My ECommerce!
Pradeep Anand, November 1999

Click here to see the version published in Computers Today- January 1-15, 2000

Recently, I read that a research firm, a font of knowledge in the technology industry, now predicts that more than 95% of ECommerce implementations will fail. Shocking as it may sound, that prediction did not surprise me. Why? Because, for the past year or so, I have seen many firms taking the plunge into ECommerce, like lemmings off the cliff, into a sea of disappointment.

The causes for the high failure rate are many, but that is what happens when corporate leaders become enamored with the growing importance of the Internet, and command, "I want my ECommerce!"

It is the beginning of a sorry tale that will embroil a firm in its quest for the pot of gold, at the end of the Internet rainbow. Yes, the riches exist but only for those who traverse this financially dangerous terrain with intelligence, instinct, and insight.

In my opinion, the probability of any ECommerce project failing is almost 100%, at the outset. Every plunge into the Internet space is doomed for failure unless promoters work hard at reducing the probability of failure. By incessantly chipping away at causes of failure, the chances of success are improved.

Some of the causes of failure are:

  1. Creating rigid E-strategies or direction.
  2. Allowing technologists to set business strategies
  3. Being out of touch with markets- customers, competition- and surviving on the momentum of old paradigms
  4. Being controlled by old business habits- this is the way we do business, this has worked in the past, and this will work in the future
  5. Being a risk averse follower, waiting for others to lead
  6. Limited imagination and understanding of what web based technologies can do to your markets and competition
  7. Believing in the modern adage "Build it and they will come."
  8. Assuming that a web site is adequate presence on the Internet
  9. Underestimating the power of the Internet to create loyal customer

To turn "I want my ECommerce!" into a runaway hit, firms should, at a minimum:

Have an adaptable business strategy. To be successful you need a unique form of business strategy that adapts as the terrain unfolds; being rigid will kill the enterprise. Pick a good, creative team and then empower them to do their job. Use people from a cross-section of the organization to accomplish this. Independence from current business units is a must.

Build an EBusiness strategy, not technology or business tactics. What is needed is an ECommerce strategy, not technology strategies in the guise of business strategies. Most firms use technology companies to create business strategies- it is like asking your builder to architect your home. Worse, some firms ask their internal IT or marketing communications departments to take them into this new world. What you typically get is a very expensive brochure or at best, a replacement of existing processes (like procurement, MRO) that may not be cost effective.

Develop an intimate, not casual knowledge of the market. All ECommerce strategies are built on strong foundations of market knowledge- customers, competition, and business climate. An indirect benefit of the Internet is that firms need to be intimate with their customers and their behavior. No more gross assumptions and abstractions- there is no room for error because all mistakes are expensive, and some can prove to be fatal to the firm. To be successful, market information and research methods and resources, combined with sophisticated analytical and data mining tools, are required before, during, and after every stage,

Break the shackles of current business models. We now have the opportunity to create entirely new business processes to reach, to interact with, and to sell our customers. The Internet now provides the ability to create entirely new processes that may compete with existing ones. All aspects, from sell-side to fulfillment and supply chain management will be affected by web-based technologies. The critical question to ask is "Will we permit ourselves to compete with our current way of doing business?" If the answer is "No" we are leaving the door open to our competition. In other words, promote cannibalization of your business- if you do not someone else will.

Have the desire and attitude to change rules in the market. Most firms are followers; leaders by definition are a minority. So, what are you? The E-World is harsh and is not for followers. Additionally, it is particularly cruel to followers who enter the E-World because it is cool to do so. There is nothing as stunning as the success or failure of an E-Venture.

Use imagination and education to understand the realm of possibilities created by the Internet. "Viral Marketing" is one such opportunity that was exploited to compound first mover advantages at Hotmail. In 1996, Hotmail pioneered a great new product category- free web-based email. The unique catalyst for Hotmail's torrid growth was "Viral Marketing", a pattern of rapid adoption through word-of-mouth networks. Similarly, web-based technologies when combined with buying behavior can create unique catalysts that help speedy adoption by the market. This area is potent with such great promise that it boggles the mind.

Aggressively create demand; do not be passive and wait for customers to wander in. "Build it and they will come" is not true in the Internet space. The biggest expense in the E Business world is demand creation, letting the target customers know that you are in business and to come visit your portal. A web site is a door through which customers enter the virtual company. However, if no one is aware of the door’s existence, will anyone knock at the door?

The web site should close the sale, not just show brochures. Most firms believe that a web site is all they need to enter the Internet world. A web site is nothing but your firm’s door, and at best, it is your brochure on the web, nothing else. Now, when was the last time your brochure made a sale, billed the customer, and received payment? Whether you are in the Business-to-Consumer (B2C) or Business-to-Business (B2B) world, the selling and fulfillment processes have to be fully anticipated in detail, and the site enabled with the best of technologies, so that the customer can easily make a purchase at the site.

Deliver unique value propositions so customers keep coming back. The Internet has very few barriers to entry. Yes, anyone can enter the market and stake a claim but the hard part is to own the customer base. This can be done in several ways- each one can provide unique value propositions to customers. First mover advantages are very powerful as are customers’ reluctance to move from one navigating methodology to another. Unique content always keeps bringing back customers, as does belonging to a unique community of users, creating customer franchises for the firm.

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