Eight Lessons from E-Commerce

Although every business should be taking full advantage of e-commerce opportunities, not all businesses are e-commerce companies.

Yet even those that don’t currently fit an e-commerce model can take advantage of Internet strategies. Over the long-term, it may be just as important to learn the lessons of the Internet as it is to use it.

Here are a series of e-commerce-inspired concepts:

1. Become a multi-niche marketer. At one time, it was location, location, location. Now, thanks to the Internet, it’s niche, niche, niche. Customers using the Internet gravitate to those web sites that provide products and services that most closely meet their needs.

From a marketing perspective, the task is to take this insight and apply it to a company’s overall marketing strategy.

2. Save customers time. Don’t just say it; do it. A dry cleaning company tells customers its home pick-up and delivery service saves time. Yet, to check on an order, the customer must go online. If the customer wants to pick up an order after hours, arrangements must be made in advance for a “locker” and to pre-pay the bill. Is this convenience? Does this save time?

While competitive pricing is, of course, critical, there’s indication that time may be equally, and in some instances, even more important to many time-sensitive customers. This is another effect of the Internet. Do people really “shop” for price when they’re surfing? Those who use priceline.com seem to. Yet, it’s pointed out that customers purchasing annuities via the Internet fail to search for lower-priced products, even though they are quite readily available.

When time is the valued commodity, price is far less a deciding factor. Those who place a high value on time are willing to spend less of it finding the lowest price. To have their needs satisfied quickly, they are willing to pay a price.

3. Give the buyer permission to take control. The Internet is all about surrendering control to customers—taking it out of the hands of the seller and placing it in the hands of the buyer. This is a revolution of unequalled proportions. Nothing else comes close. While it seems rather obvious, it’s difficult—and in some cases impossible—for companies to grasp.

For the last 100 years, the funeral business understood that control of the casket meant control of the funeral, and the funeral home was the only place to buy a casket.

What seemed like an immutable law is gone thanks to the intervention of the Internet. One dotcom casket maker advertises “their price” and “our price” for the same casket. One is $595 and the other is $1,995. Now, funeral homes must accept caskets purchased by customers elsewhere.

What’s happening in the nation’s funeral homes is anything but idiosyncratic. It’s pervasive. The customer is in charge. Progressive businesses will recreate themselves to meet the challenge.

4. Portal the business. Whether you’re excite.com or amazon.com, you’ve positioned yourself as a portal, the “magnet” that’s designed to pull the web surfer to one place instead of another. Its value is making a variety of “stores” available in one place with ease of access.

Amazon.com “tiles” are everywhere. The company gladly pays a commission for sales from anyone’s web site. Even though it became the largest book dealer in the world, it never saw itself in the book business. It was a portal from the start, pulling millions of online customers to virtual venues.

As a browser portal, Excite—as well as Yahoo and others—lets the customer build a “virtual home,” a place to live. It’s not Excite’s homepage, it’s yours. You can customize it to fit your interests. You can do everything from email and order flowers to find a person from this one “address.”

5. Give customers what they want—information. The venerable Encyclopedia Britannica is a classic case of both the instant decline of a traditional business and the rise of a new one on the Internet. The Britannica people thought they could charge customers for accessing the encyclopedia via their web site. Few subscribed, apparently shocking the company. EB failed to take one fact into consideration: information is free in an e-commerce environment. What makes the Internet different? The answer is simple: The Internet knocks down all walls to access.

The key, whether an e-commerce company or not, is to be an information resource.

6. Never stop re-creating the company. The post-World War II business model continues to linger. Essentially, the concept was to get a company up and running smoothly and then it would, in effect, run itself. By implication this meant that the owner or owners could move into a virtual retirement mode by age 45. Following such a model today is to take a bankruptcy path.

A primary e-commerce lesson suggests that re-creation must be constant. Companies are downsizing and hiring at the same time because required skill sets are continually changing.

7. Get serious about change. As the haze clears, it’s almost 100 percent certain that many businesses are in trouble as a result of the e-economy. Even with lots of fast footwork, the survival hurdles are high; too high for those who fail to respond properly.

Banks as we know them today will all but disappear from our street corners. Few, if any, of today’s teenagers will ever step inside a bricks-and-mortar bank. If this trend is even remotely accurate, why are some banks continuing to build “branches”?

Bankers aren’t alone, however. Real estate will become an online industry. When this happens, the real estate agent’s tight grip on properties will be broken.

Insurance agents aren’t exempt either. PricewaterhouseCoopers predicts 50 percent shrinkage over the next 10 years as the business moves online.

8. All of life is lifestyle. With longer working hours and more stress both before and after we get to the job, it’s not surprising that the Internet thrives as entertainment…it’s fun to surf the Net, particularly in the middle of the afternoon.

Amazon.com has perhaps the best grasp on the lifestyle issue. Between offering customers “recommended” products based on their purchasing patterns, there are product reviews provided by both professionals and consumers. In a sense, Amazon.com is its own community, perhaps more interactive than many families today.

The business world is not divided into two distinct groups: “bricks” and “clicks.” That’s an artificial distinction. The “clicks” are discovering that virtual businesses require “bricks.” This is why many retailing e-commerce companies are building their own distribution networks. At the same time, the “bricks” can learn from the “clicks,” particularly when it comes to understanding and serving customers.

John R. Graham is president of Graham Communications, a marketing services and sales consulting firm. He can be contacted 617/328-0069 or www.grahamcomm.com.