Figure 1 - The One to Many or Many to Many Continuum
Karey Patterson [HREF1], NTech Media, Lismore, NSW 2480, Australia karey@ntechmedia.com
Rod Byrnes [HREF 2], Independent Consultant Lismore, NSW 2480, Australia rod@byrnes.net
Rather than the traditional witches brew containing eye of newt and wing of bat, a successful internet business strategy can be realised by following several core (though simple) priniciples as outlined in this article. One does not have to be an initiate in the arcane ways of the technical world to take advantage of the opportunities presented in this rapidly developing market place. This article poses several important questions an interested business person should ask of themselves, and their business, so as to maximise their likelihood of success.
Traditional companies are being challenged by an unprecedented paradigm shift in the way they are expected to do business.
Internet based transactions have quadrupled from US$4.5 billion in 1998 to US$16.2 billion in 1999, and are expected to peak at over US$40 billion by the end of 2000 [HREF 3] forcing companies to review their online strategy [HREF 4], or risk seeing potential markets disappear and existing revenue streams atrophy.
Numerous examples exist of large market presences being eroded very quickly by sharply focused Internet businesses. Amazon [HREF 5] vs. Barnes & Noble [HREF 6]. eTrade [HREF 7] is challenging existing stock brokers and financial advisors. eBay [HREF 8] has further refined the many to many model which was traditionally the realm of print.
On the Internet, neither size nor location are of much importance. The Internet is a great leveller and even small companies can topple existing market giants if their strategy is flexible and determined and based on solid understanding of the principles of Internet business. However, a small but inflexible company [HREF 9] makes a loud crunch when being trodden on by a well focused competitor [HREF 10].
For every threat there is an opportunity for another business.
This article outlines a series of small but very important steps that any business interested in maximising opportunities and minimising risks presented by Internet commerce, must follow.
Your existing business model got you to where you are, but the market has shifted. It’s time to re-align your focus, to drop existing preconceptions of how your business will be transacted in the future. You have to ask yourself some questions that you may have taken for granted in the past.
Okay, we’re going to do this Internet thing. Are we going to sell locally or globally? [HREF 11]
There is a tired old axiom that states that using the Internet you can sell anything to anyone, anywhere, at any time. This may be true, for some businesses, but primarily it is a selling point for web design houses raising expectations of the fearful. By best serving the needs of your clients, and understanding your market, be it international or local, you will be well placed to increase your profit to client ratio.
True, there have been numerous examples of local business going international with great success. For example, Sausage Software [HREF 12] and Looksmart [HREF 13] , both of which are multi-billion dollar companies that started small in Australia, but with an International focus. Yet, a local company that has a limited local market, and that serves it’s market’s needs better than its competitors via the web, will have a greater chance of market leadership than if it spent it’s energies focusing on an elusive international clientele.
It’s still important to evaluate the physical or legal limitations and restrictions of your products [HREF 14] and services.
Trading on the Internet began as business to consumer. However, the growth in awareness of the possibilities and profitability’s of conducting business to business transactions online has overtaken business to consumer transactions and is still growing.
"In keeping with the B2B boom, the number of B2B companies advertising online has increased 58% over the last four months." [HREF 15]
Who do you sell to? Who do you buy from? The targeted focus that the Internet provides enables you to minimise your outgoings (by being more discerning about the businesses you deal with), and maximise your incomings (by being better serving your customer).
Traditional business is usually one-to-many with businesses jockeying for market dominance. The many-to-many model has often been seen as the realm of print media (e.g. classifieds). Amazon.com has taken a traditional one-to-many approach to the Internet and has been competing with the likes of other heavyweights such as CD-Now and Barnes & Noble. Amazon are yet to make a profit or pay a dividend. Most interest in this company is due to its potential market dominance. eBay, on the other hand, has invaded the realm of the classifieds. It has facilitated a many-to-many business model on the Internet where consumers sell to other consumers, and despite technical difficulties it has been making money from day one as it gives the consumer more choice.
Amason provides convenience; eBay choice. Where do you sit?
Figure 1 - The One to Many or Many to Many Continuum
Who is going to do what, how, or where, and how will this synergise with your existing systems?
Many a small business has attempted to develop a web presence, but has found that it interferes with their existing business model and is therefore not nurtured. Most of these sites become cobweb sites.
For an Internet presence to be viable, existing systems and processes must be carefully integrated with new systems and processes. Perhaps this will require a complete re-evaluation of how your business operates. Ask yourself, what are we doing and how are we doing it? Who’s doing what we’re doing, and how are they doing it? Tacking on an Internet arm to an existing business body without any consideration of these factors often leads to the body rejecting the new appendage.
Your Internet business should be seen as a fundamental and supplementary source of potential revenue. It’s a mistake to underestimate its worth to all areas of your business.
Amazon wasn’t built in a day. Behind every overnight success there’s usually several years of hard work. Be kind to your Internet business. Don’t shoot it out like a cannonball at your high expectations and expect it to hit first time round.
Say you’ve spent 25 years as a lawyer, what makes you think you would be able to sell your legal services on the Internet? Bring your experience with you, but keep an open mind. Sophisticated and well developed existing business models are not necessarily transferable to future business practice. Be prepared to learn a new way of selling your business. Spend time getting to know your new market place.
Get real people, real professionals to make it work. Find people who live and breathe the industry. They might not always be correct, but they will have a vested interest in helping you succeed. If you use part-time or backyard consultants, expect proportional returns on your investment. Be discerning in your decision making; shop around and find professionals who are right for you.
Be knowledgeable and aware of risk. Business on the web is just like business in real life. Make mistakes and you could be vulnerable. Be unaware and you could be vulnerable. Don’t expose yourself unnecessarily. Be informed.
How do you currently determine the success or failure of your business? What data, statistics and other information do you use to help make your business decisions? If you don’t already have a formalised system, then your Internet business will require you to do so.
Don’t go out there thinking this is going to solve all your problems. If you’ve got problems that need solving, better you focus on them than look to the Internet for comfort. Many Internet ventures have been aborted prematurely due to lofty and unrealistic expectations.
What is it you want out of your Internet business? Larger market share? Increased profitability? International focus? Know what you want.
Be prepare to review and adjust the goals and milestones you have set for your Internet business. The Internet rejects rigidity and something that works this year might be left floundering the next without continual re-evaluation. If you’re feeling dissatisfied with your web excursion, perhaps it’s time to re-evalutate your expectations. Follow your customers see what they say about your service [HREF 16]. Do they trust your business? [HREF 17]
At the start, define and develop a system of statistical tools that will enable you to accurately monitor your progress and expectations. You may want to include data from sales, costs and profits, as well as general data such as web site traffic, where your traffic comes from, most visited pages, etc. Use this to feed back on what’s working and what’s not and re-evaluate your strategies accordingly
How are you going to tell people about this new venture? Will you supplement existing marketing methodologies with your URL. Will you develop a unique web based marketing strategy, i.e. search engines, banner placements, free giveaways, etc. The 1999 Superbowl advertising campaigns demonstrated that dot com companies were not afraid to use traditional (television) media to attract new clients. Traditional and online marketing mechanisms have both been proven to be effective. Select what’s right for you.
Some sites sell convenience. Others sell services or information. Still others provide easy, cheap access to product. What is your unique selling point? Why should people visit your site? Why should they trust you? You have to give them something; you have to be seen as a reliable source.
Questions you may ask yourself are, will you supplement your existing selling method? Will you use a specific web marketing technique?
Not all businesses will necessarily benefit from an Internet presence. Before embarking on such a project, it is essential to carefully evaluate all of these factors. Failure to do so could limit possibilities and even erode your existing market share and profitability.
Karey Patterson and Rod Byrnes, © 2000. The author assigns to Southern Cross University and other educational and non-profit institutions a non-exclusive licence to use this document for personal use and in courses of instruction provided that the article is used in full and this copyright statement is reproduced. The author also grants a non-exclusive licence to Southern Cross University to publish this document in full on the World Wide Web and on CD-ROM and in printed form with the conference papers and for the document to be published on mirrors on the World Wide Web.
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