After this past holiday season no amount of hype can overcome the fact that e-commerce or e-business ultimately boils down to supply and demand and purchase and delivery of goods and services. The troubles faced by e-Toys, Amazon.com and other "name brand e-tailers" demonstrated that it takes more than a "branded" Web site and an attractive "graphical user interface" to succeed at the game of e-commerce. Jammed help-desk sites, busy signals at call centers, goods that were back-ordered and/or never arrived put a damper on what was predicted to be the break-out season for Internet-based retailers. A quick look at e-Toys’ declining stock price provides the score for one company.
The Old And New Economies Meet
Anyone who regularly studies the inner workings of automated supply chains and the "back-ends" of Web sites might have predicted the shortcomings of many e-commerce Web sites. Many of the businesses setting up e-commerce Web sites still rely on the same logistics techniques and supply chains that have served the slower, more traditional retail market. As many companies can attest the meshing of the old and the new often results in the grinding of gears rather than providing "e-commerce grease." Any business jumping into any type of e-commerce initiative, whether business to consumer or business to business must learn from these hard lessons if it wants to avoid similar disasters.
A close review of trade and industry literature shows that only now are the internal software and hardware systems being used by many businesses being solidified and re-designed to handle enterprise-wide functions such as "just in time inventory controls" and customer relationship management. In fact, the same might be said for the software and hardware systems which support Web-based customer inquiries, the order systems, the credit card payment systems, the inventory control systems and the shipping and tracking systems which constitute the supply and distribution chain that drives e-commerce in any market. If these "internal" and "external" systems are not synchronized and managed properly poor results are almost a certainty. Just as an e-commerce business needs to manage this supply chain, any company jumping into e-commerce absolutely must manage the construction of its automated supply chain. Self-education and experienced advisors are two steps in the right direction in this effort.
As a business begins to design its e-commerce systems it should first completely understand its current business and the existing supply and distribution chains. Without that understanding, no-one, whether an in-house technical officer or an outside expert, is going to be able to strategically design an e-commerce system that will improve productivity and profitability.
Several questions must be answered or at least framed to begin the process:
- What are the company’s core products and/or services?
- What are the component parts of those products and/or services?
- Who supplies the component parts?
- How are the component parts ordered and delivered?
- How are the component parts accounted for and tracked once ordered and then received?
- How is the manufacturing and/or assembly process managed and tracked?
- How do the company’s customers order the product or service?
- How are those orders tracked and managed in relationship to the order, delivery and assembly of component parts?
- How is the delivery of the final product or service achieved?
- Do the company’s customers have any way of tracking such delivery?
- Does the company follow up with customers after delivery?
- How is the information gathered from any such follow-up used with respect to that and other relationships?
This list could go on and many of these questions can be broken into important sub-parts. Each of the questions and their answers represent connections or relationships by and among two or more parties or processes which make up the supply, distribution and sale functions which comprise a business. Each of these functions must be synchronized in order to have true and efficient e-commerce. True, there is no such thing as perfection, but knowing what perfection might be and what it might cost and what it would yield is important to any well designed and implemented e-commerce plan.
Focus On The Key Relationships
Ultimately, e-commerce (and perhaps business) success will be measured by how well a company manages the most important of the connections. This type of management will begin at the very beginning of the process. Understanding what your customers require is the most important first step. Knowing how your existing suppliers and supply chain providers can be integrated into your new system is likely item 1A on your agenda. Your company needs to keep these key requirements in mind when your company contracts with the software providers and system integrators who will provide and install the parts of your e-commerce infrastructure. Having expectations and responsibilities spelled out and priced accordingly is critical. Understanding how quickly the new functions will be in place is also critical. Having a scalable system that can expand to meet fluctuating customer demand is a priority, but knowing how long it will take and how much it will cost to scale is just as important.
Conclusion – The Customer Is Always Right
After all is said and done, e-commerce is merely a more streamlined and automated way to do business. And like more traditional business, meeting customer demands and working with supplier requirements and/or limitations are unavoidable realities. You need to understand your existing business and the capabilities of the available technology thoroughly before launching your e-commerce effort. If you don’t you will most likely build expectations that you are unable to meet. Just ask the e-tailers trying to recover from the recent holiday season.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.