E-business general questions

Q. All I hear about these days is e-business. But I don't know if I need it. Should I consider it?

A. Sometimes it may seem that everybody but you is involved in e-business. Certainly there is enough noise about the subject out there to make every business stop and think about whether it should join the e-business brigade.  Statistics Canada reports, for example, that in 2004 some $26.5 billion worth of sales was conducted online. Sales from business to business represented about 75% of this total. But while these might seem like gold mine numbers, the truth is that not every SME is online, nor that every SME should be. To understand what seems like a conflicting statement, you have to go back to the definition of e-business.

At its root, e-business is simply the use of electronic communications media to do business. This may involve a full-blown online business, or simply using some aspects of electronic communications to perform some business tasks. However, many people confuse e-business with e-commerce, which is the sale of products or services over the Internet, usually to consumers. An online clothing store would be an example of e-commerce, but not necessarily of e-business. On the other hand, a business marketing its services to another business would be undertaking e-business, but not e-commerce, since transactions do not take place online.

Most e-business today involves what is known as a "clicks and mortar" approach, which simply means that a business with a physical presence incorporates electronic communications into its daily operations. This could be as simple as setting up a website for marketing and informational purposes – known as an online brochure – or as complex as creating an online store that sells hundreds of products and involves extreme logistical problems in terms of shipping.

However in the past five years, a whole new area of business has sprung up that only exists because of the new availability of electronic communications. Many businesses now are started solely as Internet-based e-businesses – known as virtual businesses -- often because it is more cost-effective to conduct business online than to invest in physical space, and also because they can reach a large number of customers outside their specific geographic regions.  These businesses are usually, at their core, knowledge businesses, which means their primary product or service involves information or specific knowledge, which they then sell to others via the Internet. A typical example would be the "content business", which is really an online publishing operation that gathers information on a specific field (such as engineering, for example) and sells it in one way or another to a community of similar customers that it has gathered together.

With these distinctions in mind, it is important that every SME thoroughly examine itself to determine whether e-business is appropriate. In most cases, there will be some aspect of e-business that will be useful. But in some – perhaps a business operating in a very narrow field where mass communications is not important – it will add little value to the business operation. One way of undertaking this examination is to take the E-Business Diagnostic.

Q. From our experience in business, has there been an evolution with regard to e-business? Is there an increase in productivity by using e-business as opposed to a human intervention? How can we assist those who cannot follow or resist change?

A. During the last two decades the technology evolution continued to make significant progress and many new technologies introduced made considerable contributions to improve business productivity. Here are some examples: voicemail, email, Internet access, call centres, artificial intelligence, automated telephone systems, ATM machines, wireless technology, scanning devices, etc.

All these new "technologies" have provided considerable enhancements to customer service, speed of communication, administration efficiency, speedier office work and have considerably improved business productivity. Here are 3 areas to watch when using technology to enhance productivity:

Technology as a tool
Technology on its own cannot boost productivity. Rather, the technology must be managed in a way to enhance productivity. Take for example, email. Used properly to expedite work documents and as a powerful and fast communication tool, it is no doubt a great productivity tool. If technology creates redundancy and red tape, it can also become a hindrance to productivity. Technology must then be used wisely as a tool and not as an objective per se.

Use to complement before substituting
As conditions will vary (customers – employees –suppliers, etc.) technology may be used first to complement existing processes and not as outright substitution for existing processes. Successful introduction of new technology must allow for a transition period. Take for example the use of ATM machines, which had a somewhat limited usage by certain types of customers; now only a minority of customers do not use ATM machines.

A more natural transitional period allows for greater productivity gains and/or service enhancements in the long term vs. shorter transitional periods, which may cause reduced productivity and deterioration of service.

Offering alternatives
As you indicate, "some of us cannot keep up" and therefore alternative ways must be made available for those who cannot embrace the new technology. Intelligent business operators therefore should always allow alternative processes, so that they do not lose business and/or have opposite productivity results. Examples for this point include the continued teller service (vs. ATM machines), the zero alternative on automated telephone systems bypassing the fixed automated venue to speak with a live representative, and so on. It is important to remind that people who choose not to embrace the general flow of technology may have to accept slower service or additional costs. While this is unfortunate, services are made available and priced according to market forces and conditions as opposed to what is ultimately right/not right.

Q. We are a specialized shoe retailer with an informative website and we are considering tapping into the e-commerce market. However, our product branding and philosophy is based on trial. How can we overcome this barrier?

A. Companies that sell products, especially in competitive retail areas such as children's clothing, should always consider their websites as more than just brochures because the Internet offers them a new channel in which to sell far beyond their local region. In essence, a website should always be treated as another store, albeit one with a much wider reach.

Buyers have become quite used to shopping on the Web for hard-to-find items, and, in fact are increasingly demanding it.

It appears that you have two concerns with selling via the Web: the effect on your image, and the need for a mechanism to ensure that your philosophy that your product line be fitted properly, be preserved.

In the first case, the days when items offered online were usually low-end and mass-produced are over. In fact, the Internet, because of its ability to target and reach specific buyers, has become the favoured vehicle for extremely customized specialty retailing. Therefore it could be said that selling through an Internet channel would enhance, not reduce, your company's image.

An example might be the rural maker of baby diapers who uses only certain materials to produce the cloth that goes into those diapers. Locally, the business would have little chance of surviving, but via the Internet, the diaper maker can (and does) sell all over the world. Another example is eBay, which provides a mechanism for all kinds of specialized retailers to sell to millions of potential customers.

The second concern is your philosophy of proper fitting. I presume this means that various shoes much be tried on to ensure a correct fit. However, this can be done virtually in a sense: in fact, various clothing retailers in the U.S. have sometimes elaborate instructions on their websites to ensure proper fitting, which is really an update of the old clothing catalogue method.

Something similar could be done with shoes. I would examine your current, in-store fitting process (for example, taking various measurements) and see how you can replicate it online to help buyers in essence do it themselves. Perhaps this could involve a downloadable fitting template of some sort.

Also, you may want to post on your website a detailed treatise regarding proper shoe fitting and how to determine it. This will not only help your buyers, but also position your company as the expert on the subject and thus reinforce your image.

Lastly, you may want to institute a thorough return policy in order to ensure that the right fit is always made. This will also enhance your image and philosophical stance.

Q. While e-business is nice to have, it may not be a must-have until a new business has established its core business. Would you agree or disagree?

A. This is a very traditional view of business that has its merits but also presumes that e-business is a static process that is instituted as a whole. In a sense, the premise is correct in that, yes, a business should always perfect its production and delivery process – its core business – before attempting to employ e-business, e-commerce, or any other aspect of commerce.

However, this view does not take into account the various aspects of e-business. These can range from institution of absolute systems to evolutionary additions of e-business processes and techniques. Your view very much depends on the nature of the business that is being discussed.

For example, some businesses are started solely as Internet-based e-businesses, often connecting or aggregating people so as to better sell services or products to them. Definitely, if the business involves services or knowledge, and more than half of businesses today do, then e-business, in the form of marketing, or transferral of information or knowledge, is a must. In fact it often is the core business. An example might be a design operation that relies as much on the Internet as face-to-face meetings to conduct business.

Other, more traditional business operations would likely take an evolutionary approach to e-business. Do not forget that the Internet is a communications medium and any organization, when examining the viability of e-business, must take into account the various communicative facets of e-business and the ability to conduct e-business in a sequential manner. For example, a large part of e-business involves marketing, and every business, whether brand new, or established, would be foolish to not take advantage of the Internet's marketing power via a website. Higher e-business capability, such as transactions, can be added later as the business and its requirements evolve. 

So e-business is not just blank and white. Every business must examine its basic processes and purposes, study the tools available to accomplish those purposes – which may include e-business techniques – and then decide what route is most appropriate to that particular business.