Expanded E-Commerce Management (ECM) Deployment
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February 1, 2000 *3,200 subscribers* Volume 2, Issue 2
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ECnow.com 2000 trends: Expanded E-Commerce Management (ECM) Deployment

FEATURE ARTICLE

Being Local Helps: The role of Brick & Mortar Strategies in e-business growth  
Louis Columbus
Director, Market Research & Planning
ZLand.com 

Increasingly the world's companies are realizing that having both a local presence in addition to a web site capable of being used on a global scale increases the number of customers reachable.  Traditional telemarketing companies using the direct sales model can reach only so many customers on the phone.  Moving into customers' communities with a retail store that is tightly integrated with the customer's telephone and online shopping experience creates a comprehensive sales experience for the customer.  Creating as many points of contact with the customer as possible is increasingly becoming the central theme of many of the world's leading companies as they embrace electronic commerce.

One of the most successful companies in using the brick & mortar model as part of an e-business strategy is Gateway Computer.  With now just over 140 stores throughout the United States, Europe, Canada, and Japan, one of the key messages in Gateway's advertising is "Call, Click or Come In".  Promotional programs with strong tie-ins to the Gateway website have since been introduced first through the Country Stores, yielding significant sales gains.  The YourWare Program introduced in the Fall of 1998 yielding close to a 30% gain in sales according to analyst's estimates. 

Like many companies adopting e-commerce strategies, Gateway first looked to their strengths and built from what they knew best.  In their instance, their key strength was innovative advertising that generates between 60,000 and 70,000 in-bound calls per day.  Fully six out of every ten in-bound calls is generated from television advertising, which has increasingly focused on the e-commerce commitment Gateway has made.  Only recently has Gateway made a philosophical shift to considering outbound calling, and only in business accounts.  Why?  Selling primarily to consumers, they did not want to be obtrusive.

Yet today Gateway is like many companies who have been successful in other arenas and want to extend that market leadership into e-commerce.  Starting in 1999, the Gateway Country Stores were re-aligned under the Gateway Business division of the company.  Further, Gateway created an Electronic Commerce Division in Gateway Business to specifically find areas of opportunity for partnerships which strengthen the computer maker's position in selling to other businesses.  The challenge for Gateway and millions of other businesses is how to successfully implement a business-to-business e-commerce strategy. 

The travel industry is another area that is seeing rapid adoption of e-commerce strategies to benefit both the consumer and business traveler.  Microsoft's Expedia site is the leading portal in this area, providing trip planning and ticket purchasing capabilities many businesses use as their online travel agent.  The interesting aspect of e-commerce adoption in the travel industry is the strategies airlines are taking given the predominance of online travel sites as the preferred method of planning and purchasing trips.  Of the airlines who have most successfully integrated e-commerce into their existing reservation and booking systems, both Southwest and American Airlines stand out.

SouthWest Airlines is one of the few airlines using the Internet as a channel to market its low fares to both new and existing customers. Its Click `n Save weekly email updates include fares available only through SouthWest's Internet specials.  As the first major airline to launch a Web site in the mid 1990s, SouthWest aggressively marketed its Web capabilities and currently allows members of its frequent flyer program to receive double flight credit for booking ticketless travel online.   The site promotes hotel and vacation offerings from Hilton resorts and hotels, offers vacation packages, and even allows customers who are shipping cargo to track their shipments online.

American's Web site is typical of many airline Web sites in that it primarily focuses on its frequent flyer customers, allowing only registered AAdvantage members to book online. The site has a link from the AOL Business Traveler section and provides up to 1,000 bonus miles for customers who book flights online.   The site offers Internet-only specials to registered users and Net SAAver fares on a weekly basis. In addition, AA.com provides links to AAVacations.com for vacation packages and offers competitive fares and links for markets that the airline does not currently serve.

Going Business to Business with E-Commerce
The market dynamics occurring in e-commerce today signal a coming generation of solutions which include the strengths of many companies in one.  Due mainly to partnerships between e-commerce companies becoming commonplace, and the rapid increase in mergers & acquisitions, the future products and services offered will be more robust in their functionality and more adaptable in their content.  AOL's acquisition of Time-Warner is just a foreshadowing of events to come.  It is entirely feasible to assume that the missing component to date in e-commerce, which is e-fulfillment, will be supplanted soon in one of the major e-commerce providers' business model.  As the velocity of transactions grows for any business, the need for being able to accurately and efficiently deliver ordered goods is crucial for growth.  Many industry analysts agree that each holiday selling season is actually cathartic for the e-commerce industry overall as it points out quickly areas of expertise, in addition to areas of improvement.  From the last holiday season, it became clear an area for growth is in the area of being able to fulfill orders when they are promised. 

Just as each holiday season brings a multiplier to the number of holiday sales, there are two significant trends that will continue to propel e-commerce growth globally for the coming eighteen months at a minimum.  First, there is an abundance of new technology in many cases, which is turnkey in approach.  There are for examples of many procurement, auction site, marketplace software, and EDI translators for business-to-business use, which are capable of being implemented in months instead of years.  The second key factor driving e-commerce growth is the sense of urgency created from early adopters who are significantly supplanting their businesses via e-commerce strategies.  With the Wall Street Journal calling the dis-intermediation of a given industry "being Delled" the Web-enablement of the direct model is now a given.

Driving business-to-business e-commerce growth are sales of information technology products and services.  Most commonly purchased products include computer software, hardware, information systems services including outsourcing and the emerging application service provider (ASP) model, telecommunication services, and telecom equipment.  Information systems-oriented products have benefited from the rapid growth of business-to-business e-commerce as they are essential for a company to get their e-commerce strategy underway.  Within the coming year however, this mix of products and services could potentially change significantly, as vertically-focused portals such as Chemdex, eSteel and PasticNet are expected to be among the top business-to-business e-commerce sites.

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