Strategies for E-Commerce

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11/16/12

Background
Companies approach E-commerce with no clear idea

of where they are going

Fail to consider the level of commitment and

organizational redefinition that must occur behind the scenes in place

Fewer companies have a formal E-business strategy Any company planning to offer E-commerce should

have a long-term vision and an objective of transforming itself into an E-business

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E-commerce requires the mastery of many

E-Commerce Strategy
Steps to formulate an E-Commerce Strategy

Step 1: Making The Initial Decision to Offer ECommerce Step 2: Identifying the Business Aims for E-Commerce Step 3: Analyzing the Feasibility of the E-Commerce Initiative Step 4: Planning and Design of E-commerce Step 5: Implementation Step 6: Strategy assessment

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Step 1: Making The Initial Decision to Offer ECommerce

A company may decide:

Not to go for E-commerce at least for the time being. use the web just as a means of advertising- this option is popular as it involves low cost, no cost of security, payment, web hosting etc. open online stores to complement existing stores establish a separate online division within the company. dissolve their regular business and go for a full online business operation
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To

to to to

Step 2: Identifying the Business Aims for E-Commerce

The aims behind an E-commerce strategy should

include some or all of the following

To improve customer service and interaction. To increase brand awareness and awareness of the company. To expand geographic reach. To expand into new markets. To increase revenue and market share. To reduce operating costs To be seen as an innovative and progressive company through being an Ecommerce leader. To compete with bigger rivals
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Step 2: Identifying the Business Aims for E-Commerce

Company should focus its reengineering into areas

where it gives more return on investment. This requires clear well-defined objectives

To sell more goods and services by using the web. To provide customer e-care, i.e. online support. To support its business partners over the web: e-care for partners. To improve communication within the company: e-care for employees. To work more closely with customers and suppliers to improve the tendering process and better administer huge number of transactions involved e-procurement.
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Step 2: Identifying the Business Aims for E-Commerce

The Role of the Company Web Site in E-Commerce

Is it for image? Do you need to be seen to keep up with technology and competitors? it purely for information? For example to supply addresses and contact numbers. Is it purely for internal use or for use by partner companies? it to advertise products? In which case are existing customers the target or is the objective to reach new customers? it to supply services? Could the site be used to 11/16/12

Is

Is

Is

Step 2: Identifying the Business Aims for E-Commerce

The company must also consider the external

viewpoint

Are customers happy with existing services or do they require more? Are customers interested in buying on-line? Will supplier companies be willing to interact on-line?

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Step 3: Analyzing the Feasibility of the E-Commerce Initiative

The company needs to carry out a feasibility study

and analyze whether it is possible for the organization to offer online services with the resources available.

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Step 3: Analyzing the Feasibility of the E-Commerce Initiative

How can the Internet further my business objectives?

the company has to accurately articulate at the strategic level the linkage between the current business objectives and the objectives in the market place.

What products and services will I offer and deliver on the Internet? How do I incorporate the Web into existing lines of business, supply

and existing channels of distribution?

How can I improve customer service and satisfaction? How can I be sure that my data, and that of my customers, suppliers

and partners will be secure?

Will I be at a significant disadvantage if my competitors provide

these capabilities to customers before I do?

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Step 3: Analyzing the Feasibility of the E-Commerce Initiative

Cost Benefit Analysis

Involve reviewing what is present at the moment in terms of skilled staff, technology and resources, and estimating costs of building, implementing, and supporting the hardware, software and human resources needed. In many e-commerce projects costs have been underestimated and benefits overestimated so companies entering this field should exercise some caution.

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Step 3: Analyzing the Feasibility of the E-Commerce Initiative

Adds tremendous marketing power to any type of business for a fraction of the cost of traditional advertising and marketing methods. Opens up a global marketplace that would normally be unattainable for

most companies.
24/7 availability. Can reduce administration costs, as all communications are electronic

faster processing of orders, reduced turn round time and the consequential saving of administration costs.

Can reduce costs and processing time when working with supplier

organizations if they too are using e-commerce. The B to B harmonization of the supply chain can reduce costs even if a company does not itself sell its products through the Internet.
A low cost alternative to a traditional physical retail outlets.

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Step 4: Planning and Design of E-commerce strategy

Process of formulating E-commerce strategy

Creating an independent E-commerce division or department with employees having specialist skills. A mixture of skills are needed: technical skills and specialties in sales and marketing, purchasing, human resources, training, finance and business process re-engineering. Conduct SWOT (strengths, weaknesses, opportunities and threats) analysis. An ecommerce initiative needs to build on these strengths. The cost benefit analysis should enable managers to set targets and prioritize e-commerce activities to give the greatest opportunities for the earliest financial return with the minimum risk. 11/16/12

Step 4: Planning and Design of E-commerce strategy

Companies should not underestimate the amount of

business re-organization required to introduce ecommerce

Companies need to consider whether they can carry

out the development work themselves or whether they should subcontract part or all of this work.

E.g. who is going to design the web site? How will the content be maintained and updated? Who will administer and control the system after it is installed?

The company must consider whether it has the

appropriate development resources and experience 11/16/12 to build e-commerce systems or whether there are

Step 4: Planning and Design of E-commerce strategy

Designing the system

How can an existing web site be developed to maintain customer loyalty? The design should take into account

the values the company wishes to promote, The image it wished to build and maintain the customer requirements of convenience and ease of use. Who will process the credit card orders? Will e-commerce be employed to transmit credit card orders to the companys merchant account provider? How will you get your order and fulfillment information into your accounting system? How can you be sure that your data and that of your customers, suppliers and partners will be secured?
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Step 4: Planning and Design of E-commerce strategy

Some Pitfalls to Avoid During Planning

Companies need to ensure they do not neglect planning for customer service both before and after a sale. to integrate their e-commerce with their traditional business to prepare for success and the volume of business it may generate, e.g. avoiding network traffic jams. the need to advertize the web site and e-commerce facility. that the web site interaction is the only 11/16/12

fail fail

underestimate assume

Step 5 Implementation
Organizational and cultural issues

In order to have a successful E-commerce development it is necessary to have board level commitment, and support from all departments, people involved and stakeholders. Projects have been known to fail without such commitment. Some education and training will need to be implemented before any further development is attempted. Introduce training on the business and technical issues of creating an e-commerce system. Training is required for various disciplines of hardware, software, networks, marketing, finance, and human resources.
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Step 6: Strategy assessment

The objectives of strategic reassessment are

To find out if the E-commerce system is delivering what it was supposed to deliver. Common pitfall :selling over the web means the company must be making money over the web. To learn from both the successes and failures of the system reviewed. E-commerce is a continually changing environment so initiatives that work in the first instance may cease to be cost effective at a later stage. To identify failing projects as soon as possible and determine the reasons for failures. There is no point in continuing with a project if it cant be saved: learn from the mistakes Feedback and corrective actions to give a policy of continual improvement are needed for any development including E-commerce. 11/16/12

Step 6: Strategy assessment

For companies implementing an Ecommerce strategy, a set of questions are given below which can be used as a checklist by the review team:

What were the aims and objectives for e-commerce? Were they met? What were the expectations? Were they realistic? What products and services did the company want to offer? Is the system delivering them? Can the proportion of offered services be quantified? Have unanticipated problems occurred? If so, what proportion were handled successfully? What costs did the company hope to reduce? What cost reductions were actually achieved? Did other costs increase unexpectedly? If so, why? What extra costs were incurred? What were the sales objectives were they realistic? How well were they obtained? Did web and Internet communications reduce traditional communication costs, if so, by how much? Did you improve customer relations? What evidence is there for this? If not what went 11/16/12 wrong?

Step 6: Strategy assessment

What internal issues have arisen? For example, has it had an effect on employees resistance to change, cultural change etc? Can any problems be quantified? Is your site making the best use of available technologies? How will you stay on top of online developments in your field? Are all appropriate staff involved and if not who else should be involved? Does your web site effectively convey the image and message the company needs? Are there new media or public relations outlets that you could tap for further promotion? What information has been gained from customer surveys, monitoring the use of the company web pages and sales made through e-commerce. Does this point to further opportunities for e-commerce expansion? Are there further efficiencies that you could achieve by more effective electronic communication? If so what is the projected saving? Could the companys database of electronic contacts be further extended and used more effectively for marketing? Note however, that care must be taken over privacy. The company should ensure it follows a clear privacy and ethical policy in all its use of customer data 11/16/12

Step 6: Strategy assessment

Review your Web traffic analysis:

Are there any obvious patterns in the Internet traffic, or the paths the companys visitors follow that may give insights into their preferences or provide opportunities for further e-commerce growth. What are the common routes users take through the web site and what are the top exit points from your site? Are these appropriate? Can these be changed by better site design? Which external sites link to you? Are these appropriate? How often are they used? Are you generating sufficient return on investment for paid for online advertising? If you provide a web site search facility, what are the most common search phrases and do they give any ideas for new areas of business development? Track competitors developments in the field: examining new and old competitors. 11/16/12