Getting It: Five factors for success

Aimee McClinchy checks out five factors for success in the e-commerce world.

1. Brand Power and targeted advertising

EstarOnline head Matthew Darby says it is obvious now that for any B2C to succeed it needs to be aligned to a bricks and mortar with a strong brand presence. That’s why he was happy to sell CD Star to IT Media, which sells complementary titles such as Crème and Rip It Up. "B2Cs have got to get their branding out there – and that takes dollars."

On the marketing side, Kate Delhagen, chairman of US-based association Shop.org, says companies with the right ideas are now focusing their efforts on increasing the frequency of purchases from existing customers to become profitable more quickly.

Opt-In marketing, where people willingly join up to loyalty schemes - such as E-Loan’s newsletter - and can unsubscribe at any time, will be the marketing tool of successful B2C's, believes Message Media chief executive Chris Price.

2. Buy, not make

Or, as venture capitalist and Technology New Zealand advisory committee member director John Cunningham prefers to say, buy software packages, not develop, or buy and customise. This is all about return on investment and was one of the biggest lessons Flying Pig learnt. After having a 12-strong team of Advantage developers working on the back end for a year, the e-tailer first implemented exo-net and just recently, eStarOnline’s iSams engine, each in just weeks.

3. Integrate front and back

Cunningham agrees with vendors Intentia, Conduit and eStarOnline that this was behind the death of many dotcoms. "If you are going to do something, do it now and scale up," Darby says. High overheads, like people and space, can be reduced when your website orders are tightly integrated with your ERP system and warehousing is also configured into the equation.

Acma Books in Singapore, a Conduit client, had a team or around 14 people to manually manage ordering, purchasing, picking and packing of its orders. After implementing its e-business platform, there is now a team of three to four people overseeing this.

Another vendor, Intentia, has web-enabled its ERP platform, and is implementing systems for retailers like Montana and Tegel, before it moves into e-commerce.

Mobile phone distributor Cellect New Zealand, whose site is due to go live in July 2001, says its back end integration will mean it can provide a richer set of tools like order reviews for customers.

4. Think of it as an "added value channel” not a business in itself

An e-commerce site should complement other offline channels, but provide levels of after-sales service and value-added, personalised information that can not be accessed from another channel. Bridalfair.co.nz offers a wedding gift registry linked to suppliers using Conduit’s platform, but also gets gifts wrapped and delivered, will soon offer advice on weddings and etiquette, and explains its founder’s offline business – home services and grooming.

5. Finding Strength in numbers

The travel industry is proving it may work well in portals – particularly because it has no “last mile” issues and can keep costs down by banding together. While the jury is still out on a final, workable model for shopping mall models, one doing well is www.go-shopping.co.nz, founded by Barter Card entrepreneur Kerry Gordon. But building communities of like-minded people for buying power online may be a flawed theory, TNZ's John Cunningham says. "That's not yet been proved; the problem is they sell them yesterday's product."

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